/raid1/www/Hosts/bankrupt/TCRAP_Public/190606.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, June 6, 2019, Vol. 22, No. 113
Headlines
A U S T R A L I A
AUSTEX OIL: Case Summary & 7 Unsecured Creditors
AUSTRALIAN VOCATIONAL: First Creditors' Meeting Set for June 12
BROOKLANDS ENGINEERING: First Creditors' Meeting Set for June 14
CAMPAIGN MONITOR: S&P Withdraws 'B-' Issuer Credit Rating
FREEDOM SOLUTIONS: Clifton Hall Appointed as Liquidators
GASCOYNE RESOURCES: Collapse May Shave AUD2M Off Zenith's Earnings
GASCOYNE RESOURCES: First Creditors' Meeting Set for June 13
MORRISET COUNTRY: First Creditors' Meeting Set for June 17
TOP SHELF: First Creditors' Meeting Set for June 17
VINE PRIDE: First Creditors' Meeting Set for June 14
C H I N A
CIFI HOLDINGS: Fitch Affirms Long-Term IDR at BB, Outlook Stable
XINJIANG ZHONGTAI: Fitch Rates $380MM Sr. Unsecured Notes 'BB+'
H O N G K O N G
CHINA OIL: S&P Alters Outlook to Stable & Affirms 'BB' ICR
I N D I A
ALLAHABAD AGRO: CRISIL Assigns B+ Rating to INR5cr Cash Loan
ARETE INDIA: CRISIL Assigns B+ Rating to INR22cr LT Loan
BAGWAN COTEX: CRISIL Migrates 'B+' Rating to Not Cooperating
CRAFTED SOLUTIONS: CRISIL Assigns B+ Rating to INR20.52cr Loan
DEEPIKA INFRATECH: CRISIL Assigns D Rating to INR130.5cr Loan
DELTA JEWELLERS: Ind-Ra Migrates BB+ LT Rating to Non-Cooperating
GODRIWALA EDUCATION: CRISIL Reaffirms 'B' Rating on INR7.8cr Loan
HK INFRAVENTURES: CRISIL Withdraws B Rating on INR6cr Term Loan
INTERFAB APPARELS: CRISIL Lowers Rating on INR4.95cr Loan to D
JP INTERNATIONAL: CRISIL Assigns B+ Rating to INR2cr Loan
M.G. INDUSTRIES: CRISIL Assigns B+ Rating to INR4.75cr Cash Loan
MANI BHUSAN: CRISIL Assigns B+ Rating to INR5cr Cash Loan
MEKA BUJJI: CRISIL Assigns B+ Rating to INR4.9cr Cash Loan
ORBIT ELECTRO: Ind-Ra Affirms BB LT Issuer Rating, Outlook Stable
PENINSULA VACATIONS: CRISIL Assigns B Rating to INR.01cr Loan
RAVINDRA BHARATHI: Ind-Ra Lowers Bank Loan Rating to 'D'
REGIN AGENCY: CRISIL Lowers Rating on INR12cr Loan to B+
REGIN EXPORTS: CRISIL Lowers Rating on INR10cr Cash Loan to B+
SAI ENTERPRISES: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
SAMARTH DAIRY: CRISIL Assigns B+ Rating to INR5cr Cash Loan
SAMARTHA LEISURES: CRISIL Reaffirms B+ Rating on INR3.29cr Loan
SARLA MEDICAL: CRISIL Lowers Rating on INR10cr LT Loan to D
SHAKTHI SAGO: CRISIL Assigns B+ Rating to INR4.50cr Cash Loan
SHIMLA AUTO: CRISIL Assigns 'B' Rating to INR5cr Cash Loan
STERLING BIOTECH: NCLAT Stays Tribunal's Liquidation Order
THEMA NUTRIMENT: CRISIL Assigns B+ Rating to INR8.8cr Term Loan
TRANSMARINUS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
URS KAR: CRISIL Lowers Rating on INR15.25cr Loan to B+
VERENE PACKAGING: CRISIL Assigns 'B' Rating to INR7cr LT Loan
VIJAYNATH ROOF: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
M A C A U
MELCO RESORTS: S&P Affirms BB Issuer Credit Rating, Outlook Stable
M A L A Y S I A
SERBA DINAMIK: S&P Assigns 'BB-' Long-Term Issuer Credit Rating
N E W Z E A L A N D
ARROW INT'L: Owes NZ$40MM; Administrators Advise Liquidation
MAD BUTCHER: Wants to Know Who Albany Franchise Has Been Sold To
S I N G A P O R E
LAFE CORP: Receives Delisting Notification from SGX-ST
RESOURCES PRIMA: AGM Deadline Extended Until June 29
S R I L A N K A
SRI LANKA: Fitch Hikes IFS Rating to 'B+', Outlook Stable
- - - - -
=================
A U S T R A L I A
=================
AUSTEX OIL: Case Summary & 7 Unsecured Creditors
------------------------------------------------
Lead Debtor: AusTex Oil Limited
Level 5, 126 Phillip Street
Sydney
Nsw 2000 Australia
Business Description: AusTex Oil, Ltd., is a publicly traded
independent oil and gas company listed on
the Australian Securities Exchange under the
symbol "AOK." Although AusTex Oil is
an Australian listed entity, the Company
operates exclusively through its United
States subsidiary debtors, each of which is
headquartered in the United States, and
maintains offices in Tulsa, Oklahoma.
Chapter 11 Petition Date: June 3, 2019
Eight affiliates that simultaneously filed voluntary petitions
seeking relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
AusTex Oil Limited (Lead Case) 19-11138
AusTex HoldCo, LLC 19-11139
International Energy Holding Company, LLC 19-11140
International Energy, LLC 19-11141
International Energy Company, LLC 19-11142
International Energy Corporation 19-11143
International Properties Partners, LLC 19-11144
International Oil & Gas, LLC 19-11145
Court: United States Bankruptcy Court
Northern District of Oklahoma (Tulsa)
Debtors' Counsel: Gary M. McDonald, Esq.
Chad J. Kutmas, Esq.
Mary E. Kindelt, Esq.
MCDONALD & METCALF, LLP
First Place Tower
15 E. Fifth Street, Suite 1400
Tulsa, OK 74103
Tel: (918) 430-3700
Fax: (918) 430-3770
E-mail: gmcdonald@mmmsk.com
ckutmas@mmmsk.com
mkindelt@mmmsk.com
AusTex Oil's Total Assets: $56,116,157
AusTex Oil's Total Liabilities: $33,179,085
The petitions were signed by Richard A. Adrey, managing director.
A full-text copy of AusTex Oil's petition is available for free
at:
http://bankrupt.com/misc/oknb19-11138.pdf
List of AusTex Oil's Seven Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Australian $1,303
Securities &
Investment Comm
Locked Bag 5000
Gippsland Mail
Centre Victoria 3841
Australia
Website: http://www.asic.gov.au/invoices
Tel: 1300 300 630
2. Boardroom Pty Trade Debt $1,240
Limited
Level 12, 225
George Street
Sydney, NSW 2000
Australia
Tel: +61 (2) 9290 9600
Email: accounts@boardroomlimited.com.au
3. Eureka Teleconferencing Trade Debt $66
Pty Ltd
Level 29, Chifley Plaza
Chifley Tower 2 Sq
Sydney NSW 2000 Australia
Tel: +61 (2) 9009 0854
Email: accounts@teleconference.com.au
4. Gilbert & Tobin Professional $54
Attorneys at Law Fees
200 Barangaroo Avenue
Barangaroo NSW
2000 Australia
Tel: +61 (2) 9009 0854
Email: gtinvoice@gtlaw.com.au
5. OTC Markets Group, Inc. Trade Debt $28,865
304 Hudson Street, 2nd Floor
New York, NY 10013-1015
Tel: 212-896-4405
Email: otcmarketsgroupbilling@otcmarkets.com
6. Puglisi & Asociates Professional $1,731
Attn: Gregory Lavelle Fees
850 Library Avenue, Suite 204
Newark, DE 19711
Tel: 302-738-6680
Email: glavelle@puglisiassoc.com
7. Servcorp Sydney Trade Debt $480
Virtual Pty LTD
MLC Centre Suite 1
Level 19
19-29 Martin Pl
Sydney NSW 2000
Australia
Tel: +61 (2) 9238 7611
Website: http://www.servcorp.com.au
AUSTRALIAN VOCATIONAL: First Creditors' Meeting Set for June 12
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Australian
Vocational Learning Centre Pty Ltd will be held on June 12, 2019,
at 10:00 a.m. at the offices of Nicols + Brien, at Level 2, 350
Kent Street, in Sydney, NSW.
Steven Nicols of Nicols + Brien was appointed as administrator of
Australian Vocational on June 3, 2019.
BROOKLANDS ENGINEERING: First Creditors' Meeting Set for June 14
----------------------------------------------------------------
A first meeting of the creditors in the proceedings of Brooklands
Engineering Pty. Limited will be held on June 14, 2019, at 11:00
a.m. at the offices of Cor Cordis, One Wharf Lane, at Level 20, 171
Sussex Street, in Sydney, NSW.
Jason Tang and Ozem Kassem of Cor Cordis were appointed as
administrators of Brooklands Engineering on June 3, 2019.
CAMPAIGN MONITOR: S&P Withdraws 'B-' Issuer Credit Rating
---------------------------------------------------------
S&P Global Ratings said that it has withdrawn its issuer credit
rating on Campaign Monitor Finance Pty Ltd. (B-/Stable/--) at the
issuer's request following the company's recent recapitalization.
S&P also withdrew its 'B-' issue ratings on the company's senior
secured notes.
The company has recently completed a recapitalization at the group
level, using the proceeds to repay all of its rated senior secured
notes due in 2021.
FREEDOM SOLUTIONS: Clifton Hall Appointed as Liquidators
--------------------------------------------------------
Timothy Clifton of Clifton Hall was appointed as Liquidator of
Freedom Solutions Group Pty Ltd on May 30, 2019.
Initial information was posted to creditors on May 31, 2019.
The information sent to creditors includes voting forms in respect
of proposals requiring creditor approval. Completed forms must be
returned by 5:00 p.m. on June 28, 2019 for the vote to be counted.
GASCOYNE RESOURCES: Collapse May Shave AUD2M Off Zenith's Earnings
------------------------------------------------------------------
The West Australian reports that Gascoyne Resources power provider
Zenith Energy has estimated the gold miner's collapse could shave
up to AUD2 million off its annual earnings.
According to the report, Zenith said Gascoyne's administrators had
said it would continue to be paid for providing energy to the
Dalgaranga mine site in the Murchison under an existing power
purchase agreement.
The West Australian relates that the power contractor said its
exposure to Gascoyne depended on the outcome of the administration
and whether the company could be recapitalised.
Under a worst-case scenario, Zenith said removing the Gascoyne
contract from its financial outlook would cut fiscal 2020 revenue
guidance by AUD4 million to AUD59-62 million, the report relays.
The West Australian says the forecast for earnings before interest,
tax, depreciation and amortisation would be cut by AUD2 million to
AUD24.5-26.5 million.
There is no impact anticipated for fiscal 2019.
The West Australian relates that Zenith estimated that if it had to
redeploy assets and workforce from Dalgaranga it would cost about
AUD1 million in EBITDA terms.
"While we, like other parties affected, are disappointed with the
recently announced events at Gascoyne, Zenith's outlook for FY20
and beyond remains positive," the report quotes Zenith managing
director Hamish Moffat as saying.
"We have a large qualified pipeline of new business opportunities,
and we are confident we can quickly redeploy our assets and
workforce resources into near-term projects in the event a Gascoyne
recapitalisation is not successful," Mr. Moffat said.
Dalgaranga mining contractor NRW Holdings, also a Gascoyne
shareholder and lender, on June 3 estimated a AUD35 million
exposure to the miner.
According to The West Australian, administrators from FTI
Consulting were called into Gascoyne by its directors on June 2,
only weeks after raising AUD24.5 million from shareholders and
creditors shore up its balance sheet.
In the absence of a recapitalisation, the collapse has wiped out
the holdings of nearly 2600 shareholders, including creditors NRW
Holdings and Commonwealth Bank, the report says.
Gascoyne had struggled over the past year to overcome problems at
Dalgaranga, near Mt Magnet, where production and gold grades had
fallen well short of expectations, adds The West Australian.
Gascoyne Resources Limited is a mineral exploration and development
company. The Company is engaged in the exploration for gold and
evaluation of the development options for its Australian gold
projects. The Company holds mining leases and exploration licenses
and applications totaling approximately 4,000 square kilometers in
the Gascoyne and Murchison regions of Western Australia. Its
Dalgaranga gold project is located approximately 70 kilometers
Northwest of Mt Magnet in the Murchison gold mining region of
Western Australia. Its Glenburgh gold project is located in the
Southern Gascoyne Province of Western Australia approximately 250
kilometers east of Carnarvon. The Glenburgh gold project consists
of a gold mineralized system hosted in interpreted remnants of
Archaean terrain in a Proterozoic mobile belt. Its Egerton project
consists of approximately two granted mining leases and over three
granted exploration licenses.
GASCOYNE RESOURCES: First Creditors' Meeting Set for June 13
------------------------------------------------------------
A first meeting of the creditors in the proceedings of:
- Gascoyne Resources Ltd
- Gascoyne Resources (WA) Pty Ltd
- Dalgaranga Operations Pty Ltd
- GNT Resources Pty Ltd
- Egerton Exploration Pty Ltd
- Dalgaranga Exploration Pty Ltd
- Gascoyne (Ops Management) Pty Ltd
will be held on June 13, 2019, at 11:30 a.m. at Karri Room,
Parmelia Hilton Perth, 14 Mill Street, in Perth, WA.
Ian Francis, Michael Ryan, and Kathryn Warwick of FTI Consulting
were appointed as administrators of Gascoyne Resources on June 2,
2019.
MORRISET COUNTRY: First Creditors' Meeting Set for June 17
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Morriset
Country Club Limited will be held on June 17, 2019, at 3:30 p.m. at
Toronto Workers Club, 9 James Street, in Toronto, NSW.
Anthony Elkerton and Cameron Gray of DW Advisory were appointed as
administrators of Morriset Country on June 4, 2019.
