/raid1/www/Hosts/bankrupt/TCRAP_Public/191014.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, October 14, 2019, Vol. 22, No. 205
Headlines
A U S T R A L I A
HUMID HOLDINGS: Second Creditors' Meeting Set for Oct. 21
LEADING EDGE: First Creditors' Meeting Set for Oct. 21
LIBERTY SERIES 2019-1: Moody's Rates AUD11MM Class F Notes B1
MORTGAGE LOAN: First Creditors' Meeting Set for Oct. 21
RAYKIR HOLDINGS: First Creditors' Meeting Set for Oct. 22
ROC N ROLLA: First Creditors' Meeting Set for Oct. 21
SAMSON OIL: Janna Blanter Resigns as Chief Financial Officer
TRANSTEX HOLDINGS: Second Creditors' Meeting Set for Oct. 21
TWO GUYS: First Creditors' Meeting Set for Oct. 22
C H I N A
GOLDEN EAGLE: S&P Alters Outlook to Positive & Affirms 'BB' ICR
GUANGXI FINANCIAL: Moody's Affirms Ba1 LT CFR, Outlook Stable
JIAYUAN INTERNATIONAL: S&P Rates New US$ Sr. Unsec. Notes 'B-'
SHANDONG RUYI: Moody's Cuts CFR to B3, Put on Review for Downgrade
H O N G K O N G
[*] HONG KONG: 100 Restaurants Shut Down due to Protests
I N D I A
ARPITA FILAMENTS: Insolvency Resolution Process Case Summary
ASOPALAV DEVELOPERS: ICRA Moves B+ Rating to Not Cooperating
BHOLARAM EDUCATION: CRISIL Assigns B- Rating to INR6cr Loan
CHANDRI PAPER: ICRA Migrates 'D' Rating to Not Cooperating
DIRECT NEWS: Insolvency Resolution Process Case Summary
DISTICHEMI PROCESS: CRISIL Maintains D Rating in Not Cooperating
DSG CORP: ICRA Maintains B- Rating in Not Cooperating Category
GOYAL ISPAT: CRISIL Maintains 'C' Rating in Not Cooperating
H. K. INTERNATIONAL: CRISIL Keeps B+ Rating in Not Cooperating
HARIOM YAMAHA: CRISIL Maintains B+ Rating in Not Cooperating
HM JEWELLERS: CRISIL Maintains B+ Rating in Not Cooperating
IVCON: CRISIL Cuts INR6.0cr Cash Loan Rating to B+, Not Cooperating
J N S L FERRO: CRISIL Maintains 'B' Rating in Not Cooperating
JAMNA METAL: CRISIL Maintains 'C' Rating in Not Cooperating
JAY BAJRANG: CRISIL Maintains 'B' Rating in Not Cooperating
KLM INFRA: Ind-Ra Withdraws 'BB-' LT Issuer Rating, Outlook Stable
KOSAK ENGINEERING: Insolvency Resolution Process Case Summary
KWALITY LTD: Haldiram Emerges as Sole Bidder with INR130cr Offer
M.D PRINTING: CRISIL Maintains 'B' Rating in Not Cooperating
M.M. COTTON: CRISIL Keeps B Rating in Not Cooperating Category
MILAP RICE: CRISIL Maintains B+ Rating in Not Cooperating
MUTHOOT FINANCE: Fitch Assigns BB+ LT IDR, Outlook Stable
MUTHOOT FINANCE: Moody's Assigns Ba2 CFR, Outlook Stable
MUTHOOT FINANCE: S&P Assigned 'BB/B' ICRs, Outlook Stable
N J EXPORTS: CRISIL Maintains 'B' Rating in Not Cooperating
NATIONAL (INDIA): ICRA Reaffirms D Rating on INR18.50cr Loan
NYSE INFRASTRUCTURE: CRISIL Maintains D Rating in Not Cooperating
PALLORBUND TEA: Insolvency Resolution Process Case Summary
PERFECT ENGINEERING: ICRA Moves B- Rating to Not Cooperating
R.S. MOTORS PRIVATE: Insolvency Resolution Process Case Summary
RESURGERE MINES: Insolvency Resolution Process Case Summary
RUBYKON MANUFACTURING: CRISIL Cuts INR13cr Loan Rating to D
S&S INDUSTRIES: Insolvency Resolution Process Case Summary
SAMPAN TRADEX: Insolvency Resolution Process Case Summary
SARASWATI EDUCATION: ICRA Keeps D Rating in Not Cooperating
SEABIRD SEAPLANE: Federal Bank Attaches Seaplane Over Default
SHREEM SPA: Insolvency Resolution Process Case Summary
SHRIRAM CEMENT: Insolvency Resolution Process Case Summary
SRI RAM SPINNING: ICRA Keeps 'D' Rating in not Cooperating
V3S INFRATECH: ICRA Maintains 'D' Rating in Not Cooperating
VIKAS FILAMENTS: ICRA Maintains B Rating in Not Cooperating
I N D O N E S I A
ALAM SUTERA: S&P Downgraded ICR to 'B-', Outlook Negative
BUANA LINTAS: Fitch Withdraws B+(EXP) Rating on New US$ Sr. Notes
J A P A N
SEVEN & I HOLDINGS: Plans to Cut 3,000 Jobs, Shut Stores
M A L A Y S I A
SUMATEC RESOURCES: Rakushechnoye Oilfield Deal Terminated
S O U T H K O R E A
LIME ASSET: Halts Investor Withdrawals Amid Probe
V I E T N A M
MONG DUONG: Moody's Reviews Ba3 USD Sr. Sec. Notes for Downgrade
SOUTHEAST ASIA: Moody's Assigns B1 Ratings, On Review for Downgrade
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A U S T R A L I A
=================
HUMID HOLDINGS: Second Creditors' Meeting Set for Oct. 21
---------------------------------------------------------
A second meeting of creditors in the proceedings of Humid Holdings
Pty Ltd has been set for Oct. 21, 2019, at 10:30 a.m. at the
offices of SV Partners, at 22 Market Street, in Brisbane,
Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Oct. 18, 2019, at 4:00 p.m.
Terrence John Rose of SV Partners was appointed as administrator of
Humid Holdings on Sept. 15, 2019.
LEADING EDGE: First Creditors' Meeting Set for Oct. 21
------------------------------------------------------
A first meeting of the creditors in the proceedings of Leading Edge
Constructions Vic Pty. Ltd will be held on Oct. 21, 2019, at 11:30
a.m. at the offices of Rodgers Reidy, Level 3, at 326 William
Street, in Melbourne, Victoria.
Brent Leigh Morgan and Geoffrey Niels Handberg of Rodgers Reidy
were appointed as administrators of Leading Edge on Oct. 9, 2019.
LIBERTY SERIES 2019-1: Moody's Rates AUD11MM Class F Notes B1
-------------------------------------------------------------
Moody's Investors Service assigned the following definitive long
term ratings to the notes issued by Liberty Funding Pty Ltd in
respect of the Liberty Series 2019-1 SME. The transaction is a
securitisation of loans to self-managed superfunds, small-to-medium
enterprises and individuals, originated by Liberty Financial Pty
Limited (unrated).
Issuer: Liberty Funding Pty Ltd in respect of the Liberty Series
2019-1 SME
AUD357.50 million Class A1 Notes, Definitive Rating Assigned Aaa
(sf)
AUD99.00 million Class A2 Notes, Definitive Rating Assigned Aaa
(sf)
AUD27.50 million Class B Notes, Definitive Rating Assigned Aa1
(sf)
AUD16.50 million Class C Notes, Definitive Rating Assigned Aa2
(sf)
AUD14.85 million Class D Notes, Definitive Rating Assigned A2 (sf)
AUD13.75 million Class E Notes, Definitive Rating Assigned Baa3
(sf)
AUD11.00 million Class F Notes, Definitive Rating Assigned B1 (sf)
The AUD9.90 million Class G Notes are not rated by Moody's.
The portfolio underlying this transaction is comprised of
first-ranking mortgage loans to SMSFs (78.2%), companies (12.3%)
and individuals (9.5%). The loans are secured by residential
(64.1%), commercial (34.4), or both (1.3%) properties in Australia
and denominated in Australian dollars. A portion of the portfolio
consists of loans extended to borrowers with impaired credit
histories (1.6%) or made on an alternative (4.2%), or no
documentation (5.4%) basis.
RATINGS RATIONALE
The ratings take into account, among other factors, an evaluation
of the underlying receivables, the capital structure and credit
enhancement provided to the notes, the guarantee fee reserve
account, the availability of excess spread over the life of the
transaction, the liquidity facility, the legal structure, and the
credit strength and experience of Liberty as servicer.
Due to the mixed nature of the pool, to perform its analysis
Moody's categorised the portfolio into separate residential loan
and SME sub-pools. Moody's Portfolio Credit Enhancement (PCE) for
the overall portfolio, i.e. the loss Moody's expects the portfolio
to suffer in the event of a severe recession scenario, is 14.6%.
Moody's expected loss for this transaction is 2.2%.
The key transactional are as follows:
- The guarantee fee reserve account, which is funded at
AUD2,750,000 at closing. The reserve will be available to cover
losses and liquidity shortfalls. Reserve draws will be replenished
through future excess spread up to its initial funded amount.
- The servicer is required to set interest rates on the mortgage
loans on a weighted average basis at a minimum level above BBSW or
higher if the trust's income is insufficient to cover the required
payments under the transaction documents. The level of the required
margin generates a strong level of excess spread available to cover
loss in the pool.
- The notes will initially be repaid sequentially. On or after
the payment date in October 2021, and prior to the call option
date, all notes (other than the Class G notes) will receive their
pro-rata share of principal payments, provided there are no
charge-offs on any of the notes, or average arrears greater than or
equal to 60 days do not exceed 4%. The Class G Notes do not step
down and will only receive principal payments once all other notes
have been repaid.
- The principal pay-down switches back to sequential if the
payment date falls on or after the call option date, i.e. once the
aggregate loan amount falls below 20.0% of the aggregate loan
amount at closing, or following the fourth anniversary of the
closing date.
- The liquidity facility provided by Westpac Banking Corporation
(Aa3/P-1/Aa2(cr)/P-1(cr)), with a limit equal to 2.0% of the
aggregate invested amount of the Class A1 to Class F notes, and the
stated amount of the Class G notes. The facility is subject to a
floor of AUD750,000.
Other pool features are as follows:
- The weighted average scheduled loan to value (LTV) ratio of the
pool is 61.6%, with 1.7% of the loans with scheduled LTV above
80.0% .
- Around 5.3% of loans in the portfolio are bullets, i.e.
non-amortising, and rely on either refinancing or sale of the
underlying property to repay the loan at maturity.
- In addition to bullet loans, the portfolio contains 18.3% of
loans with an initial interest only (IO) period of up to five
years, at the end of which they convert to principal and interest.
- The portfolio exhibits concentration in Victoria, with around
36.9% of loans secured by properties in that state.
Methodology Underlying the Rating Action:
The methodologies used in these ratings were "Moody's Approach to
Rating RMBS Using the MILAN Framework" published in July 2019, and
"Moody's Global Approach to Rating SME Balance Sheet
Securitizations" published in July 2019.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that could lead to an upgrade of the notes include a rapid
build-up of credit enhancement, due to sequential amortization or
better-than-expected collateral performance. The Australian
macroeconomic conditions and the housing market are primary drivers
of performance.
A factor that could lead to a downgrade of the notes is
worse-than-expected collateral performance. Other reasons that
could lead to a downgrade include poor servicing, error on the part
of transaction parties, a deterioration in the credit quality of
transaction counterparties, or lack of transactional governance and
fraud.
Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors. Moody's
ratings are subject to revision, suspension or withdrawal at any
time at its absolute discretion. The ratings are expressions of
opinion and not recommendations to purchase, sell or hold
securities.
MORTGAGE LOAN: First Creditors' Meeting Set for Oct. 21
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Mortgage
Loan & General Pty. Limited will be held on Oct. 21, 2019, at 3:30
p.m. at the offices of Mackay Goodwin, Level 2, at 10 Bridge
Street, in Sydney, NSW.
Thyge Trafford Jones and Domenic Calabretta of Mackay Goodwin were
appointed as administrators of Mortgage Loan on Oct. 9, 2019.
RAYKIR HOLDINGS: First Creditors' Meeting Set for Oct. 22
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Raykir
Holdings Pty Ltd will be held on Oct. 22, 2019, at 2:00 p.m. at the
offices of Jirsch Sutherland, Level 27, at 259 George Street, in
Sydney, NSW.
Daniel Jean Civil -- DanielC@jirschsutherland.com.au --
of Jirsch Sutherland was appointed as administrators of Raykir
Holdings on Oct. 10, 2019.
ROC N ROLLA: First Creditors' Meeting Set for Oct. 21
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Roc N Rolla
Property Co Pty Ltd, trustee for Roc N Rolla Property Unit Trust,
will be held on Oct. 21, 2019, at 3:00 p.m. at the offices of
Mackay Goodwin, Level 2, at 10 Bridge Street, in Sydney, NSW.
Thyge Trafford Jones and Domenic Calabretta of Mackay Goodwin were
appointed as administrators of Roc N Rolla on Oct. 9, 2019.
SAMSON OIL: Janna Blanter Resigns as Chief Financial Officer
------------------------------------------------------------
Janna Blanter resigned as the chief financial officer of Samson Oil
& Gas Limited, and Samson Oil and Gas USA, Inc., a wholly-owned
subsidiary of the Company, on Sept. 30, 2019.
