/raid1/www/Hosts/bankrupt/TCRAP_Public/191115.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
Friday, November 15, 2019, Vol. 22, No. 229
Headlines
A U S T R A L I A
AMAJAMA PTY: First Creditors' Meeting Set for Nov. 22
BUILD CLEAN: First Creditors' Meeting Set for Nov. 25
GLOBAL FREIGHT: First Creditors' Meeting Set for Nov. 25
GRAINCORP LIMITED: Swings to AUD113 Million Loss, Axes Dividend
GRANITE POWER: Second Creditors' Meeting Set for Nov. 22
INDEEP PLANNING: First Creditors' Meeting Set for Nov. 22
INH ADELAIDE: In Liquidation; Creditors' Meeting Set for Nov. 29
ONE OF A KIND: All Stores Except Tamworth to Close Soon
SIMPLY ITALIAN: Second Creditors' Meeting Set for Nov. 21
SPORTCOR: Creditor Seeks to Wind Up Smart Cricket Ball Company
TEG PTY LTD: S&P Assigns 'B' Preliminary ICR, Outlook Stable
THUNDER FINCO: Moody's Assigns B2 CFR, Outlook Stable
WAYLIE TREES: First Creditors' Meeting Set for Nov. 21
C H I N A
BINHAI INVESTMENT: Fitch Cuts LT IDR BB+, Alters Outlook to Stable
FANTASIA HOLDINGS: Fitch Rates $200MM Sr. Unsec. Notes 'B+'
XINYI CITY INVESTMENT: Fitch Rates Sr. Unsec. US$ Notes BB-(EXP)
H O N G K O N G
LIONBRIDGE CAPITAL: Fitch Affirms B+ LT IDR, Outlook Stable
I N D I A
ABHISHEK MOTORS: CRISIL Maintains 'D' Rating in Not Cooperating
ADITYA TIMBERS: CRISIL Assigns B+ Rating to INR5.0cr New Loan
ADVANSYS (INDIA): CