/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/190411.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, April 11, 2019, Vol. 22, No. 73 Headlines A U S T R A L I A AFG 2019-1 TRUST: S&P Assigns BB (sf) Rating on Class E Notes CUSTOM CLAD: First Creditors' Meeting Set for April 23 DALKEITH ESTATE: Second Creditors' Meeting Set for April 18 DIAL A DOCTOR: Second Creditors' Meeting Set for April 17 JYISHA PTY: First Creditors' Meeting Set for April 18 PLANT HIRE: First Creditors' Meeting Set for April 16 TIDE TRAINING: Second Creditors' Meeting Set for April 17 TIGER ENERGY: First Creditors' Meeting Set for April 18 WYATT HOLDINGS: Second Creditors' Meeting Set for April 17 [*] S&P Raises Ratings on Nine Tranches of Australian RMBS Deals C H I N A CHINA HONGQIAO: S&P Alters Outlook to Positive & Affirms 'B+' ICR FANTASIA HOLDINGS: S&P Rates New U.S. Dollar Sr. Unsec. Notes 'B' GOHO FINANCIAL: Moody's Assigns B1 CFR, Outlook Stable MODERN LAND: Moody's Gives B3 Sr. Unsec. Rating to New USD Notes RONSHINE CHINA: Moody's Hikes CFR to B1, Outlook Stable RONSHINE CHINA: S&P Affirms 'B' LT ICR, Alters Outlook to Positive SUNAC CHINA: Fitch Rates New $750MM Senior Notes Final 'BB' ZHENRO PROPERTIES: Moody's Ups CFR to B1, Outlook Stable [*] CHINA: Bankruptcy Run in Wealthy Province Spooks Creditors I N D I A ADH CHEMICALS: ICRA Assigns B+ Rating to INR1.0cr Cash Loan ASHAPURA MINECHEM: Insolvency Resolution Process Case Summary BHOOMI GINNING: Insolvency Resolution Process Case Summary CITRON ECOPOWER: Ind-Ra Lowers Loan Rating to B-, Outlook Negative CMC COMMUTATOR: ICRA Maintains 'B' Rating in Not Cooperating DESAI INFRASTRUCTURE: ICRA Reaffirms B+ Rating on INR4.5cr Loan DHANALAKSHMI SRINIVASAN: ICRA Rates INR52cr Term Loan 'D' GLOBAL INTERACTIVE: Insolvency Resolution Process Case Summary GURUKRUPA COTTON: ICRA Hikes Rating on INR9.50cr Loan to B+ HANUNG TOYS: Insolvency Resolution Process Case Summary IDEB PROJECTS: Insolvency Resolution Process Case Summary INA ELITE: ICRA Maintains B Rating in Not Cooperating Category INDIANROOTS SHOPPING: Insolvency Resolution Process Case Summary INKA FOODS: Insolvency Resolution Process Case Summary JET AIRWAYS: Fails to Pay Interest to Etihad-Linked Entity KGS SUGAR: ICRA Maintains D Rating in Not Cooperating Category KHODAL COTTON: ICRA Lowers Rating on INR9.14cr Loans to D MADRAS FERTILIZERS: ICRA Reaffirms C Rating on INR191.4cr Loan MAHESH ELECTRICAL: ICRA Assigns B+ Rating to INR4.0cr LT Loan MARBILANO TILES: ICRA Reaffirms B+ Rating on INR12.18cr Term Loan P. DASARATHARAMA: ICRA Maintains B+ Rating in Not Cooperating PRAGATI TRANSMISSION: ICRA Maintains B+ Rating in Not Cooperating PUNJAB INFRASTRUCTURE: Ind-Ra Lowers Long Term Loan Rating to 'D' RELIANCE COMMUNICATIONS: NCLAT to Decide Over Insolvency Plea RL STEELS: ICRA Withdraws 'D' Rating on INR300cr Loans SAI GLOBAL: ICRA Reaffirms B+ Rating on INR22.80cr Cash Loan SANT DEEPAK: ICRA Reaffirms 'D' Rating on INR13cr Loans SB URBANSCAPES: ICRA Moves B Rating to Not Cooperating Category SEAJAAN LOGISTICS: Insolvency Resolution Process Case Summary SIMHAPURI ENERGY: ICRA Maintains 'D' Rating in Not Cooperating SPS STEELS: Insolvency Resolution Process Case Summary SREE CHAITANYA: ICRA Maintains 'D' Rating in Not Cooperating STERLITE TECHNOLOGIES: Moody's Withdraws B1 CFR and Stable Outlook SUPREME AHMEDNAGAR: Ind-Ra Keeps D Loan Rating in Non-Cooperating SUPREME BEST: Ind-Ra Maintains D Loan Rating in Non-Cooperating SUPREME INFRAPROJECTS: Ind-Ra Keeps 'D' Rating in Non-Cooperating SUPREME KOPARGAON: Ind-Ra Keeps D Loan Rating in Non-Cooperating SUPREME PANVEL: Ind-Ra Maintains D Loan Rating in Non-Cooperating SUPREME SUYOG: Ind-Ra Maintains D Loan Rating in Non-Cooperating SUPREME VASAI: Ind-Ra Maintains 'D' Loan Rating in Non-Cooperating TAMILNADU STATE: ICRA Assigns B Rating to INR24cr Fund Based Loan TECHNOCRAT CONNECTIVITY: ICRA Withdraws B+ INR5.75cr Loan Rating UNITED BREWERIES: HDFC Opposes Bid to Liquidate Mallya's Assets VANILLA CLEAN: Ind-Ra Cuts INR2.30BB Loan Rating to B-, Off RWN VARDHMAN VITRIFIED: ICRA Cuts Rating on INR19cr Loans to D M A L A Y S I A FEDERAL LAND: Malaysia to Provide $1.5 Billion in Financial Aid UTUSAN MELAYU: Settles Legal Disputes With Ancom Subsidiaries N E W Z E A L A N D COOK'N WITH GAS: Two More Christchurch Restaurants Close Doors FORESTLANDS NZ: Investors Disappointed at Huge Losses MTF SIERRA 2017: Fitch Upgrades Class F Debt Rating to 'BBsf' [*] Loss of Waiho River Bridge May Push Businesses to Liquidation S O U T H K O R E A KDB LIFE: Fitch Affirms LT IDR at 'BB+', Outlook Stable - - - - - ================= A U S T R A L I A ================= AFG 2019-1 TRUST: S&P Assigns BB (sf) Rating on Class E Notes ------------------------------------------------------------- S&P Global Ratings assigned its ratings to seven of the eight classes of prime residential mortgage-backed securities (RMBS) issued by Perpetual Corporate Trust Ltd. as trustee for AFG 2019-1 Trust in respect of Series 2019-1. The ratings reflect: -- S&P's view of the credit risk of the underlying collateral portfolio, including its view that the credit support is sufficient to withstand the stresses it applies. The credit support for the rated notes comprises note subordination, excess spread and lenders' mortgage insurance (LMI) on 35.7% of the portfolio. -- S&P's expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 1.0% of the aggregate outstanding amount of the notes, subject to a floor of A$500,000, and the principal draw function are sufficient to ensure timely payment of interest. -- The extraordinary expense reserve of A$150,000 funded by AFG Securities Pty Ltd. on the closing date to meet extraordinary expenses. The reserve is to be topped up from excess spread, if any, to the extent it has been drawn. -- The counterparty exposure to National Australia Bank Ltd. as liquidity facility provider and bank account provider. The transaction documents for the liquidity facility and bank account include downgrade language consistent with S&P Global Ratings' counterparty criteria. RATINGS ASSIGNED AFG 2019-1 Trust in respect of Series 2019-1 Class Rating Amount (mil. A$) A1 AAA (sf) 95.000 A2 AAA (sf) 355.000 AB AAA (sf) 32.500 B AA (sf) 7.000 C A (sf) 5.500 D BBB (sf) 2.250 E BB (sf) 1.250 F NR 1.500 CUSTOM CLAD: First Creditors' Meeting Set for April 23 ------------------------------------------------------ A first meeting of the creditors in the proceedings of Custom Clad Services Pty Ltd will be held on April 23, 2019, at 10:00 a.m. at the offices of PCI Partners Pty Ltd, at Level 8, 179 Queen Street, in Melbourne, Victoria. Philip Newman -- pnewman@pcipartners.com.au -- of PCI Partners was appointed as administrator of Custom Clad on April 9, 2019. DALKEITH ESTATE: Second Creditors' Meeting Set for April 18 ----------------------------------------------------------- A second meeting of creditors in the proceedings of Dalkeith Estate Pty Limited, trading as Lone Star Rib House, has been set for April 18, 2019, at 9:00 a.m. at the offices of SV Partners at Suite 3, Level 3, 426 King Street, in Newcastle, West NSW. 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 April 17, 2019, at 5:00 p.m. Joshua-Lee Robb and Daniel Jon Quinn of SV Partner were appointed as administrators of Dalkeith Estate on March 14, 2019. DIAL A DOCTOR: Second Creditors' Meeting Set for April 17 --------------------------------------------------------- A second meeting of creditors in the proceedings of Dial A Doctor Cairns Pty Ltd has been set for April 17, 2019, at 2:00 p.m. at the offices of SV Partners, at 22 Market Street, in Brisbane, Queensland. 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 April 16, 2019, at 5:00 p.m. Adam Peter Kersey and Terry Grant van der Velde of SV Partners were appointed as administrators of Dial A Doctor on Jan. 11, 2019. JYISHA PTY: First Creditors' Meeting Set for April 18 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Jyisha Pty Ltd will be held on April 18, 2019, at 3:00 p.m. at the offices of Pitcher Partners, at Level 1, 100 Hutt Street, in Adelaide, SA. Michael Oscar Basedow of Pitcher Partners was appointed as administrator of Jyisha Pty on April 9, 2019. PLANT HIRE: First Creditors' Meeting Set for April 16 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Plant Hire Direct (QLD) Pty Ltd will be held on April 16, 2019, at 11:00 a.m. at the offices of Robson Cotter Insolvency Group, Unit 1, at 78 Logan Road, in Woolloongabba, Queensland. William Roland Robson -- wrrobson@rcinsol.com.au -- of Robson Cotter Insolvency Group was appointed as administrator of Plant Hire on April 4, 2019. TIDE TRAINING: Second Creditors' Meeting Set for April 17 --------------------------------------------------------- A second meeting of creditors in the proceedings of Tide Training Pty Ltd has been set for April 17, 2019, at 10:00 a.m. at the offices of Hamilton Murphy, at Level 1, 255 Mary Street, in Richmond, Victoria. 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 April 16, 2019, at 4:00 p.m. Richard Rohrt of Hamilton Murphy was appointed as administrator of Tide Training on March 16, 2019. TIGER ENERGY: First Creditors' Meeting Set for April 18 ------------------------------------------------------- A first meeting of the creditors in the proceedings of Tiger Energy Limited will be held on April 18, 2019, at 10:00 a.m. at the offices of Jones Partners Insolvency & Business Recovery at Level 13, 189 Kent Street, in Sydney, NSW. Michael Gregory Jones and Alan Godfrey Topp of Jones Partners were appointed as administrators of Tiger Energy on April 8, 2019. WYATT HOLDINGS: Second Creditors' Meeting Set for April 17 ---------------------------------------------------------- A second meeting of creditors in the proceedings of Wyatt Holdings (Tas) Pty Ltd has been set for April 17, 2019, at 12:00 p.m. at the offices of Wellington Room at the Best Western Hobart 156 Bathurst Street, in Hobart, Tasmania. 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 April 16, 2019, at 12:00 p.m. Michael Carrafa and Peter Gountzos of SV Partners were appointed as administrators of Wyatt Holdings on March 13, 2019. [*] S&P Raises Ratings on Nine Tranches of Australian RMBS Deals ---------------------------------------------------------------- S&P Global Ratings raised its ratings on nine tranches of Australian residential mortgage-backed securitization (RMBS) issued under transactions sponsored by three major banks in Australia. At the same time, S&P affirmed its ratings on 55 tranches. S&P said, "The rating actions follow our periodic review of 24 securitization transactions sponsored by Commonwealth Bank of Australia, National Australia Bank Ltd., and Westpac Banking Corp. The banks are the largest group of issuers in the Australian securitization market by volume, comprising just over 50% of the outstanding RMBS prime portfolio rated by S&P Global Ratings. We have excluded transactions in this sponsor group that are more likely to call over the near term, warehouse-style facilities, and those that have recently undergone a review." The portfolio collateral quality in the major banks sector remains strong, as evidenced by weighted-average loan-to-value (LTV) ratios of around 54% (based on original valuations). S&P Global Ratings factors into its surveillance current housing market trends using House price Index data produced by the Australian Bureau of Statistics. The loans in the portfolio have on average seasoning of around 66 months and therefore have benefitted from several years of house price appreciation before the recent market declines in most states. The portfolios also have a relatively low proportion--4.5% overall--of high LTV ratio mortgages (i.e., LTV ratios greater than or equal to 80%). Additionally, S&P considers the portfolios in this review geographically diverse, with no transaction attracting any additional adjustment for concentration within one state, as per its "Australian RMBS Rating Methodology And Assumptions," published Sept. 2, 2011. S&P said, "We are monitoring the performance of the transactions in the major banks sector in light of softening economic conditions, which we believe are likely to put pressure on mortgage arrears and prepayment rates during the next 12 months. We have observed an upward trend in arrears in the transactions in this review; however, average total arrears in the Standard & Poor's Performance Index (SPIN) for major banks remain relatively modest, at around 1.7% and the cumulative gross loss as a percentage of the original pool balance is less than 0.02% for this subset of transactions." The SPIN measures the weighted-average of arrears more than 30 days past due on residential mortgage loans in publicly and privately rated Australian RMBS transactions. Prepayment rates of around 20% have contributed to a strong build-up in credit support that provides a comfortable buffer to absorb a moderate deterioration in asset quality. The senior-rated notes in these transactions, generally listed as class A notes, have on average 4.6 times the credit support required, available in the form of subordination by junior-rated or unrated tranches, according to S&P's credit analysis. This is the result of a combination of over-enhancement from closing or a build-up of credit support due to sequential paydown structures during at least the first two years of these transactions. S&P said, "There are structural features for a number of these transactions that enhance ratings stability, in our view. In particular, unrated, subordinated, and nonamortizing junior tranches mean credit support available to rated notes will continue to build for the life of the transaction, given that the junior notes comprise a larger proportion of the transactions' capital structure over time. This provides a strong buffer against tail risk and back-ended losses. "We see limited refinancing risk in the portfolios in this review due to the relatively low proportion of interest-only loans in the pools, which is around 18% compared with 27% for the broader banking sector; the low LTV ratios; and the prime nature of the borrowers in these transactions. "Our analytical review considers the credit quality and cash-flow mechanics of each transaction taken from collateral data as of Dec. 31, 2018. All originators in this review have been categorized within "CA1," in line with our "Methodology For Assessing Mortgage Insurance And Similar Guarantees And Supports In Structured And Public Sector Finance And Covered Bonds" criteria, published on Dec. 7, 2014. The proportion of insured loans in this group of transactions is around 17%. "The cash-flow analysis considers various variables that could affect future cash flow, the portfolio performance of the transaction, and outlook, as well as the current and potential future payment mechanism. Our cash-flow analysis demonstrates the timely payment of interest and ultimate payment of principal for the rated notes at their respective rating levels after the application of the appropriate rating stresses outlined in the criteria. "We will continue to monitor quantitative and qualitative variables as part of our surveillance and future rating review. "One transaction in this review, National RMBS Trust 2016-1 Series 2016-1, is currently under criteria observation (UCO) due to the publication of our updated counterparty criteria. This review does not address the UCO on National RMBS Trust 2016-1 Series 2016-1. Our ratings will remain on UCO after this review, pending the resolution of expected changes following the criteria update." A list of Affected Ratings can be viewed at: https://bit.ly/2GcG2ys ========= C H I N A ========= CHINA HONGQIAO: S&P Alters Outlook to Positive & Affirms 'B+' ICR ----------------------------------------------------------------- On April 9, 2019, S&P Global Ratings revised its outlook on China Hongqiao Group Ltd. to positive from stable. At the same time, S&P affirmed its 'B+' long-term issuer credit rating on the China-based aluminum producer. S&P said, "We revised the outlook to positive because we expect Hongqiao to exercise discipline in its financial management and focus on debt reduction over the next 12-24 months. The company's reported financial results for 2018 showed a continued decline in capital expenditure (capex). "We expect Hongqiao to contain its capex at a moderate level in 2019-2020 on a reduced growth appetite. During the industry downturn in 2015-2016, the company expanded aluminum capacity aggressively, leading to substantially higher capex than the management's guidance. The capex was primarily debt-funded, resulting in a lower degree of predictability of its financial ratios. We believe Hongqiao's debt-funded growth phase is over, given the company is already one of the largest primary aluminum producers globally. Hongqiao's consecutive capex cuts in the past two years support our view. "Hongqiao's free operating cash flows should remain positive in 2019-2020, despite a likely decline in EBITDA and operating cash flows. We expect decelerating economic growth in China to exert downward pressure on aluminum demand and price. At the same time, Hongqiao's production costs will increase, given we anticipate that the company will start paying government levies in relation to captive power generation from 2019. As such, we expect Hongqiao's EBITDA margin to decline in 2019 and its leverage to increase moderately. Nevertheless, its operating cash flows will be more than sufficient to cover its capital spending. "We anticipate that Hongqiao will start paying down debt from 2019, given its positive free operating cash flows and ample cash on hand. The company's cash and cash equivalents more than doubled to Chinese renminbi (RMB) 45.4 billion at end-2018, from RMB21.9 billion at end-2017. This is partly due to healthy operating cash flows and partly because it borrowed more to preempt industry adversities. We believe that the company chose not to use its cash to repay debt in 2018 considering tight liquidity in the onshore market and industry uncertainties. We estimate that Hongqiao needs only RMB12.0 billion–RMB15.0 billion cash on hand to meet working capital and other operational needs, suggesting significant room for debt reduction. "The positive outlook on Hongqiao reflects our view that improved financial discipline is likely to speed up the company's debt reduction progress over the next 12-24 months, enhancing its rating buffer against industry uncertainties. We forecast that Hongqiao's leverage will increase moderately in 2019 on lower product prices and higher production costs, but its free operating cash flows will remain positive on contained capital spending." S&P may upgrade Hongqiao if: -- The company demonstrates a record of disciplined capital spending, while starting to pay down debt; or -- Its financial performance improves such that its ratio of funds from operations (FFO) to debt exceeds 30% for an extended period. S&P said, "We may revise the outlook to stable if Hongqiao's financial management is not as disciplined as we expect. One indication of this is that the company's capex is significantly higher than our expectation. "We could also revise the outlook to stable if Hongqiao's financial metrics are much weaker than we expect, due to significant drop in aluminum prices or increases in production costs. An indication could be the company's FFO-to-debt ratio trending down toward 20% over the next one to two years." FANTASIA HOLDINGS: S&P Rates New U.S. Dollar Sr. Unsec. Notes 'B' ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issue rating to U.S.