/raid1/www/Hosts/bankrupt/TCRAP_Public/191010.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, October 10, 2019, Vol. 22, No. 203
Headlines
A U S T R A L I A
COMMONWEALTH BANK: S&P Rates PERLS XII Capital Notes 'BB+'
EMMLUK PTY: First Creditors' Meeting Set for Oct. 17
FLUJO HOLDINGS: First Creditors' Meeting Set for Oct. 17
HAVEN EARLY: Second Creditors' Meeting Set for Oct. 17
INDUS ENERGY: First Creditors' Meeting Set for Oct. 17
OM MAHALAXMII: Appoints Worrells Brisbane as Liquidator
PORT WAKEFIELD: Second Creditors' Meeting Set for Oct. 24
SAI GLOBAL: S&P Lowers ICR to 'CCC' on Looming Liquidity Event
TOWER CRASH: First Creditors' Meeting Set for Oct. 17
VASS THEATRES: Second Creditors' Meeting Set for Oct. 18
WHITE RIBBON: Appoints Worrells Solvency as Liquidators
C H I N A
JIAYUAN INTERNATIONAL: Moody's Upgrades CFR to B2, Outlook Stable
LAI FUNG: Fitch Affirms BB- Issuer Default Ratings, Outlook Stable
YINGDE GASES: S&P Raises Long-Term ICR to 'BB-', Outlook Stable
I N D I A
ABC COTSPIN: CRISIL Maintains 'D' Rating in Not Cooperating
ADARSH JAN: CRISIL Maintains 'B' Rating in Not Cooperating
ADITYA POLYMERS: Insolvency Resolution Process Case Summary
AMAR JYOTI: CRISIL Maintains 'B-' Rating in Not Cooperating
ANUBHAV TRADING: CRISIL Maintains 'B' Rating in Not Cooperating
AURANGABAD GYMKHANA: CRISIL Keeps 'B' Rating in Not Cooperating
AVIS INDIA: CRISIL Maintains 'B+' Rating in Not Cooperating
BHUSHAN STEEL: Tata Steel Gains INR5,000cr Profit During Insolvency
BNR EGG: CRISIL Maintains 'B' Rating in Not Cooperating Category
CLASS RESTAURANT: CRISIL Maintains 'B-' Rating in Not Cooperating
DWARIKA PRASAD: CRISIL Assigns B Rating to INR1cr LT Loan
DYNAMIC BUILDING: CRISIL Maintains 'B' Rating in Not Cooperating
ERODE STEELS: CRISIL Cuts INR14.5cr Cash Loan Rating to B+/Not Coop
EXCELLENT POWER: CRISIL Maintains 'B' Rating in Not Cooperating
FALCON STEELS: CRISIL Maintains 'B+' Rating in Not Cooperating
GORAKHPUR DUGDH: CRISIL Assigns B- Rating to INR1cr Secured Loan
HINDUSTAN HERBALS: CRISIL Maintains B- Rating in Not Cooperating
HINDUSTAN JEWELLERS: CRISIL Keeps 'B' Rating in Not Cooperating
HITECH EXTRUSION: CRISIL Cuts INR18cr LT Loan Rating to B+/Not Coop
HOTEL MAGIC: CRISIL Maintains 'B' Rating in Not Cooperating
HOUSING DEVELOPMENT: Banker Hid Bad Loans from Regulator
HYDERABAD GALVANISING: CRISIL Keeps B+ Rating in Not Cooperating
INNOVA CHILDRENS: CRISIL Maintains 'D' Rating in Not Cooperating
IVRCL LIMITED: Deadline for Submission of EoI Extended to Oct. 14
JANA CAPITAL: Ind-Ra Assigns 'B+' Rating to INR1.5MM Proposed NCDs
JANA HOLDINGS: Ind-Ra Affirms 'B+' NCDs Rating, Outlook Stable
KIRAN INDUSTRIES: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
KRISHNA ASSETS: Insolvency Resolution Process Case Summary
KRISHNANCHAL PULP: CRISIL Assigns B+ Rating to INR5cr Cash Loan
KUSHAL FOODS: CRISIL Lowers Rating on NR9.5cr Loan to B+, Not Coop.
MD RETAIL: CRISIL Lowers Rating on INR10cr Cash Loan to B+
MITTAPALLI AUDINARAYANA: CRISIL Reaffirms B+ Cash Loan Rating
NEO CORP: Insolvency Resolution Process Case Summary
PAVANI POLYMERS: CRISIL Maintains 'D' Rating in Not Cooperating
POWER PACK: Insolvency Resolution Process Case Summary
PRE UNIQUE: Ind-Ra Affirms 'B' LT Issuer Rating, Outlook Stable
RADHA KRISNA: CRISIL Assigns B+ Rating to INR8.0cr LT Loan
RAJESH HOUSING: CRISIL Cuts Rating on INR140cr Loan to B-
RATNAGIRI CHEMICALS: CRISIL Keeps 'D Rating in Not Cooperating
SAFRI TRADELINK: Insolvency Resolution Process Case Summary
SAI SPACECON: CRISIL Hikes Rating on INR30.75cr Loan to B-
SHAHJAHANPUR EDIBLES: Insolvency Resolution Process Case Summary
SIBCO PLASTIC: CRISIL Assigns B+ Rating to INR2.7cr Demand Loan
TECHON LABS: Insolvency Resolution Process Case Summary
S I N G A P O R E
ASIATRAVEL.COM: Obtains Default Judgment vs. Creditor
KOON HOLDINGS: Seeks Court Protection Amid Debt Restructuring
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A U S T R A L I A
=================
COMMONWEALTH BANK: S&P Rates PERLS XII Capital Notes 'BB+'
----------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue credit rating to
Commonwealth Bank of Australia's (CBA; AA-/Stable/A-1+) proposed
CommBank PERLS XII Capital Notes (PERLS XII).
S&P said, "We rate PERLS XII four notches below the CBA group's
stand-alone credit profile (SACP) of 'a-'. Our starting point of
the CBA group credit profile--excluding extraordinary government
support--reflects our view that, if required, it is unlikely that
the Australian government's support for CBA and other Australian
banks would extend to hybrid capital instruments issued by the
banks."
To arrive at the rating on PERLS XII, S&P deducts notches off CBA
group's SACP reflecting the following factors:
-- S&P deducts one notch for PERLS XII's contractual
subordination in CBA's capital structure;
-- Two notches for the risk of partial or untimely payment; and
-- One notch for a nonviability contingent capital feature that
would require CBA to convert all or a proportion of PERLS XII into
ordinary shares or write them off, if a nonviability trigger event
occurs.
S&P said, "We assess the proposed issue to have intermediate equity
content. In our view, PERLS XII capital notes would be able to
absorb losses on a going-concern basis through nonpayment of
coupons and via a nonviability contingent capital clause that
results in a write-down or conversion into common equity. On
issuance, we understand that PERLS XII securities will qualify as
fully compliant Basel III Additional Tier 1 capital under
Australian Prudential Regulation Authority requirements."
EMMLUK PTY: First Creditors' Meeting Set for Oct. 17
----------------------------------------------------
A first meeting of the creditors in the proceedings of Emmluk Pty
Ltd will be held on Oct. 17, 2019, at 11:00 a.m. at Suite 203, at
517 Flinders Lane, in Melbourne, Victoria.
Trajan John Kukulovski and Liam William Bellamy of Chan & Naylor
were appointed as administrators of Emmluk Pty on Oct. 7, 2019.
FLUJO HOLDINGS: First Creditors' Meeting Set for Oct. 17
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Flujo
Holdings Pty Ltd will be held on Oct. 17, 2019, at 11:00 a.m. at
the offices of Hamilton Murphy, Level 1, at 255 Mary Street, in
Richmond, Victoria.
Stephen Dixon of Hamilton Murphy was appointed as administrator of
Flujo Holdings on Oct. 7, 2019.
HAVEN EARLY: Second Creditors' Meeting Set for Oct. 17
------------------------------------------------------
A second meeting of creditors in the proceedings of Haven Early
Childhood Education Pty Ltd has been set for Oct. 17, 2019, at
10:30 a.m. at the offices of Worrells, Level 8, at 102 Adelaide St,
in Brisbane, Queenslandd.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 16, 2019, at 5:00 p.m.
Christopher Richard Cook of Worrells Solvency & Forensic
Accountants was appointed as administrator of Haven Early on Sept.
13, 2019.
INDUS ENERGY: First Creditors' Meeting Set for Oct. 17
------------------------------------------------------
A first meeting of the creditors in the proceedings of Indus Energy
NL will be held on Oct. 17, 2019, at 11:00 a.m. at the offices of
Pitcher Partners, Level 11, at 12-14 The Esplanade, in Perth, WA.
Bryan Kevin Hughes and Daniel Johannes Bredenkamp of Pitcher
Partners were appointed as administrators of Indus Energy on Oct.
7, 2019.
OM MAHALAXMII: Appoints Worrells Brisbane as Liquidator
-------------------------------------------------------
Michael Griffin -- michael.griffin@worrells.net.au -- of Worrells
Brisbane was appointed as liquidator to OM Mahalaxmii Pty Ltd on
Sept. 27, 2019.
OM Mahalaxmii Pty Ltd was operating two IGA supermarkets at the
time of liquidation, however Worrells remind all parties that all
IGA stores are independently owned and operated.
Worrells is dealing with the operations of IGA stores at Goodna,
and Boronia Heights. The IGA Goodna is currently being
independently operated by a third party ahead of a pending sale.
Worrells is trading on the IGA Boronia Heights until alternative
trading arrangements and a sale can be arranged.
Worrells advises that its priority is to ensure the continued
operations of both stores for the employees and the communities
they service, and to work closely with all relevant stakeholders to
achieve this outcome.
Mr. Griffin said, "We appreciate the impact on the local
communities and employees. We are exploring all possible avenues
for these businesses. We will continue to proactively keep all
stakeholders informed about the insolvency administration."
Worrells has 33 offices nationally and 29 partners, across Qld,
NSW, ACT, Vic, SA, and WA. Worrells has been providing solvency
management, insolvency administration, and forensic investigation
services for over 45 years.
PORT WAKEFIELD: Second Creditors' Meeting Set for Oct. 24
---------------------------------------------------------
A second meeting of creditors in the proceedings of Port Wakefield
Developments Pty Limited has been set for Oct. 24, 2019, at 10:00
a.m. at the offices of Bernardi Martin, at 195 Victoria Square, in
Adelaide, SA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 24, 2019, at 9:00 a.m.
Hugh Sutcliffe Martin of Bernardi Martin was appointed as
administrator of Port Wakefield on July 22, 2019.
SAI GLOBAL: S&P Lowers ICR to 'CCC' on Looming Liquidity Event
--------------------------------------------------------------
On Oct. 9, 2019, S&P Global Ratings lowered its long-term issuer
credit rating on SAI Global Holdings I (Australia) Pty Ltd. to
'CCC' from 'CCC+', the ratings on the company's first-lien debt to
'CCC' from 'CCC+', and on the second-lien debt to 'CC' from 'CCC-'.
The recovery rating on the first-lien debt is '3' and that on the
second-lien debt is '6'.
S&P said, "We lowered the ratings on SAI Global to reflect our view
that tough trading conditions, particularly for the company's
Knowledge and Mortgage Settlements business, will pressure the
group's earnings, and ultimately, ability to meet its fixed
obligations--increasing the likelihood of a liquidity event over
the next 12 months. We view the company's capital structure as
unsustainable with a high annual debt amortization and interest
expense of about A$70 million amid a weak earnings outlook.
"In our view, a confluence of factors pressure the group's
earnings. The group's restructuring initiatives in the year ended
June 30, 2019, have predominantly focused on labor reduction;
however, costs of implementation have offset efficiency gains. In
addition, the company's operating expenses remain high as the
company integrates its BWise acquisition in early 2019 and invests
in sales to accelerate growth in its risk services segment. Lower
property transaction volumes, as well as a structural loss of
market share in the mortgage settlements business due to a downturn
in the Australian property market and market competition, have
worsened the company's property segment. In addition, market-based
royalty rates with Standards Australia in fiscal 2020 will place
additional pressure on SAI Global's earnings.
"In our view, the company's liquidity position remains a key rating
sensitivity. The company's fiscal 2020 budget indicates that it
will breach its net first-lien leverage ratio of 6.5x in fiscal
2020, which would enforce the revolving credit facility to be
restricted to a maximum of 35% of US$75 million (which is US$26
million). While the group's cash balance improved to about A$68
million in fiscal 2019, as a result of a capital contribution from
its financial sponsor Baring Asia Private Equity Fund VI (Baring
Asia), our rating does not incorporate parental support during
periods of financial stress. We note that Baring Asia has stated
that it will continue to be supportive of SAI Global.
"We expect SAI Global's key credit metrics to further deteriorate
in fiscal 2020. Our ratio of adjusted debt to EBITDA for fiscal
2019 was 15.3x, with the ratio of funds from operations (FFO) to
debt at negative 1.4% and an EBITDA interest coverage of 0.8x.
Baring Asia's equity contributions have enabled SAI Global to meet
its fixed obligations. We anticipate EBITDA interest coverage to
remain below 1.0x, requiring the company to use its cash balance as
well as draw on its revolving credit facility over the next 12
months.
"We believe SAI Global has some scope to reduce capital expenditure
as a means of preserving cash in the near term. However, we do not
view this as sustainable given the level of investment required to
maintain the company's market position. The company has no debt
maturities until 2023."
The negative outlook reflects the increasing possibility of a
liquidity event in the next 12 months due to SAI Global's
deteriorating operating performance and unsustainable capital
structure.
The negative outlook does not incorporate additional financial
support from the company's financial sponsor.