On Oct. 1, 2019, Mr. Tristan Farel, 49, was appointed to the
position of chief financial officer of the Company and Samson USA.
Mr. Farel has 18 years of accounting and reporting experience,
holding various executive and senior management positions with both
public and private companies in the United States, Canada, and
Australia. Mr. Farel has experience in the areas of financial
analysis, SEC reporting, International Financial Reporting
Standards (IFRS) reporting, due diligence and integration in
connection with mergers and acquisitions and consolidations,
purchase accounting, scheduling and organizing external audits,
tax scheduling, and developing capital and operating budgets.
Mr. Farel also worked for five years in public accounting as an
auditor. Mr. Farel has held the positions of chief financial
officer of PetroShale, Inc. from 2013 to 2014, chief financial
officer of New Frontier Energy, Inc. from 2010 to 2016, and chief
financial officer of Arete Industries, Inc. from 2015 to 2019. Mr.
Farel has also held the positions of Financial Reporting Manager
for Resolute Energy Corporation (2006-2010) and Audit Manager for
Hein & Associates (2001-2006).
Mr. Farel has a Bachelor of Science in Business Administration,
with an emphasis in Accounting, from the University of Colorado at
Boulder, and has been active in the Council of Petroleum
Accountants Society, the Colorado Society of Certified Public
Accountants and the American Institute of Certified Public
Accountants.
Effective Oct. 1, 2019, the Company entered into an Employment
Agreement with Mr. Farel and LTN Ergy, LLC. Pursuant to the
Employment Agreement, Mr. Farel will serve in his position as chief
financial officer of the Company for an initial period of twelve
months, and will continue to serve in such position indefinitely
thereafter until either party terminates the Employment Agreement.
Mr. Farel will be paid $240,000 per year for his service as chief
financial officer of the Company.
About Samson Oil
Samson Oil & Gas Limited -- http://www.samsonoilandgas.com/-- is
an independent energy company primarily engaged in the acquisition,
exploration, exploitation and development of oil and natural gas
properties. The Company's principal business is the exploration and
development of oil and natural gas properties in the United States.
The Company is headquartered in Perth, Western Australia.
Samson Oil incurred a net loss of $6.03 million for the year ended
June 30, 2018, following a net loss of $2.76 million for the year
ended June 30, 2017. As of March 31, 2019, Samson Oil had $33.93
million in total assets, $41.57 million in total liabilities, and a
total stockholders' deficit of $7.63 million.
Moss Adams LLP, in Denver, Colorado, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
Oct. 15, 2018, on the Company's consolidated financial statements
for the year ended June 30, 2018, stating that the Company is
inviolation of its debt covenants, has suffered recurring losses
from operations, and its current liabilities exceed its current
assets. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
TRANSTEX HOLDINGS: Second Creditors' Meeting Set for Oct. 21
------------------------------------------------------------
A second meeting of creditors in the proceedings of Transtex
Holdings Pty Ltd has been set for Oct. 21, 2019, at 2:30 p.m. at
Level 12, at 460 Lonsdale 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. 18, 2019, at 4:00 p.m.
Glenn Anthony Crisp of Jirsch Sutherland was appointed as
administrator of Transtex Holdings on Sept. 16, 2019.
TWO GUYS: First Creditors' Meeting Set for Oct. 22
--------------------------------------------------
A first meeting of the creditors in the proceedings of Two Guys One
Truck Pty Ltd will be held on Oct. 22, 2019, at 11:00 a.m. at the
offices of Jirsch Sutherland, Level 27, at 259 George Street, in
Sydney, NSW.
Daniel Jean Civil of Jirsch Sutherland was appointed as
administrator of Two Guys on Oct. 10, 2019.
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C H I N A
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GOLDEN EAGLE: S&P Alters Outlook to Positive & Affirms 'BB' ICR
---------------------------------------------------------------
On Oct. 10, 2019, S&P Global Ratings revised its outlook on
China-based department store operator Golden Eagle Retail Group to
positive from stable. At the same time, S&P affirmed its 'BB'
long-term issuer credit rating on Golden Eagle and its
'BB-'long-term issue rating on the company's senior unsecured
notes.
S&P said, "We revised our outlook on Golden Eagle Retail Group Ltd.
to positive from stable because we expect the company to maintain
steady operating cash flow over the next 12 months, supported by
its efforts to improve the merchandising mix and operating
efficiency. We also believe Golden Eagle will be disciplined on
capital expenditure (capex) and control leverage against the tough
backdrop for traditional retailers in China. We expect the
company's debt-to-EBITDA ratio to stay below 2.0x in 2019 and 2020,
compared with 1.3x in 2018.
"We affirmed the ratings because we expect the operating
environment in China's department store sector to remain
challenging, which could hamper Golden Eagle's operating
performance and its short track record of maintaining low
leverage." However, Golden Eagle has delivered steady operating
performance over the past 18 months, despite fierce competition
from online operators. This is owing to the company's efforts to
adjust and upgrade its merchandise and services offerings to
enhance the shopping experience.
Golden Eagle has been changing its tenants and merchandise mix at a
rate of 30%-50% per year over the years to adapt to fast-changing
consumer preferences in China. S&P said, "In our view, the
company's strategy to add catering, entertainment, and other
lifestyle facilities to its stores has resulted in stronger traffic
growth compared with that of industry peers. Golden Eagle's
customer foot traffic increased by 33.9% in 2018 and 7.6% in the
first half of 2019. Retail revenue rose 12.3% in 2018 and 4.9% in
the first half of 2019, outperforming the industry average of 3.5%
in 2018, according to market research firm Euromonitor
International. We expect Golden Eagle's retail revenue to increase
by 1%-3% in 2019 and 2020, despite the temporary closure of part of
its flagship Nanjing Xinjiekou Store in the second half of 2019."
S&P said "We also expect Golden Eagle to maintain good
profitability and operating cash flow over the next 12-24 months,
albeit slightly weaker than in 2018. The company has been
streamlining its cost structure, better utilizing its retail areas,
and ramping up new stores. Golden Eagle lowered its staff cost by
2% in 2017 and 13% in 2018. Our base case assumes that the
company's EBITDA margin will remain higher than its peers at
41.0%-41.8% in 2019 and 2020, albeit lower than the 42.2% in 2018.
Intense competition, which has pressured the company's
concessionaire rates and direct sales margin, tempers these
strengths. Nonetheless, we believe Golden Eagle's operating cash
flow will remain relatively steady at Chinese renminbi (RMB) 1.1
billion–RMB1.3 billion in 2019 and 2020, from RMB1.4 billion in
2018.
"In our view, Golden Eagle will remain cautious on capital
investment, given the uncertain macro environment. Our base case
assumes that the company's capex will rise to RMB1.3 billion in
2019--about RMB700 million will be used to fund a one-off property
project acquisition and construction--and fall to RMB700 million in
2020. We do not expect sizable acquisitions over the next 12-24
months. We also assume that Golden Eagle's total debt balance will
drop to RMB7.9 billion in 2019, from RMB8.3 billion in 2018, after
an early repayment of its syndicated loan in the amount of US$50
million in July 2019. Golden Eagle's capex was only about RMB762
million in 2017 and RMB240 million in 2018, substantially lower
than the peak of over RMB1 billion annually in 2014-2015. As a
result, we expect Golden Eagle's debt-to-EBITDA ratio to remain low
at 1.5x-1.7x over the next 12-24 months, from 1.3x in 2018.
"That said, we believe operating conditions will likely become more
challenging for traditional retailers in China, including Golden
Eagle, which will increase the volatility of the company's cash
flow. Competition between online and offline retailers has been
intensifying amid the slowing economy. In addition, we expect
consumer sentiment in China to weaken owing to escalating trade
tensions between China and the U.S., volatile domestic stock
markets, and tight liquidity conditions in the onshore credit
market.
"The positive outlook on Golden Eagle reflects our view that the
company will maintain relatively stable profits and operating cash
flow, and reasonably low leverage over the next 12 months, despite
slowing economic growth and weaker consumer sentiment in China, and
continuing competition from online retailers.
"We could raise the rating if we believe Golden Eagle can maintain
its debt-to-EBITDA ratio materially below 3x by demonstrating
steady EBITDA and cash flow through business cycles, and build a
sufficient track record of prudent financial management.
"We may revise the outlook to stable if Golden Eagle's
debt-to-EBITDA ratio rises above 3.0x without signs of
improvement.
"This could happen if: (1) the company's growth or margins decline
due to tougher operating conditions than we expect; or (2) the
company undertakes substantial debt-funded expansion, acquisitions,
and aggressive dividend payments."
Golden Eagle is a dominant retail store operator in Jiangsu
province, China. It also has stores in Anhui, Shaanxi, and Yunnan
provinces, and the city of Shanghai. As of June 30, 2019, the
company operates 31 stores with a gross floor area (GFA) of 2.42
million square meters. Of these, 23 stores are based in Jiangsu and
15 stores are in the lifestyle center format. The stores span
across four provinces and one municipality--Jiangsu, Anhui,
Shaanxi, Yunnan, and Shanghai. Self-owned properties account for
63% of Golden Eagle's GFA.
GUANGXI FINANCIAL: Moody's Affirms Ba1 LT CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service affirmed the Ba1 long-term corporate
family rating and Ba1 senior unsecured rating of Guangxi Financial
Investment Group Co., Ltd. At the same time, Moody's has downgraded
the company's Baseline Credit Assessment to b1 from ba3. The
outlook on the entity is stable.
Moody's has also withdrawn the debt-level outlook on the senior
unsecured rating for business reasons.
GXFIG was founded in 2008 and is 100% owned by the Guangxi
State-owned Assets Supervision and Administration Commission
(SASAC). It is a conglomerate with subsidiaries engaging in
microfinance, distressed asset management, SME credit guarantee,
private equity investment, property and casualty insurance, leasing
and credit re-guarantee, etc.
RATINGS RATIONALE
Moody's affirmation of GXFIG's Ba1 CFR incorporates a b1 BCA and a
three-notch uplift, based on Moody's expectation of strong level of
support from the Guangxi provincial government under Moody's
joint-default analysis approach for government-related issuers.
Moody's has downgraded GXFIG's BCA to b1 from ba3 to reflect its
reduced profitability, increased operational risks and complexity
arising from the evolving business mix as well as a low level of
liquid assets compared to the amount of debt maturing in one year.
The b1 BCA also reflects the company's concentration in the Guangxi
Zhuang Autonomous Region (Guangxi) which exposes the company to
regional economic uncertainties and consequent volatility in
earnings and asset quality.
Offsetting these credit challenges are GXFIG's leading position and
increasing importance in providing financing and credit guarantee
to SMEs in Guangxi and its solid level of capital adequacy
supported by various capital injections from the Guangxi
government.
In addition, GXFIG's funding sources are diversified including
banks, trust companies, state-owned asset management companies,
securities companies and onshore and offshore bond markets. GXFIG
has also been carrying out more policy-related businesses upon the
guidance of Guangxi government, indicating the company's strategic
importance.
Governance considerations were also a driver of GXFIG's BCA.
Moody's has made one-notch downward qualitative adjustment on
opacity and complexity to reflect GXFIG's complex organizational
structure, evolving business model as well as centralized
governance.
The Ba1 CFR also incorporates a three-notch government support
reflecting its expectation of a strong level of support from the
Guangxi government in times of need, based on GXFIG's strategic
importance in developing the financial services sector and
financing the small and medium-sized enterprises (SMEs) in the
region. The strategic importance is evident in GXFIG's increasing
policy-related businesses as well as the various support it has
received from the Guangxi government. GXFIG has also received
various support from the Guangxi government including promised
capital injections to support industrial investments in the region
and the injection of Guangxi Salt Industry Company for free in
March 2018 which have improved GXFIG's capital adequacy.
What Could Change the Rating -- Up
GXFIG's ratings could be upgraded if: 1) Moody's believes that
support from the Guangxi government in times of need strengthens as
it assumes a greater policy role in the region; 2) the company's
obligations become directly linked to the Guangxi government's
obligations; and 3) its BCA strengthens significantly.
GXFIG's BCA could be upgraded if the company 1) materially improves
its profitability, asset quality and liquidity metrics and 2)
establishes a track record.
What Could Change the Rating -- Down
GXFIG's ratings could be downgraded if Moody's believes that
support from the Guangxi provincial government will weaken in times
of need as a result of reduced importance of the company's
activities to the regional economy, or its BCA is downgraded.
GXFIG's BCA could be downgraded if: 1) the company's secured
borrowings increase to over 35% of gross tangible assets; 2) its
tangible common equity/tangible managed assets consistently
declines to below 12%; or 3) the change in business mix results in
a material deterioration in its profitability, capital and
liquidity or operational risk incident.
The methodologies used in these ratings were Finance Companies
published in December 2018, and Government-Related Issuers
published in June 2018.
JIAYUAN INTERNATIONAL: S&P Rates New US$ Sr. Unsec. Notes 'B-'
--------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating to the
U.S.-dollar-denominated senior unsecured notes that Jiayuan
International Group Ltd. (B/Negative/--) proposes to issue.
Jiayuan intends to use the net proceeds primarily to refinance its
existing debt. The issue rating is subject to S&P's review of the
final issuance documentation.
S&P said, "We rate the notes one notch below the issuer credit
rating on Jiayuan to reflect substantial structural subordination
risk. As of June 30, 2019, the company's capital structure consists
of Chinese renminbi (RMB) 12.1 billion in secured debt and RMB4.4
billion in unsecured debt. Jiayuan's secured debt ratio is about
74%, above our 50% threshold for notching down the issue rating.
