/raid1/www/Hosts/bankrupt/TCRAP_Public/190506.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, May 6, 2019, Vol. 22, No. 90
Headlines
A U S T R A L I A
AUSDRILL FINANCE: Moody's Rates New $500MM Sr. Unsec. Notes 'Ba2'
AUSDRILL LTD: S&P Assigns 'BB' Rating to US$500MM Sr. Unsec. Notes
BARRELFISH TOWNSVILLE: Second Creditors' Meeting Set for May 14
BOPPL (AUSTRALIA): First Creditors' Meeting Set for May 15
BORN & RAISED: First Creditors' Meeting Set for May 13
CENTENNIAL MINING: AuStar in Talks with Administrators on DOCA
EVELYN ST: Second Creditors' Meeting Set for May 13
INSIGHT EDUCATION: Second Creditors' Meeting Set for May 10
METRO FINANCE 2018-1: Moody's Upgrades Class E Notes Rating to Ba1
NEOLIDO HOLDINGS: Liquidator Sentenced to Seven Years Imprisonment
SEELITE WINDOWS: First Creditors' Meeting Set for May 13
C H I N A
CHINA FORTUNE: Fitch Cuts LT IDR to 'BB-', Outlook Stable
HNA GROUP: US$25BB Fire Sale Not Enough to Emerge From Crisis
I N D I A
ANITHA DAIRY: CRISIL Assigns 'D' Rating to INR8.4cr Term Loan
ARJUN PULP: CRISIL Withdraws 'D' Rating on INR27.34cr Loan
ASHWANI KUMAR: CRISIL Withdraws B Rating on INR6.2cr Cash Loan
BAPASITARAM CERAMIC: CRISIL Migrates B Rating to Not Cooperating
GANPATI ISPAT: CRISIL Migrates 'B+' Rating to Not Cooperating
GARHWAL JEMS: CRISIL Migrates 'B' Rating to Not Cooperating
GMR RAJAHMUNDRY: Lenders Approve Resolution Plan
GOLCONDA TEXTILES: CRISIL Migrates 'D' Rating to Not Cooperating
IENERGIZER LTD: S&P Withdraws 'B' Long-Term Issuer Credit Rating
INTERNATIONAL TRADING: CRISIL Cuts Rating on INR12.7cr Loan to D
JASAMRAT COTGIN: CRISIL Migrates 'B' Rating to Not Cooperating
JEWEL WORLD: CRISIL Migrates 'B+' Rating to Not Cooperating
JOHNS GOLD: CRISIL Downgrades Rating on INR13.5cr Loan to D
LODHA DEVELOPERS: Moody's Affirms B2 CFR, Alters Outlook to Neg.
MILLENNIUM BUSINESS: CRISIL Assigns B+ Rating to INR6.7cr Loans
MOMAI FOODS: CRISIL Assigns 'B+' Rating to INR4.96cr Term Loan
NORTH INDIA SURGICAL: CRISIL Lowers Rating on INR13cr Loan to D
P. R. FASTENERS: CRISIL Lowers Rating on INR10cr Cash Loan to D
PAC BIO: CRISIL Lowers Rating on INR5.00cr Cash Loan to D
PANVELKAR INFRA: CRISIL Cuts Rating on INR20cr Loan to D
PRANAV FOUNDATIONS: CRISIL Lowers Rating on INR25cr Loan to D
PREDOMIX TECHNOLOGIES: CRISIL Assigns 'B' Rating to INR10cr Loan
RASIK VATIKA: CRISIL Lowers Rating on INR14cr Cash Loan to B
RELIANCE COMM: NCLAT Allows Firm to Withdraw Appeal vs. Insolvency
RENEW POWER: S&P Assigns BB- Issuer Credit Rating, Outlook Stable
SAI RAGHAVENDRA: CRISIL Migrates 'B+' Rating to Not Cooperating
SAIKRUPA COTTONS: CRISIL Migrates 'D' Rating to Not Cooperating
SHAMSHREE LIFESCIENCES: CRISIL Moves D Rating to Not Cooperating
SHREE BALA: CRISIL Migrates 'D' Rating to Not Cooperating
SHRI AMARNATH: CRISIL Lowers Rating on INR21cr Cash Loan to D
SRI VANGALAMMAN: CRISIL Withdraws D Rating on INR10cr LT Loan
SRI VARALAKSHMI: CRISIL Raises Rating on INR10cr Loan to B+
STAYWELL FORMULATION: CRISIL Migrates D Rating to Not Cooperating
SURBHI INDUSTRIES: CRISIL Lowers Rating on INR6cr Loan to D
VEDIKA AGRO: CRISIL Lowers Rating on INR5cr Cash Loan to 'D'
VIJAY IRON: CRISIL Downgrades Rating on INR8cr Cash Loan to D
I N D O N E S I A
BARITO PACIFIC: Fitch Publishes B+ IDR; Rates USD Notes 'B+(EXP)'
M A L A Y S I A
KINSTEEL BHD: Bursa Reprimands Firm, Fines Directors MYR44,800
S I N G A P O R E
HYFLUX LTD: May Get SGD400 Million Lifeline from UAE's Utico
T A I W A N
E-TON SOLAR: To Temporarily Shut Tainan Factory; 300 Jobs at Risk
- - - - -
=================
A U S T R A L I A
=================
AUSDRILL FINANCE: Moody's Rates New $500MM Sr. Unsec. Notes 'Ba2'
-----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to the proposed
USD500 million senior unsecured notes to be issued by Ausdrill
Finance Pty Ltd., and has assigned a stable outlook. At the same
time, Moody's has affirmed Ausdrill Limited's Ba2 corporate family
rating. The outlook is also stable.
Moody's expects the proceeds from the issuance of the USD500
million senior unsecured notes will be used to refinance the
current USD350 million senior secured notes issued by Barminco
Finance Pty Ltd and to repay the current drawings under the
revolving credit facilities of around AUD200 million. On April 23,
2019, Ausdrill announced that it had refinanced its revolving
credit facilities with new bilateral facilities maintaining an
aggregate limit of AUD300 million with a maturity date of July 1,
2023.
RATINGS RATIONALE
Ausdrill's ratings and credit profile reflect the company's
increased scale following the acquisition of Barminco and the
material reduction in debt undertaken by the company. The ratings
also reflect the company's solid credit metrics and EBITDA margins,
as well as the improvement in the current operating environment for
the mining services sector, a cyclical industry.
Ausdrill has a strong position in providing integrated mining
services in its target markets and a demonstrated ability to
execute contracts with a diversified range of counterparties.
Following the acquisition of Barminco, which completed in November
2018, Ausdrill's product offering has increased through the
addition of a significant level of underground mining services
capabilities both in Australia and Africa.
At the same time, Ausdrill's ratings are balanced by the cyclical
nature of the mining services sector and Moody's expectation that
competition will remain strong over the next 12-18 months. The
ratings are also constrained by the company's large exposure to
Africa, which Moody's views as showing higher levels of sovereign
risk than Australia and having less-developed institutional
environments.
While the acquisition of Barminco has significantly rebalanced the
company's earnings back to Australia, reducing Ausdrill's exposure
to these jurisdictions, Moody's expects a significant portion of
the company's growth opportunities will continue to come from
Africa.
However, Ausdrill's operations in Africa also benefit from a degree
of geographic and mine diversification, as well as from its long
track record of successfully operating in these higher-risk
jurisdictions.
The affirmation of Ausdrill's rating also reflects the
consolidation of the group's security structure following the
proposed transaction, because Barminco, its subsidiaries, and
African Underground Mining Services (previously a joint venture
with Ausdrill) will no longer be ring-fenced following the
repayment of the Barminco notes.
The Ba2 rating on the proposed notes is at the same level as the
company's CFR, reflecting the preponderance of unsecured debt in
its capital structure. The rating on the notes is also supported by
Moody's expectation that the company's AUD300 million senior
secured revolver is likely to remain largely undrawn over the
forecast period.
The stable outlook on Ausdrill's ratings reflects its solid credit
metrics and Moody's expectation that the company will seamlessly
integrate Barminco into the Ausdrill group and continue to renew
its existing contracts and win new contracts
WHAT COULD CHANGE THE RATING
Ausdrill's ratings could be upgraded over time if the company
continues to grow its scale and product offerings while maintaining
a track record of strong cash flow generation and improved
earnings, such that adjusted debt/EBITDA is sustained below 1.5x
through the cycle.
Ausdrill's ratings could downgraded if the company fails to renew
material contracts or win new contracts, if adjusted debt/EBITDA
exceeds 2.5x, or if operating conditions deteriorate significantly,
leading to reduced earnings and negative free cash flow.
BACKGROUND
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Ausdrill Limited was established in 1987 as a drilling and blast
company in the Australian mining services sector and has expanded
into a global provider of surface and underground mining services
in Australia, Africa, and India, with in-house capabilities in
manufacturing, logistics and supply. Ausdrill also provides
equipment rental, parts sales, service exchange and maintenance
services.
AUSDRILL LTD: S&P Assigns 'BB' Rating to US$500MM Sr. Unsec. Notes
------------------------------------------------------------------
S&P Global Ratings said that it has assigned its 'BB' issue rating
to the proposed US$500 million seven-year senior unsecured 144a
notes issued by Ausdrill Finance Pty Ltd., the financing arm of
Ausdrill Ltd. (BB/Stable/--). S&P assigned the notes a recovery
rating of '4', reflecting its expectation for average (30%-50%;
rounded estimate 35%) recovery in the event of a payment default.
The company will use the proceeds to refinance Barminco Finance Pty
Ltd.'s US$350 million secured notes rated 'BB' maturing in 2022;
repay A$200 million of Ausdrill's A$300 million revolving credit
facility, as well as transaction costs. As part of the
recapitalization, the group's security structure would be
consolidated. The revised capital structure will provide Ausdrill
with long-dated debt.
S&P said, "We view the proposed transaction as credit neutral. The
issuer credit rating reflects Ausdrill's increased scale and
geographic diversity after its Barminco acquisition last year, as
well our view of the company's ability to sustain credit metrics in
line with the 'BB' rating level even under a moderate stress
scenario.
"Our 'BB' long-term issuer credit rating on Ausdrill Ltd. is
unchanged. The outlook is stable."
RECOVERY ANALYSIS
S&P said, "Our recovery analysis for Ausdrill Ltd. contemplates a
hypothetical simulated default during the first half of 2024. The
issue rating on Ausdrill Finance Pty Ltd. and Ausdrill
International Pty Ltd.'s upsized A$300 million, secured, bilateral
bank loan maturing on July 1, 2023, is 'BBB-' with a recovery
rating of '1'. This reflects our expectation of a very high
recovery (95%) should a default event occur. The bank loan is
guaranteed by Ausdrill Ltd. and ranks at least pari passu with all
other senior secured debt of the company."
The 'BB' issue rating on Ausdrill Finance Pty Ltd.'s proposed
seven-year US$500 million senior unsecured notes maturing in May
2026 is in line with the issuer credit rating on the company. These
notes are also guaranteed by Ausdrill Ltd. and rank at least pari
passu with all other unsecured debt. The '4' recovery rating
reflects S&P's expectation of average recovery prospects (35%)
should a default event occur.
S&P said, "At the time of hypothetical default, we expect adverse
macroeconomic conditions cause global end-market demand and pricing
for commodities to deteriorate materially, leading to steep
declines in demand for Ausdrill's services and multiple contract
cancellations. As a result, Ausdrill's revenue significantly
declines, impairing its ability to meet its cash interest
payments.
"We value the company as a going concern because we believe that
following a payment default, the company is likely to be
reorganized due to the longer-term value in its established brands
and business segments. We have applied a 5.0x valuation multiple to
an estimated distressed emergence EBITDA of around A$113.2 million
to estimate a gross enterprise value of about A$565.8 million. The
net enterprise value after administrative costs is A$537.5
million."
Simulated default assumptions:
-- Simulated year of default: 2024
-- EBITDA at emergence: A$113.2 million
-- EBITDA multiple (engineering and construction services): 5.0x
-- Gross enterprise value: A$565.8 million
Simplified waterfall
-- Net enterprise value at emergence (after 5% administrative
costs): A$537.5 million
-- Estimated secured first-lien claims (revolving facility [85%
drawn] including prepetition interest): approximately A$261.4
million
-- Estimated net enterprise value available for unsecured debt:
A$276.1 million
-- Estimated senior unsecured claims (including prepetition
interest): approximately A$726.9 million
*All debt amounts include six months of prepetition interest.
BARRELFISH TOWNSVILLE: Second Creditors' Meeting Set for May 14
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Barrelfish
Townsville Pty Ltd, trading as Commonwealth Hotel Townsville, has
been set for May 14, 2019, at 10:00 a.m. at The Ville
Resort-Casino, Sir Leslie Thiess Dr, in Townsville City,
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 May 13, 2019, at 4:00 p.m.
Geoffrey Trent Hancock of PKF was appointed as administrator of
Barrelfish Townsville on March 29, 2019.
BOPPL (AUSTRALIA): First Creditors' Meeting Set for May 15
----------------------------------------------------------
A first meeting of the creditors in the proceedings of BOPPL
(Australia) Pty Ltd will be held on May 15, 2019, at 10:00 a.m. at
the offices of McLeod & Partners, at Level 9, 300 Adelaide Street
in Brisbane, Queensland.
Jonathan McLeod and Bill Karageozis of McLeod & Partners were
appointed as administrators of BOPPL (Australia) on May 2, 2019.
BORN & RAISED: First Creditors' Meeting Set for May 13
------------------------------------------------------
A first meeting of the creditors in the proceedings of Born &
Raised Creative Group Pty Ltd and Atlas Advertising Group Pty Ltd
will be held on May 13, 2019, at 10:30 a.m. at the offices of
William Buck, at Level 29, 66 Goulburn Street, in Sydney, NSW.
Sean Wengel and Robert Whitton of William Buck were appointed as
administrators of Born & Raised on May 1, 2019.
CENTENNIAL MINING: AuStar in Talks with Administrators on DOCA
--------------------------------------------------------------
AuStar Gold Ltd advises that following a number of recent
unsolicited approaches from existing creditors of Centennial Mining
Limited, AuStar Gold has entered into discussions with the
Administrators, Korda Mentha, and other parties to assess the
potential of proposing a Deed of Company Arrangement (DOCA) to
Centennial Mining Limited creditors.
AuStar Gold said it expects to make further announcements in the
coming days regarding the details of any proposed DOCA, and
encourages all existing creditors of CTL to take no immediate
action regarding any alternative proposals until AuStar Gold
provides further updates.
As reported in the Troubled Company Reporter-Asia Pacific on March
27, 2019, Richard Tucker, John Bumbak and Leanne Chesser of
KordaMentha Restructuring were appointed as voluntary
administrators of Centennial Mining Limited and its wholly owned
subsidiary, Maldon Resources Pty Ltd on March 21, 2019.
Centennial Mining Limited (ASX:CTL) -- www.centennialmining.com/ --
engages in the exploration and development of gold projects in
Australia. It primarily develops the A1 Gold Mine located in
Eastern Victoria.
EVELYN ST: Second Creditors' Meeting Set for May 13
---------------------------------------------------
A second meeting of creditors in the proceedings of Evelyn St Group
Pty Ltd has been set for May 13, 2019, at the offices of Smith
Hancock Chartered Accountants, at Level 4, 88 Phillip Street, in
Parramatta, 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 May 10, 2019, at 4:00 p.m.
Michael John Morris Smith of Smith Hancock was appointed as
administrator of Evelyn St on March 27, 2019.
INSIGHT EDUCATION: Second Creditors' Meeting Set for May 10
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Insight
Education Centre for the Blind and Vision Impaired has been set for
May 10, 2019, at 11:00 a.m. at The Boardroom, APL Insolvency, at
Level 5, 150 Albert Road, in South Melbourne, 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 May 9, 2019, at 5:00 p.m.
Jeremy Robert Abeyratne of APL Insolvency was appointed as
administrators of Insight Education Centre on March 27, 2019.
METRO FINANCE 2018-1: Moody's Upgrades Class E Notes Rating to Ba1
------------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on four classes
of notes issued by Perpetual Corporate Trust Limited in its
capacity as the trustee of Metro Finance 2018-1 Trust.
The affected ratings are as follows:
Issuer: Metro Finance 2018-1 Trust
Class B Notes, Upgraded to Aa1 (sf); previously on Jun 15, 2018
Definitive Rating Assigned Aa2 (sf)
Class C Notes, Upgraded to A1 (sf); previously on Jun 15, 2018
Definitive Rating Assigned A2 (sf)
Class D Notes, Upgraded to Baa1 (sf); previously on Jun 15, 2018
Definitive Rating Assigned Baa2 (sf)
Class E Notes, Upgraded to Ba1 (sf); previously on Jun 15, 2018
Definitive Rating Assigned Ba2 (sf)
RATINGS RATIONALE
The upgrades were prompted by an increase in credit enhancement
available for the affected notes. In addition, the collateral
portfolio has been performing within Moody's assumptions.
The notes have been repaid sequentially from closing in June 2018.
During this period, the credit enhancement available for the Class
B, Class C, Class D and Class E Notes increased to 17.8%, 13.2%,
10.2% and 5.3% from 13.4%, 9.9%, 7.7% and 4.0% respectively.
As of March 2019, 0.74% of the outstanding pool was 30-plus-days
delinquent, and 0.24% was 90-plus-days delinquent. The portfolio
has incurred 0.01% of losses as a percentage of the original pool
balance to date, all of which have been covered by excess spread.
Based on the observed performance, current pool factor and economic
outlook, Moody's has updated its expected default assumption to
3.5% from 4.0% as a percentage of the original pool balance, while
keeping the portfolio credit enhancement and recovery unchanged at
23.5% and 35% respectively. The updated default assumption of 3.5%
is the same as the base case assumption applied to Metro Finance
2018-2 Trust, the second auto ABS transaction sponsored by the same
originator in 2018.
The transaction is a cash securitisation of a portfolio of auto
loans and leases extended to prime commercial obligors located in
Australia.
The principal methodology used in these ratings was Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS published in
March 2019.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that could lead to an upgrade of the ratings include: (1)
performance of the underlying collateral that is better than
Moody's expectation, and (2) an increase in the notes' available
credit enhancement.
Factors that could lead to a downgrade of the ratings include: (1)
performance of the underlying collateral that is worse than Moody's
expectation, (2) a decrease in the notes' available credit
enhancement, and (3) a deterioration in the credit quality of the
transaction counterparties.
NEOLIDO HOLDINGS: Liquidator Sentenced to Seven Years Imprisonment
------------------------------------------------------------------
Mr. David John Leigh, of Sherwood, Queensland, has been sentenced
before the Brisbane District Court to seven years imprisonment, and
will be eligible for parole after serving 22 months in custody,
after earlier pleading guilty to three counts of fraud under the
Queensland Criminal Code.
The Australian Securities and Investments Commission commenced an
investigation in February 2018 after Mr. Leigh's then firm
self-reported misconduct. ASIC's investigation revealed that
between July 25, 2017 and Nov. 9, 2017, Mr. Leigh, as the
co-liquidator of Neolido Holdings Pty Ltd, dishonestly redirected
$800,000 from the Neolido external administration bank account into
a bank account that he controlled. He went on to use the funds for
his own purposes.
On Feb. 22, 2019, the registration of Mr. Leigh as a liquidator was
cancelled following a decision by a disciplinary committee upon a
referral from ASIC. The Committee also decided that a condition
should be imposed on all other registered liquidators that they
must not allow Mr. Leigh to carry out any of the functions or
duties, or exercise any of the powers, of a registered liquidator
on their behalf for eight years commencing on Feb. 22, 2019.
'Liquidators must act honestly in the protection and administration
of other people's money. ASIC will continue to act against
dishonest conduct and hold offenders to account,' said ASIC
Commissioner John Price.
Upon sentencing, Judge Farr said Mr Leigh 'committed a significant
breach of trust as a court appointed liquidator' and in referring
to Mr Leigh's financial situation that led him to the offending, he
was 'uniquely positioned to know what legitimate avenues were
available in [his] circumstances but chose not to choose those
options'.
The matter was prosecuted by the Commonwealth Director of Public
Prosecutions.
Neolido is a property development company based in South Brisbane
that was wound up on Nov. 25, 2005 pursuant to a court order
obtained by ASIC. On Oct. 14, 2010, Mr. Leigh was appointed as a
co-liquidator of the company.
On March 2, 2018, ASIC suspended Mr Leigh's registration as a
company liquidator following receipt of an application by him,
formally lodged on Feb. 28, 2018. Mr. Leigh agreed to resign as
external administrator of all his current appointments and ASIC
exercised its powers to appoint replacement liquidators to 16
companies to which Mr. Leigh had been appointed as sole liquidator.
On March 20, 2018, Mr. Andrew Fielding and Ms. Helen Newman of BDO
Business Restructuring were appointed as co-liquidators of Neolido.
SEELITE WINDOWS: First Creditors' Meeting Set for May 13
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Seelite
Windows & Doors Pty. Ltd will be held on May 13, 2019, at 11:00
a.m. at the offices of Dye & Co. at 165 Camberwell Road, in
Hawthorn East, Victoria.
Nicholas Giasoumi and Shane Leslie Deane of Dye & Co. Pty Ltd were
appointed as administrators of Seelite Windows on May 2, 2019.
=========
C H I N A
=========
CHINA FORTUNE: Fitch Cuts LT IDR to 'BB-', Outlook Stable
---------------------------------------------------------
Fitch Ratings has downgraded China-based city-district developer
China Fortune Land Development Co., Ltd.'s Long-Term
Foreign-Currency Issuer Default Rating to 'BB-' from 'BB+', with a
Stable Outlook. Fitch has also downgraded CFLD's senior unsecured
rating and the ratings on all outstanding bonds to 'BB-' from
'BB+'.
The downgrade reflects CFLD's significantly higher leverage, which
Fitch now expects to be sustained at least until 2020. Fitch's
prior expectation was that the higher leverage, first reported in
3Q18, could be reversed in 2019. The higher leverage is driven
primarily by the persistent, difficult cash-collection environment
in the company's core pan-Beijing region, which has been the most
affected by changes in government policies on the sector.
CFLD's ratings are supported by its leading position in
industrial-park development in key economic regions. Its improving
geographical diversification, forthcoming cooperation with Ping'An
Insurance (Group) Co. and a new management team formed in 2018-2019
are likely to mitigate its weakened financial profile with a
strengthened business profile. CFLD's comparative advantages of a
large property sales scale, strong brand name and industrial-park
development are in line with a 'BB' category business profile.
The Stable Outlook reflects its expectations that leverage will be
able to be sustained below 65%, the level at which Fitch would
consider taking negative rating action, given that CFLD has already
been through the worst in 2018, which culminates in 2Q18 due to the
extremely low cash collection from both property sales and
government reimbursement. There has already been some recovery in
cash collection in 4Q18 and 1Q19. Fitch believes the improved cash
receipts from government reimbursement will help to support
additional investments to be made in 2019 to drive future growth.
KEY RATING DRIVERS
Prolonged Higher Leverage: CFLD's leverage, measured by net
debt/adjusted inventory + accounts receivables, spiked to 59% in
2018 from 48% in 2017, after averaging at 34% in 2014-2016. Poor
cash collection in its core pan-Beijing region, both from property
development and government-related revenue, was the main driver of
the rise. Fitch estimates that CFLD managed to collect only roughly
50% of its property contracted sales and government-related revenue
in 2018. In addition, the company took on additional debt to
decrease minority interests. Deleveraging is possible only from
2020, as CFLD's geographic diversification gathers steam and
cash-collection issues are addressed.
Lower Pan-Beijing Cash Collection: Fitch expects the low cash
collection from housing projects in the pan-Beijing area to persist
in 2019 or even longer, against its previous expectation that the
issue would see an improvement in late-2018. Beijing and the
pan-Beijing area, which includes some counties and cities in Hebei
province, was China's most policy-driven housing market in
2017-2018, and was severely hit by a zoning and land auction freeze
as well as more stringent home-purchase restrictions in 2018. CFLD,
which generates 69% of its revenue from the region, is one of the
most affected among the country's property developers, reflecting
the higher policy risks of the area.
CFLD's accounts receivable, which are mainly fee-income receivables
for industrial development from the pan-Beijing government,
increased to CNY34.7 billion in 2018 from CNY18.5 billion in 2017.
CFLD's government-related inventory also grew to CNY110.4 billion
in 2018 from CNY92.1 billion, of which around 70% are primary land
and infrastructure investments in the pan-Beijing area that have
long revenue recognition cycles that last for a few years before
they receive reimbursements from the government. Fitch believes the
accounts receivable issue will improve gradually with the better
cash collection in 4Q18 and 1Q19. However, Fitch thinks the overall
situation will only improve substantially after CFLD reduces its
reliance on pan-Beijing projects.
Sustained High District Investment: CFLD needs to pre-invest in
primary land and infrastructure in its industrial parks to support
a wider margin for its property-development projects surrounding
the parks. CFLD spent more than CNY25 billion in total on
district-related investment, and Fitch expects it to continue to
invest about CNY34 billion each year in 2019-2020, due mainly to
the early development phases of its industrial parks outside of the
pan-Beijing area. CFLD usually needs to wait for two to three years
before the government can recognise and reimburse the investment,
which can pressure CFLD's cash flow if the company is not able to
generate sufficient property sales to cover the investment.
Broadening Geographic Diversification: CFLD has expanded its
industrial parks beyond the pan-Beijing region including the areas
surrounding Nanjing, Hangzhou and Hefei. CFLD's revenue from the
pan-Beijing area dropped to 69% of the total in 2018 from 76% in
2017. The contracted gross floor area contribution from the
pan-Beijing region decreased to 46% of the total in 2018 from 66%
in 2017. Fitch thinks CFLD's increasing reach will be crucial
towards diversifying its geographic risks and maintaining a healthy
cash collection in the long run.
Ping'An Cooperation Boosts Business Profile: Ping An Insurance
increased its shareholding in CFLD to 25.25% on 9 April 2019. Ping
An has appointed two of its representatives to CFLD's board, and
helped set up the company's southern headquarters in Shenzhen with
new management to establish an urban complex development and
asset-light investment property businesses to expand beyond its
traditional industrial-park development. Ping'An also pledged to
provide more financing to CFLD in its expansion. Fitch expects the
cooperation to widen CFLD's business diversification and improve
its financial flexibility.
Improved Transparency, ESG Score Lowered: Fitch has lowered CFLD's
Financial Transparency score to '3' from '4'. This ESG score change
indicates that financial transparency, which had previously been
considered a rating-constraining factor, is no longer a key rating
driver affecting CFLD's ratings. Fitch had previously highlighted
that CFLD's poor disclosure on its district park development was a
rating factor. CFLD's new management has shared sufficient info
with Fitch to allay these considerations.
DERIVATION SUMMARY
CFLD's business profile is in line with 'BB' category credits. The
company is a leading industrial-park developer in China, with the
majority of its revenue still generated from the pan-Beijing
region. CFLD receives non-property income from government contracts
and at the same time generates property-development income from
projects within its industrial parks. CFLD is less subject to
counterparty credit risk, especially as its business model involves
paying land premiums and taxes to local governments, which are in
turn used to pay the company. This significantly strengthens its
business profile relative to other homebuilders, as it does not
need to lock up capital in land reserves that are not immediately
needed for development.
On the other hand, CFLD has to pre-invest in primary land and
infrastructure in its industrial parks to support a high value for
its property-development projects within the parks, but it has to
wait for two to three years before the government can reimburse the
investment. The large investment in district-related infrastructure
can sometimes cause a drain on CFLD's cash flow.
CFLD's financial profile is similar to that of Guangzhou R&F
Properties Co. Ltd. (BB-/Stable). CFLD's leverage, measured by net
debt/adjusted inventory + receivables, of 59% at end-2018 and
Fitch's expectation of above 60% in 2019-2020 are similar to R&F's
56% at end-2018 and 60% at-end 2017. CFLD's contracted sales of
CNY129 billion are also close to R&F's CNY131 billion. CFLD's
overall EBITDA margin of 29.2% at end-2018 is comparable with R&F's
28% at end-2018. Both CFLD and R&F's leverage are higher than 'BB'
rated issuers such as Future Land Development Holdings Limited's
44% and Sunac China Holdings Limited's 38% at end-2018, as well as
most 'BB-' rated issuers whose average 2018 leverage was around
44%. However, CFLD and R&F's higher leverages are partially
mitigated by a meaningful non-development property income.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Contracted sales of CNY95 billion and CNY105 billion in 2019
and 2020, respectively.
- District development expenditure of CNY34 billion each year in
2019-2020
- Government-related revenue to increase to CNY34 billion and
CNY37 billion in 2019 and 2020, respectively.
- Gross margin of around 40% in 2019-2020
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Large decline in housing contracted sales from the 2019 level
- Difficulty in receiving cash receipts from government
- Net debt/adjusted inventory + accounts receivables above 65%
for a sustained period
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Net debt/adjusted inventory + accounts receivables sustained
below 55%
- Diversification beyond the pan-Beijing area such that the
region's revenue accounts for less than 40% of total revenue
LIQUIDITY
Sufficient Liquidity: CFLD's available cash of CNY45.6 billion at
end-2018 was sufficient to meet its short-term debt obligations of
less than CNY34 billion, including onshore perpetual bonds, and
bonds puttable before the end of 2019. CFLD successfully issued
multiple offshore senior notes in 2018 and 2019, and Fitch believes
the company has diversified its funding channels into the offshore
market and smoothed out its debt maturity profile.
FULL LIST OF RATING ACTIONS
CFLD
- Long-Term Foreign Currency IDR downgraded to 'BB-' from 'BB+',
Outlook Stable
- Senior unsecured rating downgraded to 'BB-' from 'BB+'
Issued by CFLD (Cayman) Investment Ltd. and guaranteed by CFLD
- USD350 million 7.125% senior notes due 2022 downgraded to 'BB-'
from 'BB+'
- USD530 million 8.625% senior notes due 2021 downgraded to 'BB-'
from 'BB+'
- USD650 million 8.6% senior notes due 2024 downgraded to 'BB-'
from 'BB+'
- USD920 million 6.5% senior notes due 2020 downgraded to 'BB-'
from 'BB+'
- USD940 million 9% senior notes due 2021 downgraded to 'BB-'
from 'BB+'
HNA GROUP: US$25BB Fire Sale Not Enough to Emerge From Crisis
-------------------------------------------------------------
Jinshan Hong and K Oanh Ha at Bloomberg News report that even for a
company that's been through as many crises as HNA Group Co., it's
been a rough few months.
In April, creditors of the embattled Chinese conglomerate took the
extraordinary step of seizing golf courses and other assets after a
unit missed a loan payment, Bloomberg says. The group's also been
embroiled in an increasingly bizarre power struggle over control of
Hong Kong Airlines, while people familiar with the matter say HNA
shelved the sale of a container-leasing business after failing to
find anyone willing to pay the $1 billion-plus price it was
seeking, according to Bloomberg.
Bloomberg relates that for HNA, the setbacks underscore how the
group is still struggling to deal with the fallout of a global
acquisition spree that pushed it deep into debt. Despite agreeing
to sell more than $25 billion in assets since the beginning of
2018, HNA's travails more broadly show how China's two-year
deleveraging campaign continues to rock some of its biggest
targets, many of which emerged during a period when the government
was encouraging private enterprises to seek out overseas assets,
Bloomberg notes.
"The situation is dire," Bloomberg quotes Brock Silvers, managing
director of Kaiyuan Capital, a multi asset advisory and investment
firm focused on China, as saying. The missed loan payment by CWT
International Ltd., a Hong Kong-listed investment holding company
HNA controls, "reveals the depth of HNA's current predicament. At
this point there are no safe harbors for HNA investors.
Like many of China's once high-flying conglomerates, including
Waldorf Astoria-owner Anbang Insurance Group Co. and the
ever-shrinking Hollywood giant Dalian Wanda Group Co., HNA has been
selling off assets after the government scrutinized their
debt-fueled expansions and the financial risks tied to them, says
Bloomberg. None have faced harsher punishment from Beijing than
Anbang: its founder was jailed and the government has temporarily
seized the business, Bloomberg states.
For its part, HNA--which started out as an airline--said it's made
substantial progress bringing its focus back to its roots, cutting
debt and strengthening its balance sheet in the past year,
Bloomberg relays. "As the company looks ahead, it will continue to
take a thoughtful and disciplined approach to realigning its
portfolio and rebalancing its strategy to optimize performance over
the long-term," HNA said in a statement to Bloomberg.
There's no doubt the asset sales have helped reduce HNA's debt,
Bloomberg says. But it may not be enough. Based on the group's
latest available financials--the six months ended June 30--HNA
still held about $80 billion of debt, among the highest levels in
China. Of that amount, $25 billion was due within a year, or more
than what the company held in cash, equivalents and short-term
investments combined. The company's profits couldn't even cover its
interest payments, says Bloomberg.
"While the company seeks further liquidity, it may become
increasingly selective in honoring obligations," Mr. Silvers, who
is based in Shanghai said, Bloomberg relays. "It's possible that
HNA might not survive 2019's planned debt obligations in its
current form."
As it faces increasing pressure on debt repayments, the company's
been forced to sell core aviation assets. Last month, HNA announced
it's selling budget carrier Hong Kong Express Airways to Cathay
Pacific Airways Ltd. for HK$2.25 billion ($287 million) in cash,
Bloomberg notes.
The company has sold or agreed to dispose of more than 40 assets
since 2018, according to a Bloomberg tally. And, there's likely
more to come.
Bloomberg reported in November that HNA was marketing more than $40
billion of domestic and international holdings, including more than
90 assets in China, the U.S. and U.K. Among the priciest assets on
the list were the 245 Park Ave. skyscraper it bought for a
near-record $2.21 billion, the yin-yang-shaped Pearl Island in
Hainan and Shanghai's HNA Plaza.
Though Bloomberg has only been able to tally just over $25 billion
in asset sales, HNA Chairman Chen Feng told Caijing in November
that it had sold about $45 billion in assets in 2018.
Bloomberg notes that the rapid pace of sales hasn't eased HNA's
debt repayment pressures. And investors and analysts expect it to
do more. "HNA needs to continue selling assets, inviting strategic
investors, and repaying debt," Bloomberg quotes Warut Promboon,
managing partner at credit research firm Bondcritic Ltd, as
saying.
Compounding HNA's problems is that the company likely overpaid for
many acquisitions, said Ronald Wan, chief executive at Partners
Capital International Ltd. "Even if they sell all assets, they
could still be in deficit," he said. "It's unrealistic and
impossible to sell them at a profit," Bloomberg relays.
According to Bloomberg, HNA is also facing unusual disputes. Zhong
Guosong, a former director of HNA-backed Hong Kong Airlines, has
said he has taken control of the carrier, proclaimed himself
chairman and accused HNA of various acts of
malfeasance--accusations that HNA has denied. Hong Kong Airlines
has said it doesn't recognize Zhong's chairmanship but acknowledged
that the dispute has seriously disrupted order at their offices.
Flights were operating normally, it said. Complicating matters,
Zhong is chairman at Hong Kong Express, the carrier that HNA has
agreed to sell to Cathay Pacific.
Net Loss Forecast
Bloomberg adds that trouble has also brewed in HNA's flagship unit.
On March 15, Hainan Airlines Holding Co. said a Chinese court froze
shareholdings in the company as a result of a contract dispute with
a local aircraft leasing firm. Additionally, HNA has been behind on
its aircraft lease payment. The carrier in March revised its 2018
net loss forecast to as much as CNY4 billion ($594 million) from an
earlier forecast of as much as CNY500 million, due to asset
impairment and fewer subsidies.
Andrew Collier, a Hong Kong-based managing director at Orient
Capital Research, sees its repayment pressures and legal challenges
coming to a head, Bloomberg relates.
"HNA has clearly lost the battle to maintain its existence as a
separate company," Bloomberg quotes Mr. Collier as saying. It's
"being taken apart piecemeal."
About HNA Group
China-based HNA Group Co. Ltd. offers airlines services. The
Company provides domestic and international aviation
transportation, air travel, aviation maintenance, and aviation
logistics services. HNA Group also operates holding, capital,
tourism, logistics, and other business.
As reported in the Troubled Company Reporter-Asia Pacific on Sept.
17, 2018, the Financial Times related that HNA Group defaulted on a
CNY300 million (US$44 million) loan raised through Hunan Trust.
According to the FT, the company is already under strict
supervision by a group of bank creditors, led by China Development
Bank, following a liquidity crunch in the final quarter of last
year. The default came despite an estimated $18 billion in asset
sales by HNA this year that have done little to address its ability
to meet its domestic debts, the FT noted.
=========
I N D I A
=========
ANITHA DAIRY: CRISIL Assigns 'D' Rating to INR8.4cr Term Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Anitha Dairy Products (ADP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 0.6 CRISIL D (Assigned)
Term Loan 8.4 CRISIL D (Assigned)
The ratings reflect delay in repayment of term loan facility
because of stretched liquidity due to delays in realization of
payments from customers, along with modest scale of operations, and
a weak financial risk profile. However, these weaknesses are
partially offset of the experience of the proprietor.
Key Rating Drivers & Detailed Description
Weakness:
* Delays in debt servicing: Stretched liquidity led to delays in
principal repayment on the term loan availed. Liquidity has been
weak owing to delays in receipt of payment from customers.
* Modest scale of operations: The dairy industry is driven by
regional demand and supply factors due to transportation
constraints and perishable nature of the product. Further, intense
competition may continue to constrain scalability, pricing power,
and profitability. Revenue was modest at INR7.81 crore in fiscal
2018.
* Weak financial risk profile: Financial risk profile should remain
restricted over the medium term. Total outside liabilities to
adjusted networth ratio was high at 14.59 times as on March 31,
2018, due to modest networth of INR0.76 crore and significant term
debt. Net cash accrual to adjusted debt ratio was also below
average at 0.01 time in fiscal 2018
Strengths:
* Experience of the proprietor: Benefits from the proprietor's
experience of over 2 decades, strong understanding of local market
dynamics, and healthy relations with customers and suppliers should
continue to support the business.
Liquidity
Liquidity is likely to remain weak over the medium term. Delays in
receipt of payments from customers led to deferrals in debt
repayment by the firm. Further, cash flow may also remain modest
due to the small scale of operations.
Established in 2015 by Mr. Sama Anitha, based out of Hyderabad,
Anitha Dairy Products is engaged in processing of milk and
manufacturing of milk products.
ARJUN PULP: CRISIL Withdraws 'D' Rating on INR27.34cr Loan
----------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Arjun
Pulp and Paper India Private Limited (APPPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL's policy on withdrawal of
its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Letter of Credit 7.5 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Proposed Long Term .26 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Term Loan 27.34 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
CRISIL has been consistently following up with APPPL for obtaining
information through letters and emails dated April 15, 2019 and
April 22, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of APPPL. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that the information available for APPPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower. Based on the last available information, CRISIL
has migrated the ratings on the bank facilities of APPPL to 'CRISIL
D/CRISIL D Issuer not cooperating'.
APPPL was originally established as Vesuvio Paper Pvt Ltd; the
company was renamed in fiscal 2010. It manufactures tissue paper.
Commercial operations started in January 2015, with a manufacturing
unit at Tirunelveli, Tamil Nadu. The company is a part of the Arjun
group, promoted by Mr. Chandra Sekhar and his family.
ASHWANI KUMAR: CRISIL Withdraws B Rating on INR6.2cr Cash Loan
--------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Ashwani
Kumar and Company Private Limited (AKCPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL's policy on withdrawal of
its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.2 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long Term
Bank Loan Facility 2.21 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with AKCPL for obtaining
information through letters and emails dated
January 28, 2019, February 26, 2019, March 15, 2019 and March 20,
2019 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of AKCPL. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that the information available for AKCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower. Based on the last available information, CRISIL
has Continues the ratings on the bank facilities of AKCPL to
'CRISIL B/Stable Issuer not cooperating'.
AKCPL, incorporated in 1962, trades in over 600 types and sizes of
second-hand industrial machinery such as lathes, and milling,
grinding, drilling, boring, shearing, moulding, and welding
machines that are used in the automotive ancillaries and heavy and
general engineering segments. Mr. Ashwani Mahajan is the promoter.
BAPASITARAM CERAMIC: CRISIL Migrates B Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Bapasitaram
Ceramic (BSC) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.5 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1.0 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Term Loan 2.0 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with BSC for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BSC. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BSC is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of BSC to 'CRISIL B/Stable Issuer not cooperating'.
Set up in 2014, BSC is a partnership firm, engaged in manufacturing
of red ceramic body clay with total production capacity of 120,000
MT per annum. The firm has its manufacturing unit in Morbi-Gujarat.
GANPATI ISPAT: CRISIL Migrates 'B+' Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Ganpati Ispat
(GI) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with GI for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of GI. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on GI is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of GI to 'CRISIL B+/Stable Issuer not cooperating'.
Established in 2004 in Raipur (Chhattisgarh), GI manufactures MS
channels, strips, and billets. The firm is owned by Ganpati Sponge
Iron Pvt Ltd.
GARHWAL JEMS: CRISIL Migrates 'B' Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Garhwal Jems
And Jewellery Private Limited (GJJPL) to 'CRISIL B/Stable Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 5 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with GJJPL for obtaining
information through letters and emails dated
February 28, 2019, April 8, 2019 and April 12, 2019, among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of GJJPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on GJJPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of GJJPL to 'CRISIL B/Stable Issuer not cooperating'.
GJJPL was set up in April 2017 at Rishikesh (Uttarakhand). The
company is setting up a gold jewellery manufacturing plant, and
will undertake wholesaling and retailing of gold and
diamond-studded ornaments. The product portfolio will include
rings, necklaces, bangles, bracelets, and earrings.
GMR RAJAHMUNDRY: Lenders Approve Resolution Plan
------------------------------------------------
Business Standard reports that GMR Infrastructure Limited (GIL) has
announced execution of resolution plan for its stressed GMR
Rajahmundry Energy Limited (GREL) – 768 MW gas-fired power plant
in Andhra Pradesh. The company informed the exchanges on May 3 that
it has paid a portion of the sustainable debt of the project.
According to Business Standard, the resolution plan which has been
approved by the lenders of the project consisted of reduction of
total debt of INR2,353 crore to sustainable debt of INR1,412 crore.
"Against the above sustainable debt GMR Group has already infused
an amount of INR395 crore towards meeting 20 per cent of principal
towards repayment of the sustainable debt and the interest
servicing obligations of GREL for the first year," GIL said in its
statement.
For the balance INR1,130 crore, it will be repayable at 9 per cent
over 20 years. Business Standard relates that the lenders have
converted the remaining existing debt of INR941 crore into Long
Dated Cumulative Redeemable Preference Shares (CRPS) carrying 0.1
per cent which is repayable from 17th to the 20th year, said the
company's statement.
"The first of its kind Resolution Plan offers a mutually beneficial
resolution for both lenders and the company through a long-term
solution for the existing debt and related obligations of the
Group. It has reduced the debt for GMR Group and we believe this
will de-risk the Group substantially. This also offers quality
assets built on the ground an opportunity to perform to its
potential," Business Standard quotes Grandhi Kiran Kumar, Managing
Director & CEO, GIL, as saying.
Last year, a consortium of lenders led by IDBI Bank had put on sale
55 per cent stake in a GREL which they acquired in 2016 following
debt restructuring, Business Standard recounts.
According to the report, the company which faced debt payment and
operational issues due to non-availability of gas, the company in
its statement said it remains confident of availability of gas in
years to come ensuring good performance of its Rajahmundry plant
and "thereby meeting obligation towards both its Sustainable as
well as Long dated Preference shares."
GMR believes that gas based power plants will provide peaking power
support to the country's growing non-conventional energy of wind
and solar power, and the Resolution Plan shall be mutually
rewarding to the lenders, it said, adds Business Standard.
Incorporated in November 2009, GMR Rajahmundry Energy Limited
(GREL) is a Special Purpose Vehicle (SPV) promoted by GMR
Generation Assets Limited to set up a 768 MW (2x384 MW) gas-based
Combined Cycle Power Plant (CCPP) at Vemagiri, Dist. East Godavari,
Andhra Pradesh. GREL has been set up adjacent to the existing 389
MW gas-based CCPP of GMR Vemagiri Power Generation Limited, the
project achieved Commercial Operations Date (COD) on October 22,
2015.
As reported in the Troubled Company Reporter-Asia Pacific on
March 1, 2019, CARE Ratings reaffirmed ratings on certain bank
facilities of GMR Rajahmundry Energy Limited (GREL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 2,352.39 CARE D Reaffirmed
Facilities
(Term Loan)
Long term Bank 67.02 CARE D Reaffirmed
Facilities-Fund
Based (Cash
Credit)
Short-term Bank 138.02 CARE D Reaffirmed
Facilities-Non-
fund Based
(LC/BG)
The re-affirmation of ratings assigned to the bank facilities of
GREL continues to factor in ongoing delays in the debt servicing by
the company.
GOLCONDA TEXTILES: CRISIL Migrates 'D' Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Golconda
Textiles Private Limited (GTPL) to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .55 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 11.00 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term .45 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Term Loan 4.00 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with GTPL for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of GTPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on GTPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of GTPL to 'CRISIL D/CRISIL D Issuer not cooperating'.
GTPL was set up by Mr. Mahmood Alam Khan in 1995. The company
manufactures combed and carded cotton yarn. Its manufacturing
facility is in Vikarabad (Andhra Pradesh).
IENERGIZER LTD: S&P Withdraws 'B' Long-Term Issuer Credit Rating
----------------------------------------------------------------
S&P Global Ratings withdrew its 'B' long-term issuer credit rating
on iEnergizer Ltd. at the issuer's request. The company is an
India-based global services provider for business process
outsourcing.
INTERNATIONAL TRADING: CRISIL Cuts Rating on INR12.7cr Loan to D
----------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of
International Trading Company (ITC) to 'CRISIL D' from 'CRISIL
BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12.7 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Term Loan 3.0 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
The ratings downgrade reflects delays in the repayment of the term
loan instalment and overdrawals in the bills discounting facility
for more than 30 continuous days, due to weak liquidity arising
from stretched receivables.
The ratings reflect the small scale of operations and large working
capital requirements. These weaknesses are partially offset by the
extensive experience of the firm's partners in the readymade
garments industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Delayed debt servicing: There have been delays of around 4 to 5
days in the repayment of the term loan instalment and overdrawals
in the bills discounting facility for more than 30 continuous days,
due to weak liquidity arising from stretched receivables. The
receivables have been stretched to around 120 days, estimated as on
March 31, 2019 as against 80 days as on March 31, 2018, resulting
in weak liquidity.
* Small scale of operations: Intense competition from a few
organised players and several unorganised players keeps scale of
operations small with estimated revenue of INR27 crore for fiscal
2019.
* Large working capital requirement: Operations are working capital
intensive, as reflected in gross current assets of 331 days as on
March 31, 2018, driven by large inventory of 272 days and
receivables of 90 days.
Strength
* Extensive experience of the partners: Benefits from the partners'
experience of over a decade, established relations with customers
and reputed clientele should continue to support the business.
Liquidity
Liquidity is weak, as reflected in the delays in the repayment of
the term loan and overdrawals in the bill discounting facility.
The working capital limits of INR8 crore have been almost fully
utilised over the 12 months through March 2019, on account of
working capital intensive operations, marked by high receivables.
Set up in 2004, ITC, a partnership firm, manufactures knitted
garments for both the domestic and international markets at its
facility in Salem, Tamil Nadu.
JASAMRAT COTGIN: CRISIL Migrates 'B' Rating to Not Cooperating
--------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Jasamrat
Cotgin Private Limited (JCPL) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 3.45 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with JCPL for obtaining
information through letters and emails dated February 26, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of JCPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of JCPL to 'CRISIL B/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
JCPL was set up in June 2016 by Mr. Jaideep Singh Rajpal and his
brother, Mr. Paramjeet Singh Rajpal. It is setting up a cotton
ginning and oil extraction unit in Sendhwa, Madhya Pradesh, and
will commence operations in December 2016.
JEWEL WORLD: CRISIL Migrates 'B+' Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Jewel World
(JW) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1.0 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with JW for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of JW. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JW is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of JW to 'CRISIL B+/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
Set up in 2013 as a partnership firm by Ahmedabad-based Soni and
Patel families, JW retails gold jewellery and has two showrooms in
Ahmedabad.
JOHNS GOLD: CRISIL Downgrades Rating on INR13.5cr Loan to D
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Johns Gold & Diamonds (JGD) to 'CRISIL D' from 'CRISIL
B+/Stable'. The rating downgrade reflects delays in the repayment
of bank loans by JGD.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13.5 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The rating also reflects firm's modest scale of operations in the
highly fragmented jewellery industry. However it benefits from the
promoters' extensive experience and established client
relationship.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensely competitive jewellery
industry: With estimated revenue of INR55 crore in fiscal 2017,
scale remains small in the intensely competitive gems and jewellery
industry, which has an unorganized sector on account of low entry
barrier.
Strength
* Partners' extensive experience and established relationship with
customers: Presence of over 2 decade in the jewellery business has
enabled the partners to establish healthy relationship with
suppliers and customers.
Liquidity
Liquidity profile is weak due to over utilisation of working
capital facilities resulting in delays in repayment of bank loans.
Firm has modest cash accruals and cash and bank balance.
Set up in the 2015, JGD is a partnership firm between Mr. Sijo John
and Mr. Jesmy Sijo, Which is engaged in jewellery manufacturing and
retailing. The firm started operation from July 2016.
LODHA DEVELOPERS: Moody's Affirms B2 CFR, Alters Outlook to Neg.
----------------------------------------------------------------
Moody's Investors Service has affirmed the B2 corporate family
rating of Lodha Developers Limited.
Moody's has also affirmed the B2 senior unsecured rating of the US
dollar-denominated bonds issued by Lodha Developers International
Limited and guaranteed by LDL.
Moody's has changed the outlook to negative from stable.
RATINGS RATIONALE
"The change in outlook to negative reflects the weakening in LDL's
liquidity profile, because of lower than expected operating sales
and delays in execution of its planned asset sales, both in London
and India," says Saranga Ranasinghe, a Moody's Assistant Vice
President and Analyst.
Operating sales in both geographies in which LDL operates, Mumbai
and London, were weaker than Moody's expectations in the nine
months to December 2018 by around 20% and 50%, respectively. Sales
in Mumbai, which were affected by the tight liquidity conditions of
housing finance companies in India during the September 2018 to
December 2018, have picked up in the quarter ended March 2019.
However, Moody's expects the weakness in London to continue because
of Brexit related uncertainties.
In the absence of improvement in operating sales in London, LDL
will be reliant on asset sales in both India and London to meet its
liquidity needs.
The company has a GBP290 million (GBP 260 million drawn as at 31
March 2019) loan maturing in December 2019 (extended from August
2019), $324 million in bonds maturing in March 2020 (after the $1
million buyback), and a further GBP517 million loan maturing in
March 2021. The company's cash balance and expected operating cash
flows will not be sufficient to meet these debt repayments.
However, the company continues to pursue plans to monetize some of
its assets in India and London for the purpose of repayment of
these amounts.
LDL plans to repay the GBP290 million project loan with the
proceeds from sales at the 48CS project, the property in London for
which this facility was taken. LDL has extended the repayment of
this facility to December 2019 from the initial maturity date of
August 2019, which should provide the company with more time to
carry out sales at the project to shore up liquidity to repay the
facility. At the end of April 2019, sales at this property reached
GBP260 million, covering around 90% of the facility amount. Cash
collection on this project has already begun, with the handover of
units starting in April 2019.
LDL has also completed construction of income-generating commercial
assets in India that could be sold to third parties to raise funds
to address its liquidity needs. Moody's expects the company to
generate around $250 million from the sale of a commercial building
in New Cuff Parade and a retail mall in Palava, which would provide
the company with net proceeds of around $130 million after retiring
around $120 million of debt.
LDL is in the midst of divesting a 28% equity stake in its London
properties to a third party, which could allow the company to carry
out further stake reductions. However, there have been delays in
the receipt of funds from the equity stake sale. The company has
already received GBP25 million in proceeds. This amount is
substantially lower than Moody's expectations. Given the delays in
receiving funds for the stake sale, Moody's now expects LDL to
receive the remainder of the funds in July and September 2019. Any
proceeds from further stake sales will partially mitigate the
liquidity needs of the company.
"While LDL has assets that it could sell to improve its liquidity
position, uncertainty remains around the company's ability to
execute these asset sales in a timely manner and at values that
would be sufficient to address its liquidity needs," add
Ranasinghe.
The company has debt maturities of around INR22 billion in India
over the next 15 months, which Moody's expects will be rolled over,
given the company's track record of rolling over these facilities
in the past and its large unencumbered land bank at Palava. As at
March 31, 2019, the company also had around INR12 billion of
sanctioned and undrawn credit lines to cover the debt maturities in
India.
LDL's B2 corporate family rating reflects the company's position as
the largest developer of residential properties in India and the
size of the company's land bank. The company's rating also takes
into account the high quality of its projects under construction,
combined with its strong execution capability. In addition, the
rating is supported by the diversity of the company's project
portfolio, with projects in London and India, and the projects in
India at multiple phases and price points. LDL's credit profile is
constrained by its weak liquidity position. LDL has large debt
maturities over the next 12-18 months that are significantly higher
than the company's cash balance and expected cash flow from
operations.
The negative ratings outlook reflects uncertainty around the
execution of LDL's asset sales in a timely manner and at values
that will be sufficient to address the company's refinancing
needs.
Given the negative outlook, LDL's ratings are unlikely to be
upgraded over the next 12-18 months. The outlook is unlikely to
return to stable so long as the company's ability to repay its
near-term debt remains contingent upon its ability to execute asset
sales. The outlook could return to stable if the company
demonstrates its ability to execute asset sales in a timely
manner.
On the other hand, Moody's could downgrade the ratings if LDL's
liquidity fails to improve because a) collections and operating
sales in India deteriorates; or b) operating environment in London
deteriorates further resulting in lower than expected collections
from already executed sales; or c) the company fails to execute
asset sales of at least $300 million over the next six months.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Lodha Developers Limited is the largest real estate developer in
India by sales of residential apartments. The company is focused on
residential developments in the Mumbai Metropolitan Region, with
some projects in nearby Pune.
LDL and its promoters expanded into the London market by acquiring
two properties that are now in the process of development.
MILLENNIUM BUSINESS: CRISIL Assigns B+ Rating to INR6.7cr Loans
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Millennium Business Centre - Nashik (MBS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 1 CRISIL B+/Stable (Assigned)
Term Loan 5.7 CRISIL B+/Stable (Assigned)
The rating reflects the modest scale of operations, amidst intense
competition in the hospitality sector, and exposure to risks
related to the ongoing project. These weaknesses are partially
offset by the extensive experience of the promoters, and favourable
location of the hotel.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Revenue is estimated at INR4.3 crore
in fiscal 2019, as against INR2 crore in the previous year, and is
expected to improve further, once the hotel commences operations,
as scheduled in fiscal 2020. Nevertheless, the company's scale of
operations will remain modest, amidst intense competition in the
hotels and resorts business.
* Exposure to risks related to the ongoing project: The hotel
project is likely to commence operations in May 2019. Timely
commencement and ramp up in scale remain key monitorables. Term
loan raised for the project, has been disbursed, and repayment is
scheduled from October 2019.
Strengths
* Extensive experience of the promoters: Over two decades of
experience in the hospitality segment, has helped the promoters
develop strong understanding of market dynamics, maintain healthy
relationships with suppliers and customers, and establish strong
market presence in Nashik.
* Favorable location of the hotel: The restaurant and hotel are
situated at prime locations in Nasik, with strong connectivity to
the industrial areas and highway. These factors are likely to
ensure high occupancy levels.
Liquidity
Liquidity remains modest. Expected cash accrual of INR0.2-0.5 crore
per fiscal, should comfortably cover the term debt of INR0.1-0.3
crore, over the medium term. Timely infusion of capital by the
partners, also supports liquidity.
Outlook: Stable
CRISIL believes MBS will benefit over the medium term, from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if timely stabilisation of hotel operations, and
sustained and significant growth in revenue and profitability,
strengthen the financial risk profile. The outlook may be revised
to Negative' if considerable delay in commencement of hotel
operations, leads to considerably low cash accrual during the
initial phase, or if substantial stretch in the working capital
requirement, weakens liquidity and the financial risk profile.
Set up in 1999, MBS runs its restaurant, Yahoo in Nashik,
Maharashtra. The hotel, being set up with 50 rooms, is also
expected to commence operations at Nashik, in May 2019. Operations
are managed by Mr. Deepak Patil, Mr. Mohan Patil and Mr. Suhas
Patil.
MOMAI FOODS: CRISIL Assigns 'B+' Rating to INR4.96cr Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating on the long term
bank facilities of Momai Foods Private Limited (MFPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 4.96 CRISIL B+/Stable (Assigned)
Cash Credit 3.00 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility .68 CRISIL B+/Stable (Assigned)
The rating reflects MFPL's modest scale of operations and highly
leveraged capital structure, and large working capital requirement
due to high inventory holding. These weaknesses are partially
offset by extensive industry experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and highly leveraged capital
structure: Revenue is expected to increase, yet remain small at
INR28-30 crore for fiscal 2019. Total outside liabilities to
adjusted networth ratio has remained high, in the range of 6.5-8.5
times for last three year ending fiscal 2018. Net worth was modest
at INR2.42 crore as on March 31, 2018 due to low paid up capital
and modest accretion to reserves. With expected ramp up in scale
and sustenance of profit margin, the networth is expected to
improve, yet remain small over the medium term.
* Large working capital requirement: Operations are working capital
intensive, as reflected in estimated GCA of 210-220 days as on
March 31, 2019, mainly on account of high inventory as the company
offers a wide variety of products, for which ready stock is to be
maintained.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of more than 3 decades in dairy products
industry. This has given them an understanding of the dynamics of
the market, and enabled them to establish relationships with
suppliers and customers. Operating margin was at 28.6% in fiscal
2018 on account of low raw material cost, expected to remain
healthy over the medium term as well.
Liquidity
* High bank limit utilisation: The company enjoys fund based
facility (Cash Credit) of INR3 crore, fully utilized as on Feb
2019. Bank limit utilization has remained high, averaging 98% in
past 12 months ended Feb 2019.
* Cash accrual sufficient to meet debt obligation: Cash accrual
expected in the range of INR4.5-5.5 crore per year over the medium
term should remain sufficient against term debt repayment
obligation of INR1.1 crore.
* Low current ratio: Current ratio was 0.86 times on March 31,
2018.
Outlook: Stable
CRISIL believes MFPL will continue to benefit from the extensive
experience of its promoter, and established relationships with
clients. The outlook may be revised to 'Positive' if ramp-up in
scale of operations and stable profitability strengthen financial
risk profile. The outlook may be revised to 'Negative' if decline
in profitability or stretch in working capital cycle or large
debt-funded capital expenditure weakens capital structure.
MFPL was incorporated in the year 1985. MFPL is engaged
manufacturing, wholesaling and retailing of wide range of ice-cream
bar, ice cream cones etc. MFPL is owned and managed by Bhavesh
Chandubhai Khatra, Mehulkumar Chandubhai Khatra and Chandubhai
Shambhubhai Khatra.
NORTH INDIA SURGICAL: CRISIL Lowers Rating on INR13cr Loan to D
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of North
India Surgical Company (NISC) to 'CRISIL D/CRISIL D' from 'CRISIL
B/Stable/CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 13 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects continuous overdrawls for more than 30 days
in the cash credit facility because of stretched liquidity.
Furthermore, NISC's operations continues to remains modest in
intensively competitive healthcare industry, backed by working
capital-intensive operations and below-average financial risk
profile. However, these weaknesses are partially offset by the
extensive experience of its partners in the health care business.
Key Rating Drivers & Detailed Description
Weakness
* Weak liquidity: There have been instances of continuous
overdrawls in cash credit limit for more than 30days.
* Modest scale of operations: Intense competition in the medical
equipment distribution business keeps scale of operation small with
revenue of INR18.8 crore in fiscal 2018.
* Working capital-intensive operations: The trading nature of
business results in large working capital requirement with gross
current asset days of 435 days as on March 31, 2018.
* Below-average financial risk profile: Gearing was high at 2.8
times as on March 31, 2018 and debt protection metrics subdued
marked by interest coverage of 1.4 times during fiscal 2018.
Strength
* Extensive experience of the partners: Benefits from the partners'
experience of over three decades and diversified product portfolio
should continue to support the business.
Liquidity
Liquidity is stretched. NISC has access to fund-based limit of
INR13.0 Cr which remains fully utilized during past twelve months
ending March, 2019, with instances of continuous over utilisation
of more than 30 days.
NISC, a partnership firm of Mr. Varun Singla and Mr. Arun Singla,
commenced operations in April 2012. The firm trades in surgical
equipment such as stents, spinal implants and pacemakers.
P. R. FASTENERS: CRISIL Lowers Rating on INR10cr Cash Loan to D
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of P. R.
Fasteners Private Limited (PRFPL) to 'CRISIL D/CRISIL D' from
'CRISIL BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Letter of Credit 2 CRISIL D (Downgraded from
'CRISIL A4+')
Long Term Loan 5.5 CRISIL D (Downgraded from
'CRISIL BB/Stable')
The downgrade reflects delay in term loan payment on account of
weak liquidity.
The ratings continue to reflect the extensive experience of the
promoters resulting in strengthening of business risk profile. This
strength is partially offset by working capital-intensive nature of
operations and below average liquidity, due to high bank limit
utilisation.
Key Rating Drivers & Detailed Description
Strengths
* Extensive experience of the promoters: The two-decade-long
experience of the promoters and their healthy relationships with
suppliers and customers will continue to support the business risk
profile.
Weaknesses
* Working capital-intensive operations: Gross current assets were
high at 256 days estimated as on March 31, 2018, mainly led by
receivables of 168 days. Being a small player, the company offers
large credit to its customers. Though order-backed production keeps
inventory moderate at around 90 days, the company depends on bank
debt to cover the incremental working capital requirement.
* Below-average liquidity profile: Liquidity remains below average,
marked by high dependence on external working capital debt with
limit of INR8 crore (vis-Ã -vis net worth of ~Rs 10.4 crore as on
March 31, 2018), also reflected in almost full utilisation of bank
limit. Further, current ratio of the company is modest at ~1.05
times as on March 31, 2018. CRISIL believes that further
enhancement of working capital limits will be key sensitivity
factor.
Liquidity
Liquidity is weak as reflected in delay in term loan payment.
PRFPL was set up as a partnership firm, P R Industries in 1996, and
reconstituted into a private limited company in 2009. The company,
promoted by Mr. Vijender Verma and Mr. Sanjay Verma manufactures
various turned components and cold forged bolts and screws (in
stainless steel and aluminium) for the automobile industry and
solar power generation industry. It has manufacturing facilities at
Gurugram and Kashipur.
PAC BIO: CRISIL Lowers Rating on INR5.00cr Cash Loan to D
---------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Pac Bio
Fungbact Private Limited (PBFPL) to 'CRISIL D' from 'CRISIL
B+/Stable'. The downgrade in rating reflects a delay of more than
30 days in the repayment of the adhoc limit; the delays have been
caused by PBFPL's weak liquidity because of its large working
capital requirements.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Long Term 4.33 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B+/Stable')
The rating reflects large working capital requirement, modest scale
of operations and dependency on monsoon season. These weaknesses
are partially offset by a well-spread network and experience of the
promoter in the field of agriculture products.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Modest scale as reflected in revenue
of INR15.36 crore in fiscal 2018. These revenues are highly High
dependency of revenue on the monsoons limits the company's ability
to negotiate with customers and suppliers.
* Working capital intensive operation: Operations should remain
working capital intensive over the medium term on account of high
inventory days at level of 190 days and debtors of around 73 days
as on March 2018 resulting high GCA of around 250 days
Strengths
* Extensive industry experience of its promoter: Benefits from the
extensive experience of the promoter for over a decade has helped
the company foster strong relationships with customers and
suppliers and is expected to generate a healthy revenue, thereby
further strengthening its market position.
Liquidity
* High bank limit utilization: Average bank limit utilization was
around 100% over the past 6 months through March 2019, due to large
working capital requirement. This trend is likely to continue even
over the medium term.
* Cash accrual vis-a-vis debt obligation: Cash accruals of over
INR1.8 - INR2.2 crores are projected for fiscals 2019 and 2020,
respectively, adequate to meet annual maturing debt of around INR20
lacs each year.
* Moderate current ratio: The ratio was 1.02 times as on
March 31, 2018.
Gujarat based PBFPL was incorporated in fiscal 2010. It
manufactures and sells bio-fertilisers. PBFPL started its
commercial operation in fiscal 2013 and is promoted by Mr. Babubhai
Patel. The company has also started manufacturing of enzymes used
in detergents.
PANVELKAR INFRA: CRISIL Cuts Rating on INR20cr Loan to D
--------------------------------------------------------
CRISIL has downgraded its rating on the bank loan facilities of
Panvelkar Infrastructures Private Limited (PIPL) 'CRISIL D' from
'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 20 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects the delays in the principal repayment of
term loan availed by the company. The delays are on account of
stretched liquidity position.
PIPL is exposed to risks related to funding of its ongoing project
and to cyclicality in the domestic real estate industry. Its
promoters have extensive experience in the real estate industry.
Key Rating Drivers & Detailed Description
Weakness:
* Delays in repayment of term loan: The company has delayed in
repayment of term loans on account of slower booking pace and
receipt of customer advances.
* Risks associated with upcoming projects: The upcoming projects of
the company are at a very nascent stage. Thus, future bookings are
yet to be seen, also any delays in expected advances from customers
may impact the impact credit profile of the company.
* Susceptibility to cyclicality in the real estate sector: The real
estate sector in India is cyclical and is marked by sharp movements
in prices and a highly fragmented market structure. The overall
uncertain economic climate, and, higher caution by banks towards
exposure to the sector, can also impact company's credit profile.
Strengths:
* Extensive experience of the promoters: The expertise of the
promoter and the management team in real estate development has
helped the company successfully execute projects.
Liquidity
PIPL has weak liquidity as reflected in delay in repayment of debt
obligations on account of low cash inflows.
PIPL, incorporated in 2010 by Mr. Rahul Panvelkar and Mr. Vijay
Panvelkar, develops residential projects in Belapur and Ambernath
(Thane). Currently, the company has 3 ongoing and planned projects.
PRANAV FOUNDATIONS: CRISIL Lowers Rating on INR25cr Loan to D
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Pranav Foundations Private Limited (PFPL) to 'CRISIL D' from
'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Bank 25 CRISIL D (Downgraded from
Facility 'CRISIL BB-/Stable')
The downgrade reflects, irregularity in account due to delay in
repayment of term loan. The delay is mainly due to weak
liquidity.
The rating reflects Susceptibility to risks and cyclicality
inherent in the Indian real estate industry. These ratings
weakness are partially offset by company's stable income from
banquet hall and promoters extensive experience.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility to risks and cyclicality inherent in the Indian
real estate industry: The real estate sector in India is cyclical
and marked by volatile prices, opaque transactions, and a highly
fragmented market structure because of the presence of several
regional players. Moreover, multiplicity of property laws and
non-standardized government regulations are likely to affect the
tenure of project execution. The risk is compounded by aggressive
completion timelines and shortage of manpower (project engineers
and skilled labour) in this sector. Absence of regulatory
certifications on land titles exposes real estate developers to
legal risks. Also, high transaction costs discourage the
development of a robust secondary market, leading to liquidity
risks
Strengths
* Stable income from banquet hall: The Company derives steady
income through its banquet hall which is rented out for marriage
and other ceremonies. The hall is located in a prime location in
Chennai leading to healthy occupancy of the hall all through the
year.
* Promoter's experience: Promoter has experience of more than a
decade in the real-estate development market. He has developed more
than 30 projects in the Chennai region and over the period has
developed established relationships with various stakeholders in
the industry. The same is expected to support the business risk
profile of the company.
Liquidity
Liquidity is stretched leading to delayed in term loan repayments.
Liquidity is expected to remain stretched over the medium term.
PFPL, promoted by Mrs. Sreelakshmi Ranganathan is into real-estate
development in Chennai, Tamilnadu. The company also owns a 4
storied Banquet hall in Pursawalkam, Chennai.
PREDOMIX TECHNOLOGIES: CRISIL Assigns 'B' Rating to INR10cr Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Predomix Technologies Private Limited (POTNPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 10 CRISIL B/Stable (Assigned)
The rating reflects the company's exposure to risks related to
project implementation, demand, and funding. This weakness is
partially offset by promoters' extensive experience in the
biotechnology industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to project implementation risks: Since the project is in
an early stage, timely completion and stabilisation of operations
without any cost overrun will remain key rating sensitivity
factors.
* Risks associated with demand and funding: The number of
subscribers for the application developed by the company and
individuals opting for diabetes tests will be crucial factors for
the business. The company is also exposed to funding risks as
discussions with investors are still underway.
Strengths
* Extensive experience of the promoters: Benefits from
two-decade-long experience of the promoters in genetic engineering
and biotechnology should help with timely stabilisation of
operations and will continue to support the business.
Liquidity
Liquidity remains adequate, aided by nil payment obligation.
Current ratio is expected to be at 0.78 times as on March 31,
2020.
Outlook: Stable
CRISIL believes POTNPL will remain exposed to project completion
and implementation risks, including cost and time overruns. The
outlook may be revised to 'Positive' if timely stabilisation of
operations strengthens cash accrual. The outlook may be revised to
'Negative' if delay in project implementation or
lower-than-expected offtake from the new capacity weakens
liquidity.
Incorporated in 2018 at Gurugram, POTNPL develops platforms for
accurately predicting susceptibility of individuals to chronic
diseases; operations are set to commence from May 2019. Mr. Kanury
Venkata Subba Rao and Ms Sujata Nayak are the promoters.
RASIK VATIKA: CRISIL Lowers Rating on INR14cr Cash Loan to B
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Rasik Vatika Silk Mills Private Limited (RVSM) to 'CRISIL B/Stable'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The downgrade reflects the company's stretched liquidity, with cash
accrual insufficient to meet debt obligation. Shortfall in debt
servicing will, likely, be covered by cash credit limit,
utilisation of which is moderate.
The rating reflects the company's modest financial risk profile and
moderately working capital-intensive operations. These weaknesses
are partially offset by the promoters' extensive experience in the
textiles industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest financial risk profile: Financial risk profile is modest:
total outside liabilities to tangible networth (TOL/TNW) ratio was
2.20 times and networth was INR9.15 crore as on March 31, 2018.
Debt protection metrics are below average, with interest coverage
and net cash accrual to total debt ratios of 1.02 times and 0.02
time, respectively, in fiscal 2018. With new term debt undertaken,
TOL/TNW is expected to increase over the medium term.
* Moderately working capital-intensive operations: Operations are
working capital-intensive: gross current assets stood at 188 days
as on March 31, 2018, driven by inventory of around 82 days and
receivables of around 94 days. GCA days expected to be around
180-195 days over the medium term.
Strength:
* Extensive experience of the promoters: Benefits from the
extensive experience of the promoters in the textile industry and
strong relationships with customers and suppliers should continue
to support the business risk profile over the medium term.
Liquidity
Liquidity is stretched as cash accrual is estimated at INR0.48 &
INR0.37 crore in fiscal 2019 and fiscal 2020 respectively against
annual term debt obligation of INR1.01 crore and 1.30 crore. Cash
credit limit is moderately utilised and is expected to finance
maturing debt. Bank limit utilisation averaged 60% over the 12
months through March 31, 2019. Current ratio was low at 1.01 time
as on March 31, 2018.
Outlook: Stable
CRISIL believes RVSM will continue to benefit over the medium term
from its promoters' extensive industry experience. The outlook may
be revised to 'Positive' if significant and sustained improvement
in networth, scale of operations, and profitability strengthens
cash accrual. The outlook may be revised to 'Negative' if decline
in revenue or profitability or incremental working capital
requirement or any large capital expenditure weakens the
liquidity.
Established in 1993 as a proprietorship firm named Rasik Vatika
Silk Mills, Surat-based RVSM was reconstituted as a private limited
company in 2010. Mr. Harbans Lal Arora and Mr. Kapil Arora are the
promoters. RVSPL dyes and processes grey fabric on a job-work basis
and has also started trading in garments.
RELIANCE COMM: NCLAT Allows Firm to Withdraw Appeal vs. Insolvency
------------------------------------------------------------------
Bloomberg News reports that former Billionaire Anil Ambani's
Reliance Communications Ltd. will fall back into bankruptcy as an
appeals court allowed the beleaguered company's request to enter
the process in an attempt to sell assets.
According to Bloomberg, the National Company Law Appellate Tribunal
allowed RCom to withdraw its appeal against insolvency proceedings
initiated last year and lifted interim orders that temporarily
halted the bankruptcy case. The moratorium on recovery of dues from
RCom will continue, the report says.
Bloomberg relates that the order allowing RCom to be sent back to
bankruptcy court is in accordance with the company's plans,
disclosed to the stock exchanges in February, to seek to sell its
telecommunications assets and airwave licenses through the
insolvency process.
Bloomberg notes that Anil Ambani's older sibling and Asia's richest
man Mukesh Ambani's Reliance Jio Infocomm Ltd. had earlier offered
to purchase RCom's assets in a INR173 billion ($2.5 billion) deal,
which would have helped partly pay off lenders. The deal fell
through after encountering regulatory hurdles, the report states.
Mukesh Ambani had in March helped his younger brother avert the
risk of being jailed by making an $80 million payment on his behalf
to the local unit of Ericsson AB for past maintenance services,
Bloomberg says.
About Reliance Communications
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.
As reported in the Troubled Company Reporter-Asia Pacific on Feb.
4, 2019, BloombergQuint said Reliance Communications 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. The company said "[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."
BloombergQuint said that the company, with a debt of more than
INR47,000 crore in financial year 2018, had invoked strategic debt
restructuring in June 2017.
RENEW POWER: S&P Assigns BB- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned a 'BB-' long-term issuer credit rating
to India-based ReNew Power Ltd. (RPL). The outlook is stable.
The rating on RPL reflects the company's relatively weaker
receivables profile compared with peers and a fairly short
operating track record, particularly for its solar projects.
Furthermore, S&P expects leverage to remain high due to ongoing
debt-funded capital expenditure (capex) as the company pursues its
capacity additions.
Moderating these risks are RPL's steadying operating performance on
a large and increasingly diversified fully stabilized portfolio
(assets with more than one year of operational performance). This
is supported by a high proportion of regulated long-term power
purchase agreements (PPAs), which provides cash flow stability. S&P
also expects counterparty diversity to improve with increasing
exposure to better credit-quality offtakers.
S&P said, "We believe RPL is exposed to counterparty risk and
delayed payments from Indian state electricity boards (SEBs) that
have demonstrated patchy collection track records in the past. 65%
of RPL's revenue come from SEBs of Andhra Pradesh, Madhya Pradesh,
Karnataka, and Telangana. Given the high concentration of SEBs,
RPL's receivables track record has shown a higher number of payment
delays in the past compared with its Indian peers. However, we
expect RPL's receivables position to remain manageable, given the
company's increasing diversification toward better-quality
counterparties such as Solar Energy Corp. Of India (SECI) or NTPC
Ltd. (BBB-/Stable/--). We expect these counterparties to account
for about 20% of RPL's revenue by FY2021 and close to 40% by
FY2022.
"RPL benefits from good scale and diversity, which we believe will
support operating stability. It is the largest renewable company in
India, with a fully stabilized portfolio of more than 3 gigawatts
(GW) (as of March 31, 2019) and operating 80 projects across the
country. This has translated into better operating stability and
good asset efficiencies in the last two years, operating between
P90 and P75 (generation levels that we expect the company's
projects to achieve at least 90% or 75% of the time, respectively).
This is better than most Indian peers, whose poor resource
availability in the past two years and delays in project executions
have hurt their operating performance--underperforming P90
generation estimates over the same period. As such--with a growing
stabilized portfolio--we expect the company to sustain portfolio
generation at least in line with P90 estimates.
"Almost all of RPL's projects are contracted on 25-year
fixed-tariff PPAs, with grid priority for dispatch and no volume
risks. We believe these features support high revenue visibility
and cash flow stability, amid inherent resource risk. Compared with
other jurisdictions such as China, we believe that these features
are also characteristic of a more supportive regulatory environment
for Indian renewable players. Conversely, Chinese renewable
companies are heavily dependent on government subsidies, which have
historically been delayed--putting pressure on operating cash flow
and liquidity. Furthermore, Chinese renewable players are subject
to renewal and pricing risks as well as government influence
because PPAs in China expire on an annual basis.
"We expect RPL's leverage to improve in fiscal 2019, but to remain
elevated over the next two to three years. In our view, the company
will continue to pursue high growth--albeit moderated, compared
with past levels. We believe the company's ratio of funds from
operations (FFO) to debt should improve to still-weak levels of
around 5% in fiscal 2019 and fiscal 2020, from about 2.5% in fiscal
2018. This is on the basis that the company's overall portfolio
performs in line with P90 estimates. In our view, RPL's financial
strength will largely depend on the company's ability to maintain
its stable asset efficiencies and good project execution as well as
exercise financial discipline in spending to avoid a further
increase in its leverage.
"The stable outlook in the next 12-18 months reflects our
expectation that RPL's asset efficiencies will continue to perform
in line with P90 estimates. We also anticipate that the company
will maintain both minimal delays in project execution for future
projects and manageable receivables position. We believe that these
factors will support cash flow generation, such that the FFO cash
interest coverage is likely to be around 1.5x and FFO/debt around
5% over the next 12 months. The outlook also reflects our
expectation that any changes to the company's sponsors will not
lead to an increase in leverage.
"We may lower the rating if RPL's operating performance is weaker
than our estimates, its receivables position considerably worsens,
or the company suffers material project execution delays. These
factors could lead to FFO cash interest cover of less than 1.5x on
a sustainable basis. A deterioration in liquidity--such that its
sources of cash will be unable to meet its debt service--could also
put pressure on the rating.
"We believe an upgrade is unlikely for the next 12-24 months as
operating performance or growth aspirations can delay deleveraging.
Nevertheless, we may raise the rating on RPL if the company reduces
its leverage such that its FFO-to-debt ratio remains above 9% on a
sustainable basis. Strong sponsor support with significant equity
infusions, material improvement in cash flow diversity, better
operating performance on a sustained basis, and disciplined growth
can collectively contribute to such an improvement."
SAI RAGHAVENDRA: CRISIL Migrates 'B+' Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Sai
Raghavendra Rice Industries (Sai) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.15 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 1.47 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1.88 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
SME Credit .50 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with Sai for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Sai. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Sai is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Sai to 'CRISIL B+/Stable Issuer not cooperating'.
Incorporated in 2011 as a partnership firm, Sai Raghavendra
operates a rice mill for undertaking milling and processing of
paddy into rice, rice bran, broken rice, and husk. The firm
commenced commercial operations in fiscal 2013 and is based in
Kolkulpally, Andhra Pradesh. The managing partners, Mr. V Jagan and
Mr. V Srinivas, have around 30 years of experience in similar lines
of business.
SAIKRUPA COTTONS: CRISIL Migrates 'D' Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Saikrupa
Cottons Private Limited (SCPL) to 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Fund-
Based Bank Limits .3 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 5.7 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SCPL for obtaining
information through letters and emails dated April 10, 2019 and
April 16, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SCPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SCPL is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BBB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SCPL to 'CRISIL D Issuer not cooperating'.
SCPL is engaged in ginning and pressing of raw cotton to make
cotton bales. The unit is located at Yavatmal (Maharashtra) with an
installed capacity of producing 200 bales per day. It also has a
seed crushing unit of 300 quintals per day.
SHAMSHREE LIFESCIENCES: CRISIL Moves D Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shamshree
Lifesciences Limited (SLL) to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
Corporate Loan 1.12 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
Letter of Credit 5.00 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
Proposed Long Term 1.30 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating
Migrated)
Term Loan 11.21 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
CRISIL has been consistently following up with SLL for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SLL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SLL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SLL to 'CRISIL D/CRISIL D Issuer not cooperating'.
SLL was established in 2006 at Baddi (Himachal Pradesh) by Mr.
Jatinder Kumar Jain as a closely held public limited company;
however, operations commenced in December 2010. The company
manufactures dry powder injectables, mainly antibiotics.
SHREE BALA: CRISIL Migrates 'D' Rating to Not Cooperating
---------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Shree Bala Ji
Warehouse (SBW) to 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 11 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with SBW for obtaining
information through letters and emails dated April 10, 2019 and
April 16, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SBW. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SBW is consistent
with 'Scenario 2' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BBB' rating category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SBW to 'CRISIL D Issuer not cooperating'.
SBW was set up as a partnership firm of Mr. Sandeep Kodan, Mr.
Ramesh Kumar and Mr. Suresh Kumar in 2012. The firm has constructed
a warehouse with capacity of 52,500 MT to provide storage of agro
based products in Barwara (Haryana). It has signed a ten-year
contract with HAFED. The warehouse has been constructed with an
estimated cost of INR18.10 crore, and began commercial operations
in May 2014.
SHRI AMARNATH: CRISIL Lowers Rating on INR21cr Cash Loan to D
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Shri Amarnath Milk Foods Private Limited (SAMFPL) to 'CRISIL D'
from 'CRISIL BB/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 21 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Term Loan 4 CRISIL D (Downgraded from
'CRISIL BB/Stable')
The downgrade reflects delay in repayment of term loan facility
because of stretched liquidity due to working capital intensive
operations.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of business: With reported turnover of INR125.93
crore in fiscal 2018, scale of business remains modest.
* Working capital-intensive operations: Gross current assets were
sizeable at 106 days as on March 31, 2018, driven by high debtors
and inventory of 55 and 53 days, respectively.
Strengths:
* Extensive experience of the promoters: Benefits from the
promoters' over two decades of experience in the dairy products
segment and healthy relations with suppliers and customers in Uttar
Pradesh, Madhya Pradesh, and Rajasthan, should continue to support
the business.
Liquidity
Due to delay in receipt of payment from customers, debtors are
stretched leading to deferral in repayment of term loan.
SAMFPL, established in 2014 at Agra, Uttar Pradesh by Mr. Mahesh
Chand Singhal and Mr. Sanjeev Kumar, processes milk and milk
products such as ghee, milk powder, skimmed milk powder, butter,
and dairy whitener. Operations began in March 2015.