S&P said, "We could lower the rating if there is a higher
likelihood that the company cannot meet its fixed obligations. This
could happen if the company faces further deterioration in its
operating performance coupled with limited access to liquidity.
"We could also lower the issue rating on the company's existing
debt if: (1) we perceive a higher likelihood of default, distressed
exchange, or restructuring, or (2) the company announces its
intention to exchange some or all of its debt for a value less than
par.
"We could revise the outlook to stable if we believe that the
company can sustainably generate positive cash flows and maintain
at least adequate liquidity."
TOWER CRASH: First Creditors' Meeting Set for Oct. 17
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Tower Crash
Repairs Pty. Limited will be held on Oct. 17, 2019, at 11:00 a.m.
at the offices of CMA Chartered Accountants, at 219 Henley Beach
Road, in Torrensville, SA.
Jason Tang and Andre Lakomy of Cor Cordis were appointed as
administrators of Tower Crash on Oct. 4, 2019.
VASS THEATRES: Second Creditors' Meeting Set for Oct. 18
--------------------------------------------------------
A second meeting of creditors in the proceedings of Vass Theatres
Pty Ltd, trading as The Alex Theatre, has been set for Oct. 18,
2019, at 11:00 a.m. at the offices of Romanis Cant, 2nd Floor, at
106 Hardware Street, in Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 17, 2019, at 5:00 p.m.
Anthony Robert Cant and Renee Di Carlo of Romanis Cant were
appointed as administrators of Vass Theatres on Sept. 13, 2019.
WHITE RIBBON: Appoints Worrells Solvency as Liquidators
-------------------------------------------------------
Members at a general meeting of White Ribbon Australia Limited held
on October 2, 2019, have appointed Mr. Aaron Lucan and Mr. Graeme
Beattie, partners of Worrells Solvency and Forensic Accountants NSW
& ACT, as Liquidators of the company.
Mr Lucan said: "We have just started investigating the causes of
financial distress that led to yesterday's wind-up decision.
"At this early stage, we can't discern all of the factors leading
to insolvency. Any third party commentary on the reasons for the
wind-up is likely speculation.
"We understand that many people are affected by White Ribbon's
predicament and will provide timely updates to all concerned
stakeholders as the investigation proceeds, including people
participating in the organisation's accreditation programs.
"For now, our first priority is to secure the entitlements of White
Ribbon's 28 employees, while stabilising the organisation to
preserve as much value as possible."
White Ribbon is a non-profit organisation which aims to prevent
men's violence against women using a primary prevention approach in
schools, workplaces and communities across Australia.
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C H I N A
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JIAYUAN INTERNATIONAL: Moody's Upgrades CFR to B2, Outlook Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded Jiayuan International Group
Limited's corporate family rating to B2 from B3 and the senior
unsecured rating on its USD notes to B3 from Caa1.
The outlook on the ratings is stable.
RATINGS RATIONALE
"The upgrade reflects our expected reduction in Jiayuan's change of
control risks as a result of the completion of asset injection and
reduced share pledge loans by its chairman," says Josephine Ho, a
Moody's Vice President and Senior Analyst.
The equity-funded asset injection by Mr. Shum Tin Ching, the
chairman and the largest shareholder of the company was completed
in August 2019. And, over the last two months, Mr. Shum has reduced
his share pledge loans by 17%.
These two developments have reduced the amount of the chairman's
shares pledged for financing to 15% of the company's outstanding
shares versus Mr. Shum's 69% ownership in the company as of
September 30, 2019. Such a situation, in turn, has reduced the risk
of a change of control that could be triggered by a reduction in
the chairman's stake in Jiayuan.
"In addition, the completion of the asset injection will support
Jiayuan's contracted sales growth and liquidity over the next 12-18
months, and broaden its geographic coverage to levels that are
comparable to its B2-rated China property peers," adds Ho.
Moody's expects that Jiayuan's contracted sales will grow to
RMB25-RMB30 billion over the next 12-18 months from RMB20 billion
in 2018. In the first eight months of 2019, the company's
contracted sales grew 50% to RMB16 billion.
Moody's also expects that Jiayuan's projected credit metrics will
support its B2 CFR. Specifically, its revenue/adjusted debt will
improve to around 70% and EBIT/interest will maintain at around
3.0x over the next 12-18 months versus 68% and 3.2x for the 12
months to June 30, 2019.
In addition, the B2 CFR has considered the company's track record
in its core market of Jiangsu Province, and its low-cost and
quality land bank, tempered by its moderate operating scale and the
execution risks associated with its rapid growth plan.
With respect to environmental, social, and governance risks,
Moody's has considered the risks from concentrated ownership and
share pledge financing.
Given the company's listed status, Jiayuan is subject to the
regulations of the Hong Kong Listing Rules and Securities and
Future Ordinance. In addition, Mr. Shum has shown commitments to
inject assets to strengthen the company's operation and equity
base, as well as to reduce his share pledge loan to lower the risk
of a change in control.
Jiayuan's liquidity is adequate. Moody's expects that the company's
cash holdings, together with its contracted sales proceeds after
deducting basic operating cash flow items, will enable the company
to meet its refinancing needs over the next 12-18 months. Jiayuan
reported cash holdings totaling RMB5.7 billion as of June 30, 2019,
which covered 117% of its short-term debt. The company's
refinancing of maturing USD bonds over the last 2-3 months has also
lengthened its debt maturity profile.
The B3 senior unsecured rating of the USD notes is one notch lower
than the CFR, due to structural subordination risk. This risk
reflects the fact that the majority of claims are at the operating
subsidiaries. These claims have priority over Jiayuan's senior
unsecured claims in a bankruptcy scenario. In addition, the holding
company lacks significant mitigating factors for structural
subordination. As a result, the likely recovery rate for claims at
the holding company will be lower.
The stable ratings outlook reflects Moody's expectation that (1)
Mr. Shum will not materially increase his share pledge financing,
(2) the company's liquidity will remain adequate, with continuing
access to the onshore and offshore loan and debt capital markets;
and (3) the company will grow its sales and maintain cash
collection as planned over the next 12- 18 months.
Moody's could upgrade the ratings if Jiayuan (1) grows its
business, while achieving its credit metrics of adjusted
revenue/debt above 70% and EBIT/interest higher than 3.0x on a
sustainable basis; (2) maintains adequate liquidity, with
cash/short-term debt consistently above 1.5x; and (3) keeps the
risk of a change of control at a low level.
But Moody's could downgrade the ratings if Jiayuan's (1) liquidity
profile weakens; (2) risk of a change in control increases; or (3)
contracted sales or revenue prove weaker than Moody's had expected,
leading to a deterioration in the company's credit metrics.
Credit metrics indicative of a ratings downgrade include (1)
adjusted revenue/debt below 55%, EBIT/interest below 2x, or
cash/short-term debt below 1.0x, all on a consistent basis.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Jiayuan International Group Limited develops mass-market
residential properties mainly in Jiangsu and Anhui provinces. The
company had a total land bank of around 13 million square meters at
the end of August 2019. It also develops and operates commercial
properties alongside its residential property projects.
LAI FUNG: Fitch Affirms BB- Issuer Default Ratings, Outlook Stable
------------------------------------------------------------------
Fitch Ratings affirmed Lai Fung Holdings Limited's Long-Term
Foreign- and Local-Currency Issuer Default Ratings at 'BB-' with
Stable Outlook. Fitch has also affirmed the Hong Kong property
company's senior unsecured ratings and the rating on its USD350
million senior notes due 2023 at 'BB-'.
The affirmation is supported by Lai Fung's stable financial
profile, with the investment property EBITDA/gross interest ratio
of 1.2x and total debt/total property assets at 28% at July 31,
2018 - both ratios similar to levels a year earlier. Fitch expects
Lai Fung's IP EBITDA interest cover to remain above 1.0x due to the
stable demand for office buildings in tier 1 cities in China,
mainly Shanghai and Guangzhou. Lai Fung is likely to start leasing
out Hengqin Novotown Phase I in the financial year ending July 31,
2020 (FY20), and has plans to redevelop an investment property in
Shanghai, which may improve its IP EBITDA interest cover.
The company's ratings continue to be constrained by its small IP
EBITDA of around USD60 million and the large number of IP under
development, which amounts to a gross floor area (GFA) of 3.3
million square feet (sq ft) compared with the 3.3 million sq ft of
completed IP in operation.
KEY RATING DRIVERS
Prudent Financial Management: Lai Fung maintained neutral to
positive funds flow from operations in FY15-FY18 as it focused on
healthy profit margins in the development business to support more
IP development. Lai Fung's leverage, measured by total debt/total
property assets, remained under 30%, but rose to 32% in 1HFY19 due
to the funding required for its major projects, such as Novotown in
Hengqin and the Wuli Bridge in Shanghai, near completion. Lai Fung
also acquired the land for Phase II of the Novotown project in
December 2018.
Novotown Project a Long-Term Positive: Novotown will become an
important source of recurring income and is likely to push total IP
EBITDA above HKD600 million when it matures. The sale of Lai Fung's
cultural studios may generate around HKD1 billion to support the
Novotown development in FY19-FY20. Fitch expects Lai Fung's
leverage to stay at about 30% in the short to medium term, although
this would be below the threshold where Fitch could consider
negative rating action.
More Diversified Rental Income: Fitch expects the flagship Shanghai
Hong Kong Plaza to account for less than 50% of the company's
rental revenue by FY20, from 50-60% in 1HFY19. The decline will
result from the addition of new IP. Fitch expects Lai Fung's mature
IP to have rental growth in the mid- to low-single percentage
digits and achieve a stable EBITDA margin of around 50%-60%. Its
already-high occupancy of above 95% for most of its key office and
retail properties means that further rental revenue upside will be
driven mainly by positive rental reversion.
Residential Profitability Recovered: Fitch expects Lai Fung's gross
profit margin to remain at above 30% in the next two to three
years, underpinned by low land cost. Its gross profit margin for
the property development business recovered to 45% in FY18 from 19%
in FY17, as profit recognition in FY17 was mainly from the Palm
Spring project, in Zhongshan, which had a lower profit margin than
other projects. Lai Fung's contracted sales from development
properties will be driven by Palm Spring and the sale of cultural
studios in Novotown in FY19, and potentially the Wuli Bridge
project in FY20.
DERIVATION SUMMARY
Lai Fung's IP EBITDA/gross interest cover has been above 1.2x,
setting it apart from most Chinese homebuilders that rely on more
risky development-property sales to service their debt. Lai Fung's
leverage, as defined by net debt/adjusted inventory, at 21%, also
compares favourably with 'BB' rated peers' leverage of between 30%
and 40%.
Among Asia-Pacific property peers, Lai Fung has a smaller business
scale and slightly weaker financial profile than PT Pakuwon Jati
Tbk (BB/Stable). Both companies have stable IP portfolios, which
provide a buffer to fund their development-property businesses. Lai
Fung's small IP EBITDA of around USD60 million is lower than
Pakuwon's USD130 million. Lai Fung also has lower interest coverage
of about 1.0x-1.5x than Pakuwon's 5.0x. However, Lai Fung has a
higher quality IP portfolio focusing on tier 1 cities in China,
such as Shanghai and Guangzhou, compared with Jakarta and Surabaya
for Pakuwon.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
- Mid-to-low single-digit percentage rental growth
- Rental GFA growth of about 77% in FY19 and 0% in FY20-21
- Capex of HKD2 billion in FY19 and HKD1 billion a year in FY20
and FY21 (FY18: HKD1 billion)
- Hong Kong dollar (HKD) at 1.1 to the yuan (CNY) over 2018-2020
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- IP EBITDA above HKD600 million (1HFY19: HKD222 million) and IP
EBITDA/interest expense exceeding 1.5x (1HFY19: 0.9x) for a
sustained period
Future Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- IP EBITDA /interest expense sustained below 1.0x, or
- Total debt/property assets sustained above 40% (1HFY19: 32%)
LIQUIDITY
Sufficient Liquidity: Lai Fung has maintained enough cash to cover
its short-term debt. It had HKD3.7 billion cash (including pledged
and restricted time deposits), which was sufficient to cover its
short-term borrowings of HKD0.7bn as of end-January 2019. Lai
Fung's recurring EBITDA of over HKD400 million will also provide
steady cash flow to support its debt servicing.
FULL LIST OF RATING ACTIONS
Lai Fung Holdings Limited
- Long-Term Foreign- Currency IDR affirmed at 'BB-', Stable
Outlook;
- Long-Term Local-Currency IDR affirmed at 'BB-', Stable
Outlook;
- Foreign-currency senior unsecured ratings affirmed at 'BB-';
and
- USD350 million 5.65% senior notes due 2023 affirmed at 'BB-'.
YINGDE GASES: S&P Raises Long-Term ICR to 'BB-', Outlook Stable
---------------------------------------------------------------
On Oct. 9, 2019, S&P Global Ratings raised its long-term issuer
credit rating on China-based industrial gas supplier Yingde Gases
Group Co. Ltd. and the issue rating on the company's guaranteed
notes to 'BB-' from 'B+'.
S&P said, "The upgrade reflects our view that Yingde will maintain
its financial discipline and fairly prudent investment appetite
over the next 12 months. As a result, we believe Yingde's leverage
will stay low and its credit metrics will not deteriorate
significantly from current levels over the period.
"In our view, Yingde's prudent financial policy since its
privatization by financial sponsor PAG Asia Capital (PAG) in 2017
will continue for at least the next 12 months. We expect Yindge to
maintain disciplined organic capital expenditure (capex) of below
Chinese renminbi (RMB) 2 billion a year and continue its steady
expansion. We conservatively assume an additional RMB800
million-RMB1 billion capex for acquisitions. We believe Yingde is
open to acquisition opportunities but will remain selective in
acquiring high-quality producing assets, based on its past record.