"We believe Jiayuan's debt maturity profile will modestly improve
following the notes issuance. However, the China-based property
developer's credit profile remains constrained by its small
operating scale--despite a moderate improvement following its
acquisition of the Anhui assets package in early August 2019--tight
liquidity, and weak capital structure. We expect the company will
remain prudent in debt-funded land replenishment in the next 12-24
months. We forecast Jiayuan's financial leverage, measured by the
ratio of debt to EBITDA, will be 5.5x-6.0x in 2019 and 2020, from
about 5.5x in 2018.
"Jiayuan's performance and credit metrics so far in 2019 are in
line with our expectation." The company's total contracted sales
grew 51% year on year to about RMB15.6 billion during the first
eight months of 2019, driven by satisfactory sales execution and
inclusion of the Anhui assets. Excluding the Anhui assets, growth
would be about 15% like-for-like. Jiayuan's total adjusted debt was
flat at about RMB16.3 billion as of June 30, 2019. On the back of
improved margins, the debt-to-EBITDA ratio decreased to about 3.7x,
from about 5.5x at the end of 2018.
SHANDONG RUYI: Moody's Cuts CFR to B3, Put on Review for Downgrade
-------------------------------------------------------------------
Moody's Investors Service downgraded Shandong Ruyi Technology Group
Co., Ltd.'s corporate family rating to B3 from B2 and the rating on
the senior unsecured notes issued by Prime Bloom Holdings Limited
and guaranteed by Shandong Ruyi to Caa1 from B3.
At the same time, Moody's has placed the ratings above on review
for further downgrade.
The outlook for Shandong Ruyi and Prime Bloom Holdings Limited was
changed to ratings under review from negative.
RATINGS RATIONALE
"The downgrade of the ratings reflect our expectation that Shandong
Ruyi's liquidity will remain weak and debt leverage will stay
elevated," says Chenyi Lu, a Moody's Vice President and Senior
Credit Officer.
"The ratings remain on review for further downgrade because of our
increased concern over Shandong Ruyi's ability to service its large
onshore and offshore debt maturities over the next 12-18 months,
given the company's limited progress on its refinancing plans,"
adds Lu.
Shandong Ruyi will need to address a large amount of upcoming
maturities, including domestic bonds totaling RMB2.2 billion
maturing and puttable in October and November 2019, offshore bonds
of USD345 million (RMB2.4 billion) due in December 2019, and
domestic bonds of RMB2.5 billion maturing and puttable in 2020.
At the end of June 2019, Shandong Ruyi's cash, including pledged
deposits of RMB8.9 billion and Moody's forecast of cash flow from
operations of RMB2.3 billion for the next 12 months, was
insufficient to cover its maturing debt of RMB12.3 billion, bills
payable of RMB4.8 billion, and estimated maintenance capital
spending of RMB100 million over the same period.
Shandong Ruyi's liquidity risk is higher than Moody's had expected
because the company has made limited progress on its refinancing
plans over the last few months and the timing of the execution of
its plans remains highly uncertain.
The refinancing plans include the monetization of its alternative
assets — namely power assets in Pakistan and newly acquired
commercial buildings in Jining, Shandong — debt and equity
issuance through the capital markets, and/or increased bank
borrowings.
Moody's expects Shandong Ruyi's debt leverage to remain elevated.
The company's adjusted debt/EBITDA will recover to 7.0x-7.5x over
the next 12-18 months from 7.9x in the 12 months ended June 2019,
because improved EBITDA will be partially offset by an increase in
debt to support its investments and working capital needs.
Shandong Ruyi's debt leverage will continue to be constrained by
the company's and its parent company's high growth strategy and
strong appetite for acquisitions. Such a situation increases
financial risks related to further capital investments by Shandong
Ruyi.
Moody's rating review will mainly focus on the key developments of
Shandong Ruyi's refinancing plans. Signs of failure in executing
its refinancing plans or the inability to meet its obligations
could pressure the company's ratings.
From an environmental, social and governance perspective, Moody's
has made the assessments below, which are incorporated into
Shandong Ruyi's B3 CFR.
Firstly, Shandong Ruyi's financial strategy is acquisitive, as
reflected in its moderate financial profile and reliance on
short-term borrowings.
Secondly, Shandong Ruyi is a privately-owned company with
concentrated ownership. The parent company, which owns a 53.5%
stake in Shandong Ruyi, is a privately-owned company with low
transparency. This situation is partially mitigated by Shandong
Ruyi's track record of a prudent dividend policy and limited
related-party transactions.
Thirdly, Shandong Ruyi's textile manufacturing businesses, which
represented 22% of total revenues in 2018, show environment risk
exposures that are partially offset by the use of more advanced
equipment.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
Established in 2001, Shandong Ruyi Technology Group Co., Ltd. is a
vertically integrated textile company that engages in textile
manufacturing and trading, apparel manufacturing and retailing, and
cotton and wool production.
Shandong Ruyi's largest shareholder is Beijing Ruyi Fashion
Investment Holding Company Limited, with a 53.5% share at the end
of 2018. Other key shareholders include Yinchuan Finance Holding
Company Limited (with a 26.0% share as of the same date) and ITOCHU
Corporation (A3 stable, 11.7%).
The company has three listed subsidiaries: the Shenzhen Stock
Exchange-listed Shandong Jining Ruyi Woolen Textile Co. Ltd., the
Tokyo Stock Exchange-listed Renown Incorporated and the Euronext
Paris-listed SMCP Group.
=================
H O N G K O N G
=================
[*] HONG KONG: 100 Restaurants Shut Down due to Protests
--------------------------------------------------------
Eric Lam at Bloomberg News reports that about 100 Hong Kong
restaurants have shut down because of the months-long protests in
the city, Financial Secretary Paul Chan said in a blog post on Oct.
12.
Around 2,000 employees have been affected as a result of the
closures, Mr. Chan said in the Chinese-language post, citing the
catering industry, Bloomberg relates. He didn't provide further
details. Some retailers have also had to reduce the number of
stores or cut back on staff, and several recent sport and
entertainment events have had to be canceled for security reasons,
Mr. Chan said, Bloomberg relays.
Mr. Chan urged property owners and developers to follow the lead of
railway operator MTR Corp. in offering rent relief to affected
retailers. He said Airport Authority Hong Kong is also considering
assistance to tenants, Bloomberg adds.
=========
I N D I A
=========
ARPITA FILAMENTS: Insolvency Resolution Process Case Summary
------------------------------------------------------------
Debtor: Arpita Filaments Private Limited
4/3310, H.K. Street
Begampura, Zampa Bazar Surat
Gujarat 395003
Insolvency Commencement Date: September 26, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: March 24, 2020
(180 days from commencement)
Insolvency professional: Pankaj Nahata
Interim Resolution
Professional: Pankaj Nahata
504-505, Himadri II
Old High Court Lane
Ashram Road
Ahmedabad 380009
E-mail: pmnahata@gmail.com
cirp.afpl@gmail.com
Last date for
submission of claims: October 15, 2019
ASOPALAV DEVELOPERS: ICRA Moves B+ Rating to Not Cooperating
------------------------------------------------------------
ICRA has moved the long-term ratings for the bank facilities of
Asopalav Developers to the 'Issuer Not Cooperating' category. The
rating is now denoted as "[ICRA]B+ (Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 20.00 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity to monitor
its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Rajkot based Asopalav Developers (AD) was established in 2015. The
partners have experience of more than a decade in the real estate
segment. The current project Asopalav Enigma, consists of four
towers of 12 floors, which has 192 units covering a total saleable
area of 184,896 sq. ft. The construction started from April 2017
and was expected to be completed by September 2019.
BHOLARAM EDUCATION: CRISIL Assigns B- Rating to INR6cr Loan
-----------------------------------------------------------
CRISIL has assigned 'CRISIL B-/Stable' rating to bank facility of
Bholaram Education Society (BES).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund-
Based Bank Limits 6 CRISIL B-/Stable (Assigned)
The ratings also reflects BES's stretched liquidity, and
susceptibility to any adverse impact of regulatory changes. These
weaknesses are partially offset by the society's established
presence in the education services sector on account of running a
Delhi Public School (DPS) franchisee.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest liquidity
BES collects fees in regular interval, leading the trust to face
liquidity crunch during the non-fee collection period.
* Susceptibility to regulatory changes and exposure to intense
competition
The education sector is highly regulated in India. The trust has to
comply with specific operational and infrastructure norms laid down
by regulatory bodies. Further, there are various institutions in
the area, thus increasing competition.
Strength
* Established presence in the education sector
The trust runs a DPS in Gandhinagar, Gujarat. BES is expected to
remain supported by the established DPS brand.
Liquidity: Stretched
Liquidity is stretched, with cash accrual expected over Rs 9 crore
over the medium term. With lower estimated capital expenditure
going forward liquidity should improve over the medium term.
Outlook: Stable
CRISIL believes the society will continue to benefit from its
experience of promoter.
Rating sensitivity factors
Upward factor
* Increase in scale of operations and operating profitability
leading cash accrual of over Rs 11 crore
* Increase in fund flow to meet the debt obligations
Downward factor
* Decline in receipt of fees by 20% and sharp decline in operating
profitability.
* Large capital expenditure of funded by internal accruals leading
to mismatch in fund flow to meet the debt obligations
Set up in 2002, BES, promoted by Mr Apoorva Goenka and family, runs
DPS in Gandhinagar, Goenka Research Institute of Dental Sciences
(GRIDS), Manjushree research institute of Ayurvedic Science, and
the 100-bed multi-speciality Goenka Hospital in Piplaj (Gujarat).
CHANDRI PAPER: ICRA Migrates 'D' Rating to Not Cooperating
----------------------------------------------------------
ICRA has moved the ratings for the bank facilities of Chandri Paper
& Allied Products Private Limited to the 'Issuer Not Cooperating'
category. The ratings are now denoted as "[ICRA]D/[ICRA]D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term 12.50 [ICRA]D ISSUER NOT COOPERATING;
Fund based Rating continues to remain
Under 'Issuer Not Cooperating'
Category
Short Term 21.25 [ICRA]D ISSUER NOT COOPERATING;
Non-Fund Based Rating continues to remain
Under 'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
CPAPPL was incorporated in the year 2003 with an objective of
manufacturing and trading paraffin wax from slack wax and had
established its manufacturing facilities at Tarapur (Maharashtra)
with a capacity to produce 3,600 MT of paraffin wax annually. Since
inception, CPAPPL has been supplying paraffin wax primarily to the
local customers engaged in the manufacture of candles. In 2008, the
company forayed into the business of trading base oil, wherein it
imported base oil from oil refining companies based in Iran,
Hongkong, and Singapore and sold them in the domestic market to
companies involved in manufacturing of oil related products such as
vaseline, grease, engine oil, and transformer oil.
DIRECT NEWS: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: Direct News Private Limited
Registered office:
B-116, Ground Floor Okhla Industrial Area
Phase-I
New Delhi 110020
India
Insolvency Commencement Date: September 30, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: March 28, 2020
(180 days from commencement)
Insolvency professional: Sanjeev Gupta
Interim Resolution
Professional: Sanjeev Gupta
307, Laxmideep Building
Plot No. 9, District Centre
Laxmi Nagar, Delhi 110092
E-mail: fcasanjeev@gmail.com
cirp.directnews@gmail.com
Last date for
submission of claims: October 14, 2019
DISTICHEMI PROCESS: CRISIL Maintains D Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Distichemi Process
Engineering Private Limited (DPEPL) continues to be 'CRISIL
D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.07 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 7 CRISIL D (ISSUER NOT
COOPERATING)
Rupee Term Loan 33 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with DPEPL 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 DPEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DPEPL 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 DPEPL continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Incorporated in 2007, DPEPL undertakes engineering and designing of
turnkey projects for distilleries, and ethanol- and alcohol-based
chemical plants. The company is managed by Mr. Sunil Kansara.
DSG CORP: ICRA Maintains B- Rating in Not Cooperating Category
--------------------------------------------------------------
ICRA has continued to keep the rating for the bank facilities of
DSG Corp Private Limited (DCPL) to the 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]B-(Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Non 10.10 [ICRA]B-(Stable) ISSUER NOT
Fund Based COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
DCPL was started as a proprietorship firm by Mr. Sunil Gupta in
1992 which was converted to a partnership firm in 1995 and
subsequently converted to a private limited company in 1997 with
Mr. Sunil Gupta and Mrs. Kavita Gupta holding 100% shares of the
company. DCPL offered plumbing and fire-fighting equipment-related
systems and services to hotels, hospitals, information technology
parks, residential multiplexes, and educational institutions. On
August 31, 2010 Blue Star Limited (BSL) acquired the business of
DCPL; consequently, DCPL currently has no business operations.
GOYAL ISPAT: CRISIL Maintains 'C' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Goyal Ispat Private
Limited (GIL) continues to be 'CRISIL C/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12.5 CRISIL C (ISSUER NOT
COOPERATING)
Letter of Credit 5.0 CRISIL A4 (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with GIL 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 GIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on GIL 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 GIL continues to be 'CRISIL C/CRISIL A4 Issuer not
cooperating'.
GIL was set up in 1992 by Mr. G D Goyal. In September 2000, it was
purchased by Mr. G L Kothari and Mr. Kewal Chand Kothari. GIL has a
thermo-mechanically treated bar manufacturing facility in Chennai.