-dollar-denominated senior unsecured notes that Fantasia Holdings Group Co. Ltd. proposes to issue. Fantasia will use the proceeds to refinance its existing debt and for general corporate purposes. The issue rating is subject to S&P's review of the final issuance documentation. S&P rates the notes the same as the long-term issuer credit rating on Fantasia (B/Stable/--) because S&P does not see significant subordination risks in the company's capital structure. As of Dec. 31, 2018, Fantasia's capital structure consisted of about Chinese renminbi (RMB) 19 billion of secured debt and RMB24 billion of unsecured debt, of which about RMB5.8 billion was issued by the company's operating subsidiaries. Including the year-to-date issuance of RMB1 billion dim sum bonds and US$100 million senior notes (nonpriority debt at group level), the priority debt ratio is still slightly above our downward notching threshold of 50%. However, S&P expects the ratio to fall because the company will likely maintain high use of offshore borrowings. The issuer credit rating on Fantasia reflects the company's good sales growth, rising revenue, and proven ability to raise funds even in difficult market conditions. S&P said, "We believe Fantasia's liquidity has improved and its refinancing risk has reduced. Since the last quarter of 2018, the company has issued offshore bonds totaling about RMB3 billion to cover its upcoming bonds maturities. Despite a modest improvement, we believe Fantasia's financial leverage will remain high to support its scale expansion and construction. In our base case, the company's debt-to-EBITDA ratio will decline to about 9x in 2019 and 2020, from 10.1x in 2018." GOHO FINANCIAL: Moody's Assigns B1 CFR, Outlook Stable ------------------------------------------------------ Moody's Investors Service has assigned a B1 corporate family rating and issuer rating to GOHO Financial Asset Management Co., Ltd. (GOHO AMC). The outlook is stable. RATINGS RATIONALE GOHO AMC's B1 CFR and issuer rating reflect the company's niche franchise in the local distressed asset management business, good profitability and solid capital. However, these factors are offset by its short operating history, reliance on short-term funding, rapid asset growth resulting in relatively high asset quality risk and operating risk. GOHO AMC was established in 2014 as the first local distressed asset management company in the Anhui Province. Since its establishment, the company has set up multiple entities and channels -- including fund management, financial advisory and securitization -- to support the development of its distressed asset management operations. Supported by its niche franchise and increasing demand on local distressed asset management, GOHO AMC reported good profitability over the past few years. Its pretax pre-provision profit/average managed assets (AMA) and net profit/AMA in 2017 were 4.1% and 2.9% respectively. GOHO AMC also has strong capitalization with a tangible common equity to total managed assets ratio of more than 25% over the past few years, mainly supported by consecutive capital injections from its major shareholders. However, the company has rapid asset growth over the past three years. Its total assets increased by more than 200% to RMB13.5 billion at the end of June 2018 from RMB4.3 billion at the end of 2015. Moody's believes such rapid growth raises the risk of deteriorating asset quality as the portfolio seasons, although the company has slowed down its growth in 2018. GOHO AMC has only been in business for four years since 2014, and it will take time for it to build up its business, pricing models, risk-management systems and corporate culture to mitigate the operating and asset risks inherent to its distressed asset management business. Moreover, some of its entrusted distressed asset acquisition and operation business is only a funding business for distressed asset investors, not directly resolving the distressed assets. Regulators could scrutinize this practice in the future, which could affect the company's profitability. The company is still heavily reliant on short-term funding. Since the company's distressed asset management business, special investment opportunities and entrust loans are long-term assets, this creates asset and liability mismatch and therefore refinancing risk for the company. Nevertheless, GOHO AMC is gradually diversifying its funding sources. It has issued onshore long-term bonds in 2018 to improve its liquidity position. Given that it is a privately-owned enterprise, Moody's has not incorporated any assumption of government support into GOHO AMC's ratings. What Could Change the Rating -- Up GOHO AMC's ratings could be upgraded if the company (1) maintains its good profitability and capital adequacy without significantly increasing its asset risks; (2) moderates its asset growth; and (3) reduces its reliance on short-term funding. What Could Change the Rating -- Down The company's ratings could be downgraded if its (1) provision increases materially because of asset-quality deterioration; (2) tangible common equity/tangible managed assets ratio declines below 15%; and (3) business and earnings are significantly affected by changing regulations. The principal methodology used in these ratings was Finance Companies published in December 2018. GOHO Financial Asset Management Co., Ltd. is headquartered in Hefei, Anhui Province, and reported total assets of RMB13.5 billion at the end of June 2018. MODERN LAND: Moody's Gives B3 Sr. Unsec. Rating to New USD Notes ---------------------------------------------------------------- Moody's Investors Service has assigned a B3 senior unsecured debt rating to Modern Land (China) Co., Limited's (B2 stable) proposed USD notes. The rating outlook for Modern Land is stable. The company plans to use the proposed new notes consideration to exchange part of its existing senior unsecured notes. RATINGS RATIONALE "The proposed bond issuance and exchange offer will modestly improve Modern Land's debt maturity profile and will not materially affect the company's credit metrics," says Celine Yang, a Moody's Assistant Vice President and Analyst. Moody's estimates that Modern Land's leverage--as measured by revenue/adjusted debt and including adjustments for its shares in joint ventures and associates--will trend towards 60% over the next 12-18 months from 52% in 2018. Such improvement will be driven by controlled debt growth and an increase in revenue, supported in turn by contracted sales of RMB32.1 billion in 2018, up 45% from RMB22.2 billion in 2017. Modern Land's adjusted EBIT/interest coverage, including adjustments for its shares in joint ventures and associates, will likely remain weak at 1.4x -1.6x over the next 12-18 months from 1.5x in 2018, because its increasing funding costs will offset a likely improvement in EBIT. Moody's expects that Modern Land's liquidity will stay adequate. In particular, its cash balance of RMB9.7 billion at the end of 2018, together with cash received from its sales of properties during the year, will be sufficient to cover its short-term debt of RMB8.8 billion and fund part of its capital expenditure requirements. Modern Land's B2 corporate family rating reflects the company's (1) track record of marketing and selling its concept of comfortable and eco-friendly homes; (2) ability to execute consistent growth in contracted sales; and (3) adequate liquidity. At the same time, Modern Land's CFR is constrained by (1) its weak credit metrics, driven by debt-funded growth and high interest cost; and (2) the significant exposure of its land bank to lower-tier cities, where there is higher demand volatility compared to Tier 1 and Tier 2 cities. The stable rating outlook reflects Moody's expectation that Modern Land will (1) maintain adequate liquidity and grow its sales as planned; (2) adjust its pace of expansion in accordance with market conditions to avoid a material deterioration in its credit profile; and (3) maintain good access to funding. Modern Land's B3 senior unsecured debt rating is one notch lower than the CFR due to structural subordination risk. This risk reflects the fact that the majority of claims are at the operating subsidiaries. These claims have priority over Modern Land's senior unsecured claims in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. As a result, the likely recovery rate for claims at the holding company will be lower. Upward rating pressure could emerge if Modern Land establishes a track record of (1) growing its scale and establishing its brand in new locations outside its home market; (2) maintaining a reasonable cash balance, such that cash/short-term debt stays above 1.5x on a sustained basis; and (3) strong financial discipline in its land acquisitions, with homebuilding EBIT/interest coverage above 2.5x-3.0x and revenue/adjusted debt above 70%-75% on a sustained basis. Downward rating pressure could emerge if (1) Modern Land's liquidity and ability to generate operating cash flow prove to be weaker than Moody's expectations because of declining contracted sales and aggressive land acquisitions; (2) the company's revenue recognition is slower than Moody's expects or its profit margins decline, leading to a further drop of its interest coverage and financial flexibility; or (3) the company's funding access weakens significantly. Metrics indicative of downward rating pressure include (1) Modern Land's balance sheet cash, both restricted and unrestricted, falling below 100% of short-term debt; or (2) the company's adjusted EBIT/interest coverage weakening below 1.5x on a sustained basis. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. Modern Land (China) Co., Limited was founded in 2000 in Beijing by Mr Zhang Lei, now its chairman, who is a real estate developer in China. The company specializes in developing green housing units, and is one of the few early leaders in China's green and eco-friendly lifestyle market. The company listed on the Hong Kong Stock Exchange in July 2013. At December 31, 2018, Modern Land had a total land bank of around 8.7 million square meters in gross floor area. The company's lands are mainly located in cities such as Beijing, Hefei, Taiyuan, Wuhan, Changsha, Xiantao, Quanzhou, Suzhou, Zhangjiakou, Jingzhou, Dongguan, Dongdaihe and Foshan. Modern Land will focus on its expansion into tier 2 and lower-tier cities over the next 1-2 years. RONSHINE CHINA: Moody's Hikes CFR to B1, Outlook Stable ------------------------------------------------------- Moody's Investors Service has upgraded to B1 from B2 Ronshine China Holdings Limited's corporate family rating and to B2 from B3 the senior unsecured rating on its existing notes. The rating outlook is stable. RATINGS RATIONALE "The ratings upgrade reflects our expectation that Ronshine's credit metrics will improve over the next 12-18 months, driven by strong growth in revenue," says Cedric Lai, a Moody's Vice President and Senior Analyst. "The upgrade also reflects our expectation that Ronshine will maintain its financial discipline and continue to execute its deleveraging plan while pursuing an expansion strategy in the coming 12-18 months," adds Lai. Ronshine's total contracted sales grew 13.4% year-on-year to RMB25.5 billion in the first quarter of 2019, after recording robust 73% year-on-year growth to RMB121.9 billion for the full year 2018. These strong contracted sales should support the company's revenue growth over the next 12-18 months. Accordingly, Moody's expects that Ronshine's debt leverage--as measured by revenue/adjusted debt--will trend towards 60%-65% over the next 12-18 months from 52% in 2018, and its interest coverage--as measured by adjusted EBIT/interest--will improve to 2.5x-3.0x from around 2.1x over the same period. Ronshine targets to lower the company's reported net gearing ratio to 70%-90% by the end of 2019. As of the end of 2018, this ratio was 105%, an improvement from 159% at the end of 2017. The company's total reported debt decreased 10% to RMB62.5 billion at the end of 2018 from RMB69.5 billion at the end of 2017, driven in part by the slowdown in its pace of land acquisitions in 2018. Moody's expects Ronshine to spend a moderate land premium of around RMB30 billion in 2019, which is around 40%-45% of its contracted sales proceeds over the same period. In addition, the company conducted three share placements--in October 2017, June 2018 and April 2019, respectively--raising HKD3.5 billion in total, which helped improve its capital structure. Ronshine's liquidity is adequate. Its cash/short-term debt improved to 101% at the end of 2018 from 94% at the end of 2017, largely driven by the increase in cash and deposits (including restricted cash) to RMB25.0 billion at the end of 2018 from RMB20.5 billion at the end of 2017. Ronshine's B1 CFR continues to reflect its fast growing scale and its track record of developing properties in the Yangtze River Delta region and Fujian Province. The B1 CFR also takes into account the company's adequate liquidity, strong market position and strong sales execution ability in its key markets, including Hangzhou, Shanghai and Fuzhou. On the other hand, the rating is constrained by its high debt leverage, which results from the company's rapid expansion strategy. Ronshine's B2 senior unsecured rating is one notch lower than its CFR to reflect the risk of structural subordination. This subordination risk reflects the fact that the majority of Ronshine's claims are at its 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. Ronshine's rating could be upgraded if the company (1) demonstrates sustained growth in its contracted sales and revenue through economic cycles without sacrificing its profitability; (2) remains prudent in its land acquisitions and financial management; (3) improves its credit metrics, such that its EBIT/interest registers at least 3.0x and revenue/adjusted debt rises to 75%-80% or above on a sustained basis; and (4) maintains adequate liquidity. On the other hand, the company's ratings could come under downward pressure if Ronshine: (1) generates weak contracted sales; (2) suffers from a material decline in its profit margins; (3) experiences an impairment of its liquidity position, such that cash/short-term debt falls below 1.0x; and/or (4) materially increases its debt leverage. Credit metrics indicative of a ratings downgrade include EBIT/interest coverage below 2.0x, and/or adjusted revenue/debt below 50%-55% on a sustained basis. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in January 2018. Ronshine China Holdings Limited was incorporated in the Cayman Islands in 2014 and listed on the Hong Kong Stock Exchange in January 2016. As a property developer, it focuses on mid-to high-end residential units in Fujian Province, the Yangtze River Delta, the Pearl River Delta, Central China and the Bohai Sea Region. The company was founded by its Chairman, Mr. Ou Zonghong, who owns 60.3% of Ronshine. RONSHINE CHINA: S&P Affirms 'B' LT ICR, Alters Outlook to Positive ------------------------------------------------------------------ On April 9, 2019, S&P Global Ratings revised its rating outlook on Ronshine China Holdings Ltd. to positive from stable. S&P also affirmed its 'B' long-term issuer credit rating on Ronshine and its 'B-' long-term issue rating on the company's senior unsecured notes. S&P said, "We revised the outlook because we expect Ronshine's leverage and capital structure to improve over the next 12 months owing to strong revenue growth, more stable margins, and controlled debt expansion. We estimate the company's debt-to-EBITDA ratio will improve to about 6x in 2019, from 7.1x in 2018 and 11.6x in 2017. "In our view, Ronshine's intention to tone down its debt-funded growth is stronger than our previous expectation. Management seems to be keen on using the better liquidity conditions to improve its debt and capital structure, rather than chasing growth as in 2016-2017. "We see evidence of Ronshine adopting a more cautious attitude towards the property market, putting more emphasis on strengthening cash flow and liquidity management. After a year of low capital spending in 2018, the company remained cautious in the first quarter of 2019, acquiring only three land parcels. Similar to some peers, Ronshine has announced a slower contracted sales growth target of 15%, reaching Chinese renminbi (RMB) 140 billion for 2019, compared with an over 50% annual growth in 2016-2018. "We expect Ronshine to acquire about RMB22 billion of land in 2019 and RMB32 billion in 2020. These amounts are 35%-45% of the estimated cash proceeds from sales during the period. In our view, although Ronshine's land bank is only sufficient for three years, the company has room to maneuver its land acquisitions by spreading them out to 2020 and onwards." In addition, despite slowing land replenishment through public auctions and mergers and acquisitions, Ronshine targets to transform 5 million-6 million square meter of land bank from its primary land development projects in Zhengzhou and Taiyuan. This should support land replenishment needs with a lower total spending. Ronshine's strong sales and cash generation are likely to keep its debt under control over the next 12 months. S&P estimates the company's cash from sales will reach about RMB65 billion in 2019, supported by RMB200 billion of saleable resources to be launched in the year and a consolidated portion of about 55%. Adjusted debt should grow moderately to RMB63 billion-RMB65 billion by the end of 2019, from RMB62 billion in 2018. The easing of funding conditions in both onshore and offshore markets should enhance Ronshine's capital structure over the next 12 months. As of end-2018, majority of the company's borrowings are maturing or puttable in the next two years. However, S&P expects a notable lengthening of its maturity profile over the next 12 months. The company is using longer-term funding to replace existing shorter-tenor or costlier debt. Since 2019, Ronshine has issued an aggregate of US$900 million to refinance short-term debt, including part of its U.S. dollar senior notes puttable in the first quarter of 2020. The company also plans to use various onshore funding channels, including corporate bonds, enterprise bonds, and assets-backed securities, to enhance its capital structure. Ronshine further announced an equity issuance of about Hong Kong dollar (HK$) 1.18 billion on April 4, 2019, to fund its development and operations. S&P said, "We affirmed the rating on Ronshine to reflect the company's limited record of maintaining a less-aggressive expansion strategy. In our view, there is still a risk that the company could step up its growth aspirations if opportunities arise and the funding conditions ease more substantially. "The positive outlook reflects our view that Ronshine will continue to improve its leverage over the next 12 months through strong revenue growth, stable margins, and controlled land acquisitions. At the same time, we expect the company to strengthen its liquidity and debt maturity profile by refinancing with longer-term borrowings. "We could revise the outlook to stable if Ronshine resumes aggressive debt-funded expansion, such that its debt-to-EBITDA ratio does not improve to below 5.5x (both on a consolidated and proportionate consolidated basis). We could also revise the outlook to stable if the company's liquidity and debt maturity profile do not improve and result in shortening of the weighted average maturity from two years currently. "We could raise the rating if Ronshine improves its leverage and capital structure over the next 12 months. Indications of such improvement would be debt-to-EBITDA ratio (both on a consolidated and proportionate consolidated basis) staying sustainably below 5.5x, and a lengthening of the weighted average debt maturity to materially above two years." SUNAC CHINA: Fitch Rates New $750MM Senior Notes Final 'BB' ----------------------------------------------------------- Fitch Ratings has assigned Sunac China Holdings Limited's (BB/Stable) USD750 million 7.95% senior notes due 2023 a final rating of 'BB'. The notes are rated at the same level as Sunac's senior unsecured rating because they constitute its direct and senior unsecured obligations. The final rating follows the receipt of final documentation conforming to information already received, and is in line with the expected rating assigned on April 7, 2019. Sunac's rating reflects Fitch's view that leverage, as measured by net debt/adjusted inventory with proportional consolidation of joint ventures and associates, will stay below 40% for a sustained period. Sunac has publicly committed to deleverage and Fitch believes it will not aggressively make land acquisitions or large investments in other businesses. Its large attributable landbank of more than 113 million square metres (sq m) of saleable gross floor area is well-diversified across various regions in China, which should support contracted sales growth. KEY RATING DRIVERS Improving Leverage: Fitch expects Sunac to continue deleveraging in 2019 in the absence of large land acquisitions, despite moderating contracted sales growth on weaker industry sentiment. Sunac's leverage fell to 38.5% in 2018, from 47.3% in 2017, due to minimal landbank additions and strong cash generated from contracted sales. Its attributable contracted sales increased by 23% to CNY326 billion, while its total contracted sales reached CNY461 billion; above its full-year sales target of CNY450 billion. Diversified Land Bank: Sunac's landbank is diversified across various regions in China, including northern China, the Beijing area, Yangtze River Delta, southwest China and south-eastern China. It also has a presence in central China and the Guangdong and Hainan provinces. Up to 85% of Sunac's landbank, based on saleable value, is situated in tier 1 and 2 cities, where pent-up demand is more robust than in lower-tier cities. The remaining landbank is in strong tier 3 cities. Geographical diversification helps mitigate against local policy restrictions, as each local government implements differing home-purchase limits. Strong Sales, Lower Costs: Fitch forecasts Sunac's average selling price (ASP) to be around CNY14,000-14,500/sq m in the next few years. The company's total contracted sales increased by 11% to CNY80 billion in 3M19, with its ASP maintained at around CNY14,720/sq m. Sunac's strong sales performance is due to its focus on higher-tier cities and geographical spread, which mitigates negative shocks from specific regions. Its attributable contracted sales are comparable with other large Chinese homebuilders, including China Vanke Co., Ltd. (BBB+/Stable) and Poly Developments and Holdings Group Co., Ltd. (BBB+/Stable). Sunac's large scale also allows it to trim construction costs, leading to a strong EBITDA margin - including the proportional share of EBITDA from joint ventures and associates - of around 24% in 2018, or 33% if valuation gains from acquired projects are removed from costs of goods sold (COGS). Fitch expects an EBITDA margin, including valuation gains in COGS, of around 25% in the medium term. Higher Non-Development Contribution: Fitch forecasts Sunac to spend CNY15 billion-21 billion a year in 2019 and 2020 to ramp up its property management, rental and decoration businesses as well as the Wanda City cultural and tourism business it acquired in 2017. Fitch expects the projects to be fully funded by the sale of nearby properties. The