Compared with expansion through new plants, which will involve
construction over multiple years, acquisition of producing assets
would contribute immediately to the company's EBITDA.
"We believe Yingde has sufficient financial buffer for the current
rating. If all other assumptions are held constant, Yingde's
debt-to-EBITDA ratio will still remain below 3.5x even if its capex
increases to RMB5 billion each year in 2019-2021, and its dividend
payout rises to 50% of the previous year's net income, the upper
end of its U.S. dollar bond covenant restrictions. For 2018, the
company declared an interim dividend of RMB31 million and a final
dividend of RMB387 million (about a quarter of 2018 net income).
According to our conservative forecast, we expect the dividend
payout ratio for 2019 to be about 40% of the previous year's net
income, higher than that in 2018.
"In our base case, Yingde's ratio of debt to EBITDA will remain
below 2.5x over the next 12 months. We expect the company to
continue to generate strong cash flow of about RMB3 billion each
year, underpinned by stable average selling prices (ASP) and steady
customer demand. With the help of PAG, Yingde has optimized its
capital structure, including extending its debt maturity profile,
and deleveraged over the past two years." In March 2019, Yingde
secured a three-year 4.6% US$300 million syndicated bank loan for
the early redemption of its outstanding 7.25% US$236 million notes
due in 2020. Also, the company's debt-to-EBITDA ratio decreased to
about 2.2x in the first half of 2019, from 3.5x at the end of
2016.
Despite the economic slowdown in China, Yingde's 2019 interim
result demonstrated robust year-on-year revenue growth and stable
profitability. For the first half of 2019, revenue rose 21.5% from
a year ago, driven by a 7.6% growth in gas volumes, stable ASP, and
contributions from fertilizer producer Anyang Zhongying Fertilizer
Co. Ltd., which was acquired in 2018. Yingde also maintained stable
profitability over the period, with the EBITDA margin at 34.9%. At
the same time, the company generated strong operating cash flow of
about RMB1.4 billion.
S&P said, "Although we expect Yingde to maintain its credit metrics
with ample financial buffer, our view remains unchanged that the
financial sponsor ownership will continue to constrain our
financial risk assessment on the company. We base our financial
policy assessment on our belief that there is risk of increasing
leverage over the long term because financial sponsors typically
follow an aggressive financial strategy to maximize shareholder
returns.
"The stable outlook reflects our expectation that Yingde's leverage
will remain stable and its debt-to-EBITDA ratio will be below 3.5x
over the next 12 months, supported by its steady operations and
disciplined capital spending, including acquisitions. We expect
PAG's prudent financial policies on Yingde to remain unchanged over
the period. Also, we expect the company to maintain its good
position in the niche on-site industrial gas supply market in China
over the period.
"We may lower the rating if Yingde's debt-to-EBITDA ratio rises
above 3.5x on a sustained basis. This could happen if: (1) the
company undertakes aggressive expansion of new projects,
debt-funded acquisitions, or debt-financed dividends; or (2) its
profitability materially weakens because of a deterioration in
operations due to a poor market environment. The company's EBITDA
needs to fall by over 40% for its debt-to-EBITDA ratio to rise
above 3.5x, all else being equal.
"We could raise the rating if Yingde is no longer wholly owned by a
financial sponsor, i.e., other shareholders own more than 20% of
the company, and we anticipate the sponsor will relinquish control
of the company over the medium term. In addition, Yingde's
debt-to-EBITDA ratio will need to be below 4.0x, with the
management indicating its intention to maintain such a leverage
level, and liquidity is adequate."
Yingde is one of the largest independent industrial gas suppliers
in China. The company was established in 2001. It produces,
supplies, and distributes various gases, primarily oxygen,
nitrogen, and argon. As of June 30, 2019, Yingde operates 85
facilities in China with a total oxygen capacity of about 2,524,000
normal cubic meter (Nm3) per hour. The company had an on-site gas
revenue market share of about 38.3% in 2018, compared with 34.5% in
2016. The company is ranked number one among all independent
industrial gas producers in China and was privatized by private
equity firm PAG in August 2017.
=========
I N D I A
=========
ABC COTSPIN: CRISIL Maintains 'D' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of ABC Cotspin Private
Limited (ABC) continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 25 CRISIL D (ISSUER NOT COOPERATING)
Packing Credit 59 CRISIL D (ISSUER NOT COOPERATING)
Proposed Packing
Credit 186 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with ABC for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 ABC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ABC is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of ABC continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
ABC, incorporated in 2006 by Mr. Ashish Jobanputra and his family
members, primarily trades in cotton bales. The company generates
over 90 per cent of its revenue from the export market. It also
operates a ginning unit in Botad (Gujarat) commissioned in November
2011. It is based in Ahmedabad (Gujarat).
ADARSH JAN: CRISIL Maintains 'B' Rating in Not Cooperating
----------------------------------------------------------
CRISIL said the ratings on bank facilities of Adarsh Jan Kalyan
Evam Shiksha Samiti (AJKESS) continues to be 'CRISIL B/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund- 1 CRISIL B/Stable (ISSUER NOT
Based Bank Limits COOPERATING)
CRISIL has been consistently following up with AJKESS for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 AJKESS, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AJKESS is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of AJKESS continues to be 'CRISIL B/Stable Issuer not
cooperating'.
AJKESS, set up as a not-for-profit society, is managed by its
secretary Mr. P D Tripathi and president Mr. Rajdutt Tiwari.
Located in Lucknow district (Uttar Pradesh), the society is engaged
in various schemes operated by the state and central governments in
Lucknow and surrounding areas. The schemes include providing hot
cooked food in anganwadi centres under the scheme of Integrated
Child Development Services (ICDS) department, free meals under the
Mid-Day meal scheme, and other government-mandated schemes. The
society is also operating Adarsh Shiksha Mandir School.
ADITYA POLYMERS: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Aditya Polymers and Chemicals (India) Private Limtited
118, Satyam Estate
35/A, Erandwana
Off Karve Road
Pune 411038
Insolvency Commencement Date: September 5, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 3, 2020
(180 days from commencement)
Insolvency professional: Ms. Purnima Shetty
Interim Resolution
Professional: Ms. Purnima Shetty
DX-6, Om Woods
Plot No. 144, Badam Lane
Nr. DMart, Sector 21
Nerul East 400706
E-mail: pcspurnima@gmail.com
- and -
C/o Desai Saksena and Associates
Chartered Accountants, Laxmi Building
First Floor, Sir P.M. Road
Fort, Mumbai 400001
E-mail: cirpapcpl@gmail.com
Last date for
submission of claims: October 10, 2019
AMAR JYOTI: CRISIL Maintains 'B-' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Amar Jyoti Industries
Private Limited (AJIPL) continues to be 'CRISIL B-/Stable Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Term Loan 10.4 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AJIPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 AJIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AJIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of AJIPL continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
Incorporated in 2013, AJIPL is promoted by Mr. Amar Nath Pandey and
Mrs. Vinita Joy. The company is engaged in processing of paddy into
par-boiled rice with total capacity of 8 tonnes per hour (TPH). The
processing unit is located at Muzaffarpur (Bihar).
ANUBHAV TRADING: CRISIL Maintains 'B' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Anubhav Trading (ANT)
continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Cash 8 CRISIL B/Stable (ISSUER NOT
Credit Limit COOPERATING)
Proposed Long Term 1 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with ANT for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 ANT, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ANT is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of ANT continues to be 'CRISIL B/Stable Issuer not
cooperating'.
ANT was established in 2008 as a proprietorship firm of Mr. Dilip
Kumar Jaiswal. It is an authorised distributor of electronic
appliances of various companies, such as LG Electronics India Pvt
Ltd (LG), Whirlpool of India Ltd (Whirlpool), Voltas Ltd (Voltas),
Symphony Ltd (Symphony), and Hitachi, in North Bihar.
AURANGABAD GYMKHANA: CRISIL Keeps 'B' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Aurangabad Gymkhana
Club Private Limited (AGCPL) continues to be 'CRISIL B/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 9.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term .5 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with AGCPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 AGCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AGCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of AGCPL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
AGCPL, incorporated in 1995, and promoted by Mr. Surendra K Surana,
operates a sports club, Aurangabad Gymkhana, in Aurangabad
(Maharashtra). The company is a part of the Surana group, which
includes Surana Constructions Chembur, Surana Constructions Wadala,
Surana Infrastructure Pvt Ltd, Class Restaurant (rated 'CRISIL
B-/Stable'), Surana Housing Pvt Ltd, and Surana Hotels & Resorts
Pvt Ltd.
AVIS INDIA: CRISIL Maintains 'B+' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Avis India (Avis)
continues to be 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with Avis for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 Avis, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Avis is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of Avis continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
Avis, based in Pune (Maharashtra), was established as a
proprietorship concern in 1997 by Mr. Vijay Kulkarni. It undertakes
civil construction works such as setting up of sugar factories,
power projects for sugar factories, and water treatment plants
largely in Maharashtra,. Its day-to-day operations are managed by
Mr. Vijay Kulkarni.
BHUSHAN STEEL: Tata Steel Gains INR5,000cr Profit During Insolvency
-------------------------------------------------------------------
The Hindu BusinessLine reports that Tata Steel has walked away with
a profit of INR5,000 crore made by Bhushan Steel, now known as Tata
Steel BSL, during the insolvency period stretching over 18 months.
This contrasts with the National Company Law Tribunal (NCLT) ruling
that the profit made by Bhushan Power and Steel during the
insolvency period belongs to the financial and operational
creditors, the report says.
BusinessLine relates that JSW Steel, the winning bidder of Bhushan
Power, has moved the National Company Law Appellate Tribunal
(NCLAT) against the NCLT's order. As of May 18, the current assets
of Bhushan Steel were INR7,909 crore, while its current liabilities
were INR2,742 crore. Therefore, the net current assets bagged by
Tata Steel after the insolvency proceeding were INR5,168 crore,
BusinessLine says.
Bhushan Steel had inventories of INR4,219 crore and trade
receivables of INR1,288 crore when Tata Steel officially took over
the company, BusinessLine discloses. Tata Steel also inherited
non-current assets, other than fixed assets of INR2,028 crore and
and non-current liabilities of INR97 crore. In all, it got
non-current assets of INR1,931 crore.
Thus, Bhushan Steel has gained INR7,099 crore ever since Tata Steel
placed a bid of INR35,000 crore to acquire the insolvent asset, the
report notes.
Considering that the Insolvency and Bankruptcy Code (IBC) was a
time-bound resolution process, the Committee of Creditors (CoC) did
not make a claim on profit during the insolvency period in the
initial cases, said a lawyer familiar with the development,
BusinessLine relays.
Some of the other companies that benefited from the CoC's omission
include Vedanta and JSW Steel, which acquired Electrosteel Steels
and Monnet Ispat, BusinessLine discloses. Unlike Bhushan Steel, the
profit accrued in both the cases was negligible as most of the
units in both cases were not operational, the report says.
According to BusinessLine, the issue of profit in the case of
Bhushan Power was raked up during the court proceedings by its
promoter, Sanjay Singhal, who said the initial process document for
insolvency issued by the CoC cannot be changed at the fag end.
The CoC has made its claim on profit in the case of Essar Steel,
whose insolvency proceeding was delayed as the company had moved
various courts to scuttle insolvency, said the lawyer, the report
relays.
In the case of Essar Steel, which is being taken over by
ArcelorMittal, the NCLT ruled that the INR3,400-crore profit made
by Essar Steel during the insolvency period should be distributed
among the financial and operational creditors, BusinessLine
states.
The sharp increase in demand, lower cost of production and
moratorium on interest payment on defaulted loan have ensured that
the insolvent company made a huge profit during the insolvency
period, said an analyst, relays BusinessLine.
Responding to a query by BusinessLine, a Tata Steel spokesperson
said: "Tata Steel Ltd acquired a controlling stake in Tata Steel
BSL Ltd for INR35,232.58 crore. Accounting for the acquisition
entailed adjustments as per the approved resolution plan and as per
the requirements of the accounting standards. The assets and
liabilities of the acquired business were recognised at fair value
as on the acquisition date. The net current assets, as mentioned in
the story, does not represent profit earned by Bhushan Steel during
the insolvency period."
About Bhushan Steel
India-based Bhushan Steel -- http://www.bhushan-group.org/--
manufactures auto-grade steel.
Bhushan Steel is one of the 12 non-performing assets referred by
the Reserve Bank of India for National Company Law Tribunal (NCLT)
proceedings. NCLT admitted the bankruptcy plea against the steel
company filed by State Bank of India on July 26, 2017.
Bhushan Steel's total debt stood at around INR42,355 crore as of
March 31, 2017.
In May 2018, Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary
of Tata Steel, completed the acquisition of controlling stake of
72.65 per cent in Bhushan Steel Ltd (BSL).
BNR EGG: CRISIL Maintains 'B' Rating in Not Cooperating Category
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of BNR Egg Farms (BNR)
continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.72 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 5.40 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Cash .38 CRISIL B/Stable (ISSUER NOT
Credit Limit COOPERATING)
CRISIL has been consistently following up with BNR for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 BNR, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BNR is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of BNR continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Established in 2005 as a partnership firm, BNR is engaged in
production of commercial eggs. The firm is promoted by Mr.P.
Seshagiri Rao and his associates. Based out of Vishakhapatnam in
Andhra Pradesh.
CLASS RESTAURANT: CRISIL Maintains 'B-' Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Class Restaurant
(Class) continues to be 'CRISIL B-/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 1 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with Class for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 Class, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Class is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of Class continues to be 'CRISIL
B-/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
Class Restaurant, set up in 1998, is a proprietorship firm of Mr.