H. K. INTERNATIONAL: CRISIL Keeps B+ Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of H. K. International
(HKI, part of the HK group) continues to be 'CRISIL B+/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
Proposed Cash 3.0 CRISIL B+/Stable (ISSUER NOT
Credit Limit COOPERATING)
CRISIL has been consistently following up with HKI 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 HKI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HKI 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 HKI continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of HK International (HKI), AEL and HK
Industries (HK), as the three firms have merged into one entity.
Although HKI and HK seize to exist, following the merger, the
management has not shared any further details.
AEL and HKI were set up in 2008, by Mr Anil Anand and his family
members. The Delhi-based group trades in railway parts, lubricants
and hosiery goods. HK, set up in 2014, by Mr Anand as a
proprietorship firm, trades in copper and its allied products.
HARIOM YAMAHA: CRISIL Maintains B+ Rating in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of Hariom Yamaha (HY)
continues to be 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 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 HY 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 HY, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HY 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 HY 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.
HY was established in 2009 as a proprietorship concern by Mr.
Chanchal Chandel. The firm is a dealer of IYML two wheelers. The
firm operates two showrooms in Bhopal and Sehore (Madhya Pradesh).
HM JEWELLERS: CRISIL Maintains B+ Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of HM Jewellers Private
Limited (HJPL) continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 0.19 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
Standby Line of 0.25 CRISIL B+/Stable (ISSUER NOT
Credit COOPERATING)
Working Capital 6.75 CRISIL B+/Stable (ISSUER NOT
Facility COOPERATING)
CRISIL has been consistently following up with HJPL 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 HJPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on HJPL 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 HJPL continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Incorporated in 2007, HJPL is engaged in jewellery retailing
through its showroom at Bhubaneswar, Odisha. Its daily operations
are managed by promoter-director Mr Umesh Chandra Maharana, who has
experience of more than a decade in the gold retailing business
through proprietorship firm HM Jewellers. The firm's business was
taken over by HJPL in 2007.
IVCON: CRISIL Cuts INR6.0cr Cash Loan Rating to B+, Not Cooperating
-------------------------------------------------------------------
CRISIL said the ratings on bank facilities of Ivcon (Ivcon) was
revised to be 'CRISIL B+/Stable/CRISIL A4 Issuer not cooperating'
from 'CRISIL BB/Stable/CRISIL A4+ Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.55 CRISIL A4 (ISSUER NOT
COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Cash Credit 6.00 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with Ivcon (Ivcon) 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 Ivcon, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Ivcon 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 Ivcon revised to be 'CRISIL B+/Stable/CRISIL A4
Issuer not cooperating' from 'CRISIL BB/Stable/CRISIL A4+ Issuer
not cooperating'.
Ivcon is a proprietorship firm set up in 1998 by Mr I V Reddy. The
firm undertakes civil construction projects, in roads, railways and
irrigation segments in Maharashtra and Telangana. L1 status enables
the firm to bid for contracts of any amount.
J N S L FERRO: CRISIL Maintains 'B' Rating in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of J N S L Ferro Alloys
(JFA) continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.9 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 1.6 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with JFA 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 JFA, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JFA 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 JFA continues to be 'CRISIL B/Stable Issuer not
cooperating'.
JFA, a proprietorship firm, was incorporated in 2006-07 (refers to
financial year, April 1 to March 31) by Mr. Lakesh Juneja. It
trades in various ferrous metals like hot-rolled coils/sheets, cold
rolled coils/sheets, structured steel products, stainless steel
products and metal scrap. JFA has also developed a shopping mall in
Ludhiana (Punjab) which is expected to commence operations in
October 2015.
JAMNA METAL: CRISIL Maintains 'C' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Jamna Metal Co. (JMC)
continues to be 'CRISIL C/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.67 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 4 CRISIL C (ISSUER NOT
COOPERATING)
Proposed Long Term 10.01 CRISIL C (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 1.82 CRISIL C (ISSUER NOT
COOPERATING)
Working Capital
Term Loan 5.5 CRISIL C (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with JMC 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 JMC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JMC 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 JMC continues to be 'CRISIL C/CRISIL A4 Issuer not
cooperating'.
JMC commenced operations in 1997 as Shree Jamna Metal Works, a
proprietorship concern of Mr Kishan Chand Bansal. The firm
manufactures galvanised steel trays used in the power sector as a
base for laying power transmission cables.
JAY BAJRANG: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of Jay Bajrang Cotton
Industries (JBCI) continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.0 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term
Bank Loan Facility 1.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with JBCI 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 JBCI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JBCI 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 JBCI 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.
Promoted in June 2013, JBCI has set up a ginning and pressing unit
having a capacity to produce 20,000 to 25,000 bales per annum at
Morbi in Rajkot (Gujarat). The unit commenced operations from April
2014.
KLM INFRA: Ind-Ra Withdraws 'BB-' LT Issuer Rating, Outlook Stable
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn KLM Infra's (KLM)
Long-Term Issuer Rating of 'IND BB-'. The Outlook was Stable.
The instrument-wise rating action is:
-- The 'IND BB-' rating on the INR96.27 mil. Term loan due on
August 2019 are withdrawn.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the agency
has received no dues certificate from the lender.
COMPANY PROFILE
KLM was established in October 2012. The firm is engaged in the
construction of a residential-cum-commercial project named Sapphire
8 in Surat, Gujarat. The firm is part of KLM group which has
completed projects of 1.124 million sf.
KOSAK ENGINEERING: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Kosak Engineering and Rubber Products Private Limited
A-3, Shankar Shail Raj KunjCo-Op. HSR Society
Chembur, Mumbai
Maharashtra 400077
Insolvency Commencement Date: September 25, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 22, 2020
(180 days from commencement)
Insolvency professional: Pankaj Sham Joshi
Interim Resolution
Professional: Pankaj Sham Joshi
c/o Omega Business Solutions Pvt. Ltd.
Unit 12, Kakad Industrial Estate
Lady Jamshedji Cross Road No. 3
Mahim (West), Mumbai 400016
E-mail: pjoshi.ip@gmail.com
Last date for
submission of claims: October 15, 2019
KWALITY LTD: Haldiram Emerges as Sole Bidder with INR130cr Offer
----------------------------------------------------------------
BloombergQuint reports that Haldiram Group has emerged as the sole
bidder for acquiring debt-ridden dairy firm Kwality Ltd., offering
about INR130 crore in the ongoing insolvency process.
Kwality has a total debt of about INR1,900 crore, which means that
lenders would have to take a significant haircut if they accept
Haldiram's offer, the report says.
BloombergQuint relates that Kwality's lenders are likely to vote on
Haldiram's bid in the third week of October, said people aware of
the development. The company's committee of creditors met on Oct. 9
to take stock of the resolution process and discuss the valuation
report.
Kwality Ltd is engaged in the business of milk processing and
manufacturing of dairy products, including ghee, milk powders,
lassi, chaach, flavoured milk etc. It owns two milk processing
units, one in Softa, Haryana, and another in Dibai, Uttar Pradesh.
KKR & Co. had filed insolvency plea against Kwality, which was
accepted by the National Company Law Tribunal in December 2018.
Kwality had in 2016 raised INR300 crore from KKR India Financial
Services and later received an additional commitment of INR220
crore. The amount was raised to fund its expansion plans and enter
into consumer segment.
Shailendra Ajmera of EY is the resolution professional for Kwality,
according to BloombergQuint.
M.D PRINTING: CRISIL Maintains 'B' Rating in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of M.D Printing and
Packaging Private Limited (MDPL) continues to be 'CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 1.5 CRISIL A4 (ISSUER NOT
COOPERATING)
Term Loan 7.5 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MDPL 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 MDPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MDPL 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 MDPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Incorporated in November 2011, MDPL manufactures potato chips and
extruded snacks in Haridwar, Uttarakhand. It also has a packaging
unit in Himachal Pradesh and was promoted by Mr Muhammed Daud.
M.M. COTTON: CRISIL Keeps B Rating in Not Cooperating Category
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of M.M. Cotton Factory
(MMCF) continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Rupee Term Loan 0.37 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Warehouse Financing 5.00 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MMCF 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 MMCF, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MMCF 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 MMCF continues to be 'CRISIL B/Stable Issuer not
cooperating'.
MMCF was set up by Mr. Surinder Pal as a proprietorship firm in
2006, and was reconstituted as a partnership concern in 2012. The
firm gins and presses cotton at its unit in Malhout district
(Punjab).
MILAP RICE: CRISIL Maintains B+ Rating in Not Cooperating
---------------------------------------------------------
CRISIL said the ratings on bank facilities of Milap Rice Mill (MRM)
continues to be 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
Proposed Long Term 0.75 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 0.75 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with MRM 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 MRM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MRM 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 MRM continues to be 'CRISIL B+/Stable Issuer not
cooperating'.
Milap Rice Mill (MRM) is a partnership firm located in Ahmedabad
district of Gujarat. The firm was established in the year 1988 and
is engaged in the business of processing i.e. milling, polishing
and sorting of basmati rice and non-basmati rice. The firm is
promoted by nine partners ' Mr. Kamlesh Kumar Patel, Mr. Akbar
Vhora, Mr. SulemanVhora, Mr. Alpesh Kumar patel, and 5 others.
MUTHOOT FINANCE: Fitch Assigns BB+ LT IDR, Outlook Stable
---------------------------------------------------------
Fitch Ratings assigned India-based Muthoot Finance Limited
Long-Term Foreign- and Local-Currency Issuer Default Ratings of
'BB+'. The Outlook is Stable.
KEY RATING DRIVERS
IDRS
MFL's Long-Term IDR is driven by the non-bank financial
institution's Standalone Credit Profile. The ratings take into
account MFL's well-established franchise in the niche segment of
gold-backed financing, its low credit losses and satisfactory
leverage. These are counterbalanced by high exposure to operational
risks in the business and MFL's moderate scale in comparison with
other larger Indian NBFIs. However, the rating also factors in
MFL's long record in its core business, strong profitability and
stable funding and liquidity.
MFL caters mainly to borrowers in rural and semi-urban geographies,
and has adequate pricing power despite the competitive dynamics. It
has diversified operations across India while its branch network
has the highest usage relative to peers. Its primary collateral is
gold jewellery, which has a liquid market. Tighter regulations
since 2013 have ensured propriety in loan-to-value standards as
well as standardised auction processes. However, operational risk
is high in gold-backed financing due to its decentralised
branch-led disbursement and storage of gold jewellery stock in the
company's branches.
The business model benefits from a high net interest margin
(average 11.7% in last five years), which is reflected in high
profitability as both operating costs and credit costs are low.
Healthy internal capital generation results in a moderate
debt/tangible equity ratio (2.7x at end-March 2019) while core
capitalisation is commensurate with the risk. The company aims to
maintain leverage at comfortable levels.
MFL's funding has become less concentrated. Bank loans form 49% of
total borrowings while public non-convertible debentures constitute
another 30% of total borrowings, of which a significant part is
from MFL's retail customers in south-India states. MFL started
accessing CP since financial year ended-March 2017 (FY17) on
improved access to markets and lower interest rates, and increased
its CP share to 18% by FYE19. A well-matched asset liability
profile is supported by the low tenor of gold loans and high
prepayments, while 36% of funding is long-term despite a mostly
short-term asset profile. MFL's unused credit lines also provide an
additional liquidity buffer against any unforeseen liquidity
stress.
MFL has been diversifying into other segments, such as rural
microfinance loans, low-cost rural housing, and auto loans, to
benefit from a large customer database and branch infrastructure
synergies. Fitch regards these as non-core to MFL, and could be a
source of risk with higher growth implying a higher risk appetite
in less familiar businesses. Non-gold loan products form 11% of the
total assets under management, on a consolidated basis, which is
likely to increase. Nevertheless, Fitch expects gold loans to
remain the dominant business.
RATING SENSITIVITIES
IDRS
MFL's Long-Term IDR is at the higher-end of peers and any rating
upside is improbable in the near term. The rating is likely to see
downward pressure if losses stemming from operational risk are
higher than Fitch's expectations or a sharp and sudden decline in
gold prices were to materially affect earnings and capital buffers.
The rating would also be sensitive to rising leverage (if
debt/equity approached 4x) and a significant increase in exposure
to non-core lending products or material losses arising from
non-core lending products.
MUTHOOT FINANCE: Moody's Assigns Ba2 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service assigned a first-time Ba2 corporate
family rating to Muthoot Finance Limited.
The rating outlook is stable.
RATINGS RATIONALE
The Ba2 CFR takes into account the company's (1) leading franchise
and well established track record in lending against the gold
jewelry segment in India, and (2) strong solvency metrics,
including asset quality, capital and profitability.
However, these strengths are somewhat offset by Muthoot's modest
funding and liquidity, due to a heavy reliance on short-term
wholesale funding.
Incorporated in 1939, Muthoot is the largest financier of lending
against gold jewelry (gold loans) in India, with a market share of
about 18% among banks and non-banks at March 31, 2018. The company
has a long operating history of more than 80 years in the segment.
Muthoot's operations are concentrated in gold loans, which
represented about 88% of the company's loans at March 31, 2019.
Over the past two to three years, Muthoot started to diversify into
mortgage loans, microfinance and vehicle finance. The company has
also acquired a majority stake in a non- bank financial institution
in Sri Lanka, Asia Asset Finance Plc.
The gold loan business is operated through the holding company,
Muthoot Finance Limited. The other segments are operated from
separated legal entities, which are all Muthoot subsidiaries.