expansion of these businesses improved revenue contribution from Sunac's non-development business to CNY7.0 billion in 2018, from CNY3.3 billion in 2017, with its gross margin also strengthening to 54%, from 44%. The acquisition and retention of the Wanda City's operational and management team provides Sunac with operational control of the project, mitigating execution risk. DERIVATION SUMMARY Sunac's homebuilding attributable sales scale and geographical diversification is comparable with that of large 'BBB' rated homebuilders, such as Vanke and Poly, and is comparable with or superior to Longfor Group Holdings Limited (BBB/Stable) and Shimao Property Holdings Limited (BBB-/Stable). Country Garden Holdings Co. Ltd. (BBB-/Stable) has larger attributable scale and geographic coverage than Sunac. However, Country Garden's landbank is more concentrated in low-tier cities, where demand is susceptible to negative sentiment, while the majority of Sunac's landbank is situated in tier 1 and 2 cities, as reflected in Sunac's higher margin. However, Sunac's financial profile is more volatile than that of investment-grade peers. The leverage forecast for Sunac of around 35%-40% is more comparable with 'BB' rated issuers, like Sino-Ocean Group Holdings Limited (BBB-/Stable; standalone credit profile: BB+), Future Land Development Holdings Limited (BB/Stable) and its subsidiary, Seazen Holdings Co., Ltd. (BB/Stable), CIFI Holdings (Group) Co. Ltd. (BB/Stable) and China Aoyuan Group Limited (BB-/Positive). Sunac's leverage is lower than China Evergrande Group's (B+/Positive) 42% as of end-June 2018 and Sunac has a significantly lower payables/inventory ratio. KEY ASSUMPTIONS - Landbank replenishment to maintain a landbank life of 4.5 years in 2020, from 5.0 years in 2018 - Capex of CNY15 billion-21 billion a year in 2019 and 2020 - Contracted gross floor area to increase by 5% - Contracted ASP of around CNY14,000-14,500/sq m - EBITDA margin, excluding the effect of revaluation of acquired projects from COGS, maintained at 25%-30% RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action - Net debt/adjusted inventory below 30% (2018: 38%) for a sustained period - EBITDA margin, excluding the effect of revaluation of acquired projects from COGS, sustained above 25% (2018: 24%) Developments that May, Individually or Collectively, Lead to Negative Rating Action - Net debt/adjusted inventory above 40% for a sustained period - Attributable contracted sales/gross debt below 1.2x (2018: 1.3x) - EBITDA margin, excluding the effect of revaluation of acquired projects from COGS, sustained below 20% - Change in management strategy to refocus on aggressive acquisitions, away from Sunac's stated objective to reduce its leverage ratio LIQUIDITY Sufficient Liquidity: Fitch expects Sunac to maintain sufficient liquidity for its operations and debt repayment, as contracted sales reached CNY326 billion on an attributable basis in 2018. Sunac had a cash balance of CNY120 billion, including restricted cash of CNY44 billion, sufficient to cover short-term debt of CNY92 billion. Sunac raised USD1.9 billion in offshore senior notes in 2018 and a further USD1.6 billion so far in 2019. ZHENRO PROPERTIES: Moody's Ups CFR to B1, Outlook Stable -------------------------------------------------------- Moody's Investors Service has upgraded to B1 from B2 Zhenro Properties Group Limited's corporate family rating, and to B2 from B3 the senior unsecured rating on its existing notes. The rating outlook is stable. RATINGS RATIONALE "The ratings upgrade reflects our expectation that Zhenro's credit metrics will strengthen over the next 12-18 months, driven by strong growth in revenue and contracted sales," says Cedric Lai, a Moody's Vice President and Senior Analyst. "We expect Zhenro will continue to improve its debt maturity profile and manage down its exposure to trust financing in the coming 12-18 months," adds Lai. Zhenro has demonstrated improved access to funding over the past 12 months, especially in the debt capital markets. The company has lengthened the maturity profile of its debt, and reduced its exposure to trust loans and asset management borrowings to 36% of total debt at the end of 2018, from 55% in 2017 and 73% in 2016. These borrowings usually bear higher interest rates and have shorter maturities than bonds or bank loans. Moody's expects that Zhenro's total contracted sales will continue to grow at an annual rate of around 15% to around RMB120-RMB130 billion in 2019. Such a scale is large when compared with its B-rated Chinese property peers. These strong contracted sales should support the company's liquidity and revenue growth over the next 12-18 months. Zhenro has recorded strong contracted sales growth in the past two years. The company's total contracted sales grew 54% year-on-year to RMB108 billion in 2018, after recording 79% year-on-year growth to RMB70 billion in 2017. Meanwhile, Moody's expects that Zhenro's debt leverage — as measured by revenue/adjusted debt — will trend towards 60%-65% over the next 12-18 months from 53% at the end of 2018. Its interest coverage -- as measured by adjusted EBIT/interest -- should also improve to around 2.3x-2.5x from 1.9x over the same period. Zhenro has diversified land reserves. The company had 145 projects in 28 cities, with no particular city representing more than 20% of its total reserves gross floor area (GFA) at December 31, 2018. Its land reserves are primarily located in Tier 1 and Tier 2 cities such as Nanjing, Shanghai, Tianjin, Suzhou, Wuhan and Fuzhou where property demand is generally strong, and which accounted for more than 70% of its total land reserves at the end of 2018, in terms of GFA. Zhenro's liquidity is strong. The company's cash and cash equivalents/short-term debt ratio improved to 119% at the end of 2018 from 86% at the end of 2017, largely driven by an increase in cash and deposits (including restricted cash) to RMB28.4 billion from RMB19.7 billion over the same period. Zhenro Properties Group Limited's B1 corporate family rating reflects the company's quality and geographically diversified land bank, large scale and strong sales execution. Zhenro's B2 senior unsecured rating is one notch lower than its CFR to reflect the risk of structural subordination. This subordination risk reflects the fact that the majority of Zhenro's claims are at its 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. Zhenro's rating could be upgraded if the company (1) demonstrates sustained growth in its contracted sales and revenue through the economic cycles without sacrificing its profitability; (2) remains prudent in its land acquisitions and financial management; (3) improves its credit metrics, such that EBIT/interest registers at least 3.0x and revenue/adjusted debt rises to 75%-80% or above on a sustained basis; and (4) maintains adequate liquidity. On the other hand, the company's ratings could come under downward pressure if Zhenro: (1) generates weak contracted sales; (2) suffers from a material decline in its profit margins; (3) experiences an impairment of its liquidity position, such that cash/short-term debt falls below 1.0x; and/or (4) materially increases its debt leverage. Credit metrics indicative of a ratings downgrade include EBIT/interest coverage falling below 2.0x, and/or adjusted revenue/debt falling below 50%-55% on a sustained basis. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in January 2018. Zhenro Properties Group Limited was incorporated in the Cayman Islands in 2014 and listed on the Hong Kong Stock Exchange in January 2018. At the end of 2018, Zhenro had 145 projects in 28 cities across China. Its key operating cities include Shanghai, Nanjing, Fuzhou, Suzhou, Tianjin and Nanchang. The company was founded by Mr. Ou Zongrong, who indirectly owned 57.70% of Zhenro Properties at August 27, 2018. The sons of Mr. Ou Zongrong together owned 10.55% of the company as of the same date. [*] CHINA: Bankruptcy Run in Wealthy Province Spooks Creditors -------------------------------------------------------------- Bloomberg News reports that a series of bankruptcy filings by major private-sector bond issuers in China's third-wealthiest province is shining a spotlight on aggressive efforts by local governments to manage unsustainable debt loads. According to Bloomberg, four debtors have entered bankruptcy procedures since the start of November in Dongying, a city of 2 million in the eastern province of Shandong that once thrived with a booming tire-making industry. While China sees thousands of bankruptcies each year, instances of court-led restructuring of publicly issued bonds have been rare, the report says. Authorities in other cases have encouraged workouts with creditors, raising questions about the Dongying examples. Bloomberg notes: * Shandong SNTON Group Co., an iron-wire maker, entered bankruptcy last month; * China Eastar Group, a chemical-products company, also was declared bankrupt last month; and * Shandong Jinmao Textile Chemicals Group Co. and Shandong Dahai Group Co. went bankrupt in November. "The recent slew of bankruptcies sent shock waves through the bond market," Bloomberg quotes Chen Su, a bond portfolio manager at Shandong's Qingdao Rural Commercial Bank Co., as saying. "For bondholders, they can only expect to get a low repayment ratio through the bankruptcy reorganization--besides which it's quite a time-consuming process." Creditors would prefer direct talks with the company, Chen said. But authorities might have other ideas. Driving their potential concern: the pattern of private-sector companies guaranteeing each others' debt, Bloomberg says. According to the report, the maneuver helped encourage lenders to extend credit, but is now threatening systemic risks as one borrower gets in trouble, infecting others. In the case of SNTON, local officials have moved to halt the spread of damage, assuming some 80 percent of the guarantees that another Shandong business--China Wanda Group Co.--had extended to SNTON, people familiar with the matter said earlier last week, Bloomberg reports. China Wanda's CNY2.4 billion 5.2 percent bond due September 2021 jumped the most on record on April 3, according to Bloomberg-complied prices. Bloomberg relates that SNTON itself was a prolific debt guarantor, to the tune of CNY3.86 billion ($575 million), the equivalent of 35 percent of its net assets as of June 2018. China Eastar, which together with SNTON form two of the largest private enterprises in Shandong, extended guarantees amounting to 25 percent of net assets as of January 2018. The two textile businesses also had made guarantees to peers, Bloomberg states. That Shandong authorities were apparently comfortable with SNTON and China Eastar entering bankruptcy, yet intervened to alleviate the obligations of China Wanda, illustrates the varied and hard-to-predict decisions of local officials, says Bloomberg. China Wanda is unrelated to the entertainment giant Dalian Wanda Group Co., the report notes. Bloomberg says further illustrating the opaque nature of China's debt market: the circumstances of SNTON's bankruptcy aren't entirely clear to creditors. Bloomberg relates that a SNTON official said in a March 22 meeting with bondholders that the company itself wasn't willing to enter bankruptcy, while declining to respond to questions about whether another entity pressed it to do so, according to people familiar with the discussions. The filing itself identified the company as having initiated the application. "The local government should have played a role in pushing ahead with the bankruptcies" that have been declared in Dongying, said Shen Chen, a partner at Shanghai Maoliang Investment Management LLP, Bloomberg relays. "It is basically an attempt to get rid of weak firms with excessive external guarantees and focus on keeping those stronger ones safe, otherwise it would be too costly to save them all." Another aspect of the SNTON bankruptcy raising eyebrows is a sudden change in its reported financial details, Bloomberg says. The company announced in October that its liability-to-asset ratio was 71 percent at the end of September. However, the court bankruptcy statement from last month shows that same ratio reached 181 percent at the end of November, according to Bloomberg. Bloomberg, citing Moody's Investors Service, discloses that Shandong SNTON Group's local bond plummets amid rising debt woes Investors in future may now apply greater scrutiny to bond issuers from Shandong, which has a provincial gross domestic product in excess of $1 trillion, behind only Guangdong and Jiangsu. "They will be more concerned about the off-the-book risks, as many companies didn't disclose sufficient information on external guarantees," Bloomberg quotes Ivan Chung, head of greater China credit research at Moody's in Hong Kong, as saying. "And it is possible that banks may withdraw credit lines from all related firms regardless of the debtor or guarantor, even affecting those that are financially healthier." ========= I N D I A ========= ADH CHEMICALS: ICRA Assigns B+ Rating to INR1.0cr Cash Loan ----------------------------------------------------------- ICRA has assigned rating to the bank facilities of ADH Chemicals Private Limited (ADH), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- Cash Credit 1.00 [ICRA]B+ (Stable); Assigned Non-Fund based- Import Letter of Credit 3.50 [ICRA]A4; Assigned Non-Fund based- Forward Contract 3.50 [ICRA]A4; Assigned Untied Limits 2.00 [ICRA]B+ (Stable)/[ICRA]A4; Assigned Rationale The assigned ratings take into account the small scale of operations of ADH and nominal profits and cash accruals from the business. The ratings consider the company's highly fragmented and trading nature of operations with the presence of a large number of players and limited value addition, which restricts pricing flexibility and keeps margins under check. The company primarily caters to the plywood manufacturers, thus exposing its operations to the cyclicality of the plywood industry. The ratings are further constrained by ADH's exposure to forex risk in the absence of any formal hedging mechanism. The ratings, however, favorably consider the long experience of the promoters in the chemical trading business and the company's conservative capital structure and moderate level of debt protection metrics. Outlook: Stable ICRA believes that ADH will continue to benefit from the long experience of its promoters. The outlook may be revised to Positive if the company is able to increase its scale of operations while improving its profitability and cash accruals. The outlook may be revised to Negative if cash accrual is lower than expected or stretch in the working capital cycle weakens its liquidity. Key rating drivers Credit strengths Long experience of the promoters in chemical trading business: Long experience of the promoters in the chemical trading business for over three decades facilitates ADH's established relationship with its suppliers and customers. Conservative capital structure and moderate level of debt protection metrics: The capital structure of the company has remained conservative with a gearing of 0.56 times as on March 31, 2018 on account of low reliance on external debt. The coverage indicators have also remained at a moderate level in FY2018. Credit challenges Small scale of current operations; nominal profits and cash accruals from business: The operating income of the company has remained small over the past few years. Moreover, the same declined to ~INR12 crore in FY2018 from ~INR217 crore in FY2017, primarily on account of lower volume of sales. ICRA notes that the profits and cash accruals from the business have also remained nominal in the past few years. Foreign exchange rate fluctuation risk: The company imports chemicals from The Netherlands, China, Russia etc. This exposes ADH to foreign exchange rate fluctuation risk in the absence of any formal hedging mechanism. Fragmented and intensely competitive nature of the industry: The company's profitability remains restricted due to its trading nature of business with limited value addition. The chemical trading business is highly fragmented and is characterised by intense competition from a large number of organised and unorganised players, which restricts its pricing flexibility and keeps the margins under check. Vulnerability of profits to business cycles of plywood industry and adverse fluctuations in chemical prices: With the company catering mainly to the plywood manufacturers, ADH remains exposed to sectoral concentration risk and its operations remain vulnerable to the cyclicality of the industry. Liquidity position The company has generated positive fund flow from operations (FFO) during the last five years, however, cash accruals from the business have remained nominal. ICRA notes that cash accruals from the business would be sufficient to meet the repayment obligations related to the business loan. However, any further decline in profitability and lower-than-expected cash accruals would exert pressure on the company's liquidity position. Incorporated in 2008, ADH Chemicals Private Limited (ADH) is involved in trading of abrasives, chemicals, tapes, gloves etc in the domestic market. A major portion of its revenue is generated from chemicals. The company carries its operations from Kolkata, West Bengal and sales are made in the eastern and north eastern parts of the country. The clientele of the company consists of mainly plywood manufacturing units. ASHAPURA MINECHEM: Insolvency Resolution Process Case Summary ------------------------------------------------------------- Debtor: Ashapura Minechem Limited Registered & Prinicipal office: 278, Jeevan Udyog Building 3rd Floor, D.N. Road, Fort Mumbai 400001 Insolvency Commencement Date: March 15, 2019 Court: National Company Law Tribunal, Mumbai Bench Estimated date of closure of insolvency resolution process: September 11, 2019 (180 days from commencement) Insolvency professional: Mr. Arun Chadha Interim Resolution Professional: Mr. Arun Chadha 727, Brahmpuri Meerut 250002 Uttar Pradesh E-mail: chadharun@yahoo.com - and - E 95/2, Naraina Vihar New Delhi 110028 E-mail: cirp.ashapura@gmail.com Last date for submission of claims: April 1, 2019 BHOOMI GINNING: Insolvency Resolution Process Case Summary ---------------------------------------------------------- Debtor: Bhoomi Ginning Pressing Pvt. Ltd. Survey No. 323, Jasdan-Alkot Road Vil-Atkot, Tal-Jasdan, Dist-Rajkot 360001 Insolvency Commencement Date: April 4, 2019 Court: National Company Law Tribunal, Ahmedabad Bench Estimated date of closure of insolvency resolution process: October 1, 2019 (180 days from commencement) Insolvency professional: Vinnod Tarachand Agrawal Interim Resolution Professional: Vinnod Tarachand Agrawal 204, Wall Street-1 Near Gujarat College, Ellisbridge Ahmedabad 380006 E-mail: cirp.bhoomi@gmail.com Last date for submission of claims: April 19, 2019 CITRON ECOPOWER: Ind-Ra Lowers Loan Rating to B-, Outlook Negative ------------------------------------------------------------------ India Ratings and Research (Ind-Ra) has downgraded Citron Ecopower Private Limited's (Citron) debt facilities to 'IND B-' from 'IND BB'. The Outlook is Negative. The details are: -- INR2.750 bil. Term loan due on November 30, 2028 downgraded with IND B-/Negative rating; and -- INR250 mil. Overdraft downgraded with IND B-/Negative rating. KEY RATING DRIVERS The downgrade reflects Citron's lower-than-expected power generation during 2HFY19, continued strained liquidity and depletion of its debt service reserve (DSR) which was used for purposes other than debt service. In addition, there is a heightened liquidity risk at Leap Green Energy Private Limited (LGEPL), given the fungible nature of funds and defaults at Clover Energy Private Limited and Maple Renewable Power Private Limited. LGEPL's liquidity is stressed due to unavailability of surplus cash flows at its special purpose vehicles and cash flow mismatches. The company maintained a debt service reserve (DSR) of INR81.3 million, against INR229 million of required DSR, and cash and bank balance of INR1.3 million at March 31, 2019. The Negative Outlook reflects Citron's increased dependence on timely project cash flows to meet debt servicing in the short term and lack of clarity on the receivable days. The rating is constrained by the regulatory risk associated with a group captive business, as any changes in Electricity Rules 2005 notified by the Ministry of Power and/or the regulations notified by Tamil Nadu Electricity Regulatory Commission from time-to-time may directly impact the project cash flows. The rating, however, is supported by the presence of a medium-term power purchase agreement for the entire capacity with captive consumers, where power is directly sold to industries or commercial entities, and tariff will track the state's industrial tariff. RATING SENSITIVITIES Negative: Depletion and non-replenishment of DSR for a sustained period and/or operational and financial performance lower than Ind-Ra's base case could lead to a negative rating action. Positive: Creation and maintenance of DSR for a sustained period, sustained plant generation in line with Ind-Ra's base case and debt service coverage ratios higher than Ind-Ra's base case estimates could result in a positive rating action. COMPANY PROFILE Incorporated on March 8, 2016, Citron is a special purpose vehicle that was formed by LGEPL to operate two wind power plants (42.45MW and 33.00MW) in Tamil Nadu. CMC COMMUTATOR: ICRA Maintains 'B' Rating