Surendra Kumar Surana. It operates a restaurant, The Class Thali,
at Juhu in Mumbai. The firm is a part of the Surana group, which
includes Surana Constructions, Surana Infrastructure Pvt Ltd,
Aurangabad Gymkhana Club Pvt Ltd (CRISIL B/Stable/CRISIL A4 (Imp),
Surana Housing Pvt Ltd, and Surana Hotels & Resorts Pvt Ltd.
DWARIKA PRASAD: CRISIL Assigns B Rating to INR1cr LT Loan
---------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Dwarika Prasad Jan Kalyan Samiti.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 1 CRISIL B/Stable (Assigned)
The rating reflects a small scale of operations and a weak
financial risk profile. These weaknesses are partially offset by
the experience of the trust in implementation of mid-day meal
schemes and other social initiatives.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations
Revenue was low at INR1.76 crore in fiscal 2019, and is likely to
remain at a similar level over the medium term.
* Weak financial risk profile
The networth was small at INR37 lakh as on March 31, 2019, but
there is no debt.
Strength:
* Experience of the trust
The trust has been taking up different social initiatives including
mid-day meal schemes and running the Bal Shramik Vidyalaya in the
Kanpur and Aligarh regions of Uttar Pradesh since 2012.
Liquidity: Poor
Cash accrual is estimated to be low at around INR6 lakh, per
fiscal, but in the absence of any repayment obligation over the
medium term it will act as a cushion to liquidity. The current
ratio was moderate at 4.71 times as on March 31, 2019. The board
members have provided donations to support the different activities
undertaken by the society.
Outlook: Stable
CRISIL believes the society will continue to benefit from the
extensive experience of its trustee and established relationship
with the authorities.
Rating sensitivity factors
Upward Factor
* Sustained and significant improvement in the scale of operations,
with the operating margin being maintained at over 4%.
* Substantial improvement in the networth leading to a better
financial risk profile.
Downward Factor
* Any significant debt-funded capital expenditure, leading to
deterioration in the gearing to more than 3 times
* Weakening of operating efficiency either due to a decline in the
operating margin or increase in working capital requirement.
Dwarika Prasad Jan Kalyan Samiti was established in 2012 in
Kasganj, Uttar Pradesh. The society is run by the trustee, Mr
Kailash Chandra.
DYNAMIC BUILDING: CRISIL Maintains 'B' Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Dynamic Building
Concepts Private Limited (DBCPL) continues to be 'CRISIL B/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 8.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 2.0 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with DBCPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 DBCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DBCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of DBCPL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
DBCPL, incorporated in 2013, manufactures hollow and solid concrete
blocks. DBCPL is managed by Mr. Harpartap Singh Deol and Mr.
Amritpal Singh Sandhu. DBCPL's manufacturing unit is in district
Una (Himachal Pradesh).
ERODE STEELS: CRISIL Cuts INR14.5cr Cash Loan Rating to B+/Not Coop
-------------------------------------------------------------------
CRISIL has revised the ratings on bank facilities of Erode Steels
(ES) to 'CRISIL B+/Stable Issuer not cooperating' from 'CRISIL
BB-/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with ES for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 ES, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ES is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of ES Revised to be 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB-/Stable Issuer not cooperating'.
Set up in 1990, ES trades in construction materials such as steel,
cement, and paints. The firm is promoted by Mr V Ganesan and is
based in Erode, Tamil Nadu.
EXCELLENT POWER: CRISIL Maintains 'B' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Excellent Power Cable
Private Limited (EPCPL) continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with EPCPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 EPCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on EPCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of EPCPL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
EPCPL, incorporated in 2006 in Delhi by members of the Aggarwal
family, manufactures ACSR conductors and aluminium wires. The
company is being promoted by Mr. Moolchand Aggarwal and his family
members.
FALCON STEELS: CRISIL Maintains 'B+' Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Falcon Steels (FS)
continues to be 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with FS for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 FS, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on FS is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of FS continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Set up in March 2016, Falcon Steels (FS) manufactures SS steel
tubes, used in various industries such as infrastructure,
agriculture, industrial, water and sanitary fittings. Commercial
operations are likely to commence from April 2018. FS is a
partnership firm, between Mr Chirag Bansal, Mr Ashok Bansal, Mr
Akhil Singhal and Mr Raj Kumar Singhal. The manufacturing facility
is situated at Kaithal, Haryana with an installed capacity of 7500
metric tons per annum.
GORAKHPUR DUGDH: CRISIL Assigns B- Rating to INR1cr Secured Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the long-term
bank facility of Gorakhpur Dugdh Utpadak Sahkari Sangh Limited
(GDUSSL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Secured Overdraft
Facility 1 CRISIL B-/Stable (Assigned)
The rating reflects the company's modest scale of operations,
susceptibility to changes in government regulations, below-average
financial risk profile, and subdued operating efficiency. These
weaknesses are partially offset by the extensive experience of the
promoter in the dairy industry and the benefits expected from the
newly set-up automated manufacturing facility.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility to volatility in milk prices, changes in
government regulations, and the risk of epidemics in the dairy
industry: The price of milk is sensitive to any adverse impact of
changes in government policies and to environmental conditions.
Also, entities in the segment are susceptible to failure in milk
production because of external factors such as cattle diseases.
* Below-average financial risk profile: The financial risk profile
is constrained by weak return on capital employed and modest debt
protection metrics on account of negative operating profit in
fiscal 2019, net cash accruals & interest coverage ratio remain
below average.
* Subdued operating efficiency: The company incurred a loss of
INR0.48 crore in fiscal 2019, but is likely to benefit from
improved standards of production.
Strengths
Industry experience of the promoter: The promoter has experience of
12 years in the dairy products industry, and has an understanding
of the consumer demand and market dynamics.
* Modest scale of operation: While GDUSSL's business risk profile
is constrained by its modest scale of operations in the intensely
competitive dairy products industry, this is expected to improve
due to commencement of operations at the automated manufacturing
facility.
Liquidity: Stretched
Liquidity is constrained by high bank limit utilisation of 95-100%
over the 12 months through July 2019. Cash and cash equivalent
stood at INR2.47 crore as on March 31, 2019.
Outlook: Stable
CRISIL believe GDUSSL will continue to benefit from the extensive
experience of its promoter and its newly installed manufacturing
facility.
Rating sensitivity factors
Upward factor
* Increase in revenue and in operating margin to 4%, leading to
higher cash accrual
* Improvement in working capital cycle
Downward factor
* Substantial increase in working capital requirement, weakening
liquidity
* Increase in debt, weakening the financial risk profile
Incorporated in 1965, GDUSSL processes milk and produces milk
products such as ghee, butter, and rasgulla. The company is managed
by Mr Anuj Yadav.
HINDUSTAN HERBALS: CRISIL Maintains B- Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Hindustan Herbals
Limited (HHL) continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 5 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 5 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Working Capital 2 CRISIL B-/Stable (ISSUER NOT
Term Loan COOPERATING)
CRISIL has been consistently following up with HHL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 HHL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HHL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of HHL continues to be 'CRISIL B-/Stable Issuer not
cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
HHL was incorporated in 2010 and is promoted by Mr. Radhe Shyam
Goel, Mr. Ved Parkash Goel, and Mr. Om Parkash Goel and their sons.
The company manufactures and processes herbal extracts and
phytochemicals, and caters to manufacturers of dietary supplements.
HINDUSTAN JEWELLERS: CRISIL Keeps 'B' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Hindustan Jewellers
(HJ) continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with HJfor obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 HJ, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HJ is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of HJ continues to be 'CRISIL B/Stable Issuer not
cooperating'.
HJ is into retailing of gold based jewellery in Odisha. The firm
has its showroom in Bhubneshwar and Dhenkanal. The day to day
operations of the firm is being managed by Mr. Basant Lal Verma and
his son Mr. Surya Verma.
HITECH EXTRUSION: CRISIL Cuts INR18cr LT Loan Rating to B+/Not Coop
-------------------------------------------------------------------
CRISIL has revised the ratings on bank facilities of Hitech
Extrusion Llp (HEL) to 'CRISIL B+/Stable Issuer not cooperating'
from 'CRISIL BB/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 18.0 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Term Loan .5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')COOPERATING')
CRISIL has been consistently following up with HEL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 HEL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HEL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of HEL Revised to be 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
Set up in 2010 as a limited liability partnership firm, HEL
manufactures and exports brass and bronze extruded products such as
extrusion rods, wires, casting, pipes, tubes, hollow rods and
ingots. The facility at Jamnagar has an installed capacity of 7000
tonne per annum. The firm is a member of Metal Recycling
Association of India (MRAI).
HOTEL MAGIC: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Hotel Magic Mountain
(HMM) continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 3.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with HMM for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 HMM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HMM is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, the ratings on bank
facilities of HMM continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Established in 2015 by the Gangtok-based Mr. Yoland Christopher and
his sister, Ms. Stepheny Christopher, HMM is currently setting up a
three-star hotel in Gangtok.
HOUSING DEVELOPMENT: Banker Hid Bad Loans from Regulator
--------------------------------------------------------
Suvashree Ghosh at Bloomberg News reports that an Indian bank was
able to dupe regulators about its growing exposure to property
developer Housing Development & Infrastructure Ltd. (HDIL) for at
least a decade before the firm filed for insolvency, according to a
letter written by the lender's managing director, who has since
been removed.
Punjab & Maharashtra Co-operative Bank Ltd. (PMC) used "dummy
accounts" and other methods to hide its oversized loans to HDIL
from the Reserve Bank of India, Joy Thomas wrote in the letter, a
copy of which was seen by Bloomberg News.
"Every year during the course of RBI inspection we undergo into a
lot of stress due to concealment of information from RBI," Thomas
wrote in his letter dated Sept. 21 and addressed to a senior
supervisory official at the central bank. He said he also hid the
true exposure from the PMC board and the bank's auditors, Bloomberg
relays.
Last month, the RBI took the rare step of limiting withdrawals from
PMC, causing depositors to besiege the bank's branches to retrieve
their money, Bloomberg recalls. It also removed the former
management, including Mr. Thomas, citing major financial
irregularities, a failure of internal controls, and inaccurate
reporting that understated exposures.
PMC is one of some 97,000 cooperative lenders in India, which hold
a combined $130 billion of deposits according to CLSA Ltd. --
nearly a tenth of the wider industry's total.
Among that plethora of lenders, only the 54 biggest are monitored
by the central bank and investors are now trying to figure out
whether they pose a new threat to a banking system hobbled by a
9.3% bad-loan ratio, the highest in the world, the report states.
According to Bloomberg, Mr. Thomas said he stopped reporting to the
RBI on the bank's large exposures from 2008 "because of
reputational risk." By 2011, the exposure to HDIL stood at INR10.2
billion ($144 million), or more than half the bank's total advances
of INR20 billion, according to the letter cited by Bloomberg. The
RBI restricts single borrower exposures to one-fifth of the total.
Had the bank classified the assets as non-performing, "we would
have had to stop charging interest on these accounts and we could
have made losses," Mr. Thomas said in the letter, Bloomberg relays.
"The growth path of the bank would have got hampered."
Prior to 2015, PMC was able to conceal its HDIL exposure because
RBI officers would only inspect a few of the largest borrower
accounts, Mr. Thomas wrote. When the RBI started to ask for more
details around 2017 "the stressed legacy accounts belonging to this
group were replaced with dummy accounts to match the outstanding
balances in the balance sheet," he said.
HDIL has sought a meeting with the administrator of PMC Bank to
"put forth the true and correct picture," the company said in an
exchange filing on Oct. 1, according to Bloomberg. Lenders, led by
Bank of India, dragged the real estate developer into bankruptcy
proceedings in August.
The Press Trust of India reported on Sept. 29 that Mr. Thomas had
told the RBI that HDIL accounted for 73% of the bank's total loan
book, Bloomberg adds.
"This event might create a chain reaction among other lenders and
they might turn more circumspect in lending to the real estate
sector," Bloomberg quotes Karthik Srinivasan, head of financial
sector ratings at ICRA Ltd., the local unit of Moody's Investors
Service, as saying. "That is likely to increase the liquidity
crunch among real estate companies."
According to Bloomberg, the drumbeat of bad news in India's banking
market is affecting shares of lenders on speculation that the
scandals will prompt savers to switch to larger banks. Yes Bank
Ltd. plunged 23%, IndusInd Bank Ltd. dropped 6.2%, while RBL Bank
Ltd. lost 9%. HDFC Bank gains as smaller rivals plunge.
India's cooperative banks, set up to serve areas where banking
services aren't widely available to all people, typically cater to
poorer, less creditworthy customers, Bloomberg notes.
Bloomberg says the RBI monitors only the cooperative banks,
including PMC, that are considered systemically important. Even the
larger ones aren't as intensively supervised as the commercial
banks, however, because their respective state governments play a
role in regulation.
Bloomberg relates that Mr. Thomas said the close relationship with
HDIL dated back to 1986 when the company founders rescued the bank
by infusing capital and maintaining large deposits.
HDIL's cash flow began drying up when a large project to develop
land near Mumbai's airport was scrapped following a change in
government policy, Bloomberg adds citing Mr. Thomas's letter.
About HDIL
Housing Development & Infrastructure Limited (HDIL) is real estate
development company. The Company's services include residential,
commercial, and retail real estate development.
The National Company Law Tribunal (NCLT) on Aug. 20, 2019, admitted
an application filed by Bank of India to initiate insolvency
proceedings against the company.