TOP SHELF: First Creditors' Meeting Set for June 17
---------------------------------------------------
A first meeting of the creditors in the proceedings of Top Shelf
Dairy Supplies Pty Ltd will be held on June 17, 2019, at 10:30 a.m.
at the offices of Worrells Solvency & Forensic Accountants at Level
4, 15 Ogilvie Road, in Mount Pleasant, WA.
Mervyn Jonathan Kitay of Worrells Solvency was appointed as
administrator of Top Shelf on June 5, 2019.
VINE PRIDE: First Creditors' Meeting Set for June 14
----------------------------------------------------
A first meeting of the creditors in the proceedings of Vine Pride
Pty Ltd As Trustee For "Vine Pride Unit Trust", trading as "Harvey
Leigh's" will be held on June 14, 2019, at 10:00 a.m. at The
Sandpiper Room, Level 13, 37 St George's Terrace, in Perth, WA.
Mathieu Tribut of GTS Advisory was appointed as administrator of
Vine Pride on June 4, 2019.
=========
C H I N A
=========
CIFI HOLDINGS: Fitch Affirms Long-Term IDR at BB, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed China-based property developer CIFI
Holdings Co. Ltd.'s Long-Term Foreign-Currency Issuer Default
Rating at 'BB'. The Outlook is Stable. Fitch has also assigned the
company a Long-Term Local-Currency IDR of 'BB' with Stable Outlook.
The rating affirmation reflects CIFI's strengthening business
profile as it continued to expand nationwide, without materially
weakening its financial profile. CIFI's asset-light non-property
development (non-DP) revenue generated non-DP EBITDA interest
coverage of 0.3x in 2018 and Fitch believes that the non-DP segment
is significant and sufficiently stable to provide some support to
the rating, compared with peers rated at 'BB-' that lack this
factor.
CIFI's leverage, measured by net debt / adjusted inventory after
proportionately consolidating the joint ventures (JVs), climbed to
48% by end-2018 from 40% at end-2017, and Fitch expects leverage to
remain above 45% mainly due to the company's increasing scale and
the corresponding pressure on the company to restock its land bank.
The two factors will constrain CIFI at the current rating.
KEY RATING DRIVERS
Higher Leverage, Land Replenishment Pressure: CIFI's leverage
increased in 2018 mainly due to continued high cash outflow for
land acquisitions to support its expansion. CIFI spent 68% of total
cash receipts from sales proceeds and the non-DP segment, or CNY46
billion, on land acquisitions in 2018, compared with 85% in 2017.
CIFI had an attributable land bank of 20.7 million sq m at
end-2018, and Fitch estimates that the available-for-sale portion
is around 17.8 million sq m, equivalent to less than three years of
sales, given CIFI's aim to increase sales by 25% in 2019.
Management budgeted around 55% of total cash receipts, or CNY52
billion, for land acquisitions in 2019. However, Fitch thinks that
a company of CIFI's size would usually have land bank enough for
three years of sales to be resilient in business cycles. Hence,
Fitch expects CIFI's land acquisitions to exceed management's
budget in 2019 and its leverage to remain above 45% in 2019-2020.
Strong Sales: CIFI's total sales in 2018 rose by 46% to CNY152
billion, in line with expectations, with the average selling price
(ASP) falling by 4% to CNY15,900/sq m mainly due to more contracted
sales from third-tier Chinese cities. CIFI's attributable sales
accounted for 50% of the total sales and grew by about 40% to CNY76
billion in 2018, according to management. CIFI aims to achieve 55%
and 60% attributable sales in the next two years to increase profit
attributable to shareholders. Fitch believes CIFI is able to
achieve its target of CNY190 billion in total sales, a 25% increase
yoy, with CNY350 billion of saleable resources in 2019.
Geographical Diversification, Regional Advantage: CIFI's resources
are diversified across different city tiers and cover most of
China's key cities, giving it greater operational flexibility in
managing its sales pace to achieve its sales target. CIFI has a
historical advantage in the Yangtze River Delta, with more than 40%
of its land bank in the region in 2015-2018. However, CIFI has
reduced its reliance on the region, which accounted for 48% of
total sales in 2018, compared with above 60% in 2015-2017.
CIFI has also significantly increased its presence in Tier 3
cities, and they made up 22% of total sales in 2018 compared with
3% in 2017. These resulted in a 25% drop in average attributable
new land cost to CNY5,800/sq m in 2018. According to management,
CIFI will continue to focus on Tier 2 and Tier 3 cities for
residential projects as they have a looser policies and larger land
supply, and will focus on commercial projects in Tier 1 cities.
Margin to be Maintained: CIFI's EBITDA margin after adding back
capitalised interest fell to 21.6% in 2018 from 26.2% in 2017. The
EBITDA margin would have been higher at 31% in 2018 and 29% in 2017
if adjusted for acquisition revaluations, according to the company.
The acquisition revaluations are likely to continue as CIFI has a
significant number of JVs and associates, which will make margins
appear more volatile. Nevertheless, Fitch believes CIFI's
diversified project portfolio across cities of different tiers
allows it to maintain its fast-churn strategy without sacrificing
overall project margins.
Non-DP Segment Supports Interest Cover: CIFI's CNY3.3 billion
non-DP revenue in 2018 comprised around CNY2 billion from JV
project management fees and CNY237 million of rental revenue from
investment properties, with the rest from construction services.
Fitch believes CIFI's large JV operations and reputable property
products have created a stable fee income stream, although the fees
are not strictly recurring as most are project-based. CIFI's non-DP
EBITDA interest coverage was around 0.35x in 2017-2018 and Fitch
expects the ratio to reach 0.4x in 2020, as CIFI plans to increase
its investment-property operations to generate rental and continue
to expand its sales through JVs.
DERIVATION SUMMARY
CIFI's attributable sales reached CNY76 billion in 2018, similar to
Sino-Ocean Group Holding Limited's (BBB-/Stable, standalone credit
profile: bb+) CNY68 billion; but higher than CNY40 billion-50
billion for most peers rated 'BB-' such as, KWG Group Holdings
Limited (BB-/Stable), Times China Holdings Limited (BB-/Stable) and
Yuzhou Properties Company Limited (BB-/Stable).
Sino-Ocean has continued its geographic focus on Tier 1 and
affluent Tier 2 cities, while CIFI has increased its focus on Tier
2 and 3 cities. CIFI's leverage of around 48% at end-2018 is higher
than Sino-Ocean's 40%. Sino-Ocean's recurring EBITDA interest
coverage from quality investment properties was at 0.4x, while CIFI
had non-recurring non-DP EBITDA interest coverage of 0.35x at
end-2018.
CIFI's leverage is higher than that of KWG, Times China and Yuzhou,
but CIFI has a stronger business profile with better geographical
diversification and nationwide presence. CIFI also generates
sizeable non-DP income to provide additional support to the service
interest while the others have minimal non-DP income.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales of CNY100 billion in 2019, and
CNY120 billion in 2020.
- Attributable land purchases and construction cash costs at
around 60% and 25% of contracted sales proceeds, respectively, in
2019-2020
- Property-development gross profit margin (excluding capitalised
interest and remeasurement gain) at 30%-35% in 2019- 2020.
- Non-property development revenue to increase to CNY4.8 billion
in 2019 and CNY6 billion in 2020.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory, including
proportionate consolidation of JVs, sustained below 40%
- Maintaining high cash flow turnover despite the JV business
model and consolidated contracted sales/debt at over 1.2x (2018:
1.0x)
- Land bank sufficient for three years of sales
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Substantial decrease in contracted sales
- Net debt/adjusted inventory including proportionate
consolidation of JVs sustained above 50%
- EBITDA margin, not adjusting for the effect of acquisition
revaluation, sustained below 25%
- Non-property development EBITDA/ cash interest paid sustained
below 0.3x.
LIQUIDITY
Ample Liquidity, Low Funding Cost: CIFI had unrestricted cash of
CNY43.3 billion at end-2018, enough to cover short-term debt of
CNY13.5 billion. CIFI's average funding cost remained stable at
5.8% in 2018 (2017: 5.2%), and should stay low due to CIFI's
diversified onshore and offshore funding channels, as well as its
active management of its capital structure.
FULL LIST OF RATING ACTIONS
CIFI Holdings (Group) Co. Ltd.
Long-Term Foreign-Currency Issuer Default Rating affirmed at 'BB';
Outlook Stable
Long-Term Local-Currency Issuer Default Rating assigned at 'BB';
Outlook Stable
Senior unsecured rating affirmed at 'BB'
CNY1 billion 7.75% senior unsecured notes due 2020 affirmed at
'BB'
USD255 million 6.55% senior unsecured notes due 2024 affirmed at
'BB'
USD300 million 5.5% senior unsecured notes due 2023 affirmed at
'BB'
USD300 million 6.375% senior unsecured notes due 2020 affirmed at
'BB'
USD300 million 7.625% senior unsecured notes due 2023 affirmed at
'BB'
USD400 million 7.625% senior unsecured notes due 2021 affirmed at
'BB'
USD400 million 7.75% senior unsecured notes due 2020 affirmed at
'BB'
USD500 million 6.875% senior unsecured notes due 2021 affirmed at
'BB'
USD585 million 5.5% senior unsecured notes due 2022 affirmed at
'BB'
XINJIANG ZHONGTAI: Fitch Rates $380MM Sr. Unsecured Notes 'BB+'
---------------------------------------------------------------
Fitch Ratings has assigned China-based Xinjiang Zhongtai (Group)
Co., Ltd.'s (XJZT, BB+/Stable) USD380 million 7.0% senior unsecured
US dollar notes due 2022 a final rating of 'BB+'.
The assignment of the final ratings follows the receipt of
documents conforming to information already received. The final
ratings are in line with the expected ratings assigned on May 30,
2019.
The notes are directly issued by XJZT and are rated at the same
level as its Issuer Default Rating. The notes rank pari passu with
all XJZT's other unsecured and unsubordinated obligations. Net
proceeds will be used for domestic and overseas projects and
repayment of existing onshore debt, as well as other general
corporate and working capital purposes.
XJZT was established in 2012 by the Xinjiang Uygur Autonomous
Region and is wholly owned by the Xinjiang State-owned Assets
Supervision and Administration Commission. XJZT is a state-owned
capital investment company under government direction and has
expanded its parent-level operations. The company's major asset is
a controlling stake in Zhongtai Chemical, an integrated chemical
and textile producer.
KEY RATING DRIVERS
XJZT's IDRs are assessed under its Government-Related Entities
Rating Criteria. Fitch believes the government has a strong
incentive to provide extraordinary support to XJZT, if needed.
Fitch has factored in Xinjiang's direct ownership and control, as
well as XJZT's transformation into a more functional role as a
state-owned capital investment company.
RATING SENSITIVITIES
Any rating action on XJZT's IDR will result in similar action on
the ratings of the US dollar notes.
=================
H O N G K O N G
=================
CHINA OIL: S&P Alters Outlook to Stable & Affirms 'BB' ICR
----------------------------------------------------------
S&P Global Ratings revised its rating outlook on China Oil and Gas
Group Ltd. (COGG) to stable from positive. At the same time, S&P
affirmed its 'BB' long-term issuer credit rating on the company.
S&P also affirmed its 'BB' issue rating on COGG's outstanding
senior unsecured notes due 2020 and 2022.
S&P said, "We revised the outlook to stable because we expect
COGG's cash flow leverage to stay below our upgrade threshold due
to the company's low-teen growth in gas sales volume and revenue.
In addition, we expect the company's dollar margin and its
connection fees to remain under pressure.
"We project COGG's ratio of FFO to debt will edge up to 19%-21%
during 2019-2020, from 18.0% in 2018. The company is likely to
achieve low-teen growth in gas sales volume and revenue, given the
Chinese central government's continuous push for clean energy.
However, COGG's gas business growth has slowed in recent years, due
to the deceleration of the Chinese economy, which has weighed on
gas demand in the company's service areas, and its weaker ability
to solicit new projects compared with the top players. In 2018,
COGG sold about 3,726 million cubic meters of natural gas in China,
up 12.6% compared with 19.5% in 2017. Natural gas revenue
maintained robust growth of 25.1% in 2018, after increasing 24.9%
in 2017. Its gas sales are split between commercial and industrial
users (64%), residential users (24%), and gas stations (12%).
"In our view, the improvement in COGG's cash flow may be further
moderated by the pressure on the company's dollar margin and
connection fees. The company reduced its exposure to low-margin gas
sales volume in Qinghai province to 39.8% in 2018 from 43.9% in
2017; but its blended dollar margin was stable at Chinese renminbi
(RMB) 0.41 per cubic meter (cbm) in 2018. This was due to the
increasing contribution from other low-margin regions such as
Shanxi, Guizhou, Gansu, and Zhejiang. We expect its average dollar
margin to slightly decline in 2019-2021."
In addition, COGG's new residential connections and average
connection fees per household are likely to keep falling in the
coming 24 months. In 2018, COGG had 108,347 new residential user
connections, down from 127,100 in 2017 and 157,017 in 2016. As a
result, revenue from connection fees dropped to Hong Kong dollar
(HK$) 517.4 million in 2018 from HK$721.0 million in 2016.
Despite the limited contribution, the segment revenue from the
upstream oil and gas exploitation will decline slightly in the next
two years because we forecast a drop in West Texas Intermediate
(WTI) crude oil price to about US$55 per barrel in 2019-2021 from
US$65 in 2018. In 2018, revenue from this segment grew by 18.1% due
to a surge in average realized oil price per barrel and an 11.0%
increase in production volume.
S&P said, "We expect COGG to maintain positive free operating cash
flow. Its annual capital expenditure will remain HK$1.0
billion-HK$1.2 billion, primarily for pipeline construction. In
2018, COGG took on more new borrowings than our initial projection
partly due to an unexpected increase in dividend distribution by
the intermediate holding company to two major shareholders: COGG
(51%) and Kunlun Energy (49%). In addition, according to the
company, it overborrowed in 2018 to preserve liquidity in light of
the tightening funding conditions in China. As a result, its total
gross debt increased to HK$6,549 million from HK$5,719 million in
2017. We expect its borrowing behavior to normalize in the forecast
period and its gross debt will be largely stable at HK$6 billion.
"We have revised our assessment of COGG's liquidity to adequate
from strong in light of its US$300 million senior unsecured notes
due in May 2020. We expect the company to be contemplating a
refinancing plan ahead of its offshore bond maturity.