in Not Cooperating ------------------------------------------------------------ ICRA said the ratings for the INR10.00-crore bank facilities of CMC Commutator Private Limited (CMC) continue to remain in the 'Issuer Not Cooperating' category. The ratings are denoted as "[ICRA]B(Stable)/[ICRA]A4 ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-Term- 3.00 [ICRA]B (Stable); ISSUER NOT Fund Based COOPERATING; Rating continues to remain in the 'Issuer Not Cooperating' category Long-Term- 2.00 [ICRA]B (Stable); ISSUER NOT Term Loan COOPERATING; Rating continues to remain in the 'Issuer Not Cooperating' category Long-Term 3.35 [ICRA]B (Stable); ISSUER NOT Unallocated COOPERATING; Rating continues Limit to remain in the 'Issuer Not Cooperating' category Short-Term- 1.65 [ICRA]A4; ISSUER NOT Non-Fund Based COOPERATING; Rating continues to remain in the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the company so as to monitor its performance, but despite repeated requests by ICRA, the company's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available 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 company. Incorporated in 1977, CMC is owned and managed by Mr. Ramesh Gudi and family. Based in Belgaum (Karnataka), the company is engaged in the manufacturing of industrial commutators, molded commutators and sliprings. The company is ISO 9001:2000 certified. The company has an installed capacity to manufacture 75000 units per month. The promoters of the company own 72% stake in its subsidiary company- Indo Vacuum Technologies Private Limited (IVT) which is engaged in the manufacturing of vacuum pumps. The promoters are also associated with another group company- Acme Flowtech Private Limited. DESAI INFRASTRUCTURE: ICRA Reaffirms B+ Rating on INR4.5cr Loan --------------------------------------------------------------- ICRA reaffirmed ratings on certain bank facilities of Desai Infrastructure Pvt. Ltd.'s (DIPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- Cash Credit 4.50 [ICRA]B+(Stable); Reaffirmed Non-fund Based Bank Guarantee 5.50 [ICRA]A4; Reaffirmed Rationale The ratings reaffirmation factors in DIPL's weak financial risk profile characterised by thin net profit margins, moderately leveraged capital structure and moderately weak coverage indicators. The company's liquidity position remained tight with almost-full utilisation of the working capital limits, high debtor days due to disputed debtor and high WIP. The ratings also take into account DIPL's client and geographical concentration risks, arising from its focus on building construction projects only, located mostly in Gujarat, and the intense competition in the construction space. The ratings also note the vulnerability of the company's profitability to fluctuations in the input prices, with limited scope to pass on the price escalations. The ratings, however, continue to favourably factor in the extensive experience of the promoters in the civil construction industry and the AA class registration, which enables it to bid for higher-value contracts. Outlook: Stable ICRA expects DIPL to continue to benefit from the extensive experience of its promoters in the civil construction business. The outlook may be revised to Positive if sustainable growth in revenue and profitability improves the coverage indicators and better working capital management improves the liquidity profile. Also, securing new contracts, along with their healthy execution, may result in an upward revision of the outlook. The outlook may be revised to Negative in case of lower-than-expected revenues or profit margins, or if an increase in debt levels or working capital intensity further weakens the entity's credit profile and liquidity position. Key rating drivers Credit strengths Extensive experience of promoters in civil construction industry; AA Class registration: DIPL's operations are managed by its promoters, Mr. Kirtidev Desai, Mr. Sanjay Desai and Mr. Jatin Naik, who have more than three decades of experience in the civil construction business. The company is also a AA class registered contractor, which enables it to bid for higher-value contracts. Credit challenges Weak financial risk profile: The company's operating income (OI) registered a de-growth of ~4% in FY2018 to INR25.66 crore from INR26.72 crore in FY2017 with lower project execution. The operating margin declined to 8.85% in FY2018 from 10.70% in FY2017 with an increase in the raw material cost (mainly steel), which could not be fully passed on to customers. The net margins remained thin due to high interest and finance cost, and depreciations and declined to 0.09% in FY2018 from 0.58% in FY2017. The company's total debt increased to INR9.57 crore as on March 31, 2018 (from INR8.79 crore as on March 31, 2017) and comprised working capital facility of INR5.49 crore (57% of the total debt), NSIC loan of INR2.95 crore (31% of the total debt), 10% interest-bearing unsecured loans of INR0.95 crore (10% of the total debt) and vehicle loans of INR0.19 crore (2% of the total debt). The company's capital structure remained moderately leveraged with a gearing of 1.54 times as on March 31, 2018 against 1.37 times as on March 31, 2017 due to the increase in debt levels. The coverage indicators remained weak in FY2018 as evident from its interest coverage of 1.79 times (2.19 times in FY2017), total debt/OPBDIT of 4.21 times (3.07 times in FY2017) and NCA/total debt of 14% (19% in FY2017). The high receivables (mainly due to disputed debtors) and the high WIP levels resulted in a high working capital intensity and a tight liquidity position, which resulted in the full utilisation of the working capital facility and the availing of additional ad-hoc cash credit limits from time to time. High client and geographical concentration risks: DIPL faces high client concentration risk with its top five clients contributing 100% to the revenues in FY2017 and FY2018. Furthermore, most of the orders (executed and in hand) remain concentrated in Gujarat, resulting in increased geographical concentration risk. Fragmented and highly competitive nature of industry: The civil construction segment in Gujarat is characterised by intense competition with the presence of numerous contactors. This results in competitive bidding and consequently, pressurises the company's margins. Exposure of profitability to input price risk: The company's work orders include a mix of contracts with price variation clauses for the key inputs, linked to a benchmark price index and fixed-price contracts. However, its profitability remains vulnerable to adverse movements in the input prices, particularly for contracts with no/limitations on pass-through options (as evidenced by a 185 bps decline in the margins in FY2018). Liquidity position DIPL's fund flow from operations remained positive in FY2018, though reduced from the FY2017 levels with lower scale and increased operating cost. The free cash flows turned negative with higher working capital requirements. The company's liquidity position remains tight with the fully utilised working capital and the reliance on the ad-hoc limits from time to time, arising from high WIP and stretched receivables. The timely realisation of the debtors (mainly the disputed amount), along with the promoters' timely funding (equity infusion or unsecured loan), remains critical in case of any future cash flow mismatches. Incorporated in 2001, Navsari (Gujarat)-based Desai Infrastructure Private Limited is a civil construction contractor working for Government, semi-Government and private sector clients. The company is a registered AA class contractor with the Gujarat Government. It is promoted and managed by Mr. Kirtidev Desai, Mr. Sanjay Desai and Mr. Jatin Naik, who have experience of more than three decades in the civil construction industry. In FY2018, the company reported a net profit of INR0.02 crore on an OI of INR25.66 crore, compared to a net profit of INR0.16 crore on an OI of INR26.72 crore in FY2017. DHANALAKSHMI SRINIVASAN: ICRA Rates INR52cr Term Loan 'D' --------------------------------------------------------- ICRA has assigned rating to the bank facilities of Dhanalakshmi Srinivasan Hotels Private Limited (DSHPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based 52.00 [ICRA]D; Assigned Term Loan Rationale The assigned rating reflect the delays in meeting interest and principal repayment obligations by the group on bank loans due to tight liquidity position arising from the mismatch in cash flows between lumpy fee collections and periodical debt repayment obligations. The debt levels have increased over years which have been availed for undertaking large capital expenditure in the past. The group's financial profile is weak characterised by cash losses, stretched capital structure and coverage indicators. The rating also considers the intense competition in the industry, and presence of regulatory risks in having to comply with the standards set by regulatory bodies, for the educational institutions. Going forward, the group's ability to generate higher accruals would be key to meet its debt repayment obligations. Outlook: Not Applicable Key rating drivers Credit challenges Delays in servicing debt obligations: There are delays in debt repayment obligations (both interest and principal) of the trust. Weak Financial risk profile and constrained liquidity: Owing to large debt funded capex in the recent years, the group has elevated debt levels, which coupled with net losses has resulted in stretched capitalisation and coverage indicators with consolidated gearing of 12.2 times as on March 31, 2018 and consolidated TD/OPBITDA of 18.7 times for FY2018. With steady losses, the group's liquidity position is tight and accordingly there are delays in servicing interest and principal obligations. Intense competition and regulatory risks: The group is exposed to intense competition from other educational institutions / hotels in the vicinity. Moreover, the education sector in India remains highly regulated and the group's earnings remain vulnerable to regulatory risks. Liquidity Position: The group's liquidity profile remains constrained by presence of cash losses and high debt repayment obligations. The liquidity position is expected to be constrained going forward as well, until a turnaround happens in the group's operations. DS group of trusts namely Dhanalakshmi Srinivasan Charitable and Educational Trust (DSCET), Srinivasan Health and Educational Trust (SHET), Srinivasa Charitable and Educational Trust (SCET) were established in 1994 by Mr. Srinivasan, with the objective of running charitable and educational institutions. Dhanalakshmi Srinivasan Hotels Private Limited (DSHPL) was incorporated in 2008. The group has 19 colleges, 2 hospitals, 3 schools and one 68 key hotel. In FY2018, on a consolidated basis, the group reported a net loss INR48.2 crore on an operating income of INR276.0 crore, as compared to a net loss of INR16.2 crore on an operating income of INR273.7 crore in the previous year. GLOBAL INTERACTIVE: Insolvency Resolution Process Case Summary -------------------------------------------------------------- Debtor: M/s. Global Interactive Malls Private Limited Registered office: A-1/54, Lower Ground Floor Safder Jung Enclave New Delhi 110029 Insolvency Commencement Date: April 4, 2019 Court: National Company Law Tribunal, Delhi Bench Estimated date of closure of insolvency resolution process: October 1, 2019 (180 days from commencement) Insolvency professional: Mr. Jitesh Gupta Interim Resolution Professional: Mr. Jitesh Gupta 257, Vardhman City Center-ii Near Shakti Nagar Railway Under Bridge New Delhi, Delhi 110052 E-mail: jitesh@jkgupta.com gmallsprivatelimited@gmail.com Last date for submission of claims: April 20, 2019 GURUKRUPA COTTON: ICRA Hikes Rating on INR9.50cr Loan to B+ ----------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of Gurukrupa Cotton & Oil Industries (GCOI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Limits 9.50 [ICRA]B+ (Stable) from [ICRA]B(Stable) Rationale The rating upgrade factors in the significant growth in the firm's operating income in the current fiscal. The rating also reflects the extensive experience of the promoters in the cotton ginning industry and the locational advantages due to the unit's proximity to raw material sources. The rating, however, continues to remain constrained by the firm's weak financial risk profile, characterised by low profit margins, weak coverage indicators and high working capital intensity. The rating is also restricted by the vulnerability of the firm's profitability to fluctuations in raw material prices (raw cotton), the low value-added nature of the cotton ginning business, the intense competitive intensity and the exposure to regulatory risks with regard to the minimum support price (MSP) set by the Government. ICRA notes the partnership constitution of GCOI, wherein any significant withdrawal from the capital account could adversely impact its net worth and thereby its credit profile. Outlook: Stable ICRA believes that GCOI will continue to benefit from the experience of its promoters in the cotton ginning industry and the unit's proximity to raw material sources. The outlook may be revised to Positive if substantial growth in revenue and profitability leads to higher-than-expected net cash accruals, which coupled with capital infusion and improvement in working capital cycle, strengthens the financial risk profile. Conversely, the outlook may be revised to Negative if substantial decline in sales and profitability leads to lower-than-expected cash accruals; or any major capital withdrawals or any debt-funded capital expenditure or stretch in the working capital cycle weakens the capital structure and the overall liquidity. Key rating drivers Credit strengths Extensive experience of promoters in cotton ginning industry: GCOI is involved in ginning and pressing of raw cotton and crushing of cotton seeds. The company has been in the market for more than a decade, resulting in established relationship with customers. Location-specific advantages: The firm is based in Rajkot (Gujarat), an area of high cotton acreage and quality cotton crop. The firm benefits from low transportation cost and easy access to quality raw material (raw cotton) because of its proximity to raw material sources. Growth in revenue in current fiscal: The company's revenues grew to INR35.76 crore in FY2019 (11 months) from INR25.62 crore in FY2018. Credit challenges Average financial risk profile: The profitability continues to remain weak because of low value-added cotton ginning operations and stiff industry competition; the operating profit margin was 4.27% and the net profit margin was 0.05% in FY2018. The coverage indicators remained weak, with NCA/TD at 1%, interest coverage at 1.14 times and total debt/OPBDITA at 9.14 times. Further, the working capital intensity remained high, as reflected by NWC/OI of 48% in FY2018 owing to high inventory holding. Profitability vulnerable to fluctuations in raw material prices and regulatory changes: The profit margins are exposed to fluctuations in raw cotton prices, which depend on various factors such as seasonality, climatic conditions, global demand and supply situation, and export policy. Further, it is also exposed to regulatory risks with regard to the MSP set by the Government. Intense competition and fragmented industry structure: The cotton ginning industry is highly fragmented with presence of numerous small to mid-sized players. Thus, the firm faces stiff competition, which limits its bargaining power and exerts pressure on its margins. Risks associated with partnership concern: Given the partnership nature of the constitution, any capital withdrawal could adversely impact the capital structure of the firm, as witnessed in the past. Liquidity position: The firm's cash flows remained positive in FY2018 because of the lower operating working capital requirement compared to that of FY2017. The firm's overall liquidity position remained modest, with moderate utilisation (73%) of the working capital limits during March 2018 to January 2019. The liquidity remains adequate in near future, with no major capex plans and absence of any debt repayments in the near to medium term. Established in 2008, Gurukrupa Cotton & Oil Industries (GCOI) is involved in ginning and pressing of raw cotton and crushing of cotton seeds. Its manufacturing facility is at Rajkot (Gujarat). The firm is equipped with 24 ginning machines, one pressing machine and five expellers, with an installed processing capacity of 4,574 MT of bales per annum (with 12-hour operations). In FY2018, the firm reported a net profit of INR0.01 crore on an operating income (OI) of INR25.62 crore as against a net profit of INR0.18 crore on an OI of INR25.29 crore in FY2017. HANUNG TOYS: Insolvency Resolution Process Case Summary ------------------------------------------------------- Debtor: Hanung Toys and Textiles Limited Registered office: C-24 Greater Kailash Enclave-I New Delhi 110048 Other office: 108-109 Noida Special Economic Zone Noida 201305 Gautam Budh Nagar Uttar Pradesh Factory: Khasra No. 265, Village Lakeshari Sikanderpur, Near Bhagwanpur Roorkee 247661 Uttarakhand Insolvency Commencement Date: March 28, 2019 Court: National Company Law Tribunal, New Delhi Bench Estimated date of closure of insolvency resolution process: September 23, 2019 Insolvency professional: Mr. Arvinder Singh Interim Resolution Professional: Mr. Arvinder Singh Arvinder Singh FCA, IP 808 Eros Apartments 56, Nehru Place New Delhi 110019 E-mail: finsmartglobal@gmail.com ip.hanungtoys@gmail.com Last date for submission of claims: April 11, 2019 IDEB PROJECTS: Insolvency Resolution Process Case Summary --------------------------------------------------------- Debtor: IDEB Projects Private Limited Registered office as per ROC Company Master Data: 9th & 10th Floor Delta Tower Sigma Soft Tech Park No. 7, Whitefield Road, Varthur Kodi Bangalore 560066 Insolvency Commencement Date: March 29, 2019 Court: National Company Law Tribunal, Bengaluru Bench Estimated date of closure of insolvency resolution process: September 24, 2019 (180 days from commencement) Insolvency professional: Mr. Velayudham Jayavel Interim Resolution Professional: Mr. Velayudham Jayavel B-6 Gems Court, 2nd Floor 14, Khader Nawa Khan Road Nungambakkam, Chennai Tamil Nadu 600006 E-mail: velayudhamj@gmail.com - and - Primus Insolvency Resolution and Valuation Pvt. Ltd. (IPE) F1, Windsor, Meenakshi 5th Cross, Pai Layout, Hulimaavu Bangalore 560076 E-mail: ideb@primusresolutions.in Classes of creditors: Home buyer of real estate projects of Corporate Debtor Insolvency Professionals Representative of Creditors in a class: Ms. Manjula B.S. Mr. Lakshminaraynapuram Krishnan Sivaramakrishnan Mr. K N Ravindra Last date for submission of claims: April 15, 2019 INA ELITE: ICRA Maintains B Rating in Not Cooperating Category -------------------------------------------------------------- ICRA said the rating for the bank facilities of Ina Elite Hospitality Pvt Ltd continue to remain in the 'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]B(Stable); ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based- 10.00 [ICRA]B(Stable); ISSUER NOT Term Loan COOPERATING; Rating continues to remain in 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 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. Ina Elite Hospitality Private Limited is a closely held private limited company, promoted by Mr. Neeraj Chhabra and family, engaged in the business of running budget hotels. There are 2 hotels under the company located at Koramangala and HSR layout, Bangalore. The company has around 50 permanent employees. The company is coming up with a new 4-star hotel in Narsapura, Karnataka. The total estimated project cost is INR50.0 crore which is proposed to be funded by INR35.0 crore of term loan from bank and INR15.0 crore equity. INDIANROOTS SHOPPING: Insolvency Resolution Process Case Summary ---------------------------------------------------------------- Debtor: Indianroots Shopping Limited (Formerly NDTV Ethnic Retail Limited) Registered office as per MCA: 207, Okhla Industrial Estate, Phase-III New Delhi 110020 India Insolvency Commencement Date: March 13, 2019 Court: National Company Law Tribunal, Delhi Bench Estimated date of closure of insolvency resolution process: September 9, 2019 (180 days from commencement) Insolvency professional: Ashok Kumar Interim Resolution Professional: Ashok Kumar Garg Ashok & Company A-263/1, First Floor Derawal Nagar Delhi 110009 E-mail: gargashokca@gmail.com irpindianroots@gmail.com Last date for submission of claims: April 19, 2019 INKA FOODS: Insolvency Resolution Process Case Summary ------------------------------------------------------ Debtor: Inka Foods Private Limited Ropar Roadnalagarh Distt Solan Himachal Pradesh HP 177320 IN Insolvency Commencement Date: April 5, 2019 Court: National Company Law Tribunal, Delhi Bench Estimated date of closure of insolvency resolution process: October 3, 2019 (180 days from commencement) Insolvency professional: Ashok Kumar Gupta Interim Resolution Professional: Ashok Kumar Gupta LD-46, Pitampura Delhi 110034 E-mail: cmaashokgupt@gmail.com - and - 304, D.R. Chambers 12/56, DB Gupta Road Opp PP jwellers, Karolbagh New Delhi 110005 E-mail: irpinkafoods@gmail.com Last date for submission of claims: April 19, 2019 JET AIRWAYS: Fails to Pay Interest to Etihad-Linked Entity ---------------------------------------------------------- Luca