SRI VANGALAMMAN: CRISIL Withdraws D Rating on INR10cr LT Loan
-------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Sri
Vangalamman Farms India Private Limited (SVFIPL) on the request of
the company and after receiving no objection certificate from the
bank. The rating action is in-line with CRISIL's policy on
withdrawal of its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL D (ISSUER NOT
COOPERATING; Rating Withdrawn)
Long Term Loan 10.00 CRISIL D (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with SVFIPL for obtaining
information through letters and emails dated January 28, 2019 and
February 26, 2019 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SVFIPL. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that the information available for SVFIPL
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower. Based on the last available information, CRISIL
has Continues the ratings on the bank facilities of SVFIPL to
'CRISIL D Issuer not cooperating'.
Established in 2006 and based in Namakkal (Tamil Nadu), SVFIPL is
engaged in the poultry business and produces eggs. The company is
promoted by Mr. K Jayaprakash.
SRI VARALAKSHMI: CRISIL Raises Rating on INR10cr Loan to B+
-----------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Sri Varalakshmi Solvent Oils Private Limited (SVSOPL) to 'CRISIL
B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects the sustained improvement in the company's
business risk profile. Operating income is estimated at INR38.8
crore in fiscal 2019, up 36.2% over fiscal 2016 supported by
addition of new clients. The upgrade also factors nil long term
debt obligations over the medium term.
CRISIL rating on the long-term bank facilities of SVSOPL reflects
SVSOPL's small scale and working capital-intensive operations,
exposure to intense competition, and below-average financial risk
profile because of small networth, high gearing and weak debt
protection metrics. These weaknesses are partially offset by
promoters' extensive experience in the edible oil industry.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations: Revenue of around INR34.05 crore in
fiscal 2018 and estimated INR38 cr in fiscal 2019 reflect the
company's modest scale. This restricts benefits from economies of
scale and lowers bargaining power against customers and suppliers.
* Below-average financial risk profile: Networth was small at
INR5.02 crore as on March 31, 2018, leading to a moderate gearing
of 1.63 times. Debt protection metrics were muted, with net cash
accrual to total debt and interest coverage ratios of 0.10 time and
1.67 times, respectively, for fiscal 2018. Financial risk profile
is expected to remain subdued over the medium term.
* Working capital-intensive operations: Gross current assets were
155 days as on March 31, 2018, because of sizeable inventory of 92
days and receivables of 49 days. Operations will remain working
capital-intensive over the medium term.
* Exposure to intense competition: The edible oil industry is
highly fragmented as it is a low-margin business with limited value
addition.
Strength:
* Extensive experience of promoters: Presence of nearly five
decades in the agricultural industry has enabled the promoters to
gain local market dynamics and establish strong relationship with
rice mills in the vicinity.
Liquidity
SVSOPL has modest liquidity. The company has access to fund based
limits of INR10 cr, which are highly utilized over the 12 months
ended January 31, 2019. However, it has nil term debt obligations
over FY20 as well as FY21.
Outlook: Stable
CRISIL believes SVSOPL will continue to benefit over the medium
term from promoters' extensive experience. The outlook may be
revised to 'Positive' in case of a substantial and sustained
improvement in revenue, while maintaining profitability margins; or
if working capital management improves. The outlook may be revised
to 'Negative' in case of a steep decline in profitability margins,
or significant deterioration in capital structure on account of
sizeable working capital requirement or debt-funded capital
expenditure.
Incorporated in 2010 and promoted by Mr. Visweswara Rao and family,
SVSOPL manufactures rice bran oil at its plant in Kotabammali,
Andhra Pradesh. Commercial operations began from January 2012.
STAYWELL FORMULATION: CRISIL Migrates D Rating to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Staywell
Formulation Private Limited (SFPL) to 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
Proposed Long Term 2 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating
Migrated)
Term Loan 3 CRISIL D (ISSUER NOT
COOPERATING; Rating
Migrated)
CRISIL has been consistently following up with SFPL for obtaining
information through letters and emails dated February 28, 2019,
April 8, 2019 and April 12, 2019 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SFPL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SFPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of SFPL to 'CRISIL D Issuer not cooperating'.
SFPL was incorporated in 2009 and acquired in 2015 by Mr. Suresh
Lal Santuka and his family.The company undertakes contract
manufacturing of pharmaceuticals like tablets, injections, capsules
and syrups. The unit is in Roorkee (Uttrakhand).
SURBHI INDUSTRIES: CRISIL Lowers Rating on INR6cr Loan to D
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Surbhi Industries - Morbi (SI) to 'CRISIL D' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL D (Downgraded from
'CRISIL B/Stable')
Term Loan 1.8 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delays by SI in repayment of bank debt due
to stretched liquidity.
The firm has weak financial risk profile, large working capital
requirement, and is also exposed to fluctuation in cotton prices.
However, it benefits from the extensive experience of the promoters
in the cotton industry.
Key Rating Drivers & Detailed Description
* Delay in meeting term debt obligation: Cash accrual remained
insufficient to meet debt obligation, leading to delays in
repayment of bank debt.
Weakness
* Vulnerability to changes in cotton prices: Since cotton is an
agricultural commodity, its availability depends on the monsoon.
Furthermore, government interventions and fluctuations in global
cotton output have resulted in volatility in cotton prices,
affecting profitability of cotton ginners.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' experience of decade, their strong understanding of
local market dynamics, and healthy relations with customers and
suppliers should continue to support the business.
Liquidity
Liquidity stretched marked by insufficient cash accruals to meet
debt obligation.
Established in 2013, SI is promoted by Mr. Manoj Panara, Mr. Bipin
Kasundra, and their family members. The firm is engaged in
manufacturing of cotton bales.
VEDIKA AGRO: CRISIL Lowers Rating on INR5cr Cash Loan to 'D'
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Vedika Agro Industries (VAI) to 'CRISIL D' from 'CRISIL
B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Long Term Loan 3.75 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Proposed Working 1.25 CRISIL D (Downgraded from
Capital Facility 'CRISIL B+/Stable')
The downgrade reflects, irregularity in account due to delay in
repayment of term loan and cash credit account; currently account
is classified as non-performing asset. The delay is mainly due to
weak liquidity on account of stretched debtors.
Rating continues to reflect the modest scale of operations, low
operating margin and average financial risk profile, these
weaknesses are partially offset by the extensive experience of the
proprietor and moderate working capital requirement.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Despite steady growth over the past
four fiscals, scale has remained modest; as reflected in revenue of
INR22.66 crore in fiscal 2018. Intense competition and limited
capacities have kept the scale modest. Also operating margin is low
at 6.5% as on March 31, 2018, constrained by limited value addition
in the end product.
* Average financial risk profile: financial risk profile is
average , as marked by gearing of 1.96 times as on March 31, 2018,
and debt protection metrics, with interest coverage and net cash
accrual to total debt ratios of 2.1 times and 0.08 time,
respectively, for fiscal 2018.
Strengths
* Extensive experience of the proprietor: Benefits from the
proprietor's experience of over two decades in the dal mill
business and established relations with customers and suppliers
should continue to support the business.
* Moderate working capital requirement: Gross current assets stood
at 105 days as on March 31, 2018, (163 days a year before), aided
by moderate inventory of 55 days and debtors of 41 days. Payables
partly support working capital leading to moderate reliance on bank
debt.
Liquidity
Due to delay in receipt of payment from customers, debtors are
stretched leading to fully utilised bank limits and delay in term
loan repayment. Liquidity is expected to remain stretched over the
medium term.
Set up in 2011, VAI, a proprietorship concern of Mr. Uday Jankar,
processes chana to chana dal and then to besan. It facility at
Ambegaon, Maharashtra, has a capacity of 15 tonne per day.
VIJAY IRON: CRISIL Downgrades Rating on INR8cr Cash Loan to D
-------------------------------------------------------------
CRISIL has downgraded its rating to the long-term bank facilities
of Vijay Iron and Steel Co. (VISC) to 'CRISIL D' from 'CRISIL
B-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects continuous overdrawn for more than 30 days
in its Cash Credit facility because of the stretched liquidity due
to working capital intensive operations.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: Gearing and TOLTNW ratio were high
at 5.42 times and 7.21 times, respectively, as on March 31, 2017 on
account of large working capital debt. Also, networth was small at
INR1.96 crore. Furthermore, liquidity was stretched, reflected in
average bank limit utilisation of around 115% for the 12 months
ended May 2018. Financial risk profile will remain subdued over the
medium term.
* Modest scale of operations amid intense competition: With
turnover of about INR53 crore expected in fiscal 2018, scale
remains small in the intensely competitive steel products trading
segment. This limits bargaining power with customers and
suppliers.
Strengths:
* Extensive experience of proprietor: Industry presence of over
four decades has enabled the proprietor to establish strong
relationship with customers and suppliers.
Liquidity
Due to delay in receipt of payment from customers, debtors are
stretched leading to fully utilised bank limits. Liquidity is
expected to remain stretched over the medium term.
Established in 1972 in Jalandhar, Punjab, as a proprietorship firm
by Mr. Ramniwas Bansal, VISC trades in steel products such as
hot-rolled coils, sheets, and plates.
=================
I N D O N E S I A
=================
BARITO PACIFIC: Fitch Publishes B+ IDR; Rates USD Notes 'B+(EXP)'
-----------------------------------------------------------------
Fitch Ratings has published Indonesia-based PT Barito Pacific Tbk's
first-time Long-Term Issuer Default Rating of 'B+'. The Outlook is
Stable. The agency has also assigned Barito's proposed senior US
dollar notes an expected rating of 'B+(EXP)' with a Recovery Rating
of 'RR4'.
The proposed notes are rated at the same level as Barito's IDR, as
they constitute its direct and unsubordinated obligations. The
final rating is contingent on the receipt of documents conforming
to information already received.
Barito's rating benefits from its diversified presence across the
petrochemical and energy sectors, its leading market position as
Indonesia's largest petrochemical producer and strong record in
geothermal operations, with long-term contracts driving stable
revenue. The ratings also reflect Barito group's moderate
consolidated financial profile, fractured shareholding in key
operational subsidiaries and modest debt at the holding company.
KEY RATING DRIVERS
Diversified Businesses: Barito benefits from the diversified
businesses of its key investments in petrochemicals through PT
Chandra Asri Petrochemical Tbk (CAP, BB-/Stable) and power through
Star Energy Group Holdings Pte Limited. Fitch expects Barito to
continue to benefit from CAP's dividend and modest but improving
dividend from Star Energy. CAP and Star Energy account for nearly
half each of the group's consolidated EBITDA.
Fractured Shareholding; Structural Subordination: Barito's access
to the cash flow of CAP and Star Energy are limited by its
fractured shareholding in these entities. Barito effectively holds
46% in CAP and, through its 67% holding of Star Energy Group
Holdings, effectively owns between 35%-40% of Star Energy's
operating assets. The fragmented shareholding results in
significant leakages of dividends to minorities and leads to
structural subordination; as such, it rates Barito one notch below
the group's consolidated credit profile. Fitch estimates the
holding company's EBITDA interest cover to range between 1.5x-2.0x
over the medium term, including dividends from CAP and Star Energy
and EBITDA from forestry and real estate businesses (interest
includes debt at wholly owned subsidiaries).
Leading Position in Petrochemicals: Barito benefits from CAP's
leading market position as Indonesia's largest petrochemical
producer, with about 35% of the country's olefin and polymer
production capacity, diversified customer base, proximity to some
key customers and adequate infrastructure, including customer
pipeline connectivity. CAP is also the only domestic producer of
butadiene and styrene monomer and one of the top-two producers of
propylene and polyethylene. CAP's market position is also aided by
operations that are better integrated than those of domestic peers,
enabling it to diversify its product offering and improve
operational efficiency.
Favourable Growth, Albeit Cyclical: Fitch expects CAP to benefit
from stable domestic demand growth for petrochemical products over
the medium- to long-term and Indonesia's position as a net importer
of key petrochemical products. Fitch believes the country's strong
GDP growth and low per capita consumption will drive growth for key
polyolefins. Indonesia produces about half of its polypropylene and
polyethylene needs, which should support demand for CAP's proposed
expansion. However, the capacity expansion plans of other
Indonesian petrochemical companies are likely to gradually
intensify competition.
CAP's credit profile remains vulnerable to the commodity cycle, as
its earnings and cash flow are linked to the petrochemical
industry. Petrochemical prices and product spreads are affected by
movements in crude oil prices and global demand-supply dynamics.
Fitch expects some moderation in product spreads over the medium
term, with new capacity additions globally, and thereby expect
Barito's consolidated EBITDA margin to remain steady at around 25%
(2018: 25%, 2017: 30%).
Stable Geothermal Operation: Fitch expects Barito's credit profile
to benefit from its acquisition of Star Energy in June 2018 - the
largest geothermal energy producer in Indonesia. It expects
dividends from Star Energy to remain modest over the next three to
five years and only increase thereafter. Star Energy benefits from
long-term contracts with the state power utility, PT Perusahaan
Listrik Negara (Persero) (PLN, BBB/Stable), and the national oil
company, PT Pertamina (Persero) (BBB/Stable), which drives its
stable revenue and cash flow. Star Energy's residual contract terms
amount to more than 21 years and its operations benefit from a high
availability factor of its geothermal resources and a favourable
cost position, which drives its healthy profitability.
Large Investments: Barito has large investment plans, primarily in
its petrochemical business and modest investments in power. CAP
plans to invest about USD850m over the next three years to increase
the capacity of its downstream segment to support growth over the
medium term and maintain its market position. CAP also plans to set
up a second petrochemical complex, for which it has factored only
the initial expenses in its analysis. Meanwhile, Star Energy plans
to expand its geothermal operations over the medium to long term.
Barito has also invested in 2GW greenfield thermal power plants (PT
Indo Raya Tenaga; 49% stake) in Indonesia, with estimated project
costs of around USD3 billion. The plants will require additional
investments, in proportion to Barito's holdings, as the project
progresses, with a final investment decision to be made during
2H19.
Moderate Group Financial Profile: Fitch expects Barito group's
consolidated financial profile to remain moderate, with FFO
adjusted net leverage of around 3.0x (2018: 2.7x, 2017: 0.1x) over
the medium term. The group's financial profile weakened during 2018
due to the acquisition of Star Energy for USD755 million. The
acquisition was largely equity funded from Barito's rights issue of
around USD515 million; however, large debt at Star Energy increased
the group's leverage. Fitch does not expect any improvement in
Barito's credit metrics given its investment plan.