"The stable outlook reflects our expectation that COGG will
continue its satisfactory gas sales growth and stable capital
expenditure over the next 12-18 months. This will offset the
declining profit margin and result in the ratio of FFO to debt
staying between 19% and 21% in 2019-2020.
"We may lower the rating if COGG's ratio of FFO to debt approaches
15% without the prospect of recovery. This may be a result of
weaker-than-expected operating cash flow caused by further delays
in the pass-through of costs. In addition, large acquisitions, such
as additional upstream assets, may weaken the company's credit
profile.
"We may raise the rating if we have visibility on COGG's ability to
improve dollar margins, such that its ratio of FFO to debt firmly
improves and approaches 25% on a sustainable basis. In addition, an
upgrade hinges on a clear and stable dividend policy at COGG's
subsidiary and project level, as well as its financial discipline
in new investments and acquisitions."
=========
I N D I A
=========
ALLAHABAD AGRO: CRISIL Assigns B+ Rating to INR5cr Cash Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Allahabad Agro Commodities Private Limited (AACPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund-
Based Bank Limits 1 CRISIL B+/Stable (Assigned)
Long Term Loan 1.77 CRISIL B+/Stable (Assigned)
Cash Credit 5 CRISIL B+/Stable (Assigned)
Foreign Letter
of Credit 2.23 CRISIL B+/Stable (Assigned)
The ratings reflect the company's vulnerability to volatile raw
paddy prices and changes in government regulations, modest scale of
operations, and weak financial profile. These weaknesses are
partially offset by the extensive industry experience of the
promoters.
Key Rating Drivers & Detailed Description
Weakness
* Vulnerability to volatile raw material prices and changes in
government regulations: Vulnerability to the vagaries of rainfall
can lead to fluctuations in availability and prices of paddy and,
thus, could impact the business risk profile. Moreover, the company
will remain exposed to government regulations regarding agro
commodities, export restrictions, and so on.
* Modest scale operations: Scale of operations is modest in the
intensely competitive basmati rice industry. AACPLs moderate scale
of operations will continue limit its operating flexibility.
* Weak financial profile: Financial risk profile is weak due to
high gearing and low accruals from the operations: Debt protection
metrics are below average, with interest coverage and net cash
accrual to total debt ratios of 1.07 times and 00 time,
respectively, in fiscal 2019. The metrics are expected to remain
weak due to high debt levels.
Strength
* Extensive industry experience of the promoters: Benefits from the
three-decade-long experience of the promoters in the basmati rice
industry, their strong understanding of the market dynamics, and
healthy relationships with suppliers and customers will continue to
support the business.
Liquidity
Liquidity is adequate. Cash accrual, expected at INR0.7-0.8 crore
in fiscals 2020 and 2021 each against debt obligation of INR0.32
crore, is aided by continuous infusion of unsecured loans by the
promoters. Utilisation of fund-based limit of INR5.0 crore averaged
35% over the 12 months through April, 2019. Cash and bank balance
was INR0.02 crore as on March 31, 2018.
Outlook: Stable
CRISIL believes AACPL will continue to benefit from its promoters'
extensive experience and strong relationships with clients. The
outlook may be revised to 'Positive' if ramp-up in scale of
operations and stable profitability strengthen the financial risk
profile. The outlook may be revised to 'Negative' if decline in
profitability, stretch in the working capital cycle, or large,
debt-funded capital expenditure weakens the capital structure.
Incorporated in 2016, AACPL is engaged in processing'that is,
milling, polishing, and sorting'of basmati rice. The milling
facility is in Allahabad. Mr Pawan Kumar Gupta, Ms Sushma Gupta,
and Mr Gopesh Gupta are the promoters.
ARETE INDIA: CRISIL Assigns B+ Rating to INR22cr LT Loan
--------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of Arete India Projects Private Limited (AIPPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 22 CRISIL B+/Stable (Assigned)
The rating reflects AIPPL's susceptibility to risks inherent in the
real estate industry, and exposure to project and geographical
concentration risks.These weaknesses are partially offset by the
extensive experience of the partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility to inherent cyclicality in industry: AIPPL is
susceptible to risks pertaining to the real estate sector such as
long gestation period of projects. Any time or cost overrun or
delay in obtaining necessary approvals could affect the
realisations and profitability of the project. The demand for
residential projects is affected by the level of interest rates and
overall economic activity. I Low demand ofongoing project, or any
delay in its implementation could constrain the credit risk
profile.
* Exposure to high geographic and project concentration risks: Any
slowdown in the real estate market will impact the demand for the
project. Further, the company remains vulnerable to project
concentration risk as well since any adverse happening in the
marketing or construction of the above project can significantly
impede the business.
Strength
* Extensive experience of the partners: The promoters have
previously constructed three residential complexes successfully.
Benefits from the promoters' expertise, their strong understanding
of local market dynamics, and healthy relations with customers and
suppliers should continue to support the business.
Liquidity
The continuous flow of funds in the form of advances, promoter's
infusion along with bank funds support the overall liquidity
profile of the company. Going forward the firm is expected to
realize sufficient funds in order to support the timely repayment
(The term loan repayment will start from June, 2020).
Outlook: Stable
CRISIL believes AIPPL will continue to benefit from the healthy
booking progress and advantageous location of the project. The
outlook may be revised to 'Positive' if speedy execution of the
project and improved receipt of customer advances generates
substantial cash accrual. Conversely, the outlook may be revised to
'Negative' if cash flow from operations is significantly low,
either because of subdued response to project or low customer
advances, or if delay in completion weakens the financial risk
profile and liquidity.
AIPPL is incorporated under the Companies Act, 1956. Currently, the
Gurgaon-based company is constructing a residential project, Our
Homes 3, in Gurgaon under the Haryana Urban Development Authority's
affordable housing scheme. Mr Arun Kapoor and Mr Rajesh Goel are
the promoters.
BAGWAN COTEX: CRISIL Migrates 'B+' Rating to Not Cooperating
------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Bagwan Cotex
(Bagwan) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL B+/CRISIL B+/Stable
(ISSUER NOT COOPERATING;
Rating Migrated)
Rupee Term Loan 4.0 CRISIL B+/CRISIL B+/Stable
(ISSUER NOT COOPERATING;
Rating Migrated)
CRISIL has been consistently following up with Bagwan for obtaining
information through letters and emails dated May 21, 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 Bagwan. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Bagwan is
consistent with 'Scenario 4' outlined in the 'Framework for
Assessing Consistency of Information with '.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of Bagwan to 'CRISIL B+/Stable Issuer not cooperating'.
Established in June 2013 as partnership firm, Bagwan is engaged in
cotton ginning and pressing with production capacity of 300 bales
per day. Its manufacturing facility is located at Sillod,
Maharashtra. Mr Sayyad Yunus, Mr Sayyad Ibrahim, Mr Abdul Karim, Mr
Shaikh Rauf and Mr Shaikh Yasin are the partners.
CRAFTED SOLUTIONS: CRISIL Assigns B+ Rating to INR20.52cr Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
facilities of Crafted Solutions (CS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 20.52 CRISIL B+/Stable (Assigned)
Cash Credit 2.00 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility .48 CRISIL B+/Stable (Assigned)
The rating reflects the firm's exposure to risks related to the
ongoing project and the expected leveraged capital structure. These
weaknesses are partially offset by the extensive experience of the
partners and their funding support.
Analytical Approach
Unsecured Loan of INR2.75 crores have been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to risks related to ongoing project: CS is currently
setting up a factory for manufacturing corrugated boxes, which is
scheduled to commercialize from September 2019. Since the project
is 50% complete, the firm is exposed to high implementation risk.
Further, timely completion and successful ramp up of operations
will remain rating sensitivity factors.
* Expected leveraged capital structure: Financial risk profile is
expected to be weak with high gearing; the project has funded with
2.7 times of debt-equity ratio.
Strength:
* Extensive experience of the partners: Benefits from the partners'
experience of over 15 years, their in-depth understanding of the
dynamics of the market, and established relations with suppliers
and customers should continue to support the business. Further,
need-based funding support from the partners is expected to
continue.
Liquidity
Ongoing Debt-funded capital expenditure is likely to keep liquidity
weak over the medium term. With ramp up in operations, the accruals
are expected to improve but remain modest. Unsecured loans from
partners supports liquidity.
Outlook: Stable
CRISIL believes that CS will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if ramp up in operations post completion of capital
expenditure results in high cash accrual. The outlook may be
revised to 'Negative' if delay in the commencement of operations,
generation of low cash accrual during initial phase of operations,
or increase in working capital requirement weakens financial risk
profile, especially liquidity.
Incorporated in 2018, CS, a partnership firm of Mr. Darshan
Khivansara and Mr. Kishore Khivansara, is currently setting up a
plant to manufacture corrugated boxes with proposed installed
capacity of 3500 tons/month. Commercial operations are scheduled
to commence from September 2019.
DEEPIKA INFRATECH: CRISIL Assigns D Rating to INR130.5cr Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Deepika Infratech Private Limited (DIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 130.5 CRISIL D (Assigned)
Cash Credit 20 CRISIL D (Assigned)
The ratings reflect overdrawal in the working capital limit for
more than 30 consecutive days due to weak liquidity. However, there
has been no invocation of bank guarantee during the last four years
ended Mar 2019.
The ratings reflect Below-average financial risk profile. These
weaknesses are partially offset by extensive experience of the
promoters and Moderate scale of operations and order pipeline.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: Financial risk profile is
weak with modest networth and debt protection metrics. Working
capital limit has been overdrawn due to weak liquidity.
Strengths
* Extensive experience of the promoters: Benefits from the
promoters' experience of over two decades, their strong
understanding of market dynamics, and healthy relations with
customers and suppliers should continue to support the business.
* Moderate scale of operations and order pipeline: Operating income
stood at an estimated INR102.6 crore during fiscal 2019 and orders
worth INR1430 crore (as on March 31, 2019) are to be completed in
the next 3-4 years. However, the irrigation and engineering
procurement and construction projects are exposed to delays because
of various social and political factors influencing the
decision-making in the initial stages and the time involved in
getting required clearances and approvals.
Liquidity
Liquidity is weak. the company has fund-based limit of INR20 crore
and there were overdrawal in the working capital limit for more
than 30 consecutive days. However, the cash credit limit has
declined from INR50.45 crore in fiscal 2017 to INR20 crore,
currently. During fiscal 2019, bank guarantees worth INR12.45 crore
were released to various banks and a further INR25-30 crore is
likely to be released in fiscal 2020.
Incorporated in 2004, Hyderabad-based DIPL, promoted by Mr Kandala
Vijaya, is engaged in civil construction works mainly irrigation
projects.
DELTA JEWELLERS: Ind-Ra Migrates BB+ LT Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Delta Jewellers
Pvt Ltd's Long-Term Issuer Rating to the non-cooperating category.
The issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND BB+
(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating action is:
-- INR100 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING) /
IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 4, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2006, Delta Jewellers is a franchise of Tanishq.
The company has its registered office and retail showroom in
Durgapur, West Bengal.
GODRIWALA EDUCATION: CRISIL Reaffirms 'B' Rating on INR7.8cr Loan
-----------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable' rating on the long-term
bank facility of Godriwala Education Society (GES).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 0.2 CRISIL B/Stable (Reaffirmed)
Term Loan 7.8 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect the society's exposure to risks
related to its initial stage of operations, weak financial risk
profile, and susceptibility to regulatory risks. These weaknesses
are partially offset by the experience of its trustees in operating
pre-schools and favourable demand prospects for education.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to risks because of initial stage of operations: GES has
been operating four pre-schools and has earned very modest revenue
estimated at INR3.5 crore in fiscal 2019. It commenced operations
of school in April 2017, and has had low occupancy given the
initial phase. The school operations will be exposed to competition
and initial phase of operations in near to medium term. The
revenues are expected to be low over the medium term. Ramp-up in
school's operations and occupancy remains critical.
* Vulnerability to regulatory risks associated with the educational
institutions: Operations are regulated by government agencies such
as the Central Board of Secondary Education (CBSE) and state
governments. The trust needs to regularly invest in workforce and
infrastructure. Also, the trust has to get annual approvals from
various bodies. The society will remain exposed to regulatory
risks.
* Weak financial risk profile: The financial risk profile is
constrained by weak capital structure and subdued debt protection
metrics. Gearing and debt protection metrics are expected to be
weak due to negative networth on account of operating losses
arising from and large debt tied up to fund the school project.
Strength
* Moderate experience of the trustees and their fund support: The
operations of GES are managed by Mr Inderlani Thourani and his
family members, who have experience of managing four pre-schools.
The trustees offer funding support in the form of unsecured loans
(Rs 6 crore estimated as on March 31, 2019). CRISIL believes the
trustees will continue to offer funds to support operations until
GES turns self-sufficient.
Liquidity
Liquidity is stretched on account of negative cash accruals owing
to operating losses, however the repayment obligations are being
serviced on time through fund support from the promoters in the
form of unsecured loans. Stabilization and ramp-up of operations
leading to sizeable cash generation remains critical.
Outlook: Stable
CRISIL believes GES will continue to benefit from its trustees'
experience in operating pre-schools, which should support student
intake. The outlook may be revised to 'Positive' on stabilization
and ramp-up of operations at the upcoming school, backed by
substantial enrolment leading to sizeable cash generation. The
outlook may be revised to 'Negative' if lower ramp-up, pressure on
cash accruals or higher working capital requirements lead to
further deterioration in liquidity and financial risk profile.
GES was established in 2012 for running educational institutes. It
has opened four pre-schools (all in Raipur) with capacity of 450
students, and has set up a school in Naya Raipur which commenced
operations in 2017-18.
HK INFRAVENTURES: CRISIL Withdraws B Rating on INR6cr Term Loan
---------------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of HK Infraventures Private
Limited (HKIPL) to 'CRISIL B/Stable/Issuer not cooperating'. CRISIL
has withdrawn its rating on bank facility of HKIPL following a
request from the company and on receipt of a 'no dues certificate'
from the banker. Consequently, CRISIL is migrating the rating on
bank facilities of HKIPL from 'CRISIL B/Stable/Issuer Not
Cooperating' to 'CRISIL B/Stable'. The rating action is in line
with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 6 CRISIL B/Stable/Issuer Not
Cooperating (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING'; Rating
Withdrawn)
HKIPL promoted in 2011 by Mr Hemant Kumar Sindhi and his family,
undertakes residential real estate development. It is constructing
a residential real estate project, Sunshine Royal Place, at Dandi
Rewa Road, Allahabad (Uttar Pradesh). The project has 56 units,
including 44 and 12 units of two- and three bedroom-hall-kitchen
flats, respectively.