Casiraghi at Bloomberg News reports that an entity set up to finance affiliates of Etihad Airways PJSC said Jet Airways India Ltd. has become the third carrier in the group to fall behind on interest payments. Bloomberg relates that EA Partners I, a vehicle created in 2015 to allow Etihad to provide funds to airlines in which it owned stakes, said in a statement that the Indian carrier failed to make a payment on March 19 on account of "temporary liquidity constraints." According to Bloomberg, Etihad set up two vehicles, EA Partners I and II, which sold $1.2 billion of bonds to raise funds for several airlines. The structure was designed to provide financing for the airlines while minimizing the burden on the balance sheet of their Abu Dhabi-based parent company, Bloomberg says. The airlines each guarantee as much as 20 percent of the bonds, making regular contributions into a cash pool from which coupons are paid to investors who bought the securities, Bloomberg relays. EA Partners I's $700 million of bonds maturing in September 2020 have been trading at about 40 percent below face value after two other airlines in the group, Air Berlin and Alitalia, started insolvency proceedings in 2017, Bloomberg discloses. Etihad owns a 24 percent stake in Jet Airways. Creditors have challenged Etihad, saying it misled them on the extent to which it would support its part-owned carriers, people familiar with the matter said in October, Bloomberg adds. About Jet Airways Based in Mumbai, India, Jet Airways (India) Limited -- https://www.jetairways.com/ -- provides passenger and cargo air transportation services. It also provides aircraft leasing services. It operates flights to 66 destinations in India and international countries. As reported in the Troubled Company Reporter-Asia Pacific on Dec. 28, 2018, ICRA revised the ratings on certain bank facilities of Jet Airways (India) Limited to [ICRA]C from [ICRA]B. The rating downgrade considers delays in the implementation of the proposed liquidity initiatives by the management, further aggravating its liquidity, as reflected in the delays in employee salary payments and lease rental payments to the aircraft lessors. Moreover, the company has large debt repayments due over the next four months (December-March) of FY2019 (INR1,700 crore), FY2020 (INR2,444.5 crore) and FY2021 (INR2,167.9 crore). The company is undertaking various liquidity initiatives, which includes, among others, equity infusion and a stake sale in Jet Privilege Private Limited (JPPL), and the timely implementation of these initiatives is a key rating sensitivity. Moreover, the company continues to witness a stress in its operating and financial performance. KGS SUGAR: ICRA Maintains D Rating in Not Cooperating Category -------------------------------------------------------------- ICRA said the rating for the INR450.0-crore bank facilities of KGS Sugar & Infra Corporation Limited (KGS) continues to remain in the 'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]D/D ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term, fund 117.33 [ICRA]D; ISSUER NOT Based-Cash credit COOPERATING; Rating continues to remain under 'Issuer Not Cooperating' category Long Term, fund 210.81 [ICRA]D; ISSUER NOT Based-Term loan COOPERATING; Rating continues to remain under 'Issuer Not Cooperating' category Short term, fund 52.00 [ICRA]D; ISSUER NOT Based COOPERATING; Rating continues to remain under 'Issuer Not Cooperating' category Long term/short 69.86 [ICRA]D/D; ISSUER NOT Term-unallocated COOPERATING; Rating continues to remain under 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests from ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA on the basis of best available information on the issuer's 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. KGS is involved in the manufacturing of sugar and its allied products. The company has a sugar plant with a capacity of 4,500 tonnes of crush per day (TCD), which is forward integrated with a power co-generation unit of 14 MW. KGS is also setting up a sugar refinery unit of 400 tonnes per day (TPD) capacity. Its manufacturing facilities are located at Niphad in Nashik district of Maharashtra. KGS began its sugar mill and co-generation operations in January 2015, while the sugar refinery was expected to commence operations from October 2016. KHODAL COTTON: ICRA Lowers Rating on INR9.14cr Loans to D --------------------------------------------------------- ICRA has revised the long-term rating for the bank facilities of Khodal Cotton Processing Private Limited (KCPPL) to [ICRA]D ISSUER NOT COOPERATING from [ICRA]B+ (Stable) ISSUER NOT COOPERATING with Stable outlook. The rating continues to remain under 'Issuer Not Cooperating' category. The rating is now denoted as "[ICRA]D; ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- 0.14 [ICRA]D; ISSUER NOT COOPERATING; Term Loan Revised from [ICRA]B+ (Stable); Rating continues to remain under 'Issuer Not Cooperating' category Fund-based- 9.00 [ICRA]D; ISSUER NOT COOPERATING; Cash Credit Revised from [ICRA]B+ (Stable); Rating continues to remain under '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, despite the downgrade. Rationale The rating downgrade follows the delays in debt servicing by KPPL to the lender(s), as confirmed by them to ICRA. Established in 2011, Khodal Cotton Processing Private Limited (KCPPL) is a private limited company. The company is managed by four directors namely Mr. Mansukhbhai Ajani, Mr. Lalitbhai Ajani, Mr. Maheshbhai Bhayani and Mr. Ashvinbhai Ajani. The company is engaged in ginning and pressing of raw cotton. KCPPL's manufacturing facility is located at Jangvad, Rajkot District in Gujarat and is currently equipped with 24 ginning machines and one pressing machine to produce cotton bales and cottonseeds. KCPPL has an installed capacity to produce 280 cotton bales per day (24 hours operation). MADRAS FERTILIZERS: ICRA Reaffirms C Rating on INR191.4cr Loan -------------------------------------------------------------- ICRA reaffirmed ratings on certain bank facilities of Madras Fertilizers Limited (MFL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term, Fund based facilities 191.40 [ICRA]C; reaffirmed Long Term, Proposed Facilities 2.84 [ICRA]C; reaffirmed Short Term, Non fund based facilities 330.00 [ICRA]A4; reaffirmed Rationale The ratings reaffirmation reflects the weak financial profile of the company with substantially negative net worth position and continuing default on the repayment of the Government of India loans drawn down for the revamp project. Owing to the inadequate cash flows, the company has ceased to service the interest and principal on the Government of India loans drawn for the revamp completed in the 1990s. As part of the restructuring proposal, the management expects waiver of the GoI loan repayments which could substantially improve the capital structure of the entity. The rating, however, takes into consideration various measures being undertaken by the management to turnaround the company. MFL is in the final stages of monetisation of a large land parcel which would provide substantial cash inflows; this would be utilised towards the capital expenditure for the energy saving projects given that the energy consumption norms for urea units are continuously being tightened. The gas pipeline works have been completed and Ennore port's RLNG terminal has also been recently commissioned providing fuel supply visibility for the company which is one of the few exempted units still operating with Naphtha as feedstock. Key rating drivers Credit strengths Strong sponsor profile with GoI (~60%) and Naftiran (~26%) as the promoters: The company operates one of the vintage urea units in the country and was promoted as a Indo-Iranian Joint Venture (with Naftiran, NIOC, being the shareholder). The company also has logistical advantages being present in the vicinity of Chennai Petrochemical Corporation Limited's (CPCL) refinery, from where naphtha is being sourced, and Ennore port from where R-LNG will be imported. One of the largest manufacturers of urea in South India: The company has an established market position as one of the largest urea manufacturers with reputed brand, wide dealer network and a leading market share in Tamil Nadu (~50%). Credit challenges Continuing defaults on the GoI debt due to the poor operational performance of the company: Owing to the weak financial profile and inadequate cash flows, the company has ceased to service the interest and principal on the Government of India loans drawn for the revamp project completed in the 1990s. Old plant with poor operational efficiency and high energy consumption: The energy consumption levels have been high for MFL owing to the vintage of the plant and usage of naphtha as fuel; inability to maintain the energy consumption levels within the Govt mandated limits might result in under-recoveries and impact the profitability. MFL's plant is of old vintage having been operational for close to 50 years and is one among the only three urea plants in the country still operating with naphtha as feedstock. It falls under the pre-1992 naphtha group and the existing NPS-III mandated liquid fuel-based players like MFL to switch over to gas feedstock. In June 2015, GoI approved the continuation of the production of urea using naphtha as feedstock, till availability of gas. MFL has undertaken the conversion project and incurred most of the capex, but it could not switch over due to lack of gas availability. Ennore port's R-LNG terminal set up by IOC has been commissioned in March 2019 and hence the company is expected to switch over to gas as feedstock going forward. Liquidity Position: The cash flows have been negative over the years owing to the losses and high interest costs and hence the liquidity position remains stretched. The company operates its urea and complex units using the working capital lines sanctioned by its lenders; however, due to insufficiency of limits it continues to operate the complex fertiliser plant at very low capacity utilisation levels. Madras Fertilizers Limited (MFL) was incorporated on December 8, 1966 as a joint venture between GOI and AMOCO India incorporated of U.S.A (AMOCO) in accordance with the Fertilizer Formation Agreement executed on 14.5.1966 with equity contributions of 51% and 49% respectively. National Iranian Oil Company (NIOC), an undertaking of Government of Iran, acquired part of AMOCO's shareholding and with the company going public in 1997 the current shareholding pattern is as follows: Government of India – 59.5%; NIOC – 25.8%; Public – 14.7%. MFL is engaged in the manufacture of Ammonia, Urea, Complex Fertilizers and Biofertilizers. MFL has its plant facilities and head quarters located on 329 acres of freehold land at Manali, about 20 km north of Chennai city. MAHESH ELECTRICAL: ICRA Assigns B+ Rating to INR4.0cr LT Loan ------------------------------------------------------------- ICRA has assigned rating to the bank facilities of Mahesh Electrical & Telecom (MET), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term, Fund- Based-Cash Credit 4.00 [ICRA]B+(Stable); Assigned Short Term, Non Fund-based 3.50 [ICRA]A4; Assigned Rationale The ratings assigned take into account the long-standing experience of the proprietor of MET in the telecom and electrical construction sectors. The firm is an approved contractor with government bodies such as state electricity boards and municipal corporations which qualifies it to undertake government projects concerning electrical construction works and its operational association with one of the leading mobile tower infrastructure companies in India. The ratings also draw comfort from the comfortable capital structure of MET and adequate coverage metrics with no external long-term debt obligations on its books as on March 31, 2018. The ratings, however, remain constrained by the modest scale of operations and fluctuating trend in operating income exhibited by MET over the years. With a modest current pending order book position as on December 31, 2018 standing at 0.3x FY2018 operating income, the scale of operations is projected to remain modest in the near term. The firm also stands exposed to geographic and client concentration risk given the current order book is restricted to few districts of Maharashtra and Karnataka, with high dependence on government contracts. The firm operates in highly competitive and fragmented industry with tender based nature of business for electrical construction works and the funds being locked in the form of security deposits and retention money leads to working capital intensity. Moreover, given its constitution as a proprietary firm, MET is exposed to discrete risks including the limited ability to raise capital and possibility of withdrawal by the proprietor. Going forward, maintaining steady growth in top line backed by comfortable order book position remains crucial from the overall credit perspective. The order book position, primarily the fresh order inflows, will be critical for any significant sales momentum. Outlook: Stable ICRA believes MET will continue to benefit from the extensive experience of its proprietor and established relationship with reputed players in the telecom and electrical construction industries. The outlook may be revised to Positive if sustainable growth in revenue from comfortable order book position, improvement in profitability and coverage metrics and prudent working capital management improves financial flexibility and strengthen the financial risk profile. The outlook may be revised to Negative if reduced order inflow leads to revenue de-growth or lower than expected cash accruals, or if stretched liquidity primarily from delayed bill realizations leads to increase in debt levels and adversely impacts the capital structure. Quantum of withdrawal of capital by the proprietor will also remain a key sensitivity for the firm. Key rating drivers Credit strengths Long-standing experience of the proprietor in the telecom and electrical construction sectors: The promoter of MET, Mr. Shankar Kagne has considerable experience working in the fields of telecom and electrical infrastructure. Mr. Kagne initially worked in the telecom sector and then forayed into construction of electrical infrastructure for government bodies. The vast experience of promoter has benefitted the firm in acquiring several repeat orders over the years. Approved contractor with government bodies; decade-long operational association with one of the leading mobile tower infrastructure companies in India: MET is an approved electromechanical contractor with government bodies such as state electricty boards and municipal corporations in the states of Maharashtra and Karnataka. Empanelling with government bodies benefits MET in acquiring project orders concerning electrical construction works. Furthermore, its operational association of over a decade and track record of executing projects in Maharasthra & Goa telecom circle for one of the leading mobile tower infrastructure companies reflects positively in repeat orders. Comfortable capital structure and adequate coverage metrics: With a gearing level of 0.2x in FY2018, the capital structure of MET remains comfortable. The total debt to OPBDITA (TD/OPBDITA) and interest coverage also remain comfortable at 0.6x and 67.3x respectively in FY2018. Credit challenges Modest operating scale and fluctuating operating income and profitability metrics over the period under study: With revenues of INR16.5 crore recorded in FY2018, MET exhibits modest scale of operations. The firm reported ~32% YoY de-growth in its top line in FY2017 and ~155% YoY growth in its top line in FY2018 depicting a fluctuating trend in operating income in line with project-oriented nature of business. While the fresh order inflows and overall order book position has a key bearing on the revenue performance for the year, its profitability is dependent on the client mix and nature of the projects executed during a particular fiscal. MET has recorded operating margin in the range of 14%-21% over the last four years. In general, telecom projects have smaller ticket size but carry higher margins while electrical construction projects have larger ticket size and carry lower margins. MET has clocked revenue of INR9.0 crore in 9M FY2019 and the order book position as on December 31, 2018 remains modest at 0.3x FY2018 operating income. ICRA notes that any slowdown in the capex-oriented telecom sector or slowdown in tender allocation from electrical construction segment could adversely impact the order inflows of MET. High geographic and client concentration risk: With its geographical presence restricted to few districts of Maharashtra and Karnataka, MET stands exposed to geographic concentration risk. Moreover, the firm faces high client concentration risk with entire revenue generated from two clients in FY2018. Moreover, MET's dependence on government contracts also makes it vulnerable to any delay in awarding the contracts by the authorities concerned, prolonged stalling of projects or delays in bills realisations. However, MET's well established relations with its key clients provide some comfort against the customer concentration risk. Working capital intensity owing to funds being locked in the form of security deposits and retention money: MET exhibits high working capital intensity (NWC/OI of 42% in FY2018) owing to funds being locked in the form of security deposits and retention money. Furthermore, stretched receivables due to delay in receiving payments from few clients have led to incremental working capital requirement from the firm thereby increasing its reliance on external borrowings. Highly competitive and fragmented industry with tender based nature of business for electrical construction works: MET operates in the highly competitive and fragmented industry with tender based nature of business for electrical construction works. As a result, the revenue visibility from this segment is a function of success ratio in winning the bids for tenders floated by the authorities concerned. Nonetheless, MET's track record and approved contractor status play a positive role in acquiring electromechanical works from the government bodies. Risks associated with proprietary nature of the firm: Given MET's constitution as a proprietary firm, it is exposed to discrete risks including the limited ability to raise capital and possibility of withdrawal of capital by the proprietor. Any significant capital withdrawal could lead to cashflow mismatches and thus remains a sensitivity for the credit perspective. Liquidity Position: The liquidity position of MET remains stretched with modest cash and liquid investment of INR0.3 crore as on March 31, 2018 and buffer of INR1.1 crore in working capital facility as on December 31, 2018. However, the firm does not have any external long-term debt on its books as on March 31, 2018 which provides some comfort to the liquidity position of the firm. The buffer in bank guarantee facility remained at INR1.2 crore as on December 31, 2018. Established in year 2006, Mahesh Electrical & Telecom (MET or the Firm) is a turnkey service provider for private players in setting up telecom tower assemblies as well as a contractor for construction of electrical infrastructure for government bodies in the states of Maharashtra and Karnataka. The firm is promoted by proprietor Mr. Shankar Kagne who initially worked in the telecom sector and then entered construction line for electrical infrastructure for state electricity bodies. The firm has its registered office in Pune, Maharashtra. Providing turnkey solutions for telecom players and construction of electrical infrastructure are the two major revenue contributors of MET. The firm sets up and commissions mobile tower assemblies for telecom players and undertakes electrical construction works for government bodies in Maharashtra and Karnataka. MARBILANO TILES: ICRA Reaffirms B+ Rating on INR12.18cr Term Loan ----------------------------------------------------------------- ICRA reaffirmed ratings on certain bank facilities of Marbilano Tiles LLP (MTL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based Term Loan 12.18 [ICRA]B+(Stable); Reaffirmed Fund-based Cash Credit 7.00 [ICRA]B+(Stable); Reaffirmed Non-fund Based Bank Guarantee 2.00 [ICRA]A4; Reaffirmed Unallocated 2.82 [ICRA]B+(Stable)/[ICRA]A4; Reaffirmed Rationale The rating reaffirmation continues to remain constrained by the firm's moderate financial risk profile, characterised by low net profit margins, leveraged capital structure and high working capital intensity. The ratings also factor in the intense competition in the ceramic industry and the exposure of the firm's profitability to volatility in raw material and fuel prices. Further, ICRA notes the exposure of the firm's operations and cash flows to the cyclicality of the real-estate industry, which is the main end-user sector. The ratings, however, continue to favourably factor in the experience of partners of MTL in the ceramic industry and its proximity to raw material sources, by virtue of its presence in the ceramic hub - Morbi (Gujarat). Outlook: Stable ICRA believes Marbilano Tiles LLP (MTL) will continue to benefit from the longstanding experience of its partners in the ceramic industry and the strategic location of the plant. The outlook may be revised to Positive if substantial growth in revenue and profitability, reduction in creditors and better working capital management improve the