Based on management's plans, gold loans will continue to dominate
the company's loan portfolio and account for 80%-85% of total loan
assets over the next 2-3 years.
Muthoot's loans are also concentrated in southern India, such as
Karnataka, Tamil Nadu, Andhra Pradesh, Telangana and Kerala, which
represent close to 50% of total gold loans. Nevertheless, the share
of loans to borrowers in the country's southern states has fallen
from about 80% in 2009, as the company seeks to diversify its
operations across India.
Muthoot's reported asset quality performance has been volatile and
is impacted by the general repayment profile of gold loans, as well
as the tightening of nonperforming loan (NPL) classification norms
by the Reserve Bank of India. At March 31, 2019, IND-AS stage 3
assets represented 2.7% of the gold loan segment and 2.4% for the
consolidated entity. Stage 3 loans for the gold loan segment
increased to 3.2% in June 2019.
Despite the volatile NPL performance, the underlying credit costs
have remained fairly low, at about 0.7% of consolidated gross loans
in the past three years. Furthermore, the company incurs minimal
losses on gold loans that turn into NPLs that are ultimately
auctioned. Based on auction data over the past five years, the
company recovered the entire principal amount of the loans
outstanding, and the resultant losses were only limited to the loss
of interest.
In addition, Muthoot incurs some losses on bad debt through
burglary, staff fraud or spurious gold. Since 2011, average bad
debt written off represented about 0.06% of total gold loans.
Notwithstanding the historical performance, the company's asset
quality performance remains susceptible to adverse and sharp
movements in gold prices.
Muthoot's profitability has improved steadily in recent years, as
it leveraged its vast physical network to scale up its operations.
Its consolidated return on assets was 5.0% in 2019; increasing over
the years and proving one of the highest among finance companies in
India.
Capitalization is a key strength of the company, with consolidated
tangible common equity as a percentage of total managed assets of
24% at March 31, 2019, supported primarily by steady and strong
profitability. In the past five years, the company's dividend
payout ratio has ranged between 20% and 35%.
Somewhat offsetting these strengths is the company's weak funding
and liquidity. Like its industry peers, Muthoot relies fully on
wholesale sources for its funding needs, and has limited liquid
assets that can be mobilized to overcome refinancing issues.
Nonetheless, some of the liquidity risk is mitigated by the
company's policy to closely match the maturities of its assets and
liabilities, its diversified wholesale funding base, and good
access to liquidity from banks and debt market investors.
In addition, for the gold loan segment, monthly collections and the
disbursement of loans are fairly matched; limiting any pressure on
the company's liquid assets for balance sheet growth.
CFR
The CFR is assigned to a corporate family as if it had a single
class of debt and a single consolidated legal entity structure.
Consequently, if a single security class of debt represents the
clear majority of a family's total debt, the rating assigned to
that debt will equal the CFR.
Given that the majority of Muthoot's outstanding debt is secured by
the company's financing receivables, Muthoot's CFR is assigned to
the company's secured debt class.
A significant proportion of Muthoot's assets are encumbered for
secured borrowings. Consequently, Moody's expects a higher
loss-given-default for senior unsecured creditors than secured
creditors.
Muthoot's CFR does not benefit from affiliate and government
support.
WHAT COULD CHANGE THE RATING UP
Moody's could upgrade Muthoot's CFR if the company displays a
meaningful and sustained improvement in its funding and liquidity
profile.
WHAT COULD CHANGE THE RATING DOWN
Conversely, a meaningful increase in Muthoot's NPL formation rates
and a material deterioration in its loss-absorbing buffers could
put downward pressure on the company's standalone credit profile. A
deterioration in the company's funding and liquidity, as
demonstrated by its inability to rollover its maturity liabilities
will add pressure to its rating.
The principal methodology used in this rating was Finance Companies
published in December 2018.
MUTHOOT FINANCE: S&P Assigned 'BB/B' ICRs, Outlook Stable
---------------------------------------------------------
S&P Global Ratings said that it had assigned its 'BB' long-term and
'B' short-term issuer credit ratings to Muthoot Finance Ltd., an
India-based finance company. The outlook on the long-term rating is
stable.
The ratings on Muthoot are driven by the company's very strong
capital and earnings, with the risk-adjusted capital ratio at above
45%. Muthoot also has a strong market position in loans against
gold, although it is relatively small in the overall financial
sector in India. The company's assets and liabilities are well
matched. However, given the short-term nature of its borrowings,
Muthoot needs to continuously refinance its funding to meet its
lending needs.
Muthoot is exposed to economic risk in India, the company's
predominant market. S&P believes that Indian finance companies
(fincos) face greater operating risk than banks because they
usually have no access to central bank funding, and have less
onerous regulations--notwithstanding some regulations on capital
adequacy, asset quality, and asset-liability management. Gold
financing companies are subjected to additional regulations such as
loan-to-value (LTV) restrictions and higher capital requirements
for lending against gold. Several fincos in India have created
strong niches, domain expertise, and economies of scale to support
revenue stability and mitigate competitive pressure. S&P's starting
point for rating fincos in India is 'bb'.
S&P said, "The gold financing industry is susceptible to regulatory
risks such as imposition of interest-rate caps. We have seen LTV
restrictions imposed on the business in the past. Growth could also
be impacted if gold prices decline sharply. In our base case, we do
not factor these risks in the rating. However, we see these as
event risks."
Muthoot is a market leader in the niche area of loans with gold
jewelry as collateral. It competes against money lenders and banks,
and has been able to garner a large market share of about 18% in
the organized segment. The business is profitable, and the company
has one of the highest returns on average assets (ROAAs) among
Indian finco peers.
Muthoot has strong brand recognition and an established record in
gold-backed financing. It has a large distribution network
comprising 4,480 branches, one of the highest among the Indian
fincos. As Muthoot is a retail-focused company, its loan book is
quite granular, with an average ticket size for gold loans of about
Indian rupee (INR) 42,000.
However, Muthoot is a relatively small finance company with a
market share of just 1.4% in the fragmented Indian nonbanking
financial institution (NBFI) sector. The company has some
geographic concentration, with southern India contributing about
49% of the company's assets under management. While the
concentration has reduced from 75% in fiscal 2010 (year ended March
31, 2010), it remains high, making the company sensitive to the
economic, social, and political situation in the region.
Muthoot was fined INR26.9 million (0.13% of fiscal 2019 earnings)
under the Prevention of Money Laundering Act, 2002 (PMLA). The
company was granting loans against gold in cash but had not
reported cash transaction reports (for amounts above INR1 million)
between April 1, 2006, and Nov. 30, 2010, as required under the
Act. The company has filed an appeal and requested for condonation
of the mistake, stating it was unintentional and inadvertent, and
had occurred because PMLA was a new legislation and there was lack
of proper understanding regarding the type of transactions required
to be reported. The matter is pending with the Appellate Tribunal
under PMLA.
S&P said, "We view Muthoot's capital and earnings as very strong,
given the company's low leverage and very good profitability. We
expect Muthoot's pre-diversification risk-adjusted capital (RAC)
ratio to remain very strong in the next couple of years, at
45%-50%, compared with 46% as of March 31, 2019. Our RAC model
incorporates the benefits of gold as collateral (after applying a
"haircut" of 30%). However, the central bank does not give any such
benefit. Our RAC ratio is much higher than the regulatory tier-1
capital ratio for Muthoot of 25.61% as of March 31, 2019. If we
were to remove the benefit of gold collateral, the RAC ratio would
be 15.9%.
"We expect Muthoot's revenue growth to pick up and normalize at
15%-22% annually in the next few years. We expect the company's
good profitability and high earnings retention to support growth,
leading to further improvement in RAC. We anticipate Muthoot will
continue to pay dividends in line with the payouts in the past."
Muthoot's profitability is among the highest of domestic peers, and
is strong compared with international peers'. The company's
superior margins and low credit costs underpin its high earnings.
Its ROAA has improved sharply in the last couple of years to 5.5%
in fiscal 2019, from the low of 2.6% in fiscal 2015, mainly due to
improvement in margins. Muthoot has low earnings diversity, with a
negligible proportion of fee income. S&P expects its ROAA to
decline during the next 12-18 months to around 4.5% due to a change
in asset mix and a resultant increase in credit costs, and its
expectation of lower margins.
Muthoot's gold loans is collateral based (rather than cash flow
based) lending to relatively low to middle income sections of the
society that need money quickly or for a short period and are
prepared to pay high rates of interest. Gold loan forms the major
portion of is loans, at about 89% of total loans; housing finance
and micro finance loans are another about 5% each. The majority of
banks and other fincos assess customer cash flow in addition to the
collateral; but in this kind of business (i.e. gold loan),
underwriting is primarily based on collateral value alone. Muthoot
like other lenders in the segment also does mainly collateral-based
lending, based on the appraisal of jewelry.
While the business has lower credit risks than other finance
businesses, it has higher operational and market risk, in S&P's
view. The collateral is subject to high price volatility. The
company also faces heightened operational risk, which arises from
risk of theft/burglary of cash or pledged gold, staff frauds,
spurious/low quality gold, civil cases etc.
Mitigating these risks is the company's operation at a
loan-to-value ratio of about 70%, which is lower than the central
bank's 75% cap. Muthoot therefore has some buffer to absorb price
fluctuations. In addition, the company haircuts the value of jewels
and discounts the value of stones to ensure the value is primarily
of the gold. Muthoot also has vast experience in operating in this
segment, and has been able to manage its operations risk well, as
seen in its very low loan loss experience. Only few other domestic
finance companies such as HDFC Ltd. have lower credit costs; HDFC
operates in the low-risk housing finance business.
Given the highly liquid nature of gold, Muthoot has been able to
auction the commodity and typically recover the principal amount
for its nonperforming book, although only a small percentage of
loans need auctioning.
The company is diversifying into other business segments, namely
microfinance, housing finance, and vehicle loans. All these
business are relatively new and yet to season. S&P does expect
credit costs to increase as the company diversifies its asset mix.
However, the consolidated credit cost should remain low when
compared to peers', given that the gold loan business will remain
the major proportion of the company's business. S&P notes that
housing finance and vehicle loans are generally lower yielding and
may be a headwind to overall ROAA.
Muthoot's funding profile is reliant on short-term wholesale
funding. Loans from banks (largely working capital loans, which are
repayable on demand) form about 49% of the company's funding mix as
of March 31, 2019. This is supplemented by nonconvertible
debentures (listed and unlisted) at 30%, and commercial paper (CP)
at 18%. Given the company's asset base is largely of shorter tenor,
its short-term funding leads to generally matched assets and
liabilities.
However, Muthoot's reliance on short-term debt (i.e., working
capital lines, which are repayable on demand and CP) is high. This
debt forms about 64.4% of the total borrowing, which is high
compared with peers' and exposes the company to refinancing risk.
Moreover, as of March 2019, Muthoot has cash and bank balance and
unutilized lines of INR29.8 billion, which would meet only two
months' maturity. The company also has some reliance on mutual
funds, which account for five of its top 10 lenders; these funds
tend to have volatile finances at times of stress.
Muthoot's asset base is very liquid and is generally
self-liquidating in less than 12 months, reducing risks. That said,
given the short-term nature of its borrowings, the company needs to
continuously refinance its funding to meet the needs of its
incremental loans. Muthoot plans to increase the proportion of
long-term borrowing by relying more on retail bonds and
foreign-currency bonds, which could elongate the tenor of its
liabilities and reduce refinancing risk.
S&P said, "The stable outlook on Muthoot reflects our view that the
company will largely maintain its financial profile despite the
challenging environment over the next 12-18 months.
"We could raise the ratings on Muthoot if the company is able to
diversify its funding profile into more long-term and stable
sources. We view this as unlikely in the next one year.
"We could lower the ratings if Muthoot's credit costs increase
substantially, either due to a sharp deterioration in the company's
asset quality or if operational risks materialize. We view this as
unlikely in our base case."
N J EXPORTS: CRISIL Maintains 'B' Rating in Not Cooperating
-----------------------------------------------------------
CRISIL said the ratings on bank facilities of N J Exports (NJE)
continues to be 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with NJE 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 NJE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on NJE 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 NJE continues to be 'CRISIL B/Stable Issuer not
cooperating'.
NJE, a registered partnership firm established in 2014, is a
merchant exporter of Vannamei shrimps. Its registered office is in
Andhra Pradesh. Mr. K Natrajan and Mrs. Jona Sahaya Rani are the
partners of the firm.
NATIONAL (INDIA): ICRA Reaffirms D Rating on INR18.50cr Loan
------------------------------------------------------------
ICRA reaffirmed ratings on certain bank facilities of National
(India) Contractors & Engineers (NICE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund-
based Cash Credit 6.00 [ICRA]D; Reaffirmed
Long-term/Short-
term Non-fund-
based 18.50 [ICRA]D/[ICRA]D; Reaffirmed
Rationale
The rating reaffirmation considers the continued delays in
servicing debt obligations owing to the poor liquidity position and
its weak financial profile of NICE, characterised by volatile
revenues and stretched capitalisation and coverage indicators. The
rating also remains constrained by the execution risk for the
projects in hand, high customer concentration risk and intense
competition in the trading and construction businesses. Further,
ICRA notes that NICE is a partnership firm and any significant
withdrawals from the capital account may impact its own net worth
and capital structure.