INTERFAB APPARELS: CRISIL Lowers Rating on INR4.95cr Loan to D
--------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Interfab Apparels (Interfab) to 'CRISIL D' from 'CRISIL
BB/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.95 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Proposed Cash 3.05 CRISIL D (Downgraded from
Credit Limit 'CRISIL BB/Stable')
The rating downgrade reflects delays in the repayment of bank loans
by Interfab. The delays were due to weak operating performance.
The rating also reflects the modest scale of operations in a
competitive segment. However the firm benefits from the experience
of Interfab's partners in the readymade garments industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations amidst intense competition: Scale of
operations is low as reflected in fiscal 2017 revenue. Extreme
competition may continue to restrict the scalability of operations
and limit the pricing power with suppliers and customers, thereby
constraining profitability
Strength
* Experience of partners: Benefits from the partners' experience of
around 15 years, their strong understanding of the local market
dynamics, and healthy relations with customers and suppliers should
continue to support the business.
Liquidity
Liquidity is weak as reflected in the delays in repayment of bank
loans. Stretch in the working capital has resulted in the delays.
Interfab, set up in 2010 at Tiruppur (Tamil Nadu), as a partnership
between Mr K Karthikeyan and Ms K Sasikala. The firm manufactures
readymade garments for men and women. The garments are sold to
domestic customers.
JP INTERNATIONAL: CRISIL Assigns B+ Rating to INR2cr Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of JP International - Kolkata (JPI).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing
Credit 2 CRISIL B+/Stable (Assigned)
The rating reflects JPI's modest networth, small scale of
operations, low profitability, and susceptibility to changes in
government regulations and to cyclicality in end-user industries.
These weaknesses are partially offset by the extensive experience
of the promoter, prudent working capital management, and sound
operating efficiencies.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operation: Intense competition: due to small
initial investment and low complexity of operations'and the trading
nature of business continue to constrain scalability and
profitability: revenue and operating margin are estimated at
INR12-13 crore and 4.2%, respectively, in fiscal 2019.
* Susceptibility to regulatory changes and to cyclicality in
end-user industries: The inorganic chemical business is highly
susceptible to government regulations, and any unfavorable change
in policies could constrain profitability. Furthermore, exposure to
the risk of cyclicality in end-user industries persists.
* Small networth: Networth is estimated at INR90 lakh as on
March 31, 2019, due to modest accretion to reserve and small
initial capital.
Strengths
* Extensive experience of the promoter: Benefits from the
promoter's experience of around two decades, and his understanding
of market dynamics and healthy relationships with suppliers and
customers should continue to support business risk profile. Most of
the customers have been associated with the firm since its
inception.
* Prudent working capital management: Operations are managed
prudently. Gross current assets'estimated at 63 days as on
March 31, 2019'were 58-112 days in the three fiscals ended March
31, 2018.
* Sound operating efficiencies: Operating efficiencies are healthy,
with return on capital employed (RoCE) estimated at 29% in fiscal
2019.
Liquidity
Liquidity is adequate. Utilisation of bank limit of INR1 crore was
70-80% in the 12 months through March 2019. With the business being
expanded, bank lines are expected to be enhanced to support
incremental working capital requirements. Unencumbered cash and
liquid investments are estimated at INR56 lakh and INR80 lakh,
respectively, as on March 31, 2019. Net cash accrual is likely to
be at INR25-30 lakh per annum over the medium term vis-Ã -vis
yearly debt obligation of around INR10 lakh.
Outlook: Stable
CRISIL believes JPI will continue to benefit from the extensive
experience of its promoter and his healthy relationships with
suppliers and customers. The outlook may be revised to 'Positive'
if sustained growth in revenue strengthens financial risk profile.
The outlook may be revised to 'Negative' if low demand or decline
in profitability weakens financial risk profile, particularly
liquidity.
Incorporated in 2001, Kolkata-based JPI trades in chemicals,
industrial oil, bulk solvent/chemicals, Eastman chemicals, talc
powder, and minerals. The firm is owned and managed by Mr Sunil
Pramanik.
M.G. INDUSTRIES: CRISIL Assigns B+ Rating to INR4.75cr Cash Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of M.G. Industries - Nashik (MGINNA).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.75 CRISIL B+/Stable (Assigned)
Term Loan 1.25 CRISIL B+/Stable (Assigned)
The rating reflects the firm's small scale of operations,
vulnerability to cyclicality in end-user industry, large working
capital requirement, and a highly leveraged capital structure.
These weaknesses are partially offset by the extensive experience
of its proprietor.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations and vulnerability to cyclicality in
end-user industry: With an estimated operating income of INR20.90
crore in fiscal 2019, scale remains modest. The firm's performance
is closely linked to the investment climate of its end-user
industry, which is cyclical.
* Working capital-intensive operations: Gross current assets have
been 186-223 days over the three fiscals ended March 31, 2018, and
are estimated at 152 days as on March 31, 2019. This is mainly
because of moderate receivables of 53 days and large inventory of
100 days. The firm relies on bank borrowing to meet working capital
requirement.
* Highly leveraged capital structure: Networth is estimated to be
small at INR1.75 crore as on March 2019, while total outside
liabilities to tangible networth ratio was high at 6.54 times. Debt
protection metrics remained average, with estimated interest
coverage and net cash accrual to total debt ratios of 1.83 times
and 0.10 time, respectively, for fiscal 2019.
Strengths:
* Extensive experience of proprietor: Presence of over 30 years in
the industrial machinery and consumables industry has enabled the
proprietor to understand market dynamics and establish healthy
relationship with suppliers and customers.
Liquidity
Liquidity is likely to remain average over the medium term. Cash
accrual, projected at INR0.75-1.45 crore during fiscals 2019 to
2021 per annum, will be sufficient to meet debt obligation of
INR25-45 lakh a fiscal for the same period. Bank limit utilisation
averaged 98% in the 12 months ended February 2019. Current ratio is
estimated at 0.85 time as on March 31, 2019.
Outlook: Stable
CRISIL believes MGINNA will continue to benefit from the extensive
experience of its proprietor and established relationship with
clients. The outlook may be revised to 'Positive' if ramp-up in
operations and stable profitability strengthen financial risk
profile. The outlook may be revised to 'Negative' if decline in
profitability, stretch in working capital cycle, or large,
debt-funded capital expenditure further weakens capital structure.
MGINNA was set up in 1980 in Nashik as a proprietorship firm by Mr
K N Changrani. It manufactures machined precision components for
automobile and electrical tools, and also pneumatic tools
components.
MANI BHUSAN: CRISIL Assigns B+ Rating to INR5cr Cash Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Mani Bhusan Dutta Steel Private Limited (MBDSPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Assigned)
Proposed Cash
Credit Limit 5 CRISIL B+/Stable (Assigned)
The ratings reflect the company's stretched working capital cycle
and weak financial risk profile. These weaknesses are partially
offset by the extensive experience of the promoters in the steel
trading industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Operations are working
capital-intensive, with gross current assets of 126 days as on
March 31, 2018 driven, in turn, by inventory and debtors of 21 days
and 77 days, respectively.
* Weak financial risk profile: Financial risk profile is weak, with
networth and gearing at INR1.25 crore and 5.89 times, respectively,
as on March 31, 2018. Sizeable debt and average profitability have
resulted in modest debt protection metrics, with interest coverage
and net cash accrual to total debt ratios of 1.2 times and 0.03
time, respectively, in fiscal 2018.
Strength
* Promoters' extensive experience: Benefits from the promoters'
experience of over 20 years and their deep understanding of local
market dynamics, which helps anticipate price trends and calibrate
purchasing and stocking decisions, should continue to support
business risk profile.
Liquidity
Liquidity is sufficient. Net cash accrual is estimated to
sufficient against debt repayment obligation over the medium term.
Furthermore, financial assistance may be expected from the
promoters whenever necessary. Utilisation of cash credit limit
averaged a high 98% in the 12 months through December 2018.
Outlook: Stable
CRISIL believes MBDSPL will continue to benefit from its promoters'
extensive experience and their funding support. The outlook may be
revised to 'Positive' if higher revenue growth and stable
profitability strengthen net cash accrual. The outlook may be
revised to 'Negative' if lower-than-expected sales or
profitability, or stretch in working capital cycle weakens
financial risk profile, particularly capital structure and
liquidity.
Incorporated in 2012, MBDSPL is promoted Mr Prasanta Kumar Dutta
and Ms Suparna Dutta. The company is distributor for JSW Steel in
Hooghly and Howrah district of Kolkata. Apart from this company is
also a distributor of JSW Cement and Nuvoco Cement.
MEKA BUJJI: CRISIL Assigns B+ Rating to INR4.9cr Cash Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Meka Bujji Parameswara Rao (MBPR).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.9 CRISIL B+/Stable (Assigned)
Proposed Fund-
Based Bank Limits 1.1 CRISIL B+/Stable (Assigned)
The rating reflects the firm's modest scale of operations,
Below-average financial risk profile and exposure to risks inherent
in the poultry industry. These weaknesses are partially offset by
the extensive experience of the promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Intense competition in the poultry
business and revenue estimated at INR15 crore in fiscal 2019, scale
was modest and limits bargaining power with customers and
suppliers.
* Below-average financial risk profile marked by low net worth: The
net worth estimated as on 31st March 2019 is at a low INR1.14 crore
which is expected to improve over the medium term, though
gradually. This was due to small capital base and modest accretion.
Consequently, financial risk profile is highly leveraged as
reflected in estimated high gearing and total outside liabilities
to adjusted networth (TOLANW) ratios of 4.67 and 6.03 times,
respectively, as on March 31, 2019. Though the financial risk
profile is supported by estimated moderate debt protection metrics
as reflected by interest coverage and net cash accrual to adjusted
debt of 2.15 times and 0.08 time respectively in fiscal 2019.
* Exposure to inherent risks in the poultry industry: Outbreak of
diseases among the egg-laying birds can impact sales volume and
selling price. Diseases also impact production of healthy chicks.
Seasonality in demand also results in volatile end-product prices.
Strengths
* Extensive experience of promoters: The promoter extensive
experience of more than 35 years in the business, and healthy
relationships with customers and suppliers should continue to
support the firm.
Liquidity
Liquidity is stretched, as reflected in estimated net cash accrual
of INR0.45 crore in fiscal 2019, and expected annual accrual of
INR0.55-0.60 crore over the medium term, against nil debt
obligation. Bank limit is highly utilized at an average of 99% over
the 12 months through April 2019.
Outlook: Stable
CRISIL believe MBPR will continue to benefit from the extensive
experience of the promoter, and their healthy 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, a stretch in working capital cycle, or any large
debt-funded capital expenditure weakens capital structure.
MBPR is a proprietorship firm set up in Krishna, Andhra Pradesh in
1983. The firm sell eggs obtained from its poultry farm of 2 lakh
hens. The key proprietor, Mr. M B Parameswara Rao has experience of
over three decade in the business.
ORBIT ELECTRO: Ind-Ra Affirms BB LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Orbit Electro
Equipments Private Limited's (OEEPL) Long-Term Issuer Rating at
'IND BB'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR127.5 mil. Fund-based facilities affirmed with IND
BB/Stable/ IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects OEEPL's continued modest credit metrics as
well as tight liquidity. Credit metrics, though marginally
improved, remained modest as a result of increased debt levels in
FY19. According to the provisional financials of FY19, interest
coverage (operating EBITDA/gross interest expense) was 2.7x in FY19
(FY18: 2.1x), net financial leverage (adjusted net debt/operating
EBITDAR) was 4.1x (5.3x) and debt was INR353 million (INR339
million; FY17: INR289 million). The company had fully utilized its
fund-based facilities over the 12 months ended in March 2019. Cash
flow from operations remained negative at INR30 million in FY19
(FY18: negative INR19 million) due to the elongated working capital
cycle of 93 days (73 days) on higher receivable days of 66 (48).
The rating factor in the company's moderate scale of operations.
Sales grew 9.9% YoY to INR1,759 million in FY19 on increased orders
received from clients. Ind-Ra expects the company to sustain its
scale of operations in the medium term, backed by its outstanding
order book of INR960 million to be executed over the next six
months. EBITDA margins improved marginally but remained modest at
4.8% in FY19 (FY18: 4.0%) with RoCE of 11% (12%). Absolute EBITDA
also grew to INR84 million in FY19 (FY18: INR63 million) primarily
on lower variable expenses.
The ratings continue to be supported by over a decade of experience
of OEEPL's promoters in the panels manufacturing industry.
RATING SENSITIVITIES
Negative: A substantial decline in the profitability resulting in a
sustained deterioration in the credit profile will lead to negative
rating action.
Positive: Substantial growth in the top-line and profitability
leading to a sustained improvement in the credit metrics will be
positive for the ratings.
COMPANY PROFILE
Started in 2008, OEEPL manufactures electrical panels and fire
panels. It is also engaged in fabrication, powder coating, and
wire harnessing. OEEPL's manufacturing unit is located in
Maharashtra.
PENINSULA VACATIONS: CRISIL Assigns B Rating to INR.01cr Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the bank
facility of Peninsula Vacations Private Limited (PVPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund- .01 CRISIL B/Stable (Assigned)
Based Bank
Limits
The rating reflects PVPL's exposure to project implementation risks
and cyclicality in demand. This weaknesses are partially offset by
the promoters' extensive experience and funding support.
Key Rating Drivers & Detailed Description
Weakness:
* Exposure to project implementation and stabilisation risks: PVPL
is likely to launch its website 'Lataar.com' in July 2019. Given
the intense competitive pressure, timely implementation,
stabilisation and ramp-up in operations are critical factors and
will, therefore, be closely monitored.
* Vulnerability to cyclicality in the travel and tourism industry
The travel and tourism industry is cyclical in nature, and hence,
sensitive to overall economic conditions. Players also face
external risks such as hikes in air fares, and transportation and
fuel cost, and economic downturns.