DERIVATION SUMMARY
Barito's ratings reflect its diversified businesses across the
petrochemical and energy business, with the largest petrochemical
and geothermal operations in Indonesia. The ratings also factor in
Barito's moderate consolidated financial profile, its shareholding
in key operational subsidiaries, its subsidiaries' modest to strong
financial profiles and limited debt at the holding company.
Barito's business profile is stronger and more diversified than
that of CAP. However, its weaker financial profile on account of
structural subordination, with limited access to cash flow at its
operating subsidiaries, results in its rating being one notch
lower.
In comparison, Golden Energy and Resources Limited (GEAR;
B+/Positive) is rated at the same level as its 67% owned coal
subsidiary, PT Golden Energy Mines Tbk (GEMS; B+/Positive),
reflecting the absence of material debt at GEMS and stronger access
to cash flow; GEMS has a policy of high dividend payouts of 80%,
GEAR's financial profile is stronger than that of Barito and its
rating and the Positive Outlook reflects Fitch's expectation that
GEMS will likely be able to continue increasing coal production to
a level commensurate with the profile of a 'BB-' rated entity over
the coming year.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Moderation in products spreads of key polyolefins over the
medium term
- CAP Naphtha cracker operating rate remaining high at around
98%-99%
- Capex of around USD850m over the next three years
- CAP's dividend pay-out ratio of 30% over the medium term
- Star Energy's units operating at an availability rate of around
93%-98%
- Tariffs in line with PLN's long-term contracts
- Star Energy's capex of around USD400 million over the next five
years
- Dividend payment by Star Energy from 2019
The recovery is based mainly on sale of shareholdings in
subsidiaries held by Barito, as it is a holding company
- Fitch assumes a discount rate of 60% to book value for assets,
excluding those at CAP and Star Energy
- CAP's enterprise value is based on average EBITDA over the next
three years, discounted by 25%. The EBITDA multiple of 5.5x is
based on median of historical multiples which range between 4.9x -
17x
- The geothermal assets' enterprise value is based on the average
EBITDA over the next three years, discounted by 15%. The lower
discount is due to the stable nature of operations and revenue. The
EBITDA multiple of 6x is at a discount to historical multiples for
geothermal assets in Indonesia over the last few years.
- Recovery is capped at 'RR4' for Barito's proposed notes, as all
its operations are based in Indonesia (a group D country). The
recovery analysis results in a recovery rating of 'RR1' before
applying the cap
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
Fitch does not expect an upgrade in the medium-term, as it does not
foresee an improvement in Barito group's consolidated financial
profile given the large investment plans. Positive rating action is
contingent on an improved credit profile of key investments,
particularly CAP, and a sustainably better liquidity profile at
Barito.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Weakening of Barito's holding company EBITDA interest cover to
below 1.5x for a sustained period (2018: 0.9x); EBITDA includes
dividend from CAP and Star Energy and EBITDA from forestry and real
estate business. Interest includes debt at the fully owned
subsidiaries.
- Deterioration in Barito group's credit profile, with
consolidated FFO net leverage exceeding 4.0x for a sustained
period.
LIQUIDITY
Adequate Liquidity: Fitch expects Barito's liquidity to remain
adequate. Barito proposes to refinance its term debt raised for
funding its Star Energy acquisition with the proposed US dollar
notes, which will extend its debt maturities and support liquidity
over the medium term. Liquidity should remain adequate even if the
proposed US dollar notes are not issued, in light of the end-2021
maturity of its existing term debt. Fitch expects dividends from
operating entities, mainly CAP, to support stable cash flow,
supported by the entities' steady operating performance over the
next three years.
===============
M A L A Y S I A
===============
KINSTEEL BHD: Bursa Reprimands Firm, Fines Directors MYR44,800
--------------------------------------------------------------
The Sun Daily reports that Bursa Malaysia has publicly reprimanded
Kinsteel Bhd and five of its directors for breach of the stock
exchange's Main Market listing requirements, and imposed total
fines of MYR44,800 to four directors.
According to the report, Kinsteel was found to be in breach of the
listing requirements when it failed to issue the annual report that
included the annual audited financial statements together with the
auditors' and directors' reports for the financial year ended June
30, 2017 on or before Oct. 31, 2017. The annual report was only
issued on Dec. 15, 2017.
"Five directors of Kinsteel at the material time had breached
paragraph 16.13(b) of the listing requirements where they had
permitted Kinsteel to commit the above breach of paragraphy 9.23(1)
of the listing requirements," Bursa Malaysia said in a statement,
the Sun Daily relays.
The Sun Daily relates that Kinsteel chairman and managing director
Tan Sri Pheng Yin Huah as well as CEO and executive director Datuk
Henry Pheng Chin Guan were both publicly reprimanded and fined
MYR16,000 each.
Executive director Datuk Lew Choon and non-independent
non-executive director Pheng Chin Huat were both publicly
reprimanded and fined MYR6,400 each, notes the complaint.
Chong Hoi Sheong @ Chong Hoi Cheong, who was an independent
non-executive director and audit committee member at the material
time, was also publicly reprimanded, the report says. Chong retired
on Jan. 15, 2018.
To recap, the delay in issuance of the annual report was due to the
failure of Kinsteel to settle the outstanding audit fees to the
external auditors, which led to the delay in commencement of the
audit only on Oct. 2, 2017 instead of August 2017 as initially
scheduled, according to The Sun Daily.
Kinsteel had also failed to resolve the outstanding audit
findings/areas regarding the annual report with the external
auditors expeditiously, the report notes.
According to the report, Bursa Malaysia said Yin Huah and Henry had
failed to demonstrate reasonable and expeditious efforts taken to
pay the outstanding audit fees and resolve the audit issues with
the external auditors to enable timely issuance of the annual
report, despite numerous notices and reminders from the external
auditors.
In addition, Lew, Chin Huat and Chong had merely relied on the
management and failed to take reasonable efforts to undertake due
enquiry, follow up, monitor, supervise and address/ensure the
timely payment of the outstanding audit fees and resolution of the
audit issues to enable timely issuance of the annual report, The
Sun Daily relays.
"Bursa Malaysia views the contravention seriously as the timely and
accurate submission of financial statements is one of the
fundamental obligations of listed companies and is of paramount
importance in ensuring a fair and orderly market for securities
traded on Bursa Malaysia and necessary to aid informed investment
decisions," it said.
About Kinsteel Berhad
Malaysia-based Kinsteel Berhad (KLSE:KINSTEL)--
http://www.kinsteel.com.my/home/home.php-- is an integrated steel
manufacturer and steel millers in Malaysia. The Company
manufactures a range of long steel products used in the
manufacturing, construction and infrastructure industries. The
Company, with a product portfolio encompassing upstream, midstream
and downstream steel products, fully integrated and streamlined
manufacturing processes, serves the need for steel in
the region. It produces mild steel round bars, high tensile
deformed bars, angle bars and flat bars servicing, in particular,
the construction and infrastructure industries. There steel bars
and sections manufactured by the Company are also known as long
products. The Company has eight production lines with a total steel
bars production capacity of 800,000 metric tonnes per annum. The
types of steel bars produced are round and deformed
bars, angle bars, U-channel, wire rods and flat bars.
In October 2016, Kinsteel triggered the criteria pursuant to
Practice Note 17 (PN17) of the Main Market listing requirements of
Bursa Malaysia Securities Bhd. The company was considered a PN17
company pursuant to paragraph 2.1(d) of PN17 as the company's
auditors have expressed a disclaimer opinion in the Kinsteel's
latest audited financial statements for the financial year ended
June 30, 2016.
As reported in the Troubled Company Reporter-Asia Pacific on Feb.
28, 2018, The Edge Financial Daily said Kinsteel Bhd, whose shares
have been suspended from trading on Bursa Malaysia, has appointed
Messrs Ernst & Young as its liquidator after being served a notice
to do so on
Feb. 20, 2018.
On Jan. 22, 2018, the High Court in Kuantan has made a winding-up
order pursuant to the Section 218 of the Companies Act 1965 against
Kinsteel and Kin Kee Marketing Sdn Bhd.
Kinsteel is appealing the winding-up order. The next court
hearing is on June 25, 2019.
=================
S I N G A P O R E
=================
HYFLUX LTD: May Get SGD400 Million Lifeline from UAE's Utico
------------------------------------------------------------
Grace Leong at The Straits Times reports that Hyflux Ltd is
potentially getting a SGD400 million lifeline from United Arab
Emirates utility and developer Utico FZC to be used for equity and
working capital purposes and possible urgent interim funding, the
company said in a Singapore Exchange announcement on May 3.
The Straits Times relates that the announcement came nearly three
weeks before its debt moratorium expires on May 24, and ahead of a
pivotal High Court hearing on May 7 on whether a group of seven
unsecured banks, which collectively hold SGD648.7 million of debt,
can be granted permission to start an action for judicial
management.
If a carve-out is approved, these banks plan to file applications
for Hyflux and Hydrochem Singapore to be placed under judicial
management, and replace the current Hyflux management, the report
says. These applications will be heard on May 13.
In a bid to buy time, Hyflux had announced on April 25--just an
hour before its High Court hearing to extend its debt
moratorium--that it received a non-binding letter of intent for a
possible SGD400 million injection from an owner and developer of
water and power utilities based in the Middle East, according to
The Straits Times.
Late on May 3, Hyflux announced that its legal and financial
advisers are in active discussions with Utico's legal and financial
advisers on the terms of Utico's investment, to be set out in a
binding term sheet for execution, The Straits Times says.
Utico has informed Hyflux that it is "aware of the urgency of the
restructuring", and that it intends to invest in the group and help
preserve its key entities so that they remain intact and
operational, Hyflux said.
The Straits Times says the UAE utilities group--whose shareholders
and investors include sovereign institutions of the governments of
Oman, Saudi Arabia, Bahrain and Brunei--plans to retain Hyflux's
current management; and "reach an amicable deal with the group's
creditors and investors".
According to The Straits Times, the High Court on April 25 allowed
Hyflux and its three subsidiaries reprieve until May 24 from their
creditors as the company works on two possible plans to avoid
liquidation.
If an acceptable strategic investment is not achieved, Hyflux
founder Olivia Lum has proposed a second plan involving ongoing
projects and assets to be transferred to a special-purpose vehicle
(SPV) to be wholly owned by Hyflux, The Straits Times notes.
Hyflux on May 3 said it is also in concurrent discussions with
several other parties interested in investing in its business, The
Straits Times adds.
About Hyflux
Singapore-based Hyflux Ltd -- https://www.hyflux.com/ -- provides
various solutions in water and energy areas worldwide. The company
operates through two segments, Municipal and Industrial. The
Municipal segment supplies a range of infrastructure solutions,
including water, power, and waste-to-energy to municipalities and
governments. The Industrial segment supplies infrastructure
solutions for water to industrial customers. It employs 2,300
people worldwide and has business operations across Asia, Middle
East and Africa.
As reported in the Troubled Company Reporter-Asia Pacific on May
24, 2018, Hyflux Ltd. said that the Company and five of its
subsidiaries, namely Hydrochem (S) Pte Ltd, Hyflux Engineering Pte
Ltd, Hyflux Membrane Manufacturing (S) Pte. Ltd., Hyflux Innovation
Centre Pte. Ltd. and Tuaspring Pte. Ltd. have applied to the High
Court of the Republic of Singapore pursuant to Section 211B(1) of
the Singapore Companies Act to commence a court supervised process
to reorganize their liabilities and businesses.
The Company said it is taking this step in order to protect the
value of its businesses while it reorganises its liabilities.
The Company has engaged WongPartnership LLP as legal advisors and
Ernst & Young Solutions LLP as financial advisors in this process.
===========
T A I W A N
===========
E-TON SOLAR: To Temporarily Shut Tainan Factory; 300 Jobs at Risk
-----------------------------------------------------------------
Lisa Wang at Taipei Times reports that E-Ton Solar Technology Co on
May 3 said that it is to temporarily shut down its only operational
factory on May 10, putting more than 300 employees at risk of
losing their jobs.
"To safeguard shareholders' interests, the company is scheduled to
stop production after clearing the remaining inventory," E-Ton said
in a filing to the Taiwan Stock Exchange, Taipei Times relays.
This would help stem cash outflows, as the company has no long-term
orders on hand, E-Ton said.
Taipei Times relates that the firm is negotiating with employees
about future job arrangements, it said.
E-Ton said it would consider resuming production at the plant in
Tainan only when prices for solar cells and solar wafers rebound to
profitable levels.
According to Taipei Times, the company's board of directors decided
to stop making solar cell products due to persistent losses because
of unresolved tariff barriers in major solar markets, such as the
US, China, India and the EU, E-Ton said in a regulatory filing on
April 29.
As the solar cell market's outlook remains uncertain, the board
agreed to dispose of two idle factories and other assets in Tainan
to help improve the firm's financial structure, it said in the
filing.
The plan is subject to shareholders' approval at an annual general
meeting on June 21.
The company has been in the red since 2009, Taipei Times notes.
E-Ton reported net losses of NT$1.1 billion (US$35.59 million) last
year, less than the NT$2.8 billion in losses it reported in 2017,
with losses per share improving to NT$3.43 from NT$8.76, Taipei
Times discloses.
Last year's revenue plunged to NT$1.79 billion, from NT$4.18
billion a year earlier.
E-Ton shares fell 0.37 percent to NT$2.71 on May 3, According to
Taipei Times says. Since the beginning of this year, the stock has
sunk 32.25 percent on the local main bourse, According to Taipei
Times, notes.
Based in Tainan City, Taiwan, E-Ton Solar Tech Co., Ltd. engages in
the research, development, manufacture, and sale of solar cells in
Taiwan. It offers mono-crystalline, multi-crystalline, and
polycrystalline solar cells under the ExcelTon name.
*********
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 ***