HYDERABAD GALVANISING: CRISIL Keeps B+ Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Hyderabad Galvanising
Private Limited (HGPL) continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
Proposed Cash 3 CRISIL B+/Stable (ISSUER NOT
Credit/Bills COOPERATING)
Discounting Limit
CRISIL has been consistently following up with HGPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 HGPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HGPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of HGPL continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Established in 2009 as a private limited company, Hyderabad
Galvanising Pvt Ltd (HGPL) is engaged in fabrication and
galvanising of transmission and telecom towers. Based in Hyderabad
(Telangana), the company is promoted and managed by Mr. N Srikanth
Reddy.
INNOVA CHILDRENS: CRISIL Maintains 'D' Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Innova Childrens
Heart Hospital Private Limited (ICHPL) continues to be 'CRISIL D
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.75 CRISIL D (ISSUER NOT COOPERATING)
Term Loan 11.75 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with ICHPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 ICHPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ICHPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of ICHPL continues to be 'CRISIL D Issuer not
cooperating'.
Incorporated in 2006, ICHPL operates a 100-bed multi-specialty
hospital in Hyderabad. The operations of the hospital are managed
by its promoter, Dr. KS Murthy and Dr. K Sujanee Murthy.
IVRCL LIMITED: Deadline for Submission of EoI Extended to Oct. 14
-----------------------------------------------------------------
The Hindu BusinessLine reports that the deadline for submission of
Expression of Interest under liquidation process, as a going
concern, for IVRCL Limited has been extended to October 14.
According to the report, the Hyderabad-based infrastructure company
has gone through insolvency proceedings under the Insolvency and
Bankruptcy Code, 2016 at the National Company Law Tribunal,
Hyderabad. The Tribunal had ruled that the company would go through
the liquidation process as a going concern and appointed Sutanu
Sinha as Liquidator of IVRCL, the report discloses. He has earlier
represented as the Insolvency Professional for the company after
the Board was suspended.
BusinessLine relates that the move to liquidate comes after all
efforts to find a resolution did not materialise during the
insolvency proceedings at the NCLT.
In continuation to the announcement made on Sept. 5, inviting
Expression of Interest to submit bids for IVRCL Limited under
liquidation process as going concern, the liquidator has informed
the Stock exchanges that the last date for submission of Expression
of Interest has been extended to Oct. 14, 2019, the report notes.
And the date of e-auction has been extended to Oct. 15, 2019 with
an additional announcement that the Process Participation Fee of
INR25 lakh (plus GST 18%) has been waived, the report adds.
Hyderabad-based IVRCL provides engineering, procurement, and
construction services to the sectors of irrigation, water supply,
transportation, buildings and industrial structures. It is listed
on the National Stock Exchange and Bombay Stock Exchange.
JANA CAPITAL: Ind-Ra Assigns 'B+' Rating to INR1.5MM Proposed NCDs
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated Jana Capital
Limited's (JCL) proposed non-convertible debentures (NCDs) as
follows:
-- INR1.5 mil. Proposed NCDs assigned with Provisional IND
B+/Stable rating.
The final rating will be assigned following the final issuance and
the receipt of the final documentation, conforming to the
information already received by Ind-Ra.
Analytical Approach: The NCDs, which are yet to be issued to TPG
Asia VI India Markets Pte. Ltd, shall be junior to all the issues
raised by Jana Holdings Limited (JHL). Nevertheless, the NCDs
raised by JHL and the proposed issuance by JCL have a cross-default
clause with JHL's indebtedness. The issue shall be secured by a
second ranking pledge of 1.99% of the paid-up equity share capital
of Jana Small Finance Bank (JSFB). The NCDs shall be created in the
favor of Catalyst Trusteeship Limited and shall be subservient to
the first ranking pledge created for the benefit of the holders of
the NCDs issued by JHL over the equity shares of JSFB held by JHL
until the senior instruments are paid-off on their due dates.
The rating is based on the credit profiles of JCL, JHL and JSFB.
JCL and JHL derive their value from their direct/indirect holdings
in JSFB. JCL is a non-deposit taking non-bank finance company-core
investment company. All the three companies have limited financial
strength. JCL holds 100% of JHL, which is a non-operating financial
holding company (NOFHC) of JSFB and the value of its investments is
derived solely from its 41.99% shareholding in JSFB. The investment
value is largely subject to the incremental performance of JSFB
(commercial banking operations commenced in July 2018) and the
bank's ability to manage credit costs emanating from its legacy
portfolio.
KEY RATING DRIVERS
Bank to Face Medium-Term Profitability Pressures: JSFB reported a
net loss of INR19.5 billion as a result of high credit costs,
however, lower than the FY18 loss of INR25 billion. It could face
profitability issues in the medium term as it will need to achieve
certain scale to cover its operating and interest costs. Ind-Ra
expects a marginal improvement in JSFB's profitability in FY21
under the business-as-usual scenario, i.e. 45% growth in loans
under management over FY20-FY21 and assets under management of
INR130 billion-140 billion without any significant asset quality
deterioration. Most of the growth would be seen in the secured
asset classes and other non-microfinance products.
Liquidity Indicator - Poor for JCL, Adequate for JSFB: JCL, like
JHL, does not have cash flows to service its debt obligations and
depends on monetization of its stake in JSFB or secondary sale of
shares, etc. before maturity date of the respective instruments.
JCLs' subsidiary JHL would hold 41.99% stake in JSFB post equity
infusion and would need to list the bank before end-March 2021.
JSFB maintains surplus in each of the buckets in the up to one year
period as of August 2019 (6% of inflows as surplus). On stressing
the inflows, cumulative surplus at end-August 2019 was about 3%.
The bank has also seen substantial mobilization of deposits
especially term deposits.
Liquidity Management Challenging; Deposits Continue to See
Traction: The bank continued to report asset funding surplus of 3%
and 6% of the total inflows, in March and August 2019,
respectively, in the short-term bucket of up to one year, as is
typical of entities with substantial operations in microfinance.
JSFB has also maintained excess statutory liquidity reserves in the
range of INR6.6 billion-15.4 billion between July 2019 and August
2019 in addition to the cash reserves that it needs to maintain as
part of the regulatory requirement. The bank's liquidity coverage
ratio stood at 1,027.24% at FYE19 (FYE18: 1,112.62%).
JSFB has been able to mobilize substantial deposits over September
2018-June 2019 with term deposits increasing to INR52.9 billion in
1QFY20 (FY19: INR38.5 billion, 1HFY19: INR17.7 billion), and
current and savings accounts to INR3.61 billion (INR3.1 billion,
INR0.464 billion). Total deposits stood at INR70.1 billion at
end-August 2019, of which 45% are of tenor more than one year. The
bank received scheduled status in August 2019.
Bank Capital Constrained: JSFB received capital infusions of INR7.8
billion over November 2018-March 2019 and INR19.4 billion over
September 2017-August 2018 to strengthen its eroding capital while
maintaining its regulatory capital levels. This capital was raised
through various new and existing investors. JHL had also raised
debt to infuse capital at JSFB against the expected valuation of
JSFB at the time of its listing before end-March 2021. At FYE19,
JSFB reported Tier I capital ratio of 12.3% (FYE18: 24.3%) and
total capital adequacy ratio at 18.8% (34.7%). The bank's net worth
stood at INR6.7 billion with leverage (advances/equity) of 9.2x at
FYE19, which is higher than most other SFBs. The bank is raising
INR3.5 billion of capital during 3QFY20. The proceeds from the NCD
issue by JCL will be used for subscribing capital at the bank
level.
Considering JSFB would need growth capital to report net profits
while also reducing its leverage and maintaining regulatory
capital, Ind-Ra estimates the bank to require INR5 billion-6
billion of equity capital or internal accruals over next 18-24
months, depending on their growth and profitability, to achieve
scale that would deliver profitability with reasonable capital
buffers. JCL's divestment ability is limited as its subsidiary JHL
needs to hold at least 40% stake in the bank for a minimum period
of five years ending FY23. Also, the bank may have substantial
accruals only by FY22, and hence, leverage may only increase.
High Refinancing and Valuation Risk: The NCDs, which are yet to be
issued, face refinancing risks. JHL faces limitations related to
the dilution of its shareholding in JSFB on account of regulatory
requirements and share pledges (1.99% pledged to existing lenders).
The NCDs need to be refinanced to the extent of principal and the
rate of return promised to the investors. The NOFHC is required to
hold at least 40% stake in the bank for a minimum of five years
ending FY23. The NCDs have a cross-default clause with the existing
indebtedness of JHL. Any increase in JHL's shareholding on account
of proposed infusion may be insufficient to repay existing
obligations; hence, the valuation risk is significant.
Significant Reduction in Asset Quality Overhang: The bank reported
significant write-downs of INR25.14 billion in FY19, resulting in a
substantial improvement in its gross non-performing assets (NPAs)
to 8% in FY19 (1HFY19: 35%, FY18: 42.21%) and net NPAs to 4.4%
(1HFY19: 13%, FY18: 27.7%). This also led to a decrease in
provision coverage ratio to 47.7% in FY19 (1HFY19: 70.8%, FY18:
47.5%). While the bank had outstanding loans of INR31.8 billion in
its 90 days+ bucket, it was able to recover INR6.6 billion over
FY18-FY19 with the maximum recovery coming from 3-15 months bucket.
Ind-Ra expects write-downs to decrease to INR2 billion-3 billion in
FY20, considering the quantum of borrower spillover to 455 days+
bucket from 90-455 days bucket will gradually decline. In the
agency's assessment, the bank may not see significantly higher
credit costs on the newly originated portfolio (post-December 2017
disbursement; also reflected in the delinquency data). Old book
(pre December 2017 disbursement) is currently at 6.5% of overall
AUM.
RATING SENSITIVITIES
Positive: A significant improvement in the bank's asset quality,
capitalization and leverage, and achievement of material
profitability earlier-than-expected by Ind-Ra could result in a
positive rating action.
Negative: A significant increase in the bank's leverage without a
commensurate improvement in the asset quality, inability to raise
equity as planned, capital levels close to the regulatory minimum
or a breach of the regulatory conditions, if any, and funding gaps
that in the agency's opinion prove challenging for the bank to meet
repayment obligations could result in a negative rating action. Any
unrelated diversification by the holding company could also result
in a rating downgrade.
COMPANY PROFILE
JCL was incorporated on March 26, 2015 to carry on the business of
an investment company and to invest, buy, sell and deal in and
disposal of any share, stock, and debenture. The company received a
certificate of registration dated March 24, 2017 from the Reserve
Bank of India as a non-banking financial institution – non
deposit taking – systematically important core investment company
under section 45IA of the Reserve Bank of India Act 1934. JHL is
100%-held by JCL. JSFB had total advances of INR70.49 billion and
250 branches at end-June 2019.
JANA HOLDINGS: Ind-Ra Affirms 'B+' NCDs Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has taken the following actions
on Jana Holdings Limited's (JHL) debt instruments:
-- INR1.45 mil. NCDs affirmed with IND B+/Stable rating; and
-- INR1.55 mil. NCDs affirmed with IND B+/Stable rating.
Analytical Approach: The NCDs are held by Centrum Group and Manipal
Health Systems Pvt. Ltd. (MHSPL) and are junior to JHL's existing
debt. The NCDs held by Centrum Group will mature first, followed by
JHL's existing NCDs (not rated by Ind-Ra), which are held by
Caladium Investment Pte. Ltd (INR1 billion), Edelweiss Capital
Limited (INR1.55 billion) and TPG Capital Asia (INR4.03 billion)
and lastly those held by MHSPL. As per the conditions of the
initial public offering (IPO), any liquidity event or default on
the NCDs from Caladium Investment and Edelweiss Capital will have
senior claim on JHL's assets, or IPO or refinance proceeds. The
claims of these NCDs would be pari passu to the existing NCDs of
JHL, raised from TPG Capital Asia.
The ratings are based on the credit profile of JHL and JSFB. Both
companies have limited financial strength. JHL is a non-operating
financial holding company (NOFHC) of JSFB and the value of its
investments is derived solely from its 41.99% shareholding in JSFB.
The investment value is largely subject to the incremental
performance of JSFB (banking operations commenced in July 2018) and
the ability of the bank to manage the credit costs emanating from
its legacy portfolio.
KEY RATING DRIVERS
Bank to Face Medium-Term Profitability Pressures: JSFB reported a
net loss of INR19.5 billion as a result of high credit costs,
however, lower than the FY18 loss of INR25 billion. It could face
profitability issues in the medium term as it will need to achieve
certain scale to be able to cover its operating and interest costs.
Ind-Ra expects a marginal improvement in JSFB's profitability in
FY21 under the business-as-usual scenario, i.e. 45% growth in loans
under management over FY20-FY21 and assets under management of
INR130 billion-140 billion without any significant asset quality
deterioration. Most of the growth would be seen in the secured
asset classes and other non-microfinance products.
Liquidity Indicator - Poor for JHL, Adequate for JSFB: JHL does not
have cash flows to service its debt obligations and depends on
monetization of its stake in JSFB or secondary sale of shares, etc.
before maturity date of the respective instruments. JHL would hold
41.99% stake in JSFB post equity infusion and would need to list
the bank before end-March 2021.
JSFB maintains surplus in each of the buckets in the up to one-year
period as of August 2019 (6% of inflows as surplus). On stressing
the inflows, cumulative surplus at end-August 2019 was about 3%.
The bank has also seen substantial mobilization of deposits
especially term deposits.
Liquidity Management Challenging; Deposits Continue to See
Traction: The bank continued to report asset funding surplus of 3%
and 6% of the total inflows, in March and August 2019,
respectively, in the short-term bucket of up to one year, as is
typical of entities with substantial operations in microfinance.
JSFB has also maintained excess statutory liquidity reserves in the
range of INR6.6 billion-15.4 billion between July 2019 and August
2019 in addition to the cash reserves that it is needs to maintain
as part of the regulatory requirement. The bank's liquidity
coverage ratio stood at 1,027.24% at FYE19 (FYE18: 1,112.62%).