Strength:
* Extensive industry experience of, and funding support from, the
promoters: The decade-long experience of the promoters in the
travel and tourism industry, and their healthy relationships with
sub-agents, should help increase business volume and earn higher
incentives. Lataar.com is end to end exclusive travel booking
portal contains flight booking especially low cost airlines of
various countries worldwide, hotel booking with live inventory, new
concept of multi-city car rental, worldwide sightseeing and
international airport transfers fulfilling every travel needs of
the traveller in a smoother way. The company is expected to launch
a website along with mobile app during July 2019, to strengthen its
market position.
Liquidity
Liquidity is adequate, driven by financial support from the
promoter in the form of equity infusions.
Outlook: Stable
CRISIL believes PVPL will continue to benefit from its established
network of agents and healthy relationships with domestic airlines.
The outlook may be revised to 'Positive' in case of sizeable cash
accrual and efficient working capital management. The outlook may
be revised to 'Negative' if low cash accrual or stretch in working
capital cycle further weakens financial risk profile, particularly
liquidity.
Incorporated in September 2017, by Mr Vaibhavkumar Jyani and Mr
Jignesh Vyas, PVPL proposes to undertake online travel bookings of
flights, domestic and international hotels, multi-city car rental,
sightseeing of the world and international airport transfers.
Lataar.com is an ISO certified company and LATAAR is a trademark.
RAVINDRA BHARATHI: Ind-Ra Lowers Bank Loan Rating to 'D'
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Ravindra
Bharathi Educational Society's (RBS) bank facilities as follows:
-- INR1,765.33 bil. Bank loans (Long-term) downgraded with IND D
rating; and
-- INR250 mil. Fund-based working capital limits (Long-term)
downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects delays in debt servicing by RBS due to its
stretched liquidity position. The society has over-reliance on its
short-term loans to finance its long-term liabilities. Its DSCR
including rental payments fell below 1x during FY17-FY18. RBS
availed and repaid short-term loans during FY17-FY18.
As per FY19 provisional financials, available funds just cover
0.55% of the total debt including rent (FY18: 0.28%) and 0.49%
(0.30%) of the operating expenses. RBS over-utilized its fund-based
working capital limits during the 12 months ended April 2019.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months would
be positive for the ratings.
COMPANY PROFILE
RBS, registered under the Societies Registration Act XXI of 1860,
established its first school at Nellore in 1994. It runs 143
branches and had 145,949 students in FY19 (FY18: 141,345).
REGIN AGENCY: CRISIL Lowers Rating on INR12cr Loan to B+
--------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of Regin
Agency (RA: part of Regin Group) to 'CRISIL B+/Stable' from 'CRISIL
BB-/Negative'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
Key Cash Credit 10 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
The downgrade reflects weakening of the group's business risk
profile, marked by lower-than-expected revenues and cash accrual.
The group's operating performance has declined owing to sluggish
global demand and increasing competition. Consequently, financial
risk profile has seen a deterioration, especially liquidity. CRISIL
believes that pricing pressure due to intense industry competition
will impact the group's operating performance over the medium
term.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of RA and Regin Exports (RE) .This is
because the two firms, together referred to as the Regin group,
have considerable linkages, common business, and same management.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition: Low entry barrier due to modest
capital requirement has led to many players in the cashew
processing segment, leading to intense competition.
* Susceptibility of operating margin to volatility in raw material
prices: Profitability has remained low and volatile at 1.6-3% in
the past three years because cashew prices depend on yield in a
particular season.
* Modest financial risk profile: Estimated net worth and gearing is
moderate at INR15 crores and 2 times respectively as on March 31,
2019. Debt protection metrics are moderate, with estimated interest
coverage and net cash accrual to total debt ratios of 1.21 times
and 2 per cent, respectively, in fiscal 2019.
Strengths
* Extensive experience of promoters: Presence of over decades in
the cashew processing industry has enabled the promoters to
establish strong relationship with customers and suppliers.
Liquidity
Liquidity is stretched with expected cash accrual of INR63-65 lakhs
against repayment obligation of INR65-68 Lakhs. Presence of
unencumbered cash and bank balances of more than INR6.8 crore as on
March 31, 2019 is likely to support liquidity. Bank lines of
INR41.90 crores (including the seasonal cash credit limits are
fully utilised).
Outlook: Stable
CRISIL believes the Regin group will continue to benefit over the
medium term from the extensive experience of its promoters. The
outlook may be revised to 'Positive' if a significant improvement
in profitability leads to substantial cash accrual and hence, a
better financial risk profile. The outlook may be revised to
'Negative' if weakening of profitability and financial risk
profile, particularly liquidity, weakens due to lower-than-expected
cash accrual or sizeable working capital requirement.
RA, based in Kanyakumari, was established in 2002 as a sole
proprietorship concern by Mr. P Regin. The firm imports and
processes cashew kernels.
RE, sole proprietorship firm of the wife of Mr. P Regin, Ms. T Ani
Chandrakala, was established in 2009 and exports cashew kernels to
the US, Singapore, and Gulf countries.
REGIN EXPORTS: CRISIL Lowers Rating on INR10cr Cash Loan to B+
--------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of Regin
Exports (RE: part of Regin Group) to 'CRISIL B+/Stable' from
'CRISIL BB-/Negative'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
Key Cash Credit 5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
Long Term Loan 1.29 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Negative')
Proposed Long Term .71 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Negative')
The downgrade reflects weakening of the group's business risk
profile, marked by lower-than-expected revenues and cash accrual.
The group's operating performance has declined owing to sluggish
global demand and increasing competition. Consequently, financial
risk profile has seen a deterioration, especially liquidity. CRISIL
believes that pricing pressure due to intense industry competition
will impact the group's operating performance over the medium
term.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of RE and Regin Agency (RA) .This is
because the two firms, together referred to as the Regin group,
have considerable linkages, common business, and same management.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition: Low entry barrier due to modest
capital requirement has led to many players in the cashew
processing segment, leading to intense competition.
* Susceptibility of operating margin to volatility in raw material
prices: Profitability has remained low and volatile at 1.6-3% in
the past three years because cashew prices depend on yield in a
particular season.
* Modest financial risk profile: Estimated net worth and gearing is
moderate at INR15 crores and 2 times respectively as on March 31,
2019. Debt protection metrics are moderate, with estimated interest
coverage and net cash accrual to total debt ratios of 1.21 times
and 2 per cent, respectively, in fiscal 2019.
Strengths
* Extensive experience of promoters: Presence of over decades in
the cashew processing industry has enabled the promoters to
establish strong relationship with customers and suppliers.
Liquidity
Liquidity is stretched with expected cash accrual of INR63-65 lakhs
against repayment obligation of INR65-68 Lakhs. Presence of
unencumbered cash and bank balances of more than INR6.8 crore as on
March 31, 2019 is likely to support liquidity. Bank lines of
INR41.90 crores (including the seasonal cash credit limits are
fully utilised).
Outlook: Stable
CRISIL believes the Regin group will continue to benefit over the
medium term from the extensive experience of its promoters. The
outlook may be revised to 'Positive' if a significant improvement
in profitability leads to substantial cash accrual and hence, a
better financial risk profile. The outlook may be revised to
'Negative' if weakening of profitability and financial risk
profile, particularly liquidity, weakens due to lower-than-expected
cash accrual or sizeable working capital requirement.
RA, based in Kanyakumari, was established in 2002 as a sole
proprietorship concern by Mr. P Regin. The firm imports and
processes cashew kernels.
RE, sole proprietorship firm of the wife of Mr. P Regin, Ms. T Ani
Chandrakala, was established in 2009 and exports cashew kernels to
the US, Singapore, and Gulf countries.
SAI ENTERPRISES: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sai Enterprises
(SE) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR1.30 bil. Proposed term loan assigned with Provisional IND
BB/Stable rating.
The rating is provisional and shall be confirmed upon the sanction
and execution of loan documents for the above facility by SE to the
satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect the risk of time and cost overruns associated
with SE's ongoing residential project, Sethia Imperial Avenue. Only
42% of the total construction has been completed so far, with the
remaining likely to be completed by December 2022. The project
completion is largely dependent on customer advances from the
booking of flats. So far, SE has sold 285 flats of 451 flats.
Therefore, any delay in the booking of flats may affect the
project's progress.
The ratings also factor in the partnership structure of the
organization.
However, the ratings benefit from the company's comfortable
liquidity position with cash and cash equivalents of INR61.91
million at FYE18 (FYE17: INR1.50 million). Ind-Ra expects SE's
liquidity profile to remain comfortable over FY20-FY23 with the
debt service coverage ratio likely to be above 1.0x during this
period.
The ratings are also supported by the promoters' experience of over
10 years in the real estate sector and the project's favorable
location in Malad East, Mumbai, with proximity to schools,
colleges, and markets.
RATING SENSITIVITIES
Negative: Time and cost overruns or cancellation of sold units,
leading to stressed cash flows would be negative for the ratings.
Positive: An improvement in sales and timely receipt of advances
from customers, leading to stronger cash flows, would be positive
for the ratings.
COMPANY PROFILE
Established in 2005, SE is engaged in real estate development. Mr.
Basantraj Sethia and Sethia Infrastructure Pvt Ltd. are the
partners.
SAMARTH DAIRY: CRISIL Assigns B+ Rating to INR5cr Cash Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Samarth Dairy and Agro Products Private Limited
(SDAPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 3.5 CRISIL B+/Stable (Assigned)
Cash Credit 5 CRISIL B+/Stable (Assigned)
Proposed Fund-
Based Bank Limits 1.5 CRISIL B+/Stable (Assigned)
The rating reflects the company's exposure to intense competition
in the dairy industry, its modest scale of operations, and
below-average capital structure. These weaknesses are partially
offset by the extensive industry experience of the promoters.
Analytical Approach
Unsecured loans amounting to INR1.39 crore as on March 31, 2018,
have been treated as neither debt nor equity as they are expected
to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: With revenue estimated at INR66 crore
in fiscal 2019, scale remains modest and limits bargaining power
with customers and suppliers.
* Below-average capital structure: The capital structure is
constrained by small networth estimated at INR2 crore, and high
gearing and total outside liabilities to tangible networth ratio
estimated at 4.3 times and 3.4 times, respectively, as on March 31,
2019. With planned capital expenditure and large incremental
working capital requirement, the capital structure will remain
below average over the medium term.
* Exposure to increasing competition and changes in regulations:
The dairy industry is intensely competitive and has large players
that can leverage their scale to procure milk at low prices.
Intense competition from organised and unorganised players limits
pricing flexibility. Also, changes in regulation in relation to
milk prices can impact the profitability of dairy players.
Strength:
* Extensive industry experience of the promoters: The promoters
have experience of over two decades in the 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. The promoters have leveraged their experience in milk
procurement and processing to scale up operations continuously.
Liquidity
Liquidity is stretched, as reflected in estimated net cash accrual
of INR0.93 crore in fiscal 2019, and expected annual accrual of
INR1.00-1.25 crore over the medium term, against scheduled debt
obligation of 0.85-1.00 crore. Bank limit was utilised extensively
at an average of 94% over the 12 months through March 2019. The
company may need funding support from the promoters to manage
liquidity.
Outlook: Stable
CRISIL believes SDAPL will benefit from the extensive experience of
its promoters. The outlook may be revised to 'Positive' if healthy
growth in revenue and profitability leads to higher-than-expected
cash accrual, while working capital cycle remains under control.
The outlook may be revised to 'Negative' if decline in revenue or
profitability or larger-than-expected, debt-funded capital
expenditure adversely affects financial risk profile and
liquidity.
SDAPL was incorporated in 2012 and is based in Kolhapur. It
processes milk and other milk products. The company is owned and
managed by Mr Sanjay Desai and Mr Sampati Desai.
SAMARTHA LEISURES: CRISIL Reaffirms B+ Rating on INR3.29cr Loan
---------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' ratings on the
long-term ratings of Samartha Leisures and Restaurants Private
Limited
(SLRPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.29 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 3.01 CRISIL B+/Stable (Reaffirmed)
The rating reflects SLRPL's weak financial risk profile and the
modest scale of operations. These weaknesses are partially offset
by the extensive experience of the promoters in the hotel
industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Weak financial risk profile: The weak financial risk profile is
driven by estimated small networth of INR2.25 crore and high
gearing of 3.03 times as on March 31, 2019. However, debt
protection metrics are comfortable with interest coverage and net
cash accrual to total debt ratios of 2.1 times and 0.13 time,
respectively in fiscal 2019.
* Modest scale of operations: High geographical concentration'as
SLRPL owns only one hotel with just 35 rooms having average tariff
rates of INR1200-1500 and low occupancy level of 45-50%--leads to
modest revenues. Limited capacity with revenue concentration risk
is expected to constrain scale of operations over the medium term.
Strength:
* Extensive experience of the promoters: The promoter family
ventured into the hotel industry in 2002 through a partnership
firm, Hotel Aditya Palace'15 rooms'in Bhusaval, in Jalgaon
(Maharashtra). Benefits from the promoters' experience is expected
to continue to support the business.
Liquidity
Liquidity is adequate. Cash accrual, expected at INR0.9 crore over
the medium term should cover term debt obligation of INR0.7 crore.
Bank lines were utilised 99.6% for the 12 months through March
2019. Further, need-based funding support from the promoters in the
form of unsecured loans (Rs 35 lakh as on
March 31, 2019) is expected to continue.
Outlook: Stable
CRISIL believes SLRPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if significant ramp-up in occupancy rate leads to higher
cash accrual. The outlook may be revised to 'Negative' if decline
in cash accrual or any large debt-funded capital expenditure,
weakens financial risk profile, especially liquidity.
Incorporated in 2010, SLRPL, promoted by Mr Vinayak Phalak and Ms
Rohini Phalak, operates a hotel, Tanarika Resort, at Bhusaval. It
is equipped with 2 suites, 33 business class rooms, 2 banquet
halls, a bar, a multi-cuisine restaurant, a conference hall, a
lawn, and a swimming pool.