Key rating drivers and their description
Credit strengths
Extensive experience of partners and track record of NICE in the
construction industry - NICE was incorporated in 1962 and engaged
in the business of construction of buildings (residential and
commercial), townships and universities. The firm's partners have
extensive experience of over a decade in the construction industry.
Over the past three decades, the firm has completed more than 100
projects involving civil construction for residential, industrial
and institutional projects for Government as well as private
sectors.
Credit challenges
Continued delays in debt servicing in recent past - The firm's
liquidity position continued to remain weak on account of its
stretched receivable position, which has resulted in continued
delays in debt servicing in the recent past.
Weak financial profile characterised by volatile revenues,
stretched capitalisation, coverage indicators and poor liquidity
position - NICE is a modest sized player in intensely competitive
trading and construction businesses. Its revenues have witnessed
considerable volatility in the last five fiscals depending upon the
progress of construction projects in hand. The firm's capital
structure remained leveraged with a gearing of 1.61 time, while its
debt coverage indicators remained stretched as reflected by
interest coverage of 1.70 times, TD/OPBDITA of 4.49 times and
NCA/TD of 9% as on March 31, 2019. NICE's liquidity position
remained poor as evidenced by consistently full utilisation of the
fundbased working capital limits during the last 12 months along
with a few instances of overdrawals in the recent past. The
firm also has sizeable debt repayments in the next three years,
which is like to keep the liquidity under pressure.
Execution risk for projects in hand - As on March 31, 2019, the
firm had an unexecuted order book of INR160.54 crore (3.82 times of
its OI in FY2019) of which 89% remained concentrated between the
top four projects, exposing NICE to high project concentration
risks. The firm also faces execution risk with respects to its
projects in hand, which may adversely impact its revenues.
High customer concentration risk - In the trading business, the
firm's key client, the Mumbai-based Orbit Aya Pvt Ltd., alone
contributed 38% of the total sales in FY2018 and 43% in FY2019. In
the construction business, most of the firm's orders come from the
Public Works Department (PWD), Maharashtra, which further enhances
the customer concentration risk. NICE's customer concentration risk
remained high with its top five customers driving ~59% of the total
sales in FY2018 and 65% in FY2019.
Intense competition in the trading and construction businesses -
The firm faces stiff competition from large and wellestablished
organisations as well as small unorganised players in both the
trading and construction businesses. This limits its pricing
flexibility and bargaining power with customers, thereby putting
pressure on its revenues and margins.
Liquidity position: Poor
The firm's liquidity is poor as evidenced by consistently full
utilisation of the fund-based working capital limits during the
last 12 months along with a few instances of overdrawals, and
devolvements in non-fund based limits (Letter of Credit) in recent
times. The firm's cash flow from operations, as well as free cash
flow remained negative in FY2019 due to reduced operating income
and higher incremental working capital requirements owing to
increased inventory and reduced creditors. The firm had a modest
liquid cash and bank balance of INR0.94 crore as on March 31, 2019.
The monthly utilisation of the fund-based working capital limits
averaged full at 100% of sanctioned limits during the last 12
months leaving no cushion to the liquidity position. The firm also
have sizeable long-term debt repayments of INR1.61 crore in FY2020,
INR1.69 crore in FY2021 and INR1.92 crore in FY2022 as compared to
its expected cash accruals.
Rating sensitivities
Positive triggers: Regularisation in debt servicing over a period
of three months shall trigger an upgrade revision in ratings.
Negative triggers: Not applicable.
NICE was set up in 1962 by Mr. Usmangani Khatri and is at present
managed by three partners, Mr. Faruk Khatri, Mr. Zuber Khatri and
Mr. Rizwan Khatri. The firm is involved in the construction of
buildings, factories, townships and universities, as well as in
the trading metals and primarily steel. The firm is based out of
Mumbai and executes construction projects primarily in Maharashtra
and Rajasthan. In FY2018, NICE reported a net profit of INR1.09
crore on an OI of INR57.50 crore, compared to a net profit of
INR1.35 crore on an OI of INR45.03 crore in the previous year. On a
provisional basis in FY2019, NICE reported an OI of INR42.04 crore
and a profit before tax of INR3.18 crore.
NYSE INFRASTRUCTURE: CRISIL Maintains D Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of NYSE Infrastructure
Private Limited (NYSE) continues to be 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 110 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with NYSE 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 NYSE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on NYSE 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 NYSE continues to be 'CRISIL D Issuer not
cooperating'.
NYSE was set up in 2001 as a special-purpose vehicle by Navayuga
Engineering Company Ltd and Soma Enterprises Ltd. The company
constructed a four-lane highway of around 17 kilometres on National
Highway 5, the Chennai-Kolkata section of the Golden Quadrilateral
project. It was a build, operate, and transfer project on an
annuity basis awarded by NHAI.
PALLORBUND TEA: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: M/s Pallorbund Tea Limited
3B, Lal Bazar Street, 2nd Floor
Kolkata 700001
West Bengal
Insolvency Commencement Date: September 26, 2019
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: March 24, 2020
Insolvency professional: Aditya Kumar Tibrewal
Interim Resolution
Professional: Aditya Kumar Tibrewal
7C, Kiran Shankar Roy Road
Hasting Chamber, Basement
Kolkata 700001
E-mail: adityatibre@gmail.com
cirp.ptl@gmail.com
Last date for
submission of claims: October 14, 2019
PERFECT ENGINEERING: ICRA Moves B- Rating to Not Cooperating
------------------------------------------------------------
ICRA has moved the long term and short-term ratings for the bank
facilities of Perfect Engineering Associates Private Limited
(PEAPL) to the 'Issuer Not Cooperating' category. The ratings are
now denoted as "[ICRA]B-(Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund- 7.00 [ICRA]B-(Stable) ISSUER NOT
Based Overdraft COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Long-term Non- 10.00 [ICRA]B-(Stable) ISSUER NOT
Fund based Bank COOPERATING; Rating moved
Guarantee to the 'Issuer Not
Cooperating' category
Short-term Non- 3.00 [ICRA]A4 ISSUER NOT
Fund based COOPERATING; Rating moved to
Letter of Credit the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Incorporated in 1972, PEAPL is based out of Mumbai, and is involved
in the repair and construction of water pipelines and water
reservoirs for various municipal corporations. The company
specialises in work involving cement mortar lining of various
diameter pipes, new pipe laying and construction of water storage
tanks for urban water distribution.
R.S. MOTORS PRIVATE: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: R.S. Motors Private Limited
Opp. Eklinggarh
Goverdhan Vilas Road
NH-8, Udaipur NH-8
Udaipur, Rajasthan
Insolvency Commencement Date: September 30, 2019
Court: National Company Law Tribunal, Jaipur Bench
Estimated date of closure of
insolvency resolution process: March 28, 2020
(180 days from commencement)
Insolvency professional: Sudhir Bhansali
Interim Resolution
Professional: Sudhir Bhansali
52, Sangram Colony
C-Scheme, Jaipur 302001
E-mail: sbhansalico@gmail.com
Last date for
submission of claims: October 14, 2019
RESURGERE MINES: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Resurgere Mines & Minerals India Ltd.
15, Morvi House
28/30, Goa Street
Ballard Estate
Mumbai 400038
Insolvency Commencement Date: October 1, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: March 28, 2020
Insolvency professional: CA Naren Sheth
Interim Resolution
Professional: CA Naren Sheth
1014-1015, Prasad Chamber
Tata Road No. 1, Opera House
Charni Road (East)
Mumbai 400004
Mobile: 09821133426
Tel.: 022 66322870
E-mail: mkindia58@gmail.com
rp.resurgere@gmail.com
nvsheth@mkindia.com
Last date for
submission of claims: October 14, 2019
RUBYKON MANUFACTURING: CRISIL Cuts INR13cr Loan Rating to D
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Rubykon
Manufacturing Company (RMC) to 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL B/Stable/CRISIL A4; Issuer Not
Cooperating' .There are recent instances of consistent delays in
servicing repayment obligations on term loan and cash credit
limit.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13 CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Foreign Letter 5.7 CRISIL D (ISSUER NOT
of Credit COOPERATING; Downgraded from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Letter of Credit .1 CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
Long Term Loan 6.7 CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with RMC for obtaining
information through letters and emails dated Feb 28, 2018, Aug 31,
2018, May 05, 2019 and May 31, 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 RMC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RMC is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Based on the last available information, CRISIL has downgraded its
ratings on the bank facilities of RMC to 'CRISIL D/CRISIL D Issuer
Not Cooperating' from 'CRISIL B/Stable/CRISIL A4; Issuer Not
Cooperating' .There are recent instances of consistent delays in
servicing repayment obligations on term loan and cash credit
limit.
Established in 2011 as a partnership firm by Mr. Ashok Mehta and
his wife Mrs. Bharti Mehta, RMC is engaged in manufacturing of 3
ply and 5 ply corrugated boxes and cardboard cartons widely ranging
in thickness, shapes and sizes. The firm has manufacturing plant
set up at Kala Amb, Himachal Pradesh.
S&S INDUSTRIES: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: M/s S&S Industries And Enterprises Limited
ArcotLadavaram Main Road Mangadu
ArcotTaluk, Vellore
Tamil Nadu 632503
Insolvency Commencement Date: September 30, 2019
Court: National Company Law Tribunal, Coimbatore Bench
Estimated date of closure of
insolvency resolution process: March 28, 2020
(180 days from commencement)
Insolvency professional: CA. Mahalingam Suresh Kumar
Interim Resolution
Professional: CA. Mahalingam Suresh Kumar
M/s SPP & Co, Chartered Accountants
No. 27/9, Nivedh Vikas
Pankaja Mill Road
Puliyakulam
Coimbatore 641045
E-mail: msureshkumar@icai.org
Last date for
submission of claims: October 14, 2019
SAMPAN TRADEX: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Sampan Tradex Private Limited
Shop no. 2542, Ground Floor
Gali No. 7, Beadonapura
Karol bagh, New Delhi
Central Delhi 110005
Insolvency Commencement Date: July 30, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: January 26, 2020
(180 days from commencement)
Insolvency professional: Mr. Pawan Kumar Goyal
Interim Resolution
Professional: Mr. Pawan Kumar Goyal
304, DR Chamber 12/56
D B Gupta Road, Karol Bagh
New Delhi 110005
E-mail: ca.pawangoyal@gmail.com
cirpstpl@gmail.com
Last date for
submission of claims: October 14, 2019
SARASWATI EDUCATION: ICRA Keeps D Rating in Not Cooperating
-----------------------------------------------------------
ICRA has continued to keep the rating for the bank facilities of
Saraswati Education Society Kharghar to the 'Issuer Not
Cooperating' category. The rating is now denoted as "[ICRA]D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 8.75 [ICRA]D ISSUER NOT COOPERATING;
Fund-based Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term- 41.25 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating continues to remain in
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
SESK is a public charitable trust, incorporated in the year 1997.
The trust began its operation in the field of education with
Saraswati College of Engineering in 2004 in Maharashtra. Since
then, the society has established and acquired various other
educational institutions such as ReVera Institute of Technology,
Kharghar and Dongarai Shikshan Sanstha, Kadepur. These institutes,
recognized and affiliated to concerned authorities, are spread
across two campuses in the state of Maharashtra.
SEABIRD SEAPLANE: Federal Bank Attaches Seaplane Over Default
-------------------------------------------------------------
The Hindu reports that Federal Bank, invoking provisions in the
Insolvency Code 2016, has taken possession of a sea plane by using
the services of an insolvency professional for recovery of a
defaulted loan.
According to the Hindu, a statement from the bank said that the
seaplane company owed more than INR6 crore to the bank and as the
provisions of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Securities Interest (SARFAESI) Act did
not envisage action on assets such as aircraft, the bank invoked
provisions of the Insolvency and Bankruptcy Code 2016 to recover
the loan dues.
Seabird Seaplane Pvt. Ltd. had obtained a loan of over INR4 crore
in 2014 from the bank, the report notes.
The Hindu relates that the craft was to be deployed for
transporting passengers between Kochi and Lakshadweep.
However, the company was unable to repay the loan and it was
declared an non-performing asset (NPA) in October 2016, said a
senior bank official. The company is now under liquidation, the
Hindu relays.
The Hindu says the seaplane was parked inside the Kochi
International Airport and was taken under custody by K.K. Jose,
insolvency professional, appointed by the National Company Law
Tribunal. The proceedings at CIAL was co-ordinated by a recovery
team of Federal Bank led by Babu K.A., senior vice president, and
Mohamed Sageer T.A., vice president. The bank is actively pursuing
recovery action especially against big ticket loan defaulters, the
statement said, the report adds.