JSFB has been able to mobilize substantial deposits over September
2018-June 2019 with term deposits increasing to INR52.9 billion in
1QFY20 (FY19: INR38.5 billion, 1HFY19: INR17.7 billion), and
current and savings accounts to INR3.61 billion (INR3.1 billion,
INR463.5 million). Total deposits stood at INR70.1 billion at
end-August 2019, of which 45% are of tenor more than one year. The
bank received scheduled status in August 2019.
Bank Capital Constrained: JSFB received capital infusions of INR7.8
billion over November 2018-March 2019 and INR19.4 billion over
September 2017-August 2018 to strengthen its eroding capital while
maintaining its regulatory capital levels. This capital was raised
through various new and existing investors. JHL had also raised
debt to infuse capital at JSFB against the expected valuation of
JSFB at the time of its listing before end-March 2021. At FYE19,
JSFB reported Tier I capital ratio of 12.3% (FYE18: 24.3%) and
total capital adequacy ratio at 18.8% (34.7%). The bank's net worth
stood at INR6.7 billion with leverage (advances/equity) of 9.2x at
FYE19, which is higher than most other SFBs. The bank is raising
INR3.5 billion of capital during 3QFY20. The proceeds from this NCD
issuance by JCL will be used for subscribing of capital at the bank
level.
Considering JSFB would need growth capital to report net profits
while also reducing its leverage and maintaining regulatory
capital, Ind-Ra estimates the bank to require at least INR5
billion-6 billion equity capital or internal accruals over next
18-24 months, depending on their growth and profitability, to
achieve scale that would deliver profitability with reasonable
capital buffers. JHL's divestment ability is limited as it needs to
hold at least 40% stake in the bank for a minimum period of five
years ending FY23. Also, the bank may have substantial accruals
only by FY22, and hence, leverage may only increase.
High Refinancing and Valuation Risk: The NCDs held by Centrum Group
face refinancing risks. JHL faces limitations the dilution of its
shareholding in the bank on account of regulatory requirements and
share pledges (5.37% pledged to existing lenders). The NCDs need to
be refinanced to the extent of principal and the rate of return
promised to the investors. The NOFHC is required to hold at least
40% stake in the bank for a minimum of five years ending FY23. All
NCDs have a cross-default clause with the indebtedness of JHL. Any
increase in JHL's shareholding on account of proposed infusion may
not sufficient to repay existing obligations; hence, the valuation
risk is significant.
Significant Reduction in Asset Quality Overhang: The bank reported
significant write-downs of INR25.14 billion in FY19, resulting in a
substantial improvement in its gross non-performing assets (NPAs)
to 8% in FY19 (1HFY19: 35%, FY18: 42.21%) and net NPAs to 4.4%
(1HFY19: 13%, FY18: 27.7%). This also led to a decrease in
provision coverage ratio to 47.7% in FY19 (1HFY19: 70.8%, FY18:
47.5%). While the bank had outstanding loans of INR31.8 billion in
its 90 days+ bucket, it was able to recover INR6.6 billion over
FY18-FY19 with the maximum recovery coming from 3-15 months bucket.
Ind-Ra expects write-downs to decrease to INR2 billion-3 billion in
FY20, considering the quantum of borrower spillover to 455 days+
bucket from 90-455 days bucket will gradually decline. In the
agency's assessment, the bank may not see significantly higher
credit costs on the newly originated portfolio (post-December 2017
disbursement; also reflected in the delinquency data).
RATING SENSITIVITIES
Positive: A significant improvement in the bank's asset quality,
capitalization and leverage, and achievement of material
profitability earlier-than-expected by Ind-Ra could result in a
positive rating action.
Negative: A significant increase in the bank's leverage without a
commensurate improvement in the asset quality, inability to raise
equity as planned, capital levels close to the regulatory minimum
or a breach of the regulatory conditions, if any, and funding gaps
that in the agency's opinion prove challenging for the bank to meet
repayment obligations could result in a negative rating action. Any
unrelated diversification by the holding company could also result
in a rating downgrade.
COMPANY PROFILE
JHL is registered as an NOFHC according to the regulatory
guidelines, and is promoted by Jana Capital Ltd, to hold the
promoter stake in Jana SFB. Jana SFB commenced banking operations
in July 2018 and microfinance loans (small group loan, individual
loan and agri-loans) constituted 85.2% of its assets under
management at end June 2019 The other products offered by the bank
are small business loans, affordable housing, gold loans etc.
KIRAN INDUSTRIES: Ind-Ra Affirms BB+ Issuer Rating, Outlook Stable
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Kiran Industries
Private Limited's (KIPL) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR280 mil. (reduced from INR337 mil.) Term loan due on May
2025 affirmed with IND BB+/Stable rating;
-- INR240 mil. (increased from INR220 mil.) Fund-based limits
affirmed with IND BB+/Stable/IND A4+ rating; and
-- INR2 mil. Non-fund-based limits affirmed with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects KIPL's continued medium scale of
operations despite a decline in revenue decreased to INR1,764.72
million in FY19 (FY18: INR1,791.4 million). The decrease in revenue
was attributed to execution of lower number of orders executed on
account of shifting of its existing dying unit. The company expects
the benefit of the capex to be seen in revenue from FY20. It
recorded turnover of INR700 million in 1QFY20. The ratings continue
to factor in the company's modest operating EBITDA margins,
despite improvement to 7.5% in FY19 (FY18: 5.9%) owing to a
decrease in cost of materials consumed. Its return on capital
employed was 11% in FY19 (FY18: 13%).
The ratings continue to reflect KIPL's modest credit metrics on
account of its increased dependence on external debt to fund capex
of INR400 million. As a result, its interest coverage (operating
EBITDA/gross interest expense) deteriorated to 2.2x in FY19 (FY18:
2.6x) and net leverage (adjusted net debt/operating EBITDA) to 5.0x
(3.8x). KIPL is setting up a new dying unit at Palsana (Gujarat).
Of the capex incurred, INR277.5 million was funded through a term
loan and the remaining through internal accruals and promoters'
funds.
Liquidity Indicator – Stretched: The company's average use of its
working capital limits was above 92% during the 12 months ended
August 2019. AT FYE19, its cash and cash equivalents stood at INR13
million, against total outstanding debt of INR671 million. Its cash
flow from operations remained positive at INR99 million in FY19
(FY18: INR96 million). However, free cash flow remained negative at
INR206 million in FY19 (FY18: negative INR31 million) due to the
capex.
However, the ratings remain supported by KIPL's promoters'
three-decade-long experience in the yarn texturizing business,
leading to established relationships with customers.
RATING SENSITIVITIES
Positive: An improvement in the revenue and EBITDA margins,
resulting in the net leverage reducing below 3.5x and an
improvement in the liquidity position, all on a sustained basis,
would be positive for the ratings.
Negative: Any further decline in the revenue or EBITDA margins,
resulting in the net leverage increasing above 5.5x or a delay in
financial support from the promoters would be negative for the
ratings.
COMPANY PROFILE
Incorporated in 1986, KIPL manufactures polyester dyed yarns,
embroidery threads viscose/polyester and metallic yarns. The
company's registered office is in Surat, Gujarat.
KRISHNA ASSETS: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: M/s. Krishna Assets Developers Private Limited
391, Haveli Haider Kuli
Chadni Chowk, Delhi
East Delhi DL 110006
IN
Insolvency Commencement Date: September 24, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: March 22, 2020
Insolvency professional: Mr. Akarsh Kashyap
Interim Resolution
Professional: Mr. Akarsh Kashyap
D-3, Lgf
Lajpat Nagar-1, New Delhi
National Capital Territory of Delhi
110024
E-mail: akashyap2002@yahoo.com
- and -
Mr. Akarsh Kashyap
Resurgent Resolution Professionals LLP
(IPE)
905, 9th Floor, Tower C
Unitech Business Zone
Sector-50, Gurugram
Haryana 122018
E-mail: cirp.krishnassetsdevelopers@
gmail.com
Classes of creditors: Financial Creditors
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Anish Kumar Sanghi
Mr. Shashi Sharma
Mr. Ramit Rastogi
Last date for
submission of claims: October 14, 2019
KRISHNANCHAL PULP: CRISIL Assigns B+ Rating to INR5cr Cash Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Krishnanchal Pulp And Papers Private Limited
(KPPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Assigned)
Term Loan 1.14 CRISIL B+/Stable (Assigned)
The rating reflects the company's modest scale of operations in a
highly fragmented industry and large working capital requirement.
These strengths are partially offset by promoters' extensive
experience and modest financial risk profile.
Analytical Approach
Unsecured loans (outstanding at INR1.99 crore as on March 31, 2019)
from promoters have been treated as 75% equity and 25% debt as
these loans are subordinated to bank debt and carry a low interest
rate.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in highly fragmented industry: Scale
was subdued at INR25.16 crore in fiscal 2019 because operations
were disrupted for three months on account of renovation at the
company's factory. However, revenue will grow over the medium term,
as reflected in sales of around INR20 crore till August 2019.
Intense competition and modest scale limit ability to bargain with
suppliers and customers, thereby putting pressure on operating
margin.
* Large working capital requirement: Gross current assets (GCAs)
were 116 days as on March 31, 2019, due to receivables of 71 days
and inventory of 38 days.
Strengths
* Extensive experience of promoters: Benefits from promoters'
experience of over two decades, their strong understanding of local
market dynamics, and healthy relationship with customers and
suppliers should continue to support business.
* Modest financial risk profile: Networth was small at INR5.25
crore as on March 31, 2019, but gearing was healthy at 0.91 time
and is expected to remain stable over the medium term on account of
no further capital expenditure (capex). Debt protection metrics
were above average, with interest coverage and net cash accrual to
total debt ratios of 2.30 times and 0.21 time, respectively, for
fiscal 2019.
Liquidity: Poor
Liquidity profile is under pressure marked by bank limit was
utilised all most full at around 96% in the 12 months ended July
2019. Expected cash accrual of INR97.07 lakh over the medium term
should be sufficient to meet yearly debt obligation of about INR50
lakh in fiscal 2020. Current ratio was low at 0.77 time as on March
31 2019. Need-based funding support from promoters will continue to
support liquidity.
Outlook: Stable
CRISIL believes KPPL will continue to benefit from the extensive
experience of its promoters and established relationship with
clients.
Rating sensitivity factors
Upward factor
* Improvement in scale of operations by 40% and in operating
margin by 200 basis points, leading to higher net cash accrual of
more than INR1.50 crore
* Better financial risk profile, especially liquidity, with total
outside liabilities to tangible networth ratio of less than 2
times
Downward factor
* Decline in scale of operations, or profitability by 100 basis
points
* Large, debt-funded capex weakening capital structure, or if there
is further stretch in working capital cycle, with GCAs of more than
130 days
KPPL was set up in 2011 by Mr Javed Ali and Mr Usman Khan. It was
acquired in 2018 by Mr Prateek Bhatia, Mr Himanshu Bhatia, and Mr
Manish Bhatia. The company manufactures kraft paper that is used to
make corrugated boxes. Unit in Muzzaffarnagar, Uttar Pradesh, has
production capacity of 100 tonne per day.
KUSHAL FOODS: CRISIL Lowers Rating on NR9.5cr Loan to B+, Not Coop.
-------------------------------------------------------------------
CRISIL has revised the ratings on bank facilities of Kushal Foods
Private Limited (KFPL) to 'CRISIL B+/Stable Issuer not cooperating'
from 'CRISIL BB+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Long Term Loan 2.45 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Proposed Long Term .55 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with KFPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 KFPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on KFPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of KFPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating' from 'CRISIL BB+/Stable Issuer not cooperating'.
Furthermore, the company has not paid the fee for conducting rating
surveillance as agreed to in the rating agreement.
KFPL, incorporated in 2002, is a part of the Mayur group of Kanpur.
The company has a flour mill unit in Kanpur. It also has a bakery
unit and manufactures bakery products on a jobwork basis for its
customers.
MD RETAIL: CRISIL Lowers Rating on INR10cr Cash Loan to B+
----------------------------------------------------------
CRISIL has downgraded the rating on the bank facilities of MD
Retail India Private Limited (MD Retail) to 'CRISIL B+/Stable' from
'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects expectation of subdued operating performance
over the medium term on account of weak demand outlook for the
branded fashion clothes retail market. The company booked revensue
of INR56 cr in FY 19 which was a year on year degrowth of 31%
leading to poor cost absorption and losses at operating level. This
has led to negative cash accruals for FY 19 and negative net worth.
The reason behind this was higher operating expenses on a showroom
level. Going forward, the revenues are expected to be stagnant or
grow at low single digit.
The ratings continue to reflect on the below average financial risk
profile and moderate scale of operations in highly fragmented
retail industry. These weaknesses are partially offset by extensive
experience of the promoters.
Analytical Approach
For arriving at its ratings, CRISIL has treated unsecured loans of
INR9.3 cr, as on March 31, 2019, extended by the promoters as quasi
equity. That's because these loans are expected to remain in the
business over the long term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below average financial risk profile:
The financial risk profile of the company is below-average due to
aggressive gearing of 5.64 times and low net worth of INR65 lacs as
on March 31, 2019 due to losses. The debt protection metrics is
subdued with negative interest coverage FY 19. CRISIL believes the
financial risk profile may improve though remain below average over
the medium term.
* Moderate scale of operations in highly fragmented retail
industry:
MD Retail has a moderate scale of operations marked by revenue of
INR56 cr in 2018 - 19. CRISIL believes the scale of operation may
remain constrained due to strong competition from established
retail chains such as Pantaloons, Central, Lifestyle, and Shopper
Stop which cater to products and brands similar to those of MD
Retail.