SARLA MEDICAL: CRISIL Lowers Rating on INR10cr LT Loan to D
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sarla Medical Centre Private Limited (SMCPL) to 'CRISIL D' from
'CRISIL B/Stable'. The downgrade reflects recent delays in
repayment of installments of term loan. These delays are on account
of unavailability of adequate funds in a timely manner to meet the
term loan repayment obligations.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 10 CRISIL D (Downgraded from
'CRISIL B/Stable')
Overdraft 2 CRISIL D (Downgraded from
'CRISIL B/Stable')
The rating also reflects SMCPL's modest scale of operations due to
early stage of business. These weaknesses are partially offset by
the extensive experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses:
* Recent delay in repayment of installments of term loan: There
have been recent instances of delay in repayment of installments of
term loan. There was a delay in meeting the term loan repayment
obligation for May 2019. This delay has been on account of
non-availability of adequate funds in a timely manner thus leading
to stretch in the liquidity position. Timely repayment of term loan
installments will remain a key rating sensitivity factor over the
medium term.
* Modest scale of operations due to early stage of business: SMCPL
commenced its operations from August 2018 and is yet to establish
its brand in the market and hence scale up the operations. Also,
intense competition may continue to restrict the scalability of
operations and limit the pricing power, thereby constraining the
business. Hence, proper stabilization of operations remains a key
rating sensitivity factor over the medium term.
Strength:
* Extensive experience of promoters: Benefits from the doctors'
experience of over three decades, their strong understanding of the
healthcare industry, and healthy reputation with patients should
continue to support the business.
Liquidity
Liquidity is weak as reflected in recent delay in repayment of
installment of bank loan. Unavailability of adequate funds in a
timely manner, owing to modest scale of operations, has resulted in
the delays.
SMCPL, incorporated in 1999, is running a multispecialty hospital,
in Sector-119, Noida, with 100 beds and spread over total built up
area of 52,889 sqaure feet. The company was running a nursing home
in Sector-56, Noida since its inception.
SHAKTHI SAGO: CRISIL Assigns B+ Rating to INR4.50cr Cash Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Shakthi Sago Factory (SSF).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 1.31 CRISIL B+/Stable (Assigned)
Bank Loan Facility
Cash Credit 4.50 CRISIL B+/Stable (Assigned)
Long Term Loan 1.19 CRISIL B+/Stable (Assigned)
The rating reflects the extensive experience of SSF's proprietor
and its moderate financial risk profile. These strengths are
partially offset by the modest scale of operations and exposure to
intense competition.
Analytical Approach
Unsecured loan of INR4.27 crore (estimated as on March 31, 2019)
extended by the proprietor has been treated as 75% equity and 25%
debt. That's because these loans are low interest bearing, and are
likely to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to intense competition: Intense competition from both
large organised players and several unorganised players keeps scale
of operations modest; revenue is estimated at INR24 crore for
fiscal 2019.
* Below-average financial risk profile: Debt protection metrics are
weak with interest coverage and net cash accrual to adjusted debt
ratios estimated at 2.0 times and 0.08 time, respectively, for
fiscal 19.
Strength
* Extensive experience of the proprietor: Benefits from the
proprietor's experience of over three decades and established
relationships with raw material suppliers should continue to
support the business.
Liquidity
Liquidity is adequate, marked by moderate cash accrual and high
bank limit utilisation. Cash accrual, expected at INR0.45 to 0.75
crore per annum over the medium term, should comfortably cover
annual maturing debt of INR0.16 crore. Fund-based limit of INR4.5
crore was utilised 75%-85% over the 6 months through March 2019.
Outlook: Stable
CRISIL believes SSF will continue to benefit from its proprietor's
extensive experience. The outlook may be revised to 'Positive' if
scale of operations and profitability improve on a sustained basis
and strengthen the financial risk profile. The outlook may be
revised to 'Negative' if low cash accrual is reported, or if the
financial risk profile weakens because of large, debt-funded
capital expenditure, or inefficient working capital management, or
significant capital withdrawals by the proprietor.
Set up in 1981, SSF, a proprietorship concern of Mr B. Shakthi
Kumar, manufacturers sago.
SHIMLA AUTO: CRISIL Assigns 'B' Rating to INR5cr Cash Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Shimla Auto (SA).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (Assigned)
The rating reflects its modest scale of operations and
below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of its promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and low operating margin due to
trading nature of business: Small scale is reflected in subdued
revenue of INR17 crore in fiscal 2018. This is compounded by
intense competition, which constrains scaleability, pricing power,
and profitability.
* Weak financial risk profile: High gearing of 8.20 times as on Mar
31, 2018 and low accrual led to muted debt protection metrics, with
interest coverage and net cash accrual to total debt ratios of 1.38
times and 0.03 time, respectively, for fiscal 2018.
Strength
* Extensive experience of promoters: The firm's promoters have been
in the lubricants segment for more than a decade, resulting in a
strong market position.
Liquidity
Bank limit remained almost fully utilised throughout the year due
to working capital-intensive operations. Cash accrual of INR0.27
crore is sufficient to meet debt obligation of INR0.12 crore for
FY20. Current ratio was low at 1.07 times as on March 31, 2018.
Outlook: Stable
CRISIL believes SA will continue to benefit from its promoters'
extensive experience. The outlook may be revised to 'Positive' if
substantial growth in revenue and profitability improves business
and financial risk profiles. The outlook may be revised to
'Negative' if low growth or slowdown in end-user industry weakens
business, thereby affecting financial risk profile.
Set up in 2005 as a partnership firm by Mr Satish Bhardwaj and Mr
Sandeep Bhardwaj, SA is an authorised distributor of lubricants
(accounts for 70% of turnover) manufactured by Castrol India. The
firm also trades in spare parts (30%) of Meritor and Fleetguard
Filters Pvt Ltd in Mandi, Himachal Pradesh. SA previously had
distributorship of Valvoline.
STERLING BIOTECH: NCLAT Stays Tribunal's Liquidation Order
----------------------------------------------------------
The Economic Times reports that the National Company Law Appellate
Tribunal (NCLAT) has stayed the liquidation order passed by the
dedicated bankruptcy court against Gujarat-based Sterling Biotech.
The tribunal has granted a stay against the liquidation of the firm
in two separate petitions filed by its employees and Andhra Bank, a
lead consortium lender of the company, the report says.
"Until further order, the operation of the impugned order dated May
8, 2019, so far as liquidation is concerned shall remain stayed.
However, the liquidator will ensure that the company remains a
going concern," said NCLAT bench presided over by Justice SJ
Mukhopadhaya, Justice AIS Cheema and Kanthi Narahari, ET relays.
"The bank account(s) of the corporate debtor (Sterling Biotech) be
allowed to be operated for the day-to-day functioning of the
company such as for payment of current bills of the suppliers,
salaries and wages of the employees'/workmen, electricity bills
etc."
On May 31, while staying the tribunal order, the appellate tribunal
had given two weeks' time to the lenders and RP of the company to
file their reply and posted the matter for July 16 for further
hearing, ET reports. The lenders, led by Andhra Bank had sought the
tribunal's approval after accepting the one-time settlement from
the Sandesara brothers, the fugitive promoters of Sterling Biotech,
according to the report. On May 8, NCLT had rejected an application
from the Sterling Biotech lenders to withdraw their insolvency
resolution petition. Over 90 per cent of the lenders had approved
the settlement offer of INR3,945 crore and withdrawal of the
insolvency case under Section 12 (A) of the Insolvency and
Bankruptcy Code. The lenders received 5 per cent of the default
amount on the day of default.
Total dues to the lenders stand above INR8,100 crore, ET discloses.
Nishit Dhruva, managing partner of law firm MDP & Partners, an
advisor to Andhra Bank, confirmed the development but refused to
comment as the matter is subjudice, ET says. Sundaresh Bhat,
partner and leader of resolution process advisory at consultancy
BDO, who is the RP for the company confirmed the development but
refused to divulge any details, ET notes.
Sterling promoters Chetan and Nitin Sandesara are absconding and
believed to be in Africa. The Central Bureau of Investigation
(CBI), Enforcement Directorate (ED) and the income tax department
are looking into the dealings of the promoters, the report adds.
About Sterling Biotech
Sterling Biotech Ltd is the flagship company of the Vadodara based
Sandesara group. SBL, a listed company, is mainly engaged in the
manufacturing of pharmaceutical grade gelatin which has wide range
of applications such as capsules, tablets, etc. It is one of the
leading manufacturers of pharmaceutical grade gelatin in India with
good presence in U.S.A. which is the largest market for
Pharmaceuticals. It also manufactures Di-calcium Phosphate (DCP, a
by-product of gelatine) and Co-enzyme Q10 (CoQ10). The group has
over 27 years of industrial experience and has diversified
interests ranging from Pharmaceuticals, Healthcare, Oil & Gas,
Engineering Infrastructure, etc. The other companies of the
Sandesara group are Sterling Port Lt, Sterling Oil Resources Ltd,
PMT Machines Ltd, etc.
On June 10, Sterling Biotech was admitted by the NCLT Mumbai bench
under the corporate insolvency debt resolution process (CIRP) for
defaulting on more than INR5,400 crore, according to LiveMint.
On June 11, the Mumbai bench of NCLT admitted the insolvency
petition filed by lead lender Andhra Bank against the company.
The pharmaceutical firm owes around INR5,400 crore to various
lenders, LiveMint discloses.
THEMA NUTRIMENT: CRISIL Assigns B+ Rating to INR8.8cr Term Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank loan
facilities of Thema Nutriment and Packaging Private Limited (TNP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (Assigned)
Term Loan 8.8 CRISIL B+/Stable (Assigned)
The ratings reflect the company's exposure to risks related to
ramp-up in sales during its initial phase of operations. The
ratings also factor in its expected average financial risk profile
because of large debt-funded project to set up its plant, and
susceptibility to volatility in raw material prices. These
weaknesses are partly offset by the promoters' extensive experience
in the packaging industry and their funding support to the company,
and the strategic location of its plant ensuring easy availability
of raw material and labour.
Key Rating Drivers & Detailed Description
Weakness:
* Exposure to risks related to stabilization of operations: TNP's
plant was commissioned in May 2019. The company will face demand
risk as the packaging industry is highly fragmented because of low
entry barriers on account of small capital and technological
requirements, leading to intense competition. Timely stabilization
of operations at the new unit will remain a key rating sensitivity
factor.
* Expected leveraged capital structure: TNP is expected to have an
average financial risk profile with high gearing and moderate debt
protection metrics.
* Exposure to intense competition: The packaging industry has low
entry barriers and limited value addition, and hence, is intensely
competitive. This restricts the ability of players to ramp up
operations and bargain with customers and suppliers
Strengths:
* Extensive experience of promoters: Benefits from the extensive
industry experience of the promoters who are associated with
Kailash Bulk Handling Pvt Ltd, Theme Logistics and Management Pvt
Ltd, and Buch Plastics and Packaging Private Limited for over a
decade should continue to support business risk profile in its
initial phase of operation.
* Promoters' financial support and favorable repayment structure:
Equity and unsecured loans from the promoters and the ballooning
repayment structure for the long-term loan will support liquidity
in the initial years of operations.
Liquidity
Liquidity is expected to remain adequate on account of sufficient
accrual to meet debt obligation, funding support from the promoters
and associate concerns, and ballooning repayment of long-term debt
with moratorium of 11 months.
Outlook: Stable
CRISIL believes TNP will benefit from its promoters' extensive
industry experience and funding support, and the strategic location
of its plant. The outlook may be revised to 'Positive' if timely
stabilisation of operations leads to the anticipated revenue,
profitability, and cash accrual during the initial phase of
operations. The outlook may be revised to 'Negative' if delay in
the stabilisation of operations leads to lower-than-expected
revenue and cash accrual, or if a stretch in the working capital
cycle weakens the financial risk profile and liquidity.
Incorporated in 2018, TNP has set up a plant to manufacture
flexible intermediate bulk containers (FIBCs) and small
polypropylene (PP) bags in Gujarat. The plant has commissioned in
May 2019. TNP is owned and managed by Ms Pratixa Jha, Miss Toushi
Jha, and Mr Sunil Bhatia.
TRANSMARINUS: Ind-Ra Migrates BB Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Transmarinus' 'IND
BB' Long-Term Issuer Rating to the non-cooperating category. The
Outlook was Stable. The issuer did not participate in the rating
exercise despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating action is:
-- INR20.00 mil. Fund-based working capital limit migrated to
non-cooperating category with IND BB (ISSUER NOT COOPERATING)
/ IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 4, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Formed in 2010, Transmarinus provides freight forwarding logistics
services to various large manufacturers and industrial houses in
Ludhiana and nearby locations.
URS KAR: CRISIL Lowers Rating on INR15.25cr Loan to B+
------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facilities
of Urs Kar Service Centre Private Limited (UKSCPL) to 'CRISIL
B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Inventory Funding 15.25 CRISIL B+/Stable (Downgraded
Facility from 'CRISIL BB-/Stable')
Proposed Long Term .75 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in business risk profile in
fiscal 2019 impacted by both lower than anticipated scale of
operations and operating margins thus impacting the net cash
accrual generation. The net cash accruals are anticipated to have
been around INR1.20 crore in fiscal 2019 against debt repayment
obligation of INR1.08 crores. Capital structure has also
deteriorated, with increase in debt levels. CRISIL believes any
further deterioration in business risk profile can impact the
liquidity and hence will remain a key rating sensitivity factor
going ahead.
The rating continue to reflect intense competition in auto
dealership business and below-average financial risk profile. These
weakness are partially offset by established position in Mysore,
Karnataka and promoters' extensive experience in the auto
dealership business.
Analytical Approach
CRISIL has treated unsecured loans from its promoters as debt,
worth of INR1.14 crore as on March 31, 2018.
Key Rating Drivers & Detailed Description
Weaknesses:
* Intense competition in auto dealership business and limited
bargaining power: UKSCPL has low bargaining power with its
principals owing to its limited geographical presence and modest
scale of operations, as indicated by net operating income of
INR91.18 crore in fiscal 2019. Its operating margin have remained
range-bound and is expected to remain at under 3% in the medium
term.
* Below-average financial risk profile: UKSCPL's financial risk
profile is marked by a small networth of INR2.52 crore as at March
31, 2019 high total outside liabilities to adjusted net worth
(TOLANW) ratio of 13.53 times as on March 31, 2019 due heavy
reliance on bank lines to fund working capital. Debt protection
metrics is weak with interest coverage ratio and net cash accrual
to total debt ratio of 1.37 times and 0.06 times respectively in
fiscal 2019.