capital structure and the liquidity profile. The outlook may be revised to Negative if the firm reports lower-than-expected cash accrual or significant moderation in profitability or debt-funded capex deteriorates the capital structure or further stretches the working capital intensity, thereby weakening the liquidity. Key rating drivers Credit strengths Experience of partners in ceramic tiles industry: The partners of the firm have extensive experience in the ceramic industry through their associations with other companies in the ceramic industry. Favourable location of manufacturing hub: The location of the firm's manufacturing facility in the ceramic tiles hub of Morbi (Gujarat) enables easy access to quality raw materials and allows savings in transportation cost. Credit challenges Average financial risk profile: The firm's scale of operations remains moderate; the operating income was INR48.20 crore in FY2018, the first full year of operations. Further, the operating income stood at 32.08 crore till February 28, 2019. The firm's operating margin was moderate, at 12.00% in FY2018, and at 11.93% in 9MFY2019. However, due to high depreciation and interest cost, the PBT margin stood at 1.11% in 9MFY2019 as against 0.15% in FY2018. Further, the capital structure continued to remain leveraged, as evident from the gearing of 1.85 times as on December 31, 2018 and the high working capital requirement and term loan. The coverage indicator remained moderate, with interest coverage ratio of 2.43 times, NCA/Debt of 16% and TD/OPBDITA of 4.14 times in 9MFY2019. The working capital intensity stood stretched and increased to 24% in 9MFY2019 from 19% in FY2018. Vulnerability of demand and cash flows to cyclicality inherent in real estate industry: The real estate industry is the key end user of ceramic wall tiles. Hence, the profitability and cash flows are likely to remain vulnerable to the inherent cyclicality of the real estate industry. Vulnerability of profitability to adverse fluctuations in raw material and fuel prices: Raw material and fuel are the two major components that determine the cost competitiveness in the ceramic industry. The company has, however, little control over the prices of its key inputs such as natural gas/coal and raw materials, and thus the profit margins remain exposed to adverse movement in raw material and gas/coal prices as the ability to pass on any upward movement in cost to the customers remains limited due to stiff competition. Liquidity Position: MTL's cash flow from operations continued to remain positive in 9MFY2019. Though, the free cash flow was negative due to long-term debt repayments. The average working capital utilisation stood high, at ~93% for the fifteen months period from October 2017 to December 2018. Going forward, the firm's liquidity is expected to remain moderate in the near to medium term, with gradual increase in capacity utilisation. Higher utilisation is likely to increase the sales, resulting in better cash accruals. Established in November 2015, as a limited liability partnership firm, Marbilano Tiles LLP (MTL) manufactures glazed vitrified floor and wall tiles. It commenced operations in April 2017. The firm's manufacturing unit is situated at Morbi in Gujarat and has an installed capacity of 63,000 MT tiles per annum. The partners of the firm have past longstanding experience in ceramic industry by virtue of being associated with other ceramic companies. In FY2018, the firm reported a net profit of INR0.07 crore on an operating income of INR48.20 crore. Further, in 9MFY2019 on provisional financials, the firm reported PBT (profit before tax) of INR0.36 crore on an operating income of INR32.08 crore. P. DASARATHARAMA: ICRA Maintains B+ Rating in Not Cooperating ------------------------------------------------------------- ICRA said the ratings for the bank facilities of P. Dasaratharama Reddy continue to remain in the 'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]B+(Stable)/A4; ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term- 2.00 [ICRA]B+(Stable); ISSUER NOT Fund based CC COOPERATING; Rating continues to remain in the 'Issuer Not Cooperating' category Short-term 8.00 [ICRA]A4; ISSUER NOT Non-Fund based COOPERATING; Rating continues to remain in 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 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. P. Dasaratharama Reddy is a partnership firm established in the year 1998 and is operating as a class I civil contractor mostly for government departments in Karnataka. They are engaged in the business of construction of canals, roads and bridges. At present the firm is managed by three partners, namely Mr. Krishna Reddy, Mr. Dinesh Reddy and Mrs. Bhavani. PRAGATI TRANSMISSION: ICRA Maintains B+ Rating in Not Cooperating ----------------------------------------------------------------- ICRA said the ratings for the INR5.00-crore bank facilities of Pragati Transmission Private Limited (PTPL) continues to remain in the 'Issuer Not Cooperating' category. The ratings are denoted as "[ICRA]B+(Stable)/A4; ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 4.50 [ICRA]B+ (Stable); ISSUER NOT Based facilities COOPERATING; Rating continues to remain in the 'Issuer Not Cooperating' category Short Term-Non 0.50 [ICRA]A4; ISSUER NOT fund Based COOPERATING; Rating continues facilities to remain in 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 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. Pragati Transmission Pvt. Ltd (PTPL) was incorporated in the year 2006 as a private limited company. The directors of the company are Mr. P.D. Kadam and Mr. Atul S Bhirangi. PTPL is engaged in manufacturing, supplying and exporting of precision gears used in aerospace, industrial gear boxes, power tools, and machine tools & automobiles. The group companies of PTPL are 'ACE-Micromatic' and Pragati Automation Pvt Ltd and these companies are present in machine tool manufacturing in India and promoted by technocrats with more than three decades of experience in machine tools, power tools and automobile industries. PUNJAB INFRASTRUCTURE: Ind-Ra Lowers Long Term Loan Rating to 'D' ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded Punjab Infrastructure Development Board's (PIDB) bank facilities to 'IND D (SO)' from 'IND BBB (SO)'. The Outlook was Stable. The details are: -- INR37,419.8 bil. Term loans (Long-term) due on September 2020 – March 2023 downgraded with IND D (SO) rating. KEY RATING DRIVERS The downgrade reflects PIDB's delays in debt servicing in March 2019, due to delay in receivables from the government of Punjab (GOP). RATING SENSITIVITIES Positive: Timely debt servicing for three consecutive months will be positive for the rating. COMPANY PROFILE PIDB, established in 1998-1999, is the nodal agency for the planning and funding of infrastructure in the state of Punjab. PIDB was formed by enacting the Punjab Infrastructure Development Bill, 1998. However, to bring in a comprehensive regulatory framework, the GOP enacted PIDRAA in 2002, which provides for a regulatory framework and guidelines for PIDB in its present form. The board is chaired by the chief minister of the state of Punjab. RELIANCE COMMUNICATIONS: NCLAT to Decide Over Insolvency Plea ------------------------------------------------------------- LiveMint.com reports that the National Company Law Appellate Tribunal (NCLAT) on April 8 said it would decide on the insolvency of debt-ridden Reliance Communications (RCom). The Anil Ambani-led Reliance Group firm has pleaded the tribunal to go ahead with insolvency proceedings against it as it is unable to pay dues to its lenders, the report says. Swedish telecom gear maker Ericsson AB, which received its unpaid dues of INR550 crore from RCom last month following a Supreme Court order, is opposing the move, Livemint notes. Livemint relates that a two-member bench headed by Chairman Justice S.J. Mukhopadhaya also observed that if insolvency proceedings against RCom are allowed, then Ericsson would have to return the payout. "Why one party will take amount and let the financial creditors suffer," said the NCLAT, adding that either it may quash RCom bankruptcy proceedings in National or allow bankruptcy case to proceed, Livemint relays. According to Livemint, the appellate tribunal also said that it would consider the reply filed by the Department of Telecom (DoT) over the RCom's plea against the show cause notice issued by it over spectrum charges due on April 30, the next date of hearing. "DOT reply would be considered on April 30. Let us be very clear which are the assets of corporate debtor, whether they have some right of asset. Can you take away licence? If yes, what is the value of the company (RCom) then," the NCLAT said. Livemint says the NCLAT's direction came during the hearing of applications moved by three RCom executives. On February 4, NCLT had said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third-party rights over RCom assets, Livemint recalls. Livemint relates that the NCLAT had on March 26 put a stay on the two notices issued by the DoT to RCom over cancellation of its spectrum licence for a delay in payment. Its two-member bench had also stayed the DoT's letter dated March 20, 2019, to Axis Bank to encash the bank guarantee of INR2,000 crore given by the Anil Ambani group firm. As reported in the Troubled Company Reporter-Asia Pacific on Feb. 4, 2019, BloombergQuint said Reliance Communications Ltd. approached the National Company Law Tribunal to seek debt resolution under the insolvency law after the Anil Ambani-controlled company failed to make progress on its own. In a stock exchange filing, the Company related that "[t]he board noted that, despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway." Based in Mumbai, India, Reliance Communications Ltd (BOM:532712) -- http://www.rcom.co.in/Rcom/personal/home/index.html-- is a telecommunications service provider. The Company operates through two segments: India Operations and Global Operations. India operations segment comprises wireless telecommunications services to retail customers through global system for mobile communication (GSM) technology-based networks across India; voice, long distance services and broadband access to enterprise customers; managed Internet data center services, and direct-to-home (DTH) business. Global operations comprise Carrier, Enterprise and Consumer Business units. It provides carrier's carrier voice, carrier's carrier bandwidth, enterprise data and consumer voice services. The Company owns and operates Internet protocol (IP) enabled connectivity infrastructure, comprising over 280,000 kilometers of fiber optic cable systems in India, the United States, Europe, Middle East and the Asia Pacific region. RL STEELS: ICRA Withdraws 'D' Rating on INR300cr Loans ------------------------------------------------------ ICRA has withdrawn the outstanding rating of [CRA]D ISSUER NOT COOPERATING to the INR300.0 crore bank facilities of R. L. Steels & Energy Ltd on the basis of client's request and no objection mail received from the bankers. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 117.00 [ICRA]D ISSUER NOT COOPERATING; Based TL Withdrawn Long Term-Fund 85.01 [ICRA]D ISSUER NOT COOPERATING; Based/ CC Withdrawn Short Term-Fund 41.99 [ICRA]D ISSUER NOT COOPERATING; Based Withdrawn Short Term-Non 56.00 [ICRA]D ISSUER NOT COOPERATING; Fund Based Withdrawn RLSEL was incorporated in 1985 as the flagship company of the Aurangabad based group promoted by Mr. R L Gupta. RLSL is engaged in manufacturing alloy steel products in rounds, squares, flats and special profiles, through Induction Furnace-LD Convertor-Ladle Refining-billet casting-hot rolling route. RLSEL has a steel melting capacity of 1,44,000 MTPA and a rolling mill with capacity of 1,47,000 MTPA at Waluj, Aurangabad. RLSL caters majorly to the demand of forging and spring industry with considerable export presence. The group is integrated forward into Akar Tools Limited (hand tools and leaf spring) which consumes close to 18% of RLSEL production. SAI GLOBAL: ICRA Reaffirms B+ Rating on INR22.80cr Cash Loan ------------------------------------------------------------ ICRA reaffirmed ratings on certain bank facilities of Sai Global Yarntex (India) Private Limited ("SGYIPL"), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based- 22.80 [ICRA]B+ reaffirmed; Outlook Cash Credit revised to Positive from Stable Fund based- 1.95 [ICRA]B+ reaffirmed; Outlook Term Loan revised to Positive from Stable Unallocated 14.98 [ICRA]B+ /[ICRA]A4 reaffirmed; Outlook revised to Positive from Stable Rationale The revision in the outlook factors in the expected improvement in the company's liquidity position and debt coverage indictors with decline in the term loan repayment obligations from FY2020 onwards. The promoters had infused unsecured loans over the past five years to support company's high repayment obligations. The ratings factor in the significant experience of the promoters in the spinning industry resulting in the established customer and supplier base of the company and proximity of the plant to cotton growing areas of Ongole in the state of Andhra Pradesh, providing logistic advantage. However, the ratings are constrained by the modest scale of operations of SGYIPL with revenues of INR73.2 crore in FY2018 and highly competitive and fragmented nature of the spinning industry which limits the company's ability to pass on the hike in input costs. The ratings also consider the company's high working capital intensity which lead to high average working capital utilisation of 98.1% of the sanctioned limits for the period January 2018 to December 2018. ICRA also notes that the company is vulnerable to fluctuations in cotton and yarn prices and regulatory risks with regards to MSP (minimum selling price) for raw cotton and curbs on exports for cotton lint and yarn. Outlook: Positive The Positive outlook reflects ICRA's expectation that the company's capital structure and the debt coverage metrics will improve with decline in the term loan repayment obligations from FY2020. The outlook may be revised to Stable or Negative if lower-than-expected cash accruals or stretch in working capital cycle weakens its financial risk profile and liquidity position. The ratings could be upgraded if steady revenue growth and stable profitability support its accruals leading to improved capital structure and coverage indicators, in the absence of any major debt-funded capex. Key rating drivers Credit strengths Long experience of the promoters in the spinning industry: The promoters have extensive experience of over 13 years in the cotton-spinning industry, leading to established relationship with customers and suppliers. The management's experience in the industry also supports quality cotton procurement at favourable rates. Locational advantage: SGYIPL's plant is located near major cotton growing area of Ongole in Andhra Pradesh, resulting in easy availability of quality raw material and savings in transportation costs. Expected improvement in debt coverage indicators: The company had high repayment obligations over the past five years which lead to constrained liquidity position and stretched coverage indicators with DSCR of 0.8 for FY2018; the repayment obligations were supported by promoter's unsecured loans. However, the same are expected to improve with reduction in repayment obligations going forward (INR1.3 crore in FY2020 as against INR4.1 crore in FY2019). Credit weaknesses Modest scale of operations: The company's scale of operations have been modest with operating income of INR73.2 crore in FY2018, limiting its financial flexibility. Moreover, the company's revenues have been fluctuating in the past and increased by 6.3% in FY2018 due to higher trading sales. Intense competition in the industry: The spinning industry is highly fragmented and competitive with the presence of large number of organised and unorganised players. Intense competition in the industry and commoditised nature of the product limits SGYIPL's pricing flexibility and bargaining power. Profitability exposed to fluctuation in raw material prices: The company's profit margins are exposed to the fluctuation in raw material prices, which depend upon factors like seasonality, monsoon condition, international demand and supply situation, export policy etc. Further, it is exposed to the regulatory risks, as prices are decided through the minimum support price, set by the Government. Moreover, the company stocks high cotton inventory during the peak season (November to March), which exposes it to inventory holding risks. Liquidity Position: The company's liquidity position was stretched in the past owing to high repayment obligations and high working capital intensity as reflected in the high average utilisation of 98.1% of the sanctioned limits for the period January 2018 to December 2018. While the working capital intensity will continue to remain high during the peak season, absence of any major capex plans and expected decline in repayment obligations is expected to improve its liquidity position, going forward. Incorporated in December 2005, Sai Global Yarntex (India) Private Limited ("SGYIPL") is engaged in cotton spinning at its unit located at Ongole, Prakasam District, Andhra Pradesh. The installed capacity of the unit is 26,000 spindles. The company is promoted by Mr. Koti Reddy, Mr. Veeraprakasa Rao, Mr. G B Narayana, Mr Srinivasa Rao, Mr. Gopala Reddy and Mr. Desu Subrahmanyam. SGYIPL primarily produces cotton yarn of medium counts ranging from 26's to 40's of carded and combed variety. SANT DEEPAK: ICRA Reaffirms 'D' Rating on INR13cr Loans ------------------------------------------------------- ICRA reaffirmed ratings on certain bank facilities of Sant Deepak Education and Charitable Trust (SDECT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based/ Cash Credit 1.75 [ICRA]D; Reaffirmed Fund-based/ Term Loan 11.25 [ICRA]D; Reaffirmed Rationale The rating continues to factor in the delays in debt servicing by SDECT given the delays from fee reimbursement by the government. Going forward, the timely servicing of debt repayment commitments and SDECT's ability to improve upon its fee collection efficiency will remain the key rating sensitivities. ICRA also notes the extensive experience of the company's promoters in the education sector. Outlook: Not applicable Key rating drivers Credit challenges Delays in debt servicing because of inadequate cash flow generation in project due to slowdown in real estate: Irregularities in debt servicing with delay in the principal repayment; stretched receivables resulted in stressed liquidity position. Liquidity position SDECT's liquidity position is stressed. The company has made improved upon the number of admissions but the continued delay by the government to reimburse the fee has led to delays in debt servicing. Global Research Institute of Management & Technology, Radaur is located in the state of Haryana in the Yamuna Nagar district. The institution was established in year 2008 with the approval of AICTE, affiliation of Kurukshetra University, Kurukshetra and DTE, Panchkula. The institute is functioning under the aegis of Sant Deepak Educational & Charitable Trust (SDECT) with a Managing Committee to look after routine management functions. The broad areas of administration, e.g. planning, student amenities & welfare, faculty development, staff welfare, infrastructure development etc. are entrusted to various committees for the smooth functioning. The institute follows the academic calender of Kurukshetra University, Kurukshetra. The trust is organized by a group of professionals. The chairman of the trust Mr. Sanjay Jindal is a chartered accountant and has experience of 25 years of profession, finance & accounts. Further, he also looks after many other group companies which are mainly involved in Power Generation Companies, Printing & Packaging, Brass Sheet Manufacturing and various others. Further, the secretary of the Trust Mr. Deepak Dhawan is also chartered accountant. In FY2018, the company reported a net profit of INR0.1 crore on operating income (OI) of INR6.0 crore compared with a net profit of INR0.1 crore on an OI of INR5.7 crore in the previous year. SB URBANSCAPES: ICRA Moves B Rating to Not Cooperating Category --------------------------------------------------------------- ICRA has moved the long-term rating for the unallocated limits of SB Urbanscapes to the 'Issuer Not Cooperating' category. The ratings are now denoted as "[ICRA]B (Stable); ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term- 20.00 [ICRA]B (Stable); ISSUER NOT Unallocated COOPERATING; Rating moved to Limits 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. M/s. SB Urbanscapes is a partnership firm, was incorporated in 2012 by Mr. D. Rajgopal and family. The promoters have more than a decade of experience in construction and development of real-estate properties and civil-construction business. The firm has several group companies like Sumukha Infra, Sumukha Projects, Aashrayaa Infra, S B Properties, Elite Projects, Aashrayaa Homes, Ambience Projects which have wide ranging experience and exposure in civil engineering constructions, real estate development, and many more business activities. SEAJAAN LOGISTICS: Insolvency Resolution Process Case Summary ------------------------------------------------------------- Debtor: Seajaan Logistics Private Limited 4, Fairlie Place, HMP House 6th Floor, Room No. 610 Kolkata 700001 Insolvency