Strengths:
* Promoter's extensive experience in retail industry:
The company runs Favourite, a multi brand retail chain catering to
women, men and children. The management of the MD Retail has
extensive experience in the retail industry, of managing large
retail chains such as Soch. CRISIL expects MD Retail to benefit
from its management's extensive experience.
* Prudent working capital management:
The operations of the company has remained efficiently managed as
marked by GCA of 89 - 103 days in the past three years ending FY
19. The inventory has ranged about 2 months over the past three
years ending FY 19. Going forward, the company is expected to
maintain its working capital cycle at the same levels.
Liquidity: Poor
Low bank limit utilization: Bank limit utilization is moderate
around 82% for the past seven months ended July, 2019. CRISIL
believes that bank limit utilization is expected to remain at
similar levels on account of efficient working capital management.
Cash accrual against no debt obligation: Cash accrual are expected
to be subdued but the company has no term debt obligation.
Low current ratio: Current ratio was low at 0.94 times as on March
31, 2019.
Funding support from promoters: Liquidity is also supported by the
promoters' unsecured loan which is expected to fund the past losses
and the incremental working capital requirements.
Outlook: Stable
CRISIL believes that MD Retail will continue to benefit over the
medium term from its promoters' extensive industry experience and
its increasing number of showrooms across India.
Rating sensitivity factor
Upward factor
* Better-than-expected revenue growth and improvement in
profitability to over 5%
* Significant improvement in interest coverage ratios led by
improved profitability levels with interest coverage above 2 times
* Sustenance of efficient working capital management
Downward factor
* Sharp decline in operating performance with revenue below INR50
cr or negative accruals
* Large debt-funded capex, leading to further deteriotration in
debt protection metrics
Incorporated in April 2015, MD Retail India Private Limited, is
into apparel retailing. The company, promoted by Mr. Manohar
Chatlani who has over three decades of industry experience, used to
operate multiple stores across India under the brand, 'Soch' and
continues to operate stores in Karnataka under the brand
'Favourite'. In FY 2017, the business under the brand name of
'Soch' was demerged into another entity, 'Soch Apparels Private
Limited'.
MITTAPALLI AUDINARAYANA: CRISIL Reaffirms B+ Cash Loan Rating
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the bank
Facilities of Mittapalli Audinarayana Enterprises Private Limited
(MAEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Open Cash Credit 56 CRISIL B+/Stable (Reaffirmed)
The ratings continues to reflect the extensive experience of its
promoters in the tobacco industry and below average financial risk
profile marked by its modest net worth, high gearing, and below
average debt protection metrics, constrained on account of its
large working capital requirements and its exposure to intense
competition and regulatory risks in the tobacco industry, and the
susceptibility to fluctuations in foreign exchange rates. These
rating weaknesses are partially offset by the extensive experience
of the company's promoters in the tobacco-processing industry, and
established relationship with customers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of Rs.57 Cr in the
Fiscal 2019 the scale of operations remains small. Small scale of
operations limits company's ability to take advantages associated
with economies of scale that other players with large scale of
operations are able to enjoy.
* Below average financial risk profile: Company's financial risk
profile is marked by modest net worth, high gearing and below
average debt protection metrics. Gearing is expected to remain high
on account of small scale of operation, hence small accretion to
reserves and high working capital requirements resulting in
dependence upon cash credit limits. Debt protection metrics are
below average and are expected to remain so over the medium term.
Strengths:
* Extensive experience of promoters: Mittapalli was promoted in the
year 1964 by Mr. Mitapalli Rama Rao. It gives the promoter an
extensive experience in the tobacco processing industry which has
enabled the firm to establish strong relationships with the
customers and suppliers which ensures steady procurement of raw
material and repeated orders from the customers.
Liquidity: Stretched
Bank limit utilization is high around 98 percent for the past
twelve months ended August 31, 2019. Accruals are expected to be
over 40 Lakhs sufficient to meet its Debt Obligation.
The promoters are also likely to extend support in the form of
unsecured loans to the company to meet its working capital
requirements and repayment obligations.
Outlook: Stable
CRISIL believes that Mittapalli will continue to benefit over the
medium term from its promoters' extensive industry experience and
its established relationship with customers.
Rating Sensitivity Factors
Upward Factors
* Improvement in Working Capital Cycle with GCA less than 300
Days.
*Substantial revenue growth in coming fiscal years.
Downward Factors
*Decline in revenues below 40 Crore and margins falling below 8%.
*Further stretch in Working Capital Cycle.
MAEPL was set up as a partnership firm in 1964 by Mr. Mittapalli
Rama Rao and his sons Mr. Mittapalli Umamaheswar Rao and Mr.
Mittapalli Siva Kumar. The firm was reconstituted as a private
limited company in 2006. The company is engaged in tobacco leaves
trading and is based in Guntur, Andhra Pradesh.
NEO CORP: Insolvency Resolution Process Case Summary
----------------------------------------------------
Debtor: Neo Corp International Limited
220, Mahavir Industrial Estate
Opposite Mahakali Caves Road
Andheri (E) Mumbai 400093
Maharashtra, India
Insolvency Commencement Date: September 19, 2019
Court: National Company Law Tribunal, Navi Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 17, 2020
(180 days from commencement)
Insolvency professional: Asha Manajit Ghoshal
Interim Resolution
Professional: Asha Manajit Ghoshal
301, Arenji Corner, Plot no. 71
Sector-17, Vashi
Navi Mumbai 400705
E-mail: asha.ghoshal@amgadvisory.in
ipneocorp@amgadvisory.in
Last date for
submission of claims: October 12, 2019
PAVANI POLYMERS: CRISIL Maintains 'D' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Pavani Polymers
Private Limited (BPPL) continues to be 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 19.5 CRISIL D (ISSUER NOT COOPERATING)
Proposed Cash
Credit Limit 3.6 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with BPPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 BPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BPPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of BPPL continues to be 'CRISIL D Issuer not
cooperating'.
BPPL was set up in 2013 by Mr. Mr.Balaji Reddy and his family
members. The company manufactures polypropylene woven sacks, which
are used for packaging in various industries. Its manufacturing
unit is located in Hyderabad (Telangana).
POWER PACK: Insolvency Resolution Process Case Summary
------------------------------------------------------
Debtor: Power Pack Steel Industries Private Limited
17/Q, Heavi Industrial Area
Hathkhoj Bhilai
Durg CT 491001
IN
Insolvency Commencement Date: September 27, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 24, 2020
Insolvency professional: Rajendra K. Bhuta
Interim Resolution
Professional: Rajendra K. Bhuta
1207, Yogi Paradise
Yogi Nagar, Borivali (West)
Mumbai 400092
E-mail: rkbhuta@gmail.com
- and -
303, Raghuveer Tower
Chamunda Circle, Borivali (West)
Mumbai 400092
E-mail: powerpack.ip@gmail.com
Last date for
submission of claims: October 14, 2019
PRE UNIQUE: Ind-Ra Affirms 'B' LT Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Pre Unique (India)
Private Limited's (PUIPL) Long-Term Issuer Rating at 'IND B'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR10 mil. Fund-based working capital limit affirmed with IND
B/Stable/IND A4 rating; and
-- INR100 mil. Non-fund-based working capital limit affirmed with
IND A4 rating.
KEY RATING DRIVERS
The affirmation reflects PUIPL's continued small scale of
operations, despite growth in revenue to INR217.2 million in FY19
(FY18: INR89.7 million), due to timely execution of orders coupled
with the receipt of higher number of orders from its existing
customers. At end-April 2019, PUIPL had an order book of around
INR133.3 million of design, supply, erection and commissioning
contracts and around INR52.1 million of annual maintenance
contracts, to be executed by FY20. As per the management, the
company recorded revenue of INR80 million in 5MFY20. FY19
financials are provisional in nature.
Liquidity Indicator - Stretched: PUIPL's average maximum
utilization of its fund-based limits was 30% for the 12 months
ended August 2019. The cash flow from operations remained positive
at INR8.0 million in FY19 (FY18: INR22 million) due to negative net
working capital cycle of 13 days (negative 115 days). The company
had cash balance of INR1.2 million at FYE19 (FYE18: INR2.2
million).
The ratings also factor in the company's modest credit metrics. Its
net financial leverage (adjusted net debt/operating EBITDAR)
improved to 2.5x in FY19 (FY18: 9.1x) and EBITDA interest coverage
(operating EBITDA/gross interest expense) to 8.3x (2.3x) due to an
increase in operating EBITDA to INR402 million (INR298.1 million)
and lower use of its working capital limits.
However, the ratings are supported by PUIPL's healthy EBITDA
margins, which improved to 7.3% in FY19 (FY18: 5.7%) owing to the
increase in revenue and a decrease in direct expenses. Its return
on capital employed was 20% in FY19 (FY18: 6%).
The ratings remain supported by the promoters' experience of more
than three decades in construction and other related businesses.
RATING SENSITIVITIES
Positive: A rise in the revenue and operating profitability,
leading to an improvement in the credit metrics, all on a sustained
basis, will lead to a positive rating action.
Negative: Deterioration in the overall credit profile, on a
sustained basis, will lead to a negative rating action.
COMPANY PROFILE
Incorporated in November 2015, Hyderabad-based PUIPL is engaged in
the design, supply, fabrication and commissioning of palm oil
mills, and the construction of captive power and effluent treatment
plants at such mill sites.
RADHA KRISNA: CRISIL Assigns B+ Rating to INR8.0cr LT Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Radha Krisna Steel Company Private Limited
(RKS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan .7 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility 8.0 CRISIL B+/Stable (Assigned)
Bank Guarantee .6 CRISIL A4 (Assigned)
Cash Credit .7 CRISIL B+/Stable (Assigned)
The rating reflects the promoters' extensive experience in
manufacturing of steel wires, above average debt protection metrics
and its established relationship with the customer Tata Steel Ltd.
These strengths are partially offset by, risks related to project
implementation ,working capital intensive operations, and moderate
operating margins on account of fragmented nature of industry.
Key Rating Drivers & Detailed Description
Strengths:
* Extensive experience of the promoters
Benefits from the promoters' experience of over a decade, their
strong understanding of local market dynamics, and healthy
relations with customers and suppliers should continue to support
the business. RKS has been associated with Tata Steel Ltd for about
five years and its continued relationship with this client will
remain a rating sensitivity factor.
* Above-average debt protection metrics
Debt protections metrics are likely to remain strong over the
medium term, driven by low debt levels and support from suppliers
(in the form of extended creditors). Interest coverage and net cash
accrual to total debt ratios were 4.6 times and 0.37 time,
respectively, in fiscal 2019.
Weaknesses
* Working-capital-intensive operations: Operations remain working
capital intensive marked by GCA of around 110 days as on 31st,
March, 2019 driven by inventory of around 64 days. However, working
capital is also supported by suppliers.
* Highly fragmented industry: The industry is highly fragmented due
to low capital requirement and limited value addition. The low
entry barrier has led to many players catering to regional demand
and hence this had led to modest EBDITA margin of around 8.7
percent in fiscal 2019 & modest scale.
* Exposure to project related risk: In current fiscal 2019-20, the
company is setting up plant for manufacturing of steel rods used in
concrete based railway sleepers. It exposed remains to project
related risks pertaining to the ongoing capital expenditure.
Completion of the project within stipulated timeline without any
project over heads and timely stabilization of operations remain
key rating sensitivity factors over the medium term.
Liquidity: Adequate
Liquidity is marked by, minimal cushion in accruals vs repayment
obligations and low bank limit utilization of around 50 percent for
past 12 months ended July 2019 (for cash credit limit of INR70
lacs).
Outlook: Stable
CRISIL believes RKS will continue to benefit from the extensive
experience of its promoters.
Rating sensitivity factors
Upward factor
* Quick ramp up of operations of new project, registering
substantial improvement in operating income by over 100 percent.
* Stable working capital cycle.
Downward factor
* Decline in operating margins by around 300-400 bps. These would
lead to lower cash accruals and higher reliance on external debt,
thus ultimately leading to stretch in liquidity.
* Higher than expected debt funded capex leading to weakening of
financial risk profile.
Incorporated in 2005, RKS is engaged in job work of steels wire
conversion into smaller size and is promoted by Mr. Biswanath Hazra
and their family members.
RAJESH HOUSING: CRISIL Cuts Rating on INR140cr Loan to B-
---------------------------------------------------------
CRISIL has downgraded its rating on the non-convertible debentures
(NCDs) of Rajesh Housing Private Limited (RHPL) to 'CRISIL
B-/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Non Convertible 140.00 CRISIL B-/Stable (Downgraded
Debentures LT from 'CRISIL B/Stable')/Stable
The downgrade reflects continued delay in project implementation
and slower-than-expected progress. The company is also susceptible
to high refinancing risk, as the NCDs mature in December 2019.
The rating reflects exposure to implementation risk arising from
the nascent stage of the project and cyclicality inherent in the
real estate sector. These weaknesses are partially offset by
extensive experience of RHPL's promoters in real estate development
and favourable location of the project in Mumbai.
The NCDs will now be maturing on December 16, 2019, following an
extension in the date.
Analytical Approach
CRISIL has taken a standalone view on RHPL as it is the only
project in the company's book and cash flow is not fungible with
other projects. Unsecured loans have been treated as debt.
Key Rating Drivers & Detailed Description
Weakness:
* Heightened refinancing risk impacting financial risk profile
In the absence of any project cash flows, the debt has to be
refinanced before the date of maturity. This increases the
refinancing risk for the company, due to the upcoming repayment and
high quantum of debt to be refinanced. Maturity of the NCDs has
been extended till December 16, 2019. Any delay in refinancing will
remain a key rating sensitivity factor.