Strengths:
* Established position and Promoters' extensive experience in the
auto dealership business: The Company has benefitted from its
promoters' experience in the automobile dealership industry with
understanding of demand patterns and location specific
requirements. It has developed strong relationship with its
principals leading to exclusive dealership for all locations.
Liquidity
The company has moderate liquidity driven by expected cash accruals
of more than INR1 crore per annum in fiscal 2020 and fiscal 2021,
cash and cash equivalents of INR0.48 crore estimated as on March
31, 2019. UKSCPL also has access to fund based limits of INR17
crore, utilized to the tune of 94% on an average over the twelve
months ended February 2019. The company has long term repayment
obligations around INR1.10 crore and 0.90 crore annually in fiscal
2020 and fiscal 2021, respectively. CRISIL expects internal
accruals tightly matched against company's repayment obligations
and incremental working capital requirements.
Outlook: Stable
CRISIL believes UKSCPL will maintain its established regional
market position in the automobile dealership business. The outlook
may be revised to 'Positive' if financial risk profile improves due
to increase in scale of operations and profitability, or equity
infusion. Conversely, the outlook may be revised to 'Negative' if
decline in revenue and profitability, or if large, debt-funded
expansion, weakens financial risk profile.
Set up in 1997, UKSCPL is an authorized dealer of passenger cars
for TATA Motors Ltd (TML) and Fiat India Ltd (FIL) in Mysore. The
company is promoted by Mr. M L Kantharaj Urs and his family.
VERENE PACKAGING: CRISIL Assigns 'B' Rating to INR7cr LT Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facilities of Verene Packaging LLP (VP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 2.05 CRISIL B/Stable (Assigned)
Cash Credit .95 CRISIL B/Stable (Assigned)
Long Term Loan 7.00 CRISIL B/Stable (Assigned)
The rating reflects the firm's exposure to intense competition and
fluctuations in raw material prices, and modest scale of operations
in a competitive segment. These weaknesses are partially offset by
the extensive experience of the partners.
Analytical Approach
Unsecured loans, estimated at INR4.7 crore (as on March 31, 2019)
extended by the partners and their family, have been treated as
neither debt nor equity since these are subordinated to bank debt
and would remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to intense competition: The plastic products industry
has several unorganised players with small capacities, primarily
catering to regional demand due to economies associated with local
transportation. Low entry barriers on account of modest capital and
technology requirements, small gestation period, and easy
availability of raw materials result in intense competition. This
restricts the growth opportunities for players to expand in to new
regions and consolidate business and also constrains pricing
flexibility.
* Modest scale of operations: Fiscal 2019 is the first year of
commercial production and on account of the initial stage of
operation, scale remains small at an estimated INR3.5 crore. The
modest scale limits the pricing and bargaining power against large
end-users in the industry.
* Susceptibility to fluctuations in raw material prices:
Profitability is susceptible to volatility in the prices of
polymers (polyethylene and propylene), the basic inputs for
manufacturing plastic products, which is ultimately linked to
fluctuations in crude oil prices. Despite established relations
with customers and suppliers; intense competition limits the firm's
bargaining power. Thus profitability will remain susceptible to raw
material price fluctuations.
Strength:
* Extensive experience of the partners: Benefits from the partners'
experience of over two decades and established relations with
suppliers and customers should continue to support the business.
Liquidity
Liquidity is weak. Bank limit utilisation was 55% for the 10 months
through March 2019. Estimated net cash accrual of INR0.18 crore was
insufficient to meet repayment obligation of INR0.8 crore in fiscal
2019. Repayment obligations were met through unsecured loans from
partners, estimated at INR4.5 crore as on March 31, 2019. Net cash
accrual is expected to be tightly matched against repayment
obligations for fiscal 2020 and 2021 as well on account of the
initial stage of operation.
Outlook: Stable
CRISIL believes VP will benefit from the healthy growth prospects
of the packaging industry and the extensive experience of its
partners. The outlook may be revised to 'Positive' if revenue and
profitability improve and capital structure is stable. The outlook
may be revised to 'Negative' if low cash accrual, increase in
working capital requirement or any large debt-funded capital
expenditure weakens financial risk profile, especially liquidity.
Set up in November 2016, Delhi-based VP, is in the business of
manufacturing and supplying a wide assortment of plastic disposable
products such as polystyrene plates, trays and bowls as per
industrial standards. Mr Vijay Gupta and his son Mr Piyush Gupta
are the partners.
VIJAYNATH ROOF: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
-------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Vijaynath Roof and
Wall Cladding Systems Private Limited (VRWCPL) a Long-Term Issuer
Rating of 'IND BB-'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR30.00 mil. Fund-based working capital limit assigned with
IND BB-/Stable/IND A4+ rating; and
-- INR180.00 mil. Non-fund-based working capital limit assigned
with IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect VRWCPL's small scale of operations as indicated
by revenue of INR284.31 million in FY19 (FY18: INR202.90 million).
The growth in revenue was on the back of an increase in the number
of orders received. The company's return on capital employed was 5%
in FY19 (FY18:4%) and EBITDA margins were modest at 5.8% (6.4%).
Despite the revenue growth, the margins declined because of an
increase in the raw material cost in FY19.
The ratings also factor in VRWCPL's moderate credit metrics due to
low EBITDA and high debt levels. In FY19, its interest coverage
(operating EBITDA/gross interest expense) improved to 2.35x (FY18:
1.27x) and net financial leverage (total adjusted net
debt/operating EBITDAR) to 1.45x (1.66x), primarily on account of
the improvement in absolute EBITDA to INR16.50 million (INR12.90
million) and a decrease in associated interest obligations to
INR7.01 million (INR10.12 million).
The ratings are also constrained by VRWCPL's tight liquidity
position as indicated by full utilization of the fund-based limits
over the 12 months ended May 2019. Its working capital cycle was
long at 209 days in FY19 (FY18: 284 days) due to the long gestation
period of the projects and low bargaining power of the company. Its
cash flow from operations turned positive to INR1.30 million in
FY19 from negative INR1.18 million in FY18 owing to the increase in
revenue. Cash and cash equivalents stood at INR7.44 million at
FYE19 (FYE18: INR3.57 million).
The ratings, however, are supported by the company's strong
clientele and more than a decade of experience in providing fine
craftsmanship in the roofing and cladding industry.
RATING SENSITIVITIES
Positive: An increase in the revenue and/or a rise in the absolute
EBITDA, leading to an improvement in the credit metrics, along with
an improvement in the liquidity position, all on a sustained basis,
could lead to positive rating action.
Negative: A decline in the scale of operations, leading to a
decline in the credit metrics, along with the further weakening of
the liquidity position, all on a sustained basis, will lead to
negative rating action.
COMPANY PROFILE
Incorporated in 2003 by Mr. Vijaynath Shetty, VRWCSPL is into
complete roofing and wall cladding services. The company also
undertakes turnkey jobs such as supply and installation, design,
drawing and execution of airport and stadium roofing and wall
cladding projects.
=========
M A C A U
=========
MELCO RESORTS: S&P Affirms BB Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
On June 4, 2019, S&P Global Ratings affirmed its 'BB' long-term
issuer credit rating on Melco Resorts (Macau) Ltd.'s (MRM). S&P
also affirmed its 'BB' long-term issue rating on the senior
unsecured notes that Melco Resorts Finance Ltd. issued.
S&P affirmed the rating to reflect its view that MRM's parent,
Melco Resorts & Entertainment Ltd. (MLCO), has sufficient financial
cushion to absorb the impact of its acquisition of 19.99% stake in
Crown Resorts Ltd.
The acquisition will weaken MLCO's debt-to-EBITDA ratio to
2.8x-3.0x in 2019 and 2020, from 2.7x in 2018, and the ultimate
parent Melco International Development Ltd. (MID)'s debt-to-EBITDA
ratio to 3.8x-4.0x, from 3.4x. However, these ratios remain
commensurate with the rating.
S&P said, "In our view, the group has a limited buffer to take on
additional debt at the current rating level because we expect
US$1.0 billion of the US$1.22 billion acquisition cost to be
debt-funded, with the remainder paid in cash.
"When analyzing MRM, we look at the consolidated credit profile of
the group headed by MID. In our view, MRM is the most important
cash-generating asset of its immediate parent MLCO and ultimate
parent MID, and drives the group's credit profile.
"We believe MLCO's strong operating cash flows will provide
sufficient financial buffer for the group's acquisition of stake in
Crown Resorts. We anticipate the company will generate US$1.2
billion-US$1.5 billion of operating cash flow per year in 2019 and
2020.
"In our opinion, the group will also scale back its share
repurchases to focus on capital investments over the next 12
months. Our base case assumes that MLCO will not conduct any share
repurchase in 2019, and buy back US$150 million in shares in
2020."
The acquisition of Crown Resorts will enhance MLCO's business
position, in our view. Crown Resorts owns high quality casino
assets that generate strong operating cash flows in a favourable
regulatory environment. The immediate financial benefits of MLCO's
shareholding in Crown Resorts will be a stream of stable dividend
income.
S&P said, "We assume that MLCO will spend an additional US$300
million-US$400 million to further increase its stake in Crown
Resorts in 2020. However, we do not expect MLCO to become the
controlling shareholder of Crown Resorts during the period.
Additional stake beyond our base case could improve MLCO's
operating scale and geographic diversify.
"MID's credit metrics are weaker than that of MLCO. MID
consolidates MLCO's debt, and is likely to add debt related to a
venture to build a casino in Cyprus. We expect MID's debt-to-EBITDA
ratio to increase by a greater magnitude, compared with MLCO's.
"We expect MRM's liquidity to tighten due to the likely outflow of
US$1.22 billion in 2019 for the acquisition of stake in Crown
Resorts. We assess the company's liquidity as adequate, from strong
earlier, because the ratio of sources to uses of liquidity is
likely to drop to 1.4x in 2019, from more than 2.0x in 2018.
"The stable outlook on MRM reflects our expectation that MLCO's
business fundamentals will remain solid as its product mix improves
with a greater focus on mass-market gaming. We anticipate that the
group will scale back its share repurchase and focus on capital
investments over the next 12 months. We also expect MRM to be
prudent in capital investments post the Crown Resorts acquisition
such that the debt-to-EBITDA ratio stays at 2.8x-3.0x over the next
12 months.
"We may lower our rating on MRM if the credit profile of MLCO
weakens significantly, as indicated by the debt-to-EBITDA ratio
approaching 3.5x. This could happen if: (1) MLCO's market position
deteriorates; (2) the gaming industry in Macau turns challenging,
resulting in weakening cash flows; or (3) MLCO adopts a more
aggressive policy on capital investments or shareholder returns
than we expect.
"We may also lower our rating on MRM if the credit profile of MID
weakens such that its debt-to EBITDA ratio stays above 4.0x. This
could happen if MID's capital spending in Cyprus is more aggressive
than we expect or if MID takes on additional capital investment in
other gaming markets.
"The rating upside is limited over the next 12 months because MLCO
continues to pursue high growth and take on additional debt to
expand in Macau and other markets in Asia.
"We could raise our rating on MRM if MLCO substantially lowers its
debt leverage on a sustained basis, supported by more disciplined
capital investment and shareholder returns, while maintaining a
good market position in Macau."
===============
M A L A Y S I A
===============
SERBA DINAMIK: S&P Assigns 'BB-' Long-Term Issuer Credit Rating
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term issuer credit
rating to Malaysia-based engineering solutions provider Serba
Dinamik Holdings Bhd. (SDHB). The outlook is stable. S&P also
assigned its 'BB-' long-term issue rating to the
U.S.-dollar-denominated senior unsecured sukuk trust certificates
issued by SD International Sukuk Ltd. (SDIL), SDHB's fully owned
subsidiary. SDHB guarantees the notes.
SDHB will use the proceeds from the issuance to repay a significant
part of its current short-term debt, and will use the rest to fund
its working capital and capital expenditure requirements for the
next 12 months. S&P has received the final issuance documents, and
they are in line with its expectation for criteria of rating sukuk
certificates.
The sukuk transaction involves SDIL, which issues trust
certificates and will use the proceeds of the sukuk to acquire
beneficial interest in a pool of underlying assets, including
Wakala assets (for at least 51% of the sukuk proceeds) and Murabaha
assets made of commodities (for 49% maximum of the sukuk proceeds).
The issuer undertakes to use the proceeds of the sukuk to enter
into a Wakala agreement, in which the wakeel will invest in the
Shariah compliant business of the obligor. Both the periodic
distribution amount and dissolution distribution amounts will be
paid by the Murabaha leg of the transaction. At the maturity date
of the transaction or upon the occurrence of an early dissolution
event, SDIL will use the proceeds from closing of transaction to
repay the sukuk holders.
Based on the final sukuk documentation, S&P equalizes the issue
rating on the U.S. dollar-denominated sukuk to the issuer credit
rating on SDHB because the transaction fulfils the five conditions
of our criteria for rating sukuk:
-- SDIL will provide sufficient, irrevocable, and timely
contractual obligations for the periodic distribution amounts
payable on the periodic distribution dates and the repayment of
principal amount through deferred payment price agreed under the
Commodity Murabaha Investment agreement. The deferred payment price
comprises the aggregate of the principal amount and the profit
agreed under the same agreement. Murabaha profit is distributed in
equal installments that match the periodic distribution amount and
dates. The proceeds from Wakala and Murabaha legs of the
transaction will be collected separately such that losses from
Wakala do not affect proceeds and distribution under Murabaha. The
obligations of SDIL are guaranteed by SDHB.
-- SDIL's obligations are irrevocable and unconditional.
-- The guarantee provided by SDHB on SDIL's obligations will rank
equally with SDHB's other senior unsecured financial obligations.
-- SDIL will undertake to cover all the costs related to the
transaction for the benefit of SDIL. Such cost reimbursements are
covered under Wakala, Murabaha agreements and under Declaration of
Trust agreement. SDIL's obligations are guaranteed by SDHB.
-- The documentation does not mention a risk of total loss event.
Total loss event is not a major risk because, under the structure,
there is no physical asset involved.
S&P said, "In addition we equate the ratings because we project the
proportion of secure debt at SDHB to be less than 50% of total
consolidated debt over the next two years at least. The guarantee
provided by SDHB on SDIL's obligations fill in any short falls
conforms to our guarantee criteria.