Commencement Date: April 4, 2019 Court: National Company Law Tribunal, Kolkata Bench Estimated date of closure of insolvency resolution process: October 1, 2019 Insolvency professional: Shashi Agarwal Interim Resolution Professional: Shashi Agarwal Subarna Appartment (Opp: Udayan Club) 21N, Block-A, New Alipore Kolkata 700053 E-mail: shahiagg@rediffmail.com s9339216750@rediffmail.com Last date for submission of claims: April 18, 2019 SIMHAPURI ENERGY: ICRA Maintains 'D' Rating in Not Cooperating -------------------------------------------------------------- ICRA said the ratings for the INR2206.81 crore bank facilities of Simhapuri Energy Limited (erstwhile Simhapuri Energy Pvt. Ltd.) continue to remain in the 'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]D ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based 2173.01 [ICRA]D ISSUER NOT COOPERATING; Facilities Rating continue to remain in 'Issuer Not Cooperating' category Unallocated 33.80 [ICRA]D ISSUER NOT COOPERATING; Limits Rating continue to remain in '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 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. Simhapuri Energy Limited (erstwhile Simhapuri Energy Pvt. Ltd.) (SEL), owned subsidiary of Hyderabad based Madhucon Group, is established in 2005 to develop, construct, operate and distribute power from coal-based power projects in India. It has 600 MW operational thermal power capacity plant. SPS STEELS: Insolvency Resolution Process Case Summary ------------------------------------------------------ Debtor: SPS Steels Limited Elegant Towers 224A A.J.C. Bose Road Kolkata WB 700017 India Insolvency Commencement Date: March 30, 2019 Court: National Company Law Tribunal, Kolkata Bench Estimated date of closure of insolvency resolution process: September 26, 2019 (180 days from commencement) Insolvency professional: CA Nitesh Kumash More Interim Resolution Professional: CA Nitesh Kumash More 31 Ganesh Chandra Avenue, 6th Floor Kolkata 700013, West Bengal E-mail: nmore2091@gmail.com - and - 18 Rabindra Sarani Gate No. 1, 7th Floor, Room No. 701 Kolkata 700001 Last date for submission of claims: April 13, 2019 SREE CHAITANYA: ICRA Maintains 'D' Rating in Not Cooperating ------------------------------------------------------------ ICRA said the ratings for the INR8.00 crore bank facilities of Sree Chaitanya Corporation Pvt Ltd continue to remain under 'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]D; ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- LT Unallocated 8.00 [ICRA]D; ISSUER NOT Limits COOPERATING; Rating continues To remain under '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 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. Setup in 2011 as a proprietorship concern, M/s. Chaitanya Industries was later converted to private limited company in 2015. SCCPL was promoted by Mr. R.Kanaka Rao for trading of iron ore fines. Subsequently, several other commodities like coal, rice, maize, granite blocks were added to the portfolio. SCCPL purchases coal from local importers and supplies to traders who deal with end customers across pharma and sponge iron units based out of Visakhapatnam. STERLITE TECHNOLOGIES: Moody's Withdraws B1 CFR and Stable Outlook ------------------------------------------------------------------ Moody's Investors Service has withdrawn Sterlite Technologies Limited's (STL) B1 corporate family rating and the stable outlook on the rating. RATINGS RATIONALE Moody's has decided to withdraw the rating for its own business reasons. STL is a telecommunications products, services and software company that is listed on the Bombay Stock Exchange. The company manufactures optical communication products (i.e. preform, optic fiber, optic fiber cable and copper cables). The services business includes network and system integration for end-to-end project management for building and managing broadband networks. The software business sells operating and business support systems, primarily to telecommunications operators. As at December 31, 2018, Volcan Investments Ltd., through its 100%-owned subsidiary Twin Star Overseas Ltd, owned 52.04% of STL, while Vedanta Limited owned 1.2% directly. The public float was 46.7%. SUPREME AHMEDNAGAR: Ind-Ra Keeps D Loan Rating in Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Ahmednagar Karmala Tembhurni Tollways Private Limited's senior project bank loan in the non-cooperating category. The issuer did not participate in the surveillance exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The detailed rating action is: -- INR4.05 bil. Bank loans (long-term) maintained in non- cooperating category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The rating was last reviewed on March 23, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the rating. COMPANY PROFILE Supreme Ahmednagar Karmala Tembhurni Tollways is a special purpose vehicle incorporated to implement a 61.71km lane extension (two to four lanes) on the Ahmendnagar-Karmala-Tembhurni section of State Highway 141 in Maharashtra, under a 22.78-year concession from the state government. The project is sponsored by Supreme Infrastructure India Ltd ('IND D (ISSUER NOT COOPERATING)'). SUPREME BEST: Ind-Ra Maintains D Loan Rating in Non-Cooperating --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Best Value Kolhapur (Shiroli) Sangli Tollways Private Limited's term loans' ratings in 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 the ratings. The ratings will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The detailed rating actions are: -- INR1.8 bil. Term loan - Facility A (long-term) due on March 31, 2027 maintained in Non-Cooperating Category with IND D (ISSUER NOT COOPERATING) rating; and -- INR675 mil. Term loan - Facility B (long-term) due on March 31, 2029 maintained in Non-Cooperating Category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on March 23, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Supreme Best Value Kolhapur (Shiroli) Sangli Tollways was set up by Supreme Infrastructure BOT Holdings Private Limited, a subsidiary of Supreme Infrastructure India Ltd to complete the construction of, and operate and maintain, the 52km stretch of state highway connecting Shiroli and Sangli under a concession from the Public Works Department, the government of Maharashtra. SUPREME INFRAPROJECTS: Ind-Ra Keeps 'D' Rating in Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Infraprojects Private Ltd.'s term loan in the non-cooperating category. The issuer did not participate in the surveillance exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The detailed rating action is: -- INR646.9 mil. Term loans (Long term) due on March 31, 2022 maintained in non-cooperating category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on March 27, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Supreme Infraprojects is a special purpose company owned by Supreme Infrastructure BOT Private Limited, a 100% subsidiary of Supreme India Infrastructure Limited ('IND D (ISSUER NOT COOPERATING)'). It was set up to complete the construction of, and operate and maintain, the 55.77km state highway connecting Patiala and Malerkotla under a re-assigned concession from the Public Works Department, the government of Punjab. The project commenced operations on June 25, 2012. SUPREME KOPARGAON: Ind-Ra Keeps D Loan Rating in Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Kopargaon Ahmednagar Tollways Private Ltd.'s term loan in the non-cooperating category. The issuer did not participate in the surveillance exercise, despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The detailed rating action is: -- INR1.75 bil. Term loan (long-term) due on June 30, 2019 maintained in non-cooperating category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The rating was last reviewed on March 28, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the rating. COMPANY PROFILE Supreme Kopargaon Ahmednagar Tollways was set up by Supreme Infra BOT Private Ltd (a 100% subsidiary of Supreme India Infrastructure Limited ('IND D (ISSUER NOT COOPERATING)') to complete the construction of, and operate and maintain the 55km stretch of state highway SH-10 that connects Kopargaon and Ahmednagar. The project is a re-assigned concession from the Public Works Department, Government of Maharashtra. It commenced operations on September 24, 2011. SUPREME PANVEL: Ind-Ra Maintains D Loan Rating in Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Panvel Indapur Tollways Private Limited's senior project bank loans' rating in 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 the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR9.0 bil. Bank loans (long-term) maintained in Non- Cooperating Category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The rating was last reviewed on March 23, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the rating. COMPANY PROFILE Supreme Panvel Indapur Tollways is a special purpose company incorporated to implement a 84km lane expansion (from two lanes to four lanes) project on a design, build, finance, operate and transfer basis, under a 21-year concession from National Highways Authority of India ('IND AAA'/Stable). Supreme Panvel Indapur Tollways is a joint venture between Supreme Infrastructure India Ltd (64%), China State Construction Engineering Hong Kong Limited (26%) and Mahavir Road and Infrastructure Pvt Limited (10%). SUPREME SUYOG: Ind-Ra Maintains D Loan Rating in Non-Cooperating ---------------------------------------------------------------- India Ratings and Research (Ind-Ra) has maintained Supreme Suyog Funicular Ropeways Private Ltd.'s bank loans' rating in 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 the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR600 mil. Bank loans (long-term) maintained in Non- Cooperating Category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on March 27, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Supreme Suyog Funicular Ropeways is a special purpose vehicle incorporated to construct a funicular railway at Haji Malanggad, Ambernath (Maharashtra), on a build, operate and transfer basis under a 24.5-year concession agreement with the government of Maharashtra. SSFRPL is sponsored by Supreme Infra BOT Private Limited (98%), a wholly owned subsidiary of Supreme Infrastructure India Limited; Suyog Telematics Private Ltd (1%); and Yashita Automotive Engineering Private Ltd (1%). SUPREME VASAI: Ind-Ra Maintains 'D' Loan Rating in Non-Cooperating ------------------------------------------------------------------ India Ratings and Research (Ind-Ra) has maintained Supreme Vasai Bhiwandi Tollways Private Limited's senior project bank loans in the non-cooperating category. The issuer did not participate in the surveillance exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating action is: -- INR1.540 bil. Bank loan (long-term) maintained in non- cooperating category with IND D (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The rating was last reviewed on March 23, 2017. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the rating. COMPANY PROFILE Supreme Vasai Bhiwandi Tollways is a special purpose vehicle that was acquired by Supreme Infra BOT Private Limited in October 2013. Supreme Infra BOT is a 100% subsidiary of Supreme Infrastructure India Ltd and is the holding company of the Supreme Group for its build-operate-transfer projects. TAMILNADU STATE: ICRA Assigns B Rating to INR24cr Fund Based Loan ----------------------------------------------------------------- ICRA has assigned rating to the bank facilities of Tamilnadu State Transport Corporation (Kumbakonam) Limited (TNSTCK), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- 24.00 [ICRA]B(Stable); Assigned Working Capital Facilities Rationale The assigned rating takes into consideration the strategic importance of the TNSTCK to the Government of Tamil Nadu (GoTN), with the company playing an important role of providing transport services in and around Kumbakonam, and the financial flexibility enjoyed by it for being a state-owned entity. The rating is constrained by TNSTCK's weak financial performance over the years, characterised by continued operating losses and the consequent strained liquidity position and inadequate credit metrics. Its cash flows have been supported by regular funding support received from the GoTN and Tamil Nadu Transport Development Finance Corporation (TDFC). The losses from operations have been primarily because of lack of ticket tariff revision amid rising fuel and employee expenses and stagnant revenues witnessed during the recent fiscals. The cash losses incurred have increased TNSTCK's dependence on funding support to meet its rising operating expenses. The timely receipt of funding support from the GoTN will be important for supporting its liquidity position and would remain a key rating sensitivity, going forward. Outlook: Stable ICRA believes that TNSTCK's liquidity position would continue to be supported by the regular funding support from the GoTN, with the company performing an important public function in the region. The outlook may be revised to Positive if its earnings significantly exceed estimates and improve the financial risk profile. The outlook may be revised to Negative if there is any delay or shortfall in the support received from the GoTN, which would severely affect TNSTCK's liquidity position. Key rating drivers Credit strengths Strategic importance to the GoTN and financial flexibility derived for being a state-owned entity: TNSTCK is wholly owned by GoTN and is strategically important to the state government, with the entity playing an important role in providing transport services in and around Kumbakonam. TNSTCK receives regular support from the GoTN in the form of loans and equity to support its cash flows. Further, the company receives periodic term-loans from TDFC (a GoTN-owned NBFC) to meet its funding requirements. Credit challenges Weak financial profile: TNSTCK's financial profile is weak, characterised by its large negative net worth and high debt levels, which had been drawn to fund the losses incurred over the years. TNSTCK's performance has been constrained owing to the firm fuel costs and rising employee expenses against the lack of fare revision (no hike in tariff between November 2011 and January 2018), which resulted in continuous losses incurred at the operating level. While the fares were revised in January 2018, the same have been inadequate, as evident from the losses incurred in the current fiscal (cash loss of around INR430 crore expected in FY2019). The weak earnings profile is despite the established market position of TNSTCK in the road transport segment in the Kumbakonam region, operating across a wide network (1,850 routes) with a fleet of around 3,350 buses as on March 31, 2018. The recent procurement of buses (to replace the old fleet) and effective vehicle utilisation are likely to support the operating efficiency. However, TNSTCK is likely to incur operating losses over the medium term owing to the high operating expenses, resulting in inadequate credit metrics. Liquidity position TNSTCK's cash flows have been strained over the years owing to the operating losses incurred. Regular support from the GoTN and TDFC has helped TNSTCK to meet its operating expenses and manage losses. With the losses likely to continue, TNSTCK would remain dependent on external support to sustain its operations. Parent Support: The assigned rating factors in the strategic importance of TNSTCK for the GoTN, as the company plays an important role in providing transport services in the Kumbakonam region. ICRA expects that the same should induce the GoTN to extend timely financial support to the rated entity as seen over the years. Standalone Rating is based on standalone financial statements of TNSTCK. TNSTCK, headquartered in Kumbakonam and wholly owned by GoTN, provides passenger transport services to many districts in Tamil Nadu. Its operating network spans across Ariyalur, Karur, Nagapattinam, Perambalur, Pudukottai, Ramanathapuram, Sivagangai, Thanjavur, Thiruvarur, Tiruchirapalli and Karaikal regions. As on March 31, 2018, TNSTCK had a fleet of 3,350 buses operating in 1850 routes daily through 60 depots, employing around 23,500 personnel. The average effective distance covered per day is close to 16.3 lakh kilometres, carrying about 27.9 lakh passengers. TECHNOCRAT CONNECTIVITY: ICRA Withdraws B+ INR5.75cr Loan Rating ---------------------------------------------------------------- ICRA withdrawn ratings on certain bank facilities of Technocrat Connectivity Systems Private Limited (TCSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term: Fund Based-Cash Credit 4.00 [ICRA]B+ (Stable) ISSUER NOT COOPERATING; Rating Withdrawn Long Term: Fund Based-Term Loan 1.75 [ICRA]B+ (Stable) ISSUER NOT COOPERATING; Rating Withdrawn Rationale The ratings assigned to TCSPL have been withdrawn at its request and based on the no objection certificate provided by its banker. Key rating drivers Key rating drivers has not been captured since the ratings are withdrawn. Liquidity position Liquidity position has not been captured since the ratings have been withdrawn TCSPL was incorporated in August 2000 as a private limited company. It is promoted by Mr. V.K. Pahilajani and by Mr. T.C. Pahilajani. The company is manufacturing and exporting wires and wiring harnesses. Wire harness is generally used for the purpose of connecting wires. The company is engaged in manufacturing from its facilities located in Gurgaon and Rudrapur. UNITED BREWERIES: HDFC Opposes Bid to Liquidate Mallya's Assets --------------------------------------------------------------- The Indian Express reports that HDFC Bank has opposed the plea filed by consortium of banks seeking liquidation of Vijay Mallya's assets, which include Indian company United Breweries Holdings Limited (UBHL) or UB Group. HDFC, according to the Indian Express, stated that the consortium does not hold any security interest or any other protectable interest over the concerned property. Indian Express relates that HDFC Bank has claimed in its reply to the consortium's plea that as part of its business operations, it has been extending commercial loans to United Breweries since the 1980s. In 2010, various loans were given which were secured by shares and various immovable properties including the attached property-pledged shares. The bank claimed that under a Share Pledge Agreement, UBHL and Kingfisher Finvest India Limited had pledged 65.85 lakh shares in favour of HDFC Bank, the report says. In 2013, when Karnataka High Court allowed UBHL to sell a large block of shares to Diageo, the court directed that proceeds from the sale should be given to various creditors of UBHL including HDFC Bank, the private bank claimed before the court, the report recalls. HDFC Bank had received INR135 crore to the extent of sale of 15.85 lakh shares pledged to it. This sale, however, was challenged by the consortium, led by State Bank of India, before the Karnataka HC, which partially allowed its plea, but disallowed refund of the INR135 crore paid to HDFC Bank, as sought by the consortium. This has been challenged by the consortium in a Special Leave Petition before the Supreme Court, the report says. HDFC Bank claimed before the court that till the SLP is pending, an order on the liquidation of assets cannot be passed, Indian Express notes. United Breweries Holdings Ltd. is an Indian conglomerate company headquartered in UB City, Bangalore in the state of Karnataka, India. The Company operates an airline, bottles beverages, manufactures fertilizers, and offers construction services. United Breweries is India's largest producer of beer with a market share of more than 50% by volume. VANILLA CLEAN: Ind-Ra Cuts INR2.30BB Loan Rating to B-, Off RWN --------------------------------------------------------------- India Ratings and Research (Ind-Ra) has downgraded the ratings on Vanilla Clean Power Private Limited's (VCPPL) debt facilities while resolving the Rating Watch Negative (RWN) as follows: -- INR2.30 bil. Term loan due on June 30, 2030, downgraded; Off RWN; Outlook Negative with IND B-/Negative rating; and -- INR210 mil. Overdraft Downgraded; Off RWN; Outlook Negative with IND B-/Negative rating. KEY RATING DRIVERS The downgrade and the RWN resolution follows lower-than-expected power generation by VCPPL in FY19 owing to low machine availability (which was due to liquidity issues faced by the O&M contractor), continued strained liquidity, non-creation of the stipulated debt service reserve as per the financing documents and unavailability of surplus cash flows from the holding company (Leap Green Energy Pvt. Ltd). In addition, there is a heightened liquidity risk faced by Leap Green Energy in view of the fungible nature of funds and defaults at its group companies Clover Energy Private Limited and Maple Renewable Power Private Limited. Leap Green Energy's liquidity is stressed due to unavailability of surplus cash flows at its special purpose vehicles and cash flow mismatches. VCPPL has power purchase agreements with Jodhpur Vidyut Vitran Nigam Limited for 56MW capacity and with Ajmer Vidyut Vitran Nigam Limited for the balance 8MW capacity at a fixed tariff of INR5.18/kWh. Receivables from Jodhpur Vidyut Vitran Nigam and Ajmer Vidyut Vitran Nigam have averaged at around 130 and 35 days, respectively. The Negative Outlook reflects continued high O&M and generation risks faced by VCPPL owing to inadequate O&M servicing and low machine availability (below 90%). As on March 313, 2019, VCPPL had utilized INR126.3 million of the overdraft facility and had a cash and bank balance of INR0.2 million. RATING SENSITIVITIES Negative: Any significant payment delays from the offtakers and continued lower-than-expected machine availability may result in a downgrade. Positive: Better-than-expected operating and financial performance on a sustained basis, a creation of the debt service reserve and the resolution of O&M contractor's liquidity issues may lead to an upgrade. COMPANY PROFILE VCPPL is a special purpose vehicle formed by Leap Green Energy to operate two wind farms in Jaisalmer, Rajasthan. These plants were acquired from Inox Renewables (Jaisalmer) Limited on a slump sale basis in August 2017. VARDHMAN VITRIFIED: ICRA Cuts Rating on INR19cr Loans to D ---------------------------------------------------------- ICRA has downgraded the long-term and the short-term ratings for the bank facilities of Vardhman Vitrified Private Limited (VVPL) to [ICRA]D ISSUER NOT COOPERATING from the log-term rating of [ICRA]C+ and the short term-rating of [ICRA]A4 ISSUER NOT COOPERATING. The rating continues to remain in the 'Issuer Not Cooperating' category. The rating is now denoted as "[ICRA]D/D; ISSUER NOT COOPERATING" for the bank facilities of the company. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- 6.00 [ICRA]D; ISSUER NOT COOPERATING; Cash Credit Downgraded from [ICRA]C+; Rating continues to remain in the 'Issuer Not Cooperating' category Fund-based- 3.00 [ICRA]D; ISSUER NOT COOPERATING; Bank Guarantee Downgraded from [ICRA]A4; Rating continues to remain in the 'Issuer Not Cooperating' category Unallocated 10.00 [ICRA]D; ISSUER NOT COOPERATING; Limits Downgraded from [ICRA]C+/[ICRA]A4; Rating continues to remain in 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, despite the downgrade. Rationale The ratings take into consideration the irregularity in debt servicing by VVPL, as confirmed by its lender to ICRA. Incorporated in July 2009, Vardhman Vitrified Private Limited manufactures vitrified floor tiles of three sizes - 600 X 600 mm, 800 x 800 mm and 1000 x 1000 mm. The company started its commercial operations from May 25, 2010. VVPL's manufacturing facility, located at Morbi (Gujarat), has an annual manufacturing capacity of 37,800 MT. It sells its products under the brand name of 'Vardhman'. VVPL was promoted by Mr. Vitenkumar Kavar, who has extensive experience in the ceramic industry by virtue of his association with other companies engaged in a similar line of business like New Vardhman Vitrified Private Limited and Comet Ceramic. =============== M A L A Y S I A =============== FEDERAL LAND: Malaysia to Provide $1.5 Billion in Financial Aid --------------------------------------------------------------- Reuters reports that Malaysia will provide state-owned palm oil plantation agency Felda or the Federal Land Development Authority with financial aid of MYR6.23 billion ($1.52 billion) following a government inquiry into the company whose losses and debt have soared over the past decade. The agency's total liabilities had risen 12-fold over 10 years, from 1.2 billion ringgit in 2007 to 14.4 billion ringgit in 2017, Reuters discloses citing a white paper released to parliament on April 10 that cited poor management and low integrity. Reuters says the report was prepared by the Ministry of Economic Affairs after the government of Mahathir Mohamad, who came to power last year after defeating Malaysia's longtime ruling coalition, had vowed to look into Felda's financial troubles and alleged graft. "The report found that operational mismanagement, failure of investment management and low levels of integrity are the main sources that caused Felda's poor cash flow, and affected its developmental program," the report, as cited by Reuters, said. Felda will also restructure and delay some repayments of its borrowings, said the report, which follows two years of management crises and allegations of corruption under the previous government, Reuters relays. Reuters relates that the report said Felda would restructure the principal payment of its debts, as well as delay the repayment of its borrowings of MYR1.98 billion in 2019. The remainder of its MYR9.3 billion borrowings will be repaid from 2020 to 2028. According to Reuters, Felda's chairman said last September it would sell assets, restructure loans and try to boost its cashflow in a bid to trim debts by nearly 20 percent from MYR8.03 billion ($1.93 billion) at mid-2018 to MYR6.5 billion by year-end. Felda was created by Malaysia's second prime minister in 1956, and aimed to resettle and employ the rural poor in the palm oil industry. It grew to become the world's largest state-run palm oil agency. Its problems, however, have frustrated Malaysia's 650,000 palm oil farmers, also known as settlers, as they have racked up debt on low incomes, Reuters states. The settlers had been a key source of votes for the previous ruling coalition, which suffered a shock defeat in May last year. Reuters adds that the government said it has set aside about 2 billion ringgit to write off debt interest for settlers loans, among other measures to increase estate efficiencies and reduce operational costs. UTUSAN MELAYU: Settles Legal Disputes With Ancom Subsidiaries ------------------------------------------------------------- Arjuna Chandran Shankar at theedgemarkets.com reports that Utusan Melayu (M) Bhd settled its legal disputes with two subsidiaries of Ancom Bhd. According to the report, the PN17 media group is to settle the MYR10 million owed to Nylex (M) Bhd, by transferring The Trax, a mixed development worth MYR6.7 million located near Utusan's headquarters at the Jalan Chow Sow Lin area to Nylex with Utusan paying for any stamp duty incurred upon the transfer of the property by March 31, 2021. The balance MYR2.98 million is to be paid in monthly instalments, with the first instalment due Jan. 31, 2020, the report relays. Its legal dispute with Ancom unit Redberry Sdn Bhd was settled with Utusan's wholly-owned unit Utusan Airtime Sdn Bhd transferring its 20% stake worth MYR6 million in Titanium Compass Sdn Bhd to Redberry, who will bear the agreed position of a MYR2.02 million loss suffered by Utusan related to the supply of the tablets agreement, with the loss being set off against the judgement sum with all parties to withdraw any claims or counterclaims within five days to execute the agreement, with no option to file afresh, theedgemarkets.com relates. About Utusan Melayu Utusan Melayu (Malaysia) Berhad engages in the publication, printing and distribution of newspapers. The Company's segments include Publishing, distribution and advertisements, which is engaged in publishing and distribution of newspapers, magazines and books, and also indoor and outdoor advertising; Printing, which is engaged in printing of magazines and books; Information technology and multimedia, and Investment holding, management services and others. It publishes newspapers, which include Utusan Malaysia, Mingguan Malaysia, Kosmo! and Kosmo! Ahad. Its magazines include Mastika, Saji, Infiniti and Wanita. The Company, through its subsidiary, publishes educational books that cover all levels of education, from pre-school to university. It also publishes children's books and other general titles covering subjects, such as religion and women's titles. Its other services include transportation, audio video production and series, and archive and research information services. Utusan Melayu was classified as a PN17 company on Aug. 21, as it had failed to provide a solvency declaration to Bursa Malaysia after defaulting on its principal and profit payment to Maybank Islamic Bhd and Bank Muamalat Malaysia Bhd. On Aug. 30, Utusan Melayu said it will have the Corporate Debt Restructuring Committee (CDRC), under the purview of Bank Negara Malaysia, mediate between the group and its respective financiers. The company said it is in the midst of formulating a regularization plan to address its PN17 status. ===================== N E W Z E A L A N D ===================== COOK'N WITH GAS: Two More Christchurch Restaurants Close Doors -------------------------------------------------------------- Liz McDonald at Stuff.co.nz reports that two more central Christchurch restaurants have closed their doors in a tough hospitality market that has already seen a string of collapses. Award-winning restaurant Cook'N with Gas and attached bar Astro Lounge on Worcester Blvd closed their doors on March 29 and the business is in liquidation, Stuff discloses. Also in liquidation is Sailor's Son Ltd owned by Ed and Celia Tanner. Their two businesses, Sailor's Son coffee roastery and The Anchorage cafe, share premises on Walker St and both closed this week, Stuff says. Founded in 1998 and owned by husband and wife Bruce Griffiths and Kate Kennedy, the high-end Cook'N with Gas won multiple local, national and international awards. According to Stuff, Ms. Kennedy said after initially picking up after the earthquakes, trade had slowed and the last three years had been a struggle. Running the business had been complicated as she had been battling cancer. She said the downturn was caused by a range of factors including diners staying away from the central city, roadworks and access problems, a shortage of central city residents, the slowness of the rebuild, too many new licensed premises in the city, tighter liquor laws, the Night Noodle Markets, and a move away from fine-dining to cheaper options and shared plates, Stuff relays. The March 15 mosque attacks meant "no-one wanted to come into town and celebrate" and were the last straw, she said. Stuff notes that attempts to sell the business have proven unsuccessful. "No-one wants to buy a failing business. Fine dining is gone, it's dead, people are more informal," Stuff quotes Ms. Kennedy as saying. Their moves to broaden the menu were "too little, too late", she said. The liquidator's first report is not yet ready and Ms. Kennedy did not know how much money creditors were owed, Stuff adds. Twelve staff lost their jobs, with wages paid but not holiday pay, she said. They owed "too much money" to Inland Revenue, banks, and suppliers, and feared their collapse might "take some of the suppliers down" with them. "Restaurant after restaurant after restaurant in the city--good restaurants--are just dying. It's so tough on staff, suppliers, on us," Stuff quotes Ms. Kennedy as saying. The Sailor's Son and The Anchorage opened in mid-2017 in a former warehouse, focusing on specialty coffee. The business was operating from leased premises, as was Cook'N with Gas. Other hospitality outlets to have gone under in Christchurch recently include upmarket French restaurant St Germain, chef Philip Kraal's Bamboozle, the Villas in Montreal St, The Good Goat, Iconic Club and Bar, and chef Tony Astle's Victoria St business Rockstar Pizza, Stuff discloses. FORESTLANDS NZ: Investors Disappointed at Huge Losses ----------------------------------------------------- Rob Stock at Stuff.co.nz reports that investors of Forestlands NZ Limited and Forestlands No. 2 to 20 Limited are disappointed for large losses they have with the failed investment companies. In early April 2019, Korda Mentha, liquidator of the 16 Forestlands forestry investment companies set up by Motueka businessman Rowan Kearns, will begin returning capital to investors, Stuff.co.nz notes. Stuff.co.nz points out by example that Wayne Drogemuller, former Inland Revenue tax auditor, will have little to show for the NZ$1,000 share in Forestlands Number 2 company he bought 20 years ago. Mr. Drogemuller will be paid NZ$725 for his share in Forestlands Number 2, the report notes. In all, Mr. Drogemuller said he invested NZ$26,000 in Forestlands companies, but expected to get back a little less than NZ$15,000 in total by the time the liquidators have wrapped up their work, and taken their fees, Stuff relates. Stuff notes that forestry investments do not pay an income to investors until the trees were harvested. But the forests owned by the Forestlands companies were not harvested before the companies were put into liquidation late last year by the High Court in Nelson at the request of the Financial Markets Authority (FMA), the government's investment watchdog, Stuff states. Apparently, the forests were sold in 2015 without the knowledge of investors who owned non-voting shares in the Forestland companies, Stuff relates. Investors protested, and the FMA and Serious Fraud Office began investigations, which both agencies said were ongoing. Mr. Kearns, the sole director of the Forestlands group, denies wrongdoing, Stuff says. According to Stuff, the liquidators related in their first report that there was NZ$16.7 million remaining from the proceeds of the NZ$23.5 million sale. Stuff relates that Mr. Kearns said in an accompanying statement that he arranged the sale of the forests because health and safety and financial compliance costs made the business unviable. He didn't tell shareholders at the time because he feared that if the general market found out he would never obtain the price he did for the forests in Southland, Hawkes Bay and Wairarapa, Stuff adds. He blamed the 22-month FMA investigation and "one-sided" media reporting for affecting third party valuations of the forests, and returns of capital to shareholders. About Forestlands NZ Forestlands Group of Companies was engaged in forestry investment. Forestlands NZ Limited and Forestlands (No. 2) - (No. 20) Limited are currently in liquidation. Neale Jackson and Grant Graham of KordaMentha are the appointed liquidators. MTF SIERRA 2017: Fitch Upgrades Class F Debt Rating to 'BBsf' ------------------------------------------------------------- Fitch Ratings has upgraded the ratings on 10 tranches and affirmed the ratings on two tranches from two MTF ABS Trusts. The transactions are securitisations backed by New Zealand automotive loan receivables originated by Motor Trade Finance Ltd (MTF). The notes were issued by Trustees Executors Limited in its capacity as trustee of the respective trusts. At the March 2019 payment date, the collateral balances for MTF Torana Trust 2016 and MTF Sierra Trust 2017 were NZD140.6 million and NZD206.2 million, respectively. The upgrades reflect Fitch's revised cashflow modelling, which takes into account the shorter remaining term of the transactions, asset performance that is in line with base-case gross loss expectations set at closing and better recovery and net loss than the expectations set at closing for both trusts, increased credit enhancement and yield post the end of the revolving period for MTF Torana, and pool quality that is better than initially modelled for MTF Sierra and that is not expected to materially deteriorate from the current composition for the remaining six months of the revolving period. Further upgrades to class B notes in MTF Torana and MTF Sierra are constrained by the transaction's documented counterparty triggers. Upgrades to the class F notes in both trusts were constrained as ratings on lower-rated notes are more reliant on excess spread, hence they are more susceptible to adverse scenarios than more senior notes in the capital structure and more sensitive to losses in the tail end of the transaction. MTF Sierra Trust 2017 - Class A NZSTMTFAT015; LT AAAsf Affirmed - Class B NZSTMTFAT023; LT AA+sf Upgrade - Class C NZSTMTFAT031; LT AA-sf Upgrade - Class D NZSTMTFAT049; LT Asf Upgrade - Class E NZSTMTFAT056; LT BBB+sf Upgrade - Class F; LT BBsf Upgrade MTF Torana Trust 2016 - Class A NZTTMTFAT013; LT AAAsf Affirmed - Class B NZTTMTFAT021; LT AA+sf Upgrade - Class C NZTTMTFAT039; LT AA+sf Upgrade - Class D NZTTMTFAT047; LT AA-sf Upgrade - Class E NZTTMTFAT054; LT Asf Upgrade - Class F; LT BBBsf Upgrade [*] Loss of Waiho River Bridge May Push Businesses to Liquidation ----------------------------------------------------------------- 1 News Now reports that some West Coast businesses may go bust after the closure of the Waiho River Bridge caused an abrupt end to visits by tourists. According to the report, the South Westland Bailey bridge was washed away when torrential rain battered the West Coast on March 26, cutting off access between Fox Glacier and Franz Josef. It's about a 25-minute drive from Fox Glacier to Franz Josef when the bridge is intact. But without the bridge, South Westland has been effectively cut in half with detours adding hundreds of extra kilometres or forcing people to use helicopter taxis. Motorists are forced to drive around the Aoraki/Mt Cook National Park and through Arthur's Pass, a roughly 12-hour journey, the report says. 1 News Now relates that the Transport Agency said teams are working to reopen the bridge in time for the school holidays in a week's time. But West Coast accountant Andrew Elphick said that was not enough to assure some Franz Josef businesses, who laid off staff early. "A lot of people have already made their decisions, tourism operators can't go on a hope that something will be open. Going into the winter that loss and turnover is going to take a major effect on cash flow," the report quotes Mr. Elphick as saying. "Cash flow is king during the winter, that means by about October their monetary resources could be exhausted or they might be looking at liquidation." 1 News Now says the 170 metre new Bailey bridge was initially expected to be in place within seven to 10 days, but problems with site access and materials had slowed progress. It's now expected to be reopened by April 12, the report notes. ===================== S O U T H K O R E A ===================== KDB LIFE: Fitch Affirms LT IDR at 'BB+', Outlook Stable ------------------------------------------------------- Fitch Ratings has affirmed South Korea-based KDB Life Insurance Co., Ltd.'s Insurer Financial Strength Rating at 'BBB-' (Good) and its Long-Term Issuer Default Rating at 'BB+'. The Outlook on both ratings is Stable. Fitch has also affirmed the company's US dollar subordinated hybrid securities at 'BB'. KEY RATING DRIVERS KDB Life's IFS rating reflects its moderate business profile, adequate capitalisation and moderately weak financial performance. The rating also factors in the increased financial leverage and interest burden resulting from the issuance of subordinated securities in 2018. Fitch ranks KDB Life's business profile as moderate compared with that of other Korean life insurers, underpinned by its position as a mid-sized life insurer in the country, somewhat diversified business portfolio and moderate business risk profile. The company has an operating history of more than 40 years with a domestic life insurance market share of about 3% in 2018 by premium income. The franchise value is augmented by the common branding with its parent and major shareholder, Korea Development Bank (KDB, AA-/Stable), which is a state-owned policy bank in Korea. Fitch scores KDB Life's business profile at 'bbb' under the agency's credit-factor scoring guidelines based on the ranking. KDB Life's capitalisation has shown improvement. Its score on Fitch's Prism Factor-Based Model (FBM) improved to 'Adequate' by-end-2018 from 'Somewhat Weak' a year earlier following a KRW304 billion rights issue in January 2018 and a subsequent issuance of hybrid and subordinated securities of USD200 million and KRW220 billion, respectively. The company's risk-based capital (RBC) ratio also increased to 215% by end-2018 from 108% at end-2017. The improved capitalisation was partly offset by high financial leverage, which increased to 48% by end-2018 from 35% at end-2017, as well as a high interest burden. The fixed-charge coverage ratio improved to 1.4x in 2018 from -3.6x in 2017. However, Fitch expects the financial leverage and fixed-charge coverage ratios to stabilise by 2020, given KDB's plan to inject additional capital into the company as well as the insurer's gradual improvement in profitability. Fitch treats Korean hybrid securities as 100% debt for leverage calculation. The company's profitability has recovered, but remains low. KDB Life's return on equity and pretax return on assets (ROA) turned positive at 1.1% and 0.2%, respectively, in 2018 (2017: -15.2% and -0.2%) as a result of its restructuring plans. The company's bottom line may improve on its increased exposure to alternative investments and a shift of its product mix towards protection-type policies with higher margins. Fitch expects the insurer to remain profitable but significant improvement is unlikely in the near term. RATING SENSITIVITIES Key downgrade sensitivities include: - a significant decline in KDB Life's capital and leverage position, with its Prism FBM score falling below the 'Adequate' category or its local RBC ratio dropping to below 150% and an increase in financial leverage to above 45% over a sustained period; or - a prolonged deterioration in profitability, measured by a consolidated pretax ROA below 0.2%, and a fixed-charge coverage ratio consistently below 1.9x; or - a significant decrease in KDB's ownership in KDB Life, or other corporate actions that may result in a weakening assessment of the parent's support for the subsidiary. Key upgrade sensitivities include: - a sustained improvement of its Prism FBM score to well into the 'Adequate' category with financial leverage below 39%; and - pretax return on assets above 0.4% on a sustained basis. ********* 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 2019. 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 ***