SHREEM SPA: Insolvency Resolution Process Case Summary
------------------------------------------------------
Debtor: Shreem Spa & Resorts Limited
Solitaire Building, 3rd Floor
Opp. Bombay Garage, Shahibaug
Ahmedabad, GJ 380004
Insolvency Commencement Date: September 23, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: March 21, 2020
Insolvency professional: George Samuel
Interim Resolution
Professional: George Samuel
217, Ganesh Glory
Jagatpur, SG Highway
Ahmedabad 382481
E-mail: gsforgs@gmail.com
Last date for
submission of claims: October 14, 2019
SHRIRAM CEMENT: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Shriram Cement Limited
Registered office:
S.No. 47/P, Village: Hadad
Taluka: Danta
District: Banaskantha, Hadad
Gj 385110
Insolvency Commencement Date: September 20, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: March 18, 2020
Insolvency professional: Mr. Umesh Harjivandas Ved
Interim Resolution
Professional: Mr. Umesh Harjivandas Ved
304, Shoppers Plaza - V
Opp. Municipal Market
C G Road, Navranpura
Ahmedabad 380009
E-mail: umesh@umeshvedcs.com
Last date for
submission of claims: October 14, 2019
SRI RAM SPINNING: ICRA Keeps 'D' Rating in not Cooperating
----------------------------------------------------------
ICRA said the ratings for the INR28.71-crore bank facilities of SRI
RAM Spinning Mills Limited (SRSML) continue to remain under 'Issuer
Not Cooperating' category'. The ratings are denoted as "[ICRA]D/D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 9.00 [ICRA]D; ISSUER NOT COOPERATING;
Based/CC Continues to remain under the
'Issuer Not Cooperating'
Category
Long Term-Fund 6.21 [ICRA]D; ISSUER NOT COOPERATING;
Based TL Continues to remain under the
'Issuer Not Cooperating'
Category
Short Term-Non 0.27 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based Continues to remain under the
'Issuer Not Cooperating'
Category
Long Term/Short 13.23 [ICRA]D; ISSUER NOT COOPERATING;
Term-Unallocated Continues to remain under the
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Sri Ram Spinning Mills Limited (SSML), promoted by Sri Subhash
Chand Sancheti, was established in 1995 with an initial capacity of
6048 spindles. The company is a part of a textile group comprising
three companies, with the others involved in cotton trading and
yarn trading. SSML manufactures cotton yarn in the coarser and
medium count range, with average count ranging from 30's to 40's.
The company largely caters to the hosiery and warp markets of North
and West India, and also directly markets a portion of its produce
to corporates. SSML is operating with a capacity of 23,184
spindles.
V3S INFRATECH: ICRA Maintains 'D' Rating in Not Cooperating
-----------------------------------------------------------
ICRA said the ratings for the INR72.50 crore bank facilities of V3S
Infratech Limited (V3S) continues to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D/[ICRA]D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 32.50 [ICRA]D ISSUER NOT COOPERATING;
Rating continues to remain
under the 'Issuer Not
Cooperating' category
Non-Fund based 40.00 [ICRA]D ISSUER NOT COOPERATING;
Rating continues to remain
under the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
V3S Infratech Limited (V3S), earlier known as Gahoi Buildwell
Limited) was promoted in the year 2003 by Mr. Yogendra Chandra
Kurele. In FY 2007 and FY 2008, several promoter group companies
were amalgamated with V3S and in 2009-10, the name of the company
was changed from Gahoi Buildwell Limited to V3S Infratech Limited.
The company has been engaged in the development of
multiplexes-cum-malls and commercial space in Delhi. The completed
real estate projects of the company include – V3S mall, V3S East
Centre and North Delhi Mall. However, since February 2008 the
company has shifted its focus from real estate development to civil
construction mainly in residential, industrial and commercial
segments particularly for government agencies.
VIKAS FILAMENTS: ICRA Maintains B Rating in Not Cooperating
-----------------------------------------------------------
ICRA said the ratings for the INR13.67 crore bank facilities of
Vikas Filaments Private Limited (VFPL) continue to remain under
Issuer Not Cooperating category. The long-term rating is denoted as
[ICRA]B(Stable) ISSUER NOT COOPERATING with a Stable outlook, while
the short-term rating is denoted as [ICRA]A4 ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term, 5.85 [ICRA]B(Stable); ISSUER NOT
Fund based: COOPERATING; Rating continues
Cash Credit to remain in the 'Issuer Not
Cooperating' category
Long-term, 7.67 [ICRA]B(Stable); ISSUER NOT
Fund based: COOPERATING; Rating continues
Term Loan to remain in the 'Issuer Not
Cooperating' category
Short-term, 0.15 [ICRA]A4; ISSUER NOT
nonfund based COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Vikas Filaments Private Limited was incorporated in the year 1993
by Mr. Banshidhar Singhal as private limited company and is engaged
in manufacturing of textured yarn. In 2005, the texturing unit was
transferred to Vishal Polyfilms Private Limited, a group concern of
VFPL. Since 2005, the company was engaged in trading of Fully Drawn
Yarn (FDY) as a dealer of Nova Petrochemicals Limited, the same was
discontinued in FY 2014. Subsequently, the company set up a
knitting unit with an installed capacity of 900 MTPA which started
commercial production in February 2012. Thereafter, the company set
up a sizing unit with an installed capacity of 2400 MTPA which
started production in May 2013. Both manufacturing facilities are
based near Surat (Gujarat).
=================
I N D O N E S I A
=================
ALAM SUTERA: S&P Downgraded ICR to 'B-', Outlook Negative
---------------------------------------------------------
On Oct. 10, 2019, S&P Global Ratings lowered its long-term issuer
credit rating on PT Alam Sutera Realty Tbk. and the long-term issue
rating on the company's guaranteed senior unsecured notes to 'B-'
from 'B'.
The downgrade reflects S&P's expectations that Alam would have low
property sales and compressed interest-servicing capacity over the
next 12 months.
Alam achieved about Indonesian rupiah (IDR) 1.4 trillion in
marketing sales for the six months ended June 30, 2019, meeting
only about one-third of our full-year projection. S&P does not
expect a material pickup in sales in the third quarter because the
company has no significant new launches this year.
The shortfall in Alam's sales revenue is mainly due to limited
inflows from land sales to China Fortune Land Development Co. Ltd.
(CFLD). We had previously estimated inflows of about Indonesian
rupiah (IDR) 1.3 trillion per year.
S&P said, "We see elevated risk for Alam to consistently recognize
land sales to CFLD over the next two years. This is despite a
five-year land sale agreement between the two starting from 2017.
As of Sept. 30, 2019, CFLD owes Alam about IDR450 billion in cash
for land sales transacted in early 2018. Given the outstanding cash
payment and soft Indonesia property market, we see increasing
uncertainty that CFLD will consistently acquire more land from Alam
over the next two years.
"We believe Alam will face increasing earnings and cash flow
volatility due to uncertainty related to land sales to CFLD. In
addition, Alam may find it hard to make up the IDR1
trillion–IDR1.5 trillion shortfall in land sales through new
launches in a soft property market. Average property sales from
each of the company's new launches were IDR200 billion–IDR500
billion in the past two years.
"Our markedly lower property sales estimate through 2019 will
hamper Alam's recognized revenues, cash collections, and EBITDA. We
now project EBITDA to be about IDR1.2 trillion in 2019 and IDR1.5
trillion in 2020. These revised levels are 35%-45% less than our
original estimates."
Steady land sales to CFLD are critical for Alam to maintain its
operating performance and interest servicing capability because
CFLD contributes about one-third of total sales. Alam's EBITDA
interest coverage--which was about 1.5x for the six months ended
June 30, 2019--will stay below S&P's downgrade trigger of 2.0x over
the next 12 months if the land sales are not executed in a timely
manner.
S&P said, "We believe land sales are also important for Alam to
refinance its US$175 million notes due in April 2021. The company
predominately relies on the offshore fixed-income market for
capital raising and refinancing. This market is highly subject to
investor sentiment and confidence toward the company. We understand
that Alam is making efforts to refinance the notes. However, the
success of a notes placement will increasingly depend on favorable
market conditions as the maturity draws closer. We also believe
that timely refinancing of the 2021 notes is critical for Alam to
refinance its 2022 notes, which are callable in 2020.
"Meanwhile, we believe Alam has sufficient liquidity to meet its
interest obligations for the next 12 months. This is because the
company has retained about US$40 million from the US$125 million
note retap exercise in May 2019, increasing its total cash balance
to IDR1.1 trillion as of June 30, 2019, compared to IDR656 billion
in Dec. 31, 2018. We expect Alam to adjust its capital spending and
slow down its land acquisitions in light of the subdued market to
reserve its cash flow. As of June 30, 2019, the company has only
incurred about IDR108 billion capital spending.
"The negative outlook reflects our view of Alam's uncertain
operating performance, coupled with the company's sizable and
mounting refinancing requirements in the next three to six months.
"We could lower the rating in the next three to six months if Alam
fails to refinance a majority of its debt, including its notes due
in April 2021, with long-dated debt.
"We would revise the outlook to stable if Alam's capital structure
looks more sustainable. This could materialize if the company
pushes sizable debt maturities well beyond 2021."
A revision of the outlook to stable would also be contingent on
Alam demonstrating steady property sales and cash collection, being
prudent in capital spending, maintaining a sound liquidity buffer,
and keeping its EBITDA interest coverage above 1.5x.
BUANA LINTAS: Fitch Withdraws B+(EXP) Rating on New US$ Sr. Notes
-----------------------------------------------------------------
Fitch Ratings has withdrawn the 'B+(EXP)' expected rating with a
Recovery Rating of 'RR4' assigned to Indonesia-based PT Buana
Lintas Lautan Tbk's proposed US dollar senior unsecured notes.
Fitch is withdrawing the expected rating as BULL's proposed note
issuance is no longer expected to convert to final ratings as the
company has not proceeded with the note issue within the previously
envisaged timeline. The expected rating on the proposed notes was
assigned on May 13, 2019.
KEY RATING DRIVERS
The notes were to be issued by BULL's wholly owned subsidiary BULL
Maritime Capital Pte. Ltd. and guaranteed by BULL and its operating
subsidiaries representing more than 90% of consolidated EBITDA. The
proceeds were intended to be used mainly for refinancing BULL's
existing debt and funding additional capex.
=========
J A P A N
=========
SEVEN & I HOLDINGS: Plans to Cut 3,000 Jobs, Shut Stores
--------------------------------------------------------
Bloomberg News reports that Seven & i Holdings Co.'s stock rose the
most in more than two years after the Japanese retailer said it
will close 1,000 unprofitable 7-Elevens and eliminate 3,000 jobs
from its other units as it continues a structural reform.
According to Bloomberg, the convenience chain said it will
implement new policies for its franchisees, such as reducing
monthly fees. Additionally, it will close five Seibu and Sogo
department stores, and is considering shuttering 33 Ito-Yokado
general-merchandise shops.
The company's 7-Eleven Japan business will take a JPY10 billion
($93 million) charge due to the new incentives for the franchisees,
Chief Executive Officer Ryuichi Isaka said in Tokyo while
announcing the company's second-quarter results, Bloomberg relays.
Seven & i said a new mid-term plan will be announced next April.
According to Bloomberg, Seven & i, the largest convenience store
operator in Japan, has been pressured in a saturated domestic
market, where growth has been limited to taking share from
competitors. It's also been under fire in the past year for
enforcing a 24-hour operation on its franchisees amid a labor
crunch in Japan. It is now testing stores with reduced hours.
In early Tokyo trading on Oct. 4, Seven & i shares rose as much as
6.3%, the biggest intraday gain since January 2017. The stock has
been recovering in the past month and a half, after tumbling more
than 20% this year through August.
Bloomberg relates that JP Morgan analyst Dairo Murata said the
7-Eleven charge was a surprise, but in the long run, it could bear
some fruit. "They'll have their new mid-term plan announcement next
April, so this structural reform is probably an effort to be able
to grow earnings for that period," the report quotes Mr. Murata as
saying.
Bloomberg says the staff reductions--to be taken over the next
three years--will apply to Ito-Yokado, where 1,700 positions will
be cut, and Sogo and Seibu, which will see 1,300 job losses. Those
stores have dragged on the company's more profitable convenience
store operation, Bloomberg notes. Although known for its 7-Elevens
that dot Japan and the globe, the company's other operations span
multiple business areas, from Denny's Japan restaurants to its own
bank.
While Seven & i said it is examining the impact of the measures on
earnings, it kept its operating profit forecast for the current
fiscal year the same at JPY420 billion, in line with estimates. The
company said it will "promptly make an announcement should there be
any impact on financial results," Bloomberg relays.
In recent months, Seven & i has also been embroiled in negative
publicity in Japan as its digital payment system 7 Pay was hacked
and money from customers taken within days of its launch in July.
The company shut down the service last month. The company said on
Oct. 10 that Isaka and two other executives will take a salary
reduction for three months. Additionally, the executive in charge
of the payment system will retire, adds Bloomberg.
===============
M A L A Y S I A
===============
SUMATEC RESOURCES: Rakushechnoye Oilfield Deal Terminated
---------------------------------------------------------
Tan Xue Ying at The Edge Financial Daily reports that Sumatec
Resources Bhd has received a notice from CaspiOilGas LLP (COG),
owned by its executive vice-chairman Tan Sri Halim Saad,
terminating a joint investment agreement (JIA) for the development
and extraction of hydrocarbon in the Rakushechnoye oilfield in
Kazakhstan.
Sumatec entered into the agreement on March 8, 2012 with Markmore
Energy (Labuan) Ltd and COG for the proposed project, the report
notes.
The Edge says COG cited constraints faced under Sumatec's current
financial and legal predicaments as a reason for the termination.
"[The constraints have] impacted Sumatec's wholly-owned subsidiary
Sumatec Oil And Gas LLP's (SOG) ability to comply with COG's
obligations to carry out appropriate investment or work programmes
and provide the necessary funding for the petroleum operation under
the JIA," COG told Sumatec in the termination notice, the report
relays.
The Edge relates that in a filing with Bursa Malaysia on Oct. 7,
Sumatec said SOG received the notice from COG terminating the JIA
and novation agreement effective Oct. 17.
Nevertheless, COG has requested SOG to confirm whether the latter
would still be able to continue operating under the JIA, and to
provide assurance whether Sumatec would be able to regularise its
financial position and set aside the winding-up petitions by its
legacy shipping creditors.