"Our stable outlook on SDBH indicates our expectations that the
company will continue to prudently grow its business, fulfill its
orders within budget, and pragmatically invest in growth-related
capital expenditure and working capital investment."
An upgrade will hinge upon significant cash flow growth such that
the ratio of funds from operations (FFO) to debt moves higher than
35% from about 25% this year. Downward rating pressure will
materialize if weaker cash flows pushes the FFO-to-debt ratio
toward 20% or dependence on short-term debt increases beyond
expectations.
=====================
N E W Z E A L A N D
=====================
ARROW INT'L: Owes NZ$40MM; Administrators Advise Liquidation
------------------------------------------------------------
Stuff.co.nz reports that Arrow International's voluntary
administrators at accountancy firm BDO have identified nearly $40
million in debts and are recommending to creditors that the group
of companies be placed in liquidation.
A watershed creditors meeting will be held in Auckland on June 6
with video connections to locations in Wellington, Christchurch and
Queenstown, Stuff says.
Directors Ron Anderson and Bob Foster sought voluntary
administration in February with the loss of about 200 jobs,
although many employees were taken on by other contractors to
complete projects, the report recounts.
The Arrow group traded at a loss between 2016 and late 2018 due to
intense construction industry competition, and the award of a
disputed NZ$4.5 million payment in February meant the companies
couldn't fulfil obligations to creditors, Stuff discloses.
According to Stuff, administrators Andrew Bethell and Andrew McKay
said the recovery of NZ$3.3 million so far was sufficient to meet
secured creditor ANZ's debts, employee entitlements, and there were
sufficient funds to pay subcontractor retentions on contracts
entered after April 2017. About NZ$1.1 million or 20 per cent of
retentions had been repaid.
It was too early to estimate funds available for 84 unsecured
creditors owed NZ$36 million, Stuff adds. "This will largely
depend on the level of recoveries . . . and the outcome of the sale
of two investment properties."
Theoretically the value of assets was about NZ$40 million but most
of this was in shares of subsidiaries and not recoverable, Stuff
notes.
Stuff adds that the reasons for collapse included high industry
competition, new subcontractor retention payment rules reducing
working capital, funding an Australian company, a large loss-making
project, high overhead structure, less work, unprofitable
developments, failure to find an investor, and the NZ$4.5 million
payment to March Construction.
The only option was liquidation and it was unrealistic for the
companies to be returned to the directors, they said.
Stuff says Arrow was likely to have been insolvent before February
2019 when placed in administration but more investigation was
required to determine when the company missed its subcontractor
payments in January.
The administrators had not identified any breaches of directors'
duties, Stuff relays.
There was NZ$5.6 million held in a trust account on behalf of
subcontractors for retention payments to be returned when projects
were completed.
Arrow International NZ had 20 projects that are listed in the
administrators' report, including apartments in Auckland and
Wellington, as well as places like Coronet Peak and Millbrook near
Queenstown, Stuff discloses.
The Portlink industrial subdivision in Christchurch was major asset
that had been put up for sale to help scale back the company,
according to the report.
Stuff discloses that the administrators had investigated selling
the business as a going concern but it was not an option so they
aimed to get projects back underway as quickly as practical to
reduce principal and subcontractor claims and transfer staff.
There were three main companies involved--Arrow International (NZ)
the construction arm, Arrow International Group, and Construction
Labour & Resources (CLRL).
CLRL was trading profitably but its staff relied on Arrow NZ
projects, the report adds. Arrow International Group held
guaranteed construction performance bonds of Arrow International
(NZ) which "had some challenges on certain construction contracts
in the past three years due to prevailing market conditions".
According to Stuff, Arrow International (NZ) was the largest
company and in 2016 posted a NZ$1.9 million loss on turnover of
NZ$344 million; in 2007 the loss widened to NZ$8.6 million on lower
revenue of NZ$192 million; and in 2018 returned to a NZ$229,000
profit on declining turnover of NZ$178 million, with an improved
profit in February 2018 of NZ$2.9 million on turnover of NZ$212
million.
Despite the improvement, the current assets NZ$51 million were
still behind current liabilities of NZ$53 million, which swelled
with the disputed NZ$4.5 million disputed payment, Stuff discloses.
The administrators' fees have taken NZ$927,000 so far, adds Stuff.
MAD BUTCHER: Wants to Know Who Albany Franchise Has Been Sold To
----------------------------------------------------------------
Anuja Nadkarni at Stuff.co.nz reports that the Mad Butcher chain
wants to know how much its failed Albany store was sold for and to
whom, by its liquidator.
Soncam Limited, trading as Mad Butcher Albany, was placed into
liquidation in April. The appointed liquidator, Peter Jollands, has
since sold the company to an undisclosed buyer, the report says.
But Murray Tingey, lawyer for The Mad Butcher chain, claims the
liquidator's sale was a breach of the franchise agreement as Mr.
Jollands ignored the master franchisor's bid to buy the failed
business, according to Stuff.
Stuff relates that Mr. Tingey said, under the franchise agreement,
The Mad Butcher chain had first dibs on buying the business, and
the sale of its secured assets was a breach.
But lawyer for Soncam Robert Hucker claimed the owners terminated
the monthly lease when liquidators were appointed, Stuff says.
Stuff notes that Soncam has applied for an injunction at the
Auckland High Court requiring the Mad Butcher to release its assets
on the condition it will pay the chain NZ$40,000 in trading debt.
Mr. Hucker has so far refused to release the sale and purchase
agreement, citing confidentiality.
But Mr. Tingey said more than the trading debt, the "real damage"
The Mad Butcher chain had suffered was the business being sold to
someone else, Stuff relays.
"How can it be confidential, when it's an agreement of assets in a
liquidation that is a public matter? It is the assets subject to
the agreement, there is no basis for it to not to be disclosed.
"We do need that document so we can properly obtain the injunction
to quantify the secured claim which is required to release the
assets."
Mr. Tingey said: "We want to take control of our assets to
re-establish a franchise business," Stuff relays.
But Mr. Hucker said the Mad Butcher was "wanting its cake and
eating it too".
Messrs. Hucker and Tingey are waiting for their next fixture when
Justice Anne Hinton will determine the release of the sale and
purchase agreement before dealing with the injunction, Stuff notes.
=================
S I N G A P O R E
=================
LAFE CORP: Receives Delisting Notification from SGX-ST
------------------------------------------------------
Janice Heng at The Business Times reports that Mainboard-listed
Lafe Corp has received a notification of delisting from Singapore
Exchange Securities Trading (SGX-ST) dated June 4, after having
been on the exchange's financial watch-list since June 3, 2016, the
developer announced on June 5.
Firms on the financial watch-list need to fulfil exit requirements
within 36 months, namely to record consolidated pre-tax profit for
the most recently completed financial year, and post an average
daily market capitalisation of at least SGD40 million over the last
six months, the report says.
BT relates that Lafe Corp was informed that, having not met the
requirements for removal, SGX-ST will proceed to delist it.
According to the report, the company or its controlling
shareholders must provide "a reasonable exit offer" to
shareholders, and must advise SGX-ST of the exit offer proposal no
later than one month from the date of the delisting notification.
Trading in Lafe shares will continue until 5:00 p.m. on July 3,
after which trading will be suspended from 9:00 a.m. on July 4 till
the completion of the exit offer, BT relays.
BT adds that Lafe said it will keep shareholders informed of any
developments in this regard and will make such further
announcements as and when appropriate. It also advised investors
and shareholders to exercise caution when trading in its shares.
Based in Singapore, Lafe Corporation Limited, an investment holding
company, engages in property investment, development, and agency
and consultancy activities in the People's Republic of China. It
also provides property management and appraisal, building
consultancy, corporate administration, security guard, fund
management, close protection, cleaning, and employee outsourcing
services, as well as engages in trademarks holding activities.
Lafe Corporation Limited is a subsidiary of Sino Capital Resources
Limited.
RESOURCES PRIMA: AGM Deadline Extended Until June 29
----------------------------------------------------
Janice Heng at The Business Times reports that Catalist-listed
Resources Prima Group said on June 4 that the Accounting and
Corporate Regulatory Authority of Singapore has approved its
application for an extension of time to hold its annual general
meeting (AGM) for the financial year ended Dec. 31, 2018.
BT says the company now has to hold its AGM by June 29, 2019. It
has already gained the Singapore Exchange's approval for the
extension.
Resources Prima said it will update shareholders on the date and
venue of the AGM in due course, the report relates.
In a separate announcement on June 4, the Indonesian coal miner
said that its independent auditor, Baker Tilly TFW LLP, had issued
a qualified opinion on its FY2018 audited financial statements, and
indicated material uncertainties that may cast doubt on its ability
to continue as a going concern, BT reports.
According to BT, Resources Prima advised shareholders to read its
announcement in conjunction with the independent auditor's report
and its annual report, to be dispatched in due course.
BT relates that the independent auditor's report said the basis for
issuing a qualified opinion was related to the loss from
discontinued operations of PT Rinjani Kartanegara, its main
operating subsidiary that was declared bankrupt on Oct 9, 2017.
Resources Prima lost control over Rinjani on Aug. 24, 2017, and
could not obtain Rinjani's audited financial statements for the
period from Jan. 1 till then, BT recounts. Baker Tilly said it
consequently could not determine if adjustments were necessary
regarding a US$14.79 million loss for discontinued operations, the
related basic and diluted loss per share attributable to equity
holders, and the effect on Rinjani's cash flow statement.
Trading in the shares of the company has been suspended since June
28, 2017, as the board was of the view at the time that the firm
could not continue as a going concern, BT states.
Resources Prima Group Limited is a Singapore-based investment
holding company. The Company is a mine owner and engages in the
business of coal mining and coal exploration operations in East
Kalimantan, Indonesia. The Company, through its subsidiary, PT
Rinjani Kartanegara, holds a production operations license to carry
out coal mining operations in an area covering approximately 1,930
hectares in Kutai Kartanegara Regency, East Kalimantan, Indonesia.
Its operational system includes a vertically integrated model, with
the extraction of coal from its mine, transported by the Company's
road system for processing, and using its bay facility to export
and meet the demands in offshore markets. The Company also engages
in the provision of coal mining facilities, such as coal hauling
road system, coal stockpile, coal crushers, coal conveyor system
and jetty with barge loading facilities, to third parties. Its
subsidiaries include Energy Prima Pte. Ltd. and PT Energy Indonesia
Resources.
=================
S R I L A N K A
=================
SRI LANKA: Fitch Hikes IFS Rating to 'B+', Outlook Stable
---------------------------------------------------------
Fitch Ratings has upgraded Sri Lanka Insurance Corporation
Limited's Insurer Financial Strength Rating to 'B+' from 'B'. The
Outlook is Stable. The Under Criteria Observation status on the IFS
Rating has also been removed. Fitch has simultaneously upgraded
SLIC's National IFS Rating to 'AAA(lka)' from 'AA+(lka)' with a
Stable Outlook.
KEY RATING DRIVERS
The upgrade follows the revision of Fitch's global Insurance Rating
Criteria in January 2019. SLIC's IFS rating was previously capped
by the sovereign constraint set at 'B', which is the Long-Term
Local-Currency Issuer Default Rating of Sri Lanka. The new criteria
remove the top-down sovereign constraint and Fitch assesses SLIC's
country risk in each criteria factor under a bottom-up analysis.
The agency has assessed that the positive impact from the removal
of the top-down sovereign constraint exceeds the negative pressure
from the revised bottom-up country-risk assessment.
The rating action takes into account SLIC's favourable business
profile and 'Good' financial performance and capitalisation, which
more than offset the company's high investment and asset risks.
Fitch's assesses SLIC's business profile as favourable compared
with other Sri Lankan insurance companies due to its leading
business franchise, well-diversified participation in business
lines across life and non-life insurance sectors, stable business
focus on established product lines and its favourable domestic
operating scale. Fitch scores SLIC's business profile at 'bb-'
under its credit-factor scoring guidelines in light of the ranking.
SLIC was Sri Lanka's second-largest life insurer and third-largest
non-life insurer based on gross written premiums in 2018.
Nevertheless, Fitch expects the growth in industry premiums to
moderate in the near term due partly to a slowdown in motor
premiums fuelled by a continuous increase in taxes on imported
vehicles and slower recovery in the country's economic activity.
SLIC's life and non-life risk-based capital (RBC) ratios, a measure
of its capitalisation, were 437% and 200%, respectively, at
end-2018 (2017: 432%, 200%), significantly above the industry
average and the 120% regulatory minimum. Fitch expects the company
will maintain its capitalisation above 350% for life and 200% for
non-life operations in the medium term.
The insurer has consistently maintained its non-life combined ratio
below 100% for the previous four years (last three-year average:
96%) buoyed by its scale advantages as a large entity, which helps
SLIC keep its expense ratios well below that of the industry, as
well as prudent underwriting practices. However, Fitch expects the
weakening of the rupee against the majority of hard currencies to
increase claim costs in 2019, mainly due to the higher costs
involved in importing replacement automotive components.
SLIC's exposure to Sri Lankan sovereign investments was 140% of its
capital at end-2018, which continues to restrict Fitch's assessment
on SLIC's investment and asset risk to 'b-' under its
credit-factor scoring guidelines. SLIC has relatively high exposure
to non-core subsidiaries, which underscores its high investment and
asset risks, although that is balanced by the insurer's favourable
business profile, healthy financial performance and consistent
above-industry capitalisation.
RATING SENSITIVITIES
An upgrade for SLIC's National IFS is not possible as its
'AAA(lka)' National IFS Rating is already the highest score on the
National Rating scale.
Downgrade sensitivities include:
- Significant weakening in SLIC's business profile
- Deterioration in the RBC ratio to below 350% for the life and
200% for the non-life businesses for a sustained period or a
significant increase in non-core investments
- Significant increase in SLIC's sovereign investment
concentration risk
- Deterioration in the non-life combined ratio to well above 100%
for a sustained period
- A downgrade of the local-currency sovereign rating of Sri Lanka
by more than one notch
Upgrade sensitivities include:
- Maintenance of SLIC's favourable business profile while
significantly reducing its investment and asset risks on a
sustained basis
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2019. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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*** End of Transmission ***