* Exposure to implementation risk given nascent stage of project
Though RHPL has already acquired the entire land of 10.5 acres,
delays in obtaining requisite approvals, led to postponing of the
project launch. Approvals for commencement of construction are
still to be received. Though the project will be executed in
phases, it remains exposed to risks related to time and cost
overruns at the initial stage. Proven track record of promoters
will support project implementation, but any further delay will
remain a key rating sensitivity factor.
* Susceptibility of sales to cyclicality inherent in the real
estate sector
Cyclicality inherent in the real estate sector could result in
fluctuations in saleability and cash inflow, and disrupt the flow
of customer advances. In contrast, cash outflow related to project
completion and debt obligation are relatively fixed, and could
thus, lead to substantial cash flow mismatch.
Strengths:
* Extensive experience of promoters
The promoters have been engaged in the real estate sector for over
five decades. They have developed residential and commercial space
of over 3 million square feet (sq ft) over the past eight years,
and have a strong track record in the western and eastern suburbs
in Mumbai.
* Favourable location of project
The project, located on LBS Marg in Vikhroli, is accessible to both
the central and western suburbs of Mumbai, including Powai and
SEEPZ. Hence, saleability is expected to be healthy.
Liquidity: Poor
Liquidity is poor due to the nascent stage of the project. Although
NCDs do not have coupon payments, redemption with premium are due
in December 2019. This exposes RHPL to refinancing risk, with
approvals yet to be obtained. Timely refinancing will remain a key
rating sensitivity factor.
Outlook: Stable
CRISIL believes RHPL will continue to benefit from the extensive
experience of its promoters.
Rating sensitivity factors
Upward factors
* 100% refinancing of debt, along with redemption premium
* Significant progress in project construction and sales, leading
to higher cash flow
Downward factors
* Inability to refinance the debt on time or less than 100%
refinancing of the debt
* Delay in debt servicing
RHPL, which is a part of the Rajesh Lifespaces group, was set up in
2015. The company is developing a residential-cum-commercial
project in Vikhroli, Mumbai.
The Rajesh Lifespaces group is a Mumbai-based real estate
developer, promoted by Mr Raghav Patel. The group has been in real
estate construction and development for over 50 years. Operations
are currently managed by the third-generation of the family, Mr
Priyal Patel and Mr Pratik Patel. As on date, the group has nearly
8.6 million sq ft of area under development across Mumbai.
RATNAGIRI CHEMICALS: CRISIL Keeps 'D Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Ratnagiri Chemicals
Private Limited (RCPL) continues to be 'CRISIL D/CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.5 CRISIL D (ISSUER NOT COOPERATING)
Packing Credit 4.5 CRISIL D (ISSUER NOT COOPERATING)
Post Shipment
Credit 2.0 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with RCPL for obtaining
information through letters and emails dated March 30, 2019 and
September 17, 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 RCPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RCPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Based on the last available information, the ratings on bank
facilities of RCPL continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Incorporated in 1996 by Mr. P. V. Ramana Rao, RCPL is engaged in
the manufacturing of specialty chemicals and antioxidant additives,
which find application in food processing, petrochemical, and
pharmaceutical industries. The company has its manufacturing
facilities at Parshuram (Ratnagiri) with a total installed capacity
of around 2500 MT per annum.
SAFRI TRADELINK: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Safri Tradelink Private Limited
901, Budhwar Peth
Chetana Lodge, Vijayanand
Pune MH 411002
India
Insolvency Commencement Date: September 11, 2019
Court: National Company Law Tribunal, Pune Bench
Estimated date of closure of
insolvency resolution process: March 9, 2020
Insolvency professional: Mr. Neehal Mahamulhal Pathan
Interim Resolution
Professional: Mr. Neehal Mahamulhal Pathan
Plot No. 27, R.S. 825
Sahjeevan Parisar
Near TPM Church
Behind Circuit House
Kolhapur 416003 MH
E-mail: ca.neehal@gmail.com
Last date for
submission of claims: October 9, 2019
SAI SPACECON: CRISIL Hikes Rating on INR30.75cr Loan to B-
----------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Sai Spacecon India Private Limited (SSIPL) to 'CRISIL B-/Stable'
from 'CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Proposed Long Term
Bank Loan Facility 26.75 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Term Loan 30.75 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The upgrade factors in timely repayment of debt obligation in the
past 12 months. However, liquidation of assets, change in the
business model and its impact on the financial and business risk
profiles of the company would remain a key monitorable.
The rating also reflects the modest scale of operations amidst
intense competition in the real estate industry and susceptibility
to cyclicality inherent in the real estate industry. These
weaknesses are partially offset by the extensive experience of the
promoters
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations amidst intense competition:
Revenue remains modest at INR7.48 crore, due to sluggish occupancy
levels and large inventory. Further change in business model and
its impact on the revenues and cash flow remains a key
monitorable.
* Susceptibility to cyclicality inherent in the real estate
industry: The real estate sector is affected by volatile prices,
opaque transactions, and intense competition. Moreover,
multiplicity of property laws and non-standardised government
regulations can affect the tenure of project execution. The risk is
compounded by aggressive completion timelines and shortage of
manpower (project engineers and skilled labour) in this sector.
Apart from these macro-economic factors, credit risk profile is
expected to be driven by the level of economic activity and the
outlook for the real estate sector. Any adverse change in the
overall economic environment is likely to impact the segment. For
instance, the slowdown in the real estate market has resulted in
high unsold inventory thus affecting the company's financial risk
profile mainly liquidity.
Strength
* Extensive experience of the promoters
The two-decade-long experience of the promoters, in the real estate
industry, will continue to support the business risk profile.
Liquidity: Poor
The overall liquidity remains poor with high BLU and the tight cash
accruals against repayment obligations. Additional liquidity
supported is expected with sales of assets over the medium term.
Outlook: Stable
CRISIL believes SSIPL will continue to benefit from the extensive
experience of its promoters, and assured demand from the group
company.
Rating sensitivity factor
Upward factor
* Growth in revenue by over 25% and sustained margin
* Strengthening of financial risk profile, with improved gearing
and accrual
Downward factor
* Decline in revenue by over 20%, leading to lower accrual
* Further stretch in working capital cycle
SSIPL was formed as a proprietorship firm,by Mr Subhash Nelge in
1993. The company was reconstituted as a private limited company in
May 2011. It is part of the Pune-based Sai group, and is engaged in
residential and commercial real estate development primarily in
Pune and the vicinity. Operations are managed by Mr Nelge, along
with his brother Mr Shivkumar Nelge, and his wife, Mrs Babita
Nelge.
SHAHJAHANPUR EDIBLES: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: Shahjahanpur Edibles Private Limited
Kisan Cold Storage & Allied Industries
Rausar Kothi Road Village Mishripur
Shahjahanpur UP 242001
IN
Insolvency Commencement Date: September 27, 2019
Court: National Company Law Tribunal, Meerut Bench
Estimated date of closure of
insolvency resolution process: March 25, 2020
Insolvency professional: Manish Agarwal
Interim Resolution
Professional: Manish Agarwal
707, Saket
Opp. Rohtash Sweets
Meerut 250001
Uttar Pradesh
Tel.: 0121-4054491
9412705345205
E-mail: manishfcs@gmail.com
- and -
2nd Floor, Rohit House
Tower-2, Tolstoy Marg
Connaught Place
New Delhi 01
Tel.: 011-41509352
9412705345
E-mail: cirp.shahjahanpuredibles@
gmail.com
Last date for
submission of claims: October 11, 2019
SIBCO PLASTIC: CRISIL Assigns B+ Rating to INR2.7cr Demand Loan
---------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Sibco Plastic Industries Private Limited
(Sibco).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Working Capital
Demand Loan 2.7 CRISIL B+/Stable (Assigned)
Term Loan 2.3 CRISIL B+/Stable (Assigned)
Non-Fund Based Limit 1.3 CRISIL B+/Stable (Assigned)
Cash Credit .1 CRISIL B+/Stable (Assigned)
Letter of Credit 1.6 CRISIL A4 (Assigned)
The ratings reflect the firm's exposure to risks, given the nascent
stage of operation and its average financial risk profile. These
weaknesses are partially offset by extensive experience of the
partners in the poly vinyl chloride (PVC) foam industry. and their
funding support.
Key Rating Drivers & Detailed Description
Weakness:
* Exposure to risks arising from the nascent stage of operations:
Sibco is setting up a PVC foam sheet manufacturing unit, with
capacity of 350 kgs per hour. Operations have begun to ramp up from
fiscal 2020. Though the company has already reported revenue of
around INR6 crore in the first five months of fiscal 2020, the
scale may remain moderate during the initial years.
* Average financial risk profile: Low networth and high gearing
during the initial years, may keep the financial risk profile
average in the medium term. With increase in scale of operation and
steady accretion to reserves, the financial risk profile of the
company is expected to remain moderate over the medium term.
Strengths:
* Extensive experience of the partners: The decade-long experience
of the partners, in the PVC industry, and their keen grasp over
local market dynamics, will continue to support the business risk
profile. The promoters have also infused funds via equity.
Liquidity: Poor
Cash accrual of around INR0.55 crore per annum, expected over the
medium term, should suffice to cover the maturing debt of around
INR0.40 crore. Bank limit utilisation averaged around 45% for the
six months through August 2019.
Outlook: Stable
CRISIL believes Sibco will continue to benefit from the extensive
experience of its partners.
Rating sensitivity factors
Upward Factor
* Growth in revenue to over INR20 crore and operating margin of
around 10%
* Better working capital management, with lower inventory and
receivables
Downward Factor
* Modest scale of operations, with revenue of less than INR10 crore
and margin of below 5% leading to cash accrual less than INR0.40 Cr
over the medium term
* Stretch in working capital cycle, with substantial receivables
and inventory.
Incorporated in 2013, Sibco is setting up a manufacturing unit for
PVC foam sheets in Howrah, West Bengal. The company has been
promoted by Mr Subham Agarwal.
TECHON LABS: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: M/s Techon Labs Private Limited
Q1-287, South City-II
Gurgaon HR 122001
Insolvency Commencement Date: September 27, 2019
Court: National Company Law Tribunal, Chandigarh Bench
Estimated date of closure of
insolvency resolution process: March 25, 2020
(180 days from commencement)
Insolvency professional: Mr. Sunil Kumar Agrawal
Interim Resolution
Professional: Mr. Sunil Kumar Agrawal
E-29, South Extension-II
New Delhi 110049
E-mail: aggarwalsk21@yahoo.com
- and -
904, GF, Sector-7C
Faridabad 121006
E-mail: irptechcon2019@gmail.com
Last date for
submission of claims: October 11, 2019
=================
S I N G A P O R E
=================
ASIATRAVEL.COM: Obtains Default Judgment vs. Creditor
-----------------------------------------------------
Sharanya Pillai at The Business Times reports that distressed
Asiatravel.com has obtained a default court ruling in China for its
SGD7.4 million claim against creditor Zhonghong Holding Co, the
Catalist-listed company announced in a bourse filing on Oct. 8.
According to BT, Asiatravel.com said Zhonghong entered a
convertible note agreement with the company in August 2018 for a
principal amount of SGD10 million, but only paid SGD2.65 million.
In June this year, Asiatravel.com served a writ of summons on
Zhonghong in China via the International Cooperation Bureau of the
Supreme People's Court, the report says.
With Zhonghong failing to appear in court, Asiatravel.com has
obtained a default judgement for the outstanding SGD7.35 million,
as well as over SGD6,000 in costs, BT relates.
BT meanwhile reports that Asiatravel.com has obtained a six-month
extension of its ongoing debt moratorium from the Singapore High
Court, starting from Oct. 9.
On Sept. 27, Asiatravel.com had applied to the court for a deadline
extension to convene a meeting of its creditors. The company has
been undergoing a restructuring exercise since February 2018.
Shares of Asiatravel.com last closed at SGD0.027 before trading was
suspended in July 2018, BT notes.
KOON HOLDINGS: Seeks Court Protection Amid Debt Restructuring
-------------------------------------------------------------
Fiona Lam at The Business Times reports that Koon Holdings and its
subsidiary Koon Construction & Transport (KCT) have applied for a
90-day debt moratorium as they intend to propose and implement a
scheme of arrangement with their creditors.
BT relates that on Oct. 8, the two companies filed the applications
with the High Court of Singapore to obtain an order, among other
things, that no legal action or proceedings against them be
commenced or continued.
The scheme is necessary to address the debt obligations owed by
Koon Holdings and KCT to their creditors and is part of the group's
restructuring exercise to restore the two companies' financial
position, Koon Holdings said in a filing on Oct. 9, BT relays.
Details of the scheme are targeted to be finalised during the 90
days.
According to the report, Koon Holdings and KCT have appointed Tan
Kok Quan Partnership as their legal adviser and RSM Corporate
Advisory as their financial consultant to advise on strategies for
restructuring the debts and liabilities so that the group may
continue as a going concern.
In September, Koon Holdings auditor Ernst and Young issued a
disclaimer of conclusion over the group's interim financial results
for the six months ended June 30, BT recalls. The review flagged
that the group recognised a net loss of SGD50 million for the
period, and that its current liabilities exceeded its current
assets by SGD20.6 million, conditions that indicate the existence
of material uncertainty.
Coupled with challenging conditions affecting the construction and
precast sectors in Singapore, the material uncertainty may "cast
significant doubt" on Koon Holdings' ability to continue as a going
concern, Ernst and Young said, according to BT.
Shares of Koon Holdings have been suspended since Aug. 30, the
report notes.
Koon Holdings is a Singapore infrastructure and civil engineering
service provider specialising in reclamation and shore protection
works. KCT is the group's main operating company.
*********
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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Information contained herein is obtained from sources believed
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*** End of Transmission ***