The Edge adds that COG has also requested SOG to provide an
appropriate remedy to resolve its deficiency under the JIA and
offer a credible plan on how to ensure the financing of petroleum
operation at the Rakushechnoye field can continue smoothly in light
of Sumatec's existing PN17 status.
Under the JIA, SOG was to carry out all operations related to the
production of hydrocarbon from the oilfield for COG, as well as to
study, appraise, develop and produce the relevant petroleum
reservoirs of the oilfield. It was to complete all operations to
develop the oilfield by Aug 25, 2025.
"The board of directors, after deliberating the termination notice,
has resolved to seek the indulgence of COG from terminating the JIA
and novation agreement as the board is finalising a plan to
regularise the PN17 status and remedy the winding-up petitions,"
Sumatec, as cited by the Edge, said.
According to the report, Sumatec added that the plan is expected to
involve raising funds involving a rights issue to raise up to
MYR100 million; a proposed participation by the company to build a
gas processing facility; and a settlement arrangement with Sumatec
Group's creditors involving a settlement amount of 15 sen in
respect of every RM1 owed to the creditors.
"The company will make the necessary announcement on the details
and further development of the matters in accordance with Bursa
Securities' Main Market listing requirements in due course," said
Sumatec.
About Sumatec Resources
Sumatec Resources Berhad offers services to the oil and natural gas
industry. The Company offers engineering and construction services,
offers marine transport services of oil, provides onshore drilling
rigs and related equipment, stores oil, and explores and develops
marginal oil fields. Sumatec also builds biomass fueled power
plants, and explores and mines for metals.
Sumatec Resources Bhd has been admitted into the Practice Note 17
(PN17) category after its external auditors Grant Thornton
Malaysia's disclaimer opinion on its financial statements ended
December 31, 2017. The auditors said Sumatec's ability to continue
as going concern is dependent on a series of corporate exercises
including a proposed acquisition of Markmore Energy (Labuan) Ltd
(MELL) from its controlling stakeholder Tan Sri Halim Saad.
=====================
S O U T H K O R E A
=====================
LIME ASSET: Halts Investor Withdrawals Amid Probe
-------------------------------------------------
Heejin Kim at Bloomberg News reports that one of South Korea's
largest hedge funds suspended withdrawals from some funds, saying
the firm has been unable to liquidate assets fast enough to meet
demands from investors for their money back.
Lime Asset Management Co., which runs $4 billion of assets, froze
funds worth KRW620 billion ($520 million), Won Jong-Jun, chief
executive officer at the Seoul-based firm, said by phone, Bloomberg
relays. The suspensions affect funds that invest in assets that
lack liquidity, not those buying publicly-listed stocks or bonds,
Won said.
"We made this decision through consultations with regulators in
order to minimize the losses of investors," Bloomberg quotes Won as
saying. "Due to several issues surrounding the firm recently, some
investors wanted withdrawals from our funds and we couldn't
liquidate them as fast as they want."
Bloomberg says the rise in redemption requests came after local
media reported on a Korean regulatory probe into the company's
investments in convertible bonds.
Sales of convertibles, which pay low coupons and let investors swap
the securities for stock, have surged in Korea amid demand from
homegrown hedge funds, Bloomberg notes. Investments in domestic
convertibles--often sold by small- and medium-sized firms without
credit ratings--were also encouraged by the Korean government,
which wanted to nurture the country's young companies amid a
flagging economy.
Bloomberg says South Korea's small-cap Kosdaq market is down 6%
this year, making it less likely that hedge funds can book a profit
from converting bonds into underlying shares.
"Korea's convertible bond market is still vulnerable--technically
when investors rush for withdrawals, fund managers should sell the
bonds to return cash to investors," Bloomberg quotes Kim Pil-kyu,
senior research fellow at Korea Capital Markets Institute, as
saying. "But that is not that easy in the private market, which
lacks liquidity."
=============
V I E T N A M
=============
MONG DUONG: Moody's Reviews Ba3 USD Sr. Sec. Notes for Downgrade
----------------------------------------------------------------
Moody's Investors Service placed the Ba3 rating for Mong Duong
Finance Holdings BV's USD senior secured notes on review for
downgrade.
This rating action follows Moody's decision to place the Ba3 local
and foreign currency issuer and senior unsecured ratings of the
Government of Vietnam under review for downgrade on October 9,
2019.
Mong Duong Finance is a finance entity, whose credit profile is
closely linked to AES-VCM Mong Duong Power Company Limited, because
of several structural features.
MDP owns coal-fired power plants in Vietnam and operates with the
assurance that the government will make reliable and timely
payments to MDP, if and when required, under the Government
Guarantee and Undertaking Agreement and the Build Operate Transfer
contract.
RATINGS RATIONALE
"The rating action reflects Moody's view that the rating on the
notes is linked to Vietnam sovereign's rating, given that the
government's commitment to MDP under the GGU and the BOT contract
is a key driver for MDP's credit quality," says Mic Kang, a Moody's
Vice President and Senior Credit Officer.
The government's commitment to MDP under the GGU and the BOT
contract supports the predictability of the company's operating
cash flow, while mitigating MDP's risk exposure to concentration in
the state-owned Vietnam Electricity, the single offtaker, and
Vietnam National Coal-Mineral Industries Group (Vinacomin), the
sole coal supplier.
The government guarantees the performance of all payment
obligations and all financial commitments of Vietnam Electricity
and Vinacomin, and compensates MDP for any operational difficulties
stemming from a failure of coal supply by Vinacomin, under the GGU
and the BOT contract.
The rating of the notes will therefore continue to be constrained
by Vietnam's sovereign rating, as well as MDP's concentration in a
single offtaker and a single coal supplier, and MDP's short
operational track record of about four years.
By contrast, the rating on the notes continues to benefit from the
major sponsors' — AES Corporation (Ba1 stable) and POSCO Energy,
a subsidiary of POSCO (Baa1 stable) — strong commitment and
expertise, which will likely continue to support MDP's operating
performance.
Moody's base case is that MDP will recognize average debt service
coverage ratios of 1.4x-1.5x during the tenor of the notes. Such a
situation will support MDP's credit quality.
The review will consider the outcome of the sovereign rating
review.
The Ba3 rating could be confirmed, if (1) the review for downgrade
on Vietnam's sovereign rating is removed; and (2) MDP maintains its
solid operations and financial leverage, within Moody's base case
expectations.
Moody's could downgrade the rating if (1) Moody's downgrades
Vietnam's sovereign; or (2) MDP's debt service coverage ratio falls
below 1.1x during the amortization period.
In terms of environmental, social and governance factors, MDP's
coal-fired power project is exposed to carbon transition risk and
tightening air pollution regulations. Nevertheless, MDP's exposure
to these environmental risks will not increase materially, as long
as the government compensates for most incremental costs resulting
from unfavorable regulatory changes, including environmental laws
and regulations, through direct payments or adjustments of the
tariff structure under the BOT contract.
MDP's exposure to social risk mainly stemming from health and
safety requirements is mitigated by the sponsors' strong
commitments to MDP, and by MDP's insurance coverage, which
encompasses property damage, business interruptions, public and
product liability and employer's liability.
MDP's adoption of an aggressive financial policy is unlikely, given
the sponsors' strong commitments and project finance features under
the USD notes and project loans.
The principal methodology used in this rating was Power Generation
Projects published in June 2018.
Mong Duong Finance Holdings BV is the issuer of the proposed USD
notes. The entity is indirectly owned by AES Corporation and China
Investment Corporation. It will be owned by the same shareholders
as AES-VCM Mong Duong Power Company Limited (MDP) and in the same
proportional shareholding, if POSCO Energy becomes a shareholder of
Mong Duong Finance Holdings BV.
MDP is a limited liability joint venture that owns and operates two
sub-critical coal fired power plants with a total capacity of 1,120
megawatts. The plants are located around 220 kilometers east of
Hanoi (50 km north-east of Ha Long City in Quang Ninh Province).
MDP is owned by AES Mong Duong Holdings B.V. (51%) --
a subsidiary of AES Corporation (Ba1 stable) --
PSC Energy Global Co., Ltd (30%) -- a subsidiary of POSCO Energy,
and which is in turn owned by POSCO (Baa1 stable) -- and Stable
Investment Corporation (19%), which is owned by China Investment
Corporation, a sovereign wealth fund of the Government of China (A1
stable).
SOUTHEAST ASIA: Moody's Assigns B1 Ratings, On Review for Downgrade
-------------------------------------------------------------------
Moody's Investors Service assigned the following first-time ratings
and assessments to Southeast Asia Joint Stock Commercial Bank, a
bank based in Vietnam (Ba3 review for downgrade):
1. Long-term and short-term local and foreign currency deposit
ratings of B1, Rating Under Review/NP
2. Long-term and short-term local and foreign currency issuer
ratings of B1, Rating Under Review/NP
3. Long-term and short-term local and foreign currency
counterparty risk ratings of B1/NP
4. Baseline credit assessment (BCA) and adjusted BCA of b2
5. Long-term and short-term counterparty risk assessments of
B1(cr)/NP(cr)
The bank's long-term issuer and deposit ratings are on review for
downgrade, following Moody's placement of Vietnam's Ba3 sovereign
rating under review for downgrade on October 9, 2019.
The review on SeABank is purely driven by sovereign considerations,
and does not reflect any weakening of SeABank's standalone
financial profile.
RATINGS RATIONALE
The B1 long-term ratings assigned to SeABank are one notch higher
than its b2 BCA because of Moody's expectation of a moderate
probability of support from the Government of Vietnam, in times of
need.
In turn, the b2 BCA reflects the bank's modest solvency and
funding, and good liquidity.
While asset quality is gradually improving, the bank has an
elevated amount of legacy problematic credit exposures, such as
non-performing loans (1.4% of gross loans), loans pending
resolution, bonds from the Vietnam Asset Management Company,
repossessed assets and special mention loans. In total, such
problematic exposures as calculated by Moody's accounted for 7% of
adjusted gross loans as of June 30, 2019, down from 10% as of
December 31, 2017. The bank expects a significant decrease in
problem assets in the latter part of 2019.
A risk for future loan quality is the bank's exposure to cyclical
industries such as construction, real estate, hospitality and
recreational activities, which together accounted for 29% of gross
loans at June 30, 2019. While the quality of recently booked loans
is good, cyclical industries are more sensitive to weaker economic
conditions, should they materialize in Vietnam.
The bank's capital is modest, with tangible common equity
accounting for 8.9% of adjusted risk-weighted assets as of June 30,
2019, based on pro-forma numbers that include the VND1.68 trillion
capital increase that was completed in September 2019. Moody's
expects that SeABank's capital ratio will decrease moderately in
the next 12-18 months, as RWA growth will likely outpace internal
capital generation. Shareholders are supportive in terms of new
capital: they have not extracted cash dividends for many years, and
injected another VND1.6 trillion in the bank's capital in 2018.
Profitability is improving, but from a low level. The bank posted
low annualized return on assets of 0.43% for the first six months
of 2019, higher than the 0.35% recorded for the whole of 2018.
Moody's expects that profitability will improve on the back of a
higher net interest margin (NIM) and lower credit provisions. The
widening in the bank's NIM will likely originate from its focus on
higher-yielding retail loans and loans to small and medium sized
enterprises, while provisions will moderate.
The bank's funding is modest, while liquidity is good. The bank has
a high reliance on market funds, which accounted for 32% of its
assets as of June 30, 2019. Market funds were mostly dominated by
short-term interbank borrowings. Liquid assets accounted for a
healthy 35% of assets as of the same date.
SeAbank is exposed to moderate governance risk, but this does not
affect its credit ratings because Moody's does not incorporate any
governance-related qualitative adjustments. Governance risk
originates from a narrow ultimate ownership of the bank and its
board structure, with one independent director out of seven.
Moody's expects that SeABank will receive public support should the
need arise, which results in a one-notch rating uplift from its b2
BCA. Support considerations are based on a history of regulatory
forbearance in Vietnam, and the provision of liquidity support to
troubled banks in the past.
REVIEW FOR DOWNGRADE
Vietnam's sovereign credit strength is an input in Moody's ratings
for SeABank, because the country's credit strength affects Moody's
assessment of the government's capacity to provide support to
SeABank in times of stress. As such, changes in the sovereign
creditworthiness can have a direct effect on the public support
uplift for SeABank's ratings.
Because of the sovereign review, Moody's has also placed SeABank's
ratings on review.
FACTORS THAT COULD LEAD TO AN UPGRADE
The long-term deposit and issuer ratings of SeABank currently have
limited upside because of the review for downgrade. However,
Moody's will confirm the bank's ratings with a stable outlook if
the Vietnam's sovereign rating is confirmed at Ba3 with a stable
outlook.
The bank's BCA could be upgraded if there is a substantial decrease
in problem assets and improved core profitability.
A diversification away from cyclical industries could also be
positive for the BCA. A higher Macro Profile for Vietnam could also
be positive for the BCA.
FACTORS THAT COULD LEAD TO A DOWNGRADE
If Vietnam's sovereign rating is downgraded, this will lead to the
removal of public support uplift above SeABank's BCA, translating
into lower issuer and deposit ratings for the bank.
Moreover, the ratings could be downgraded if the bank's core
capital weakens significantly, because of much higher business
growth and/or asset impairment. A lower Macro Profile could also be
negative for the credit ratings of SeABank.
The principal methodology used in these ratings was Banks published
in August 2018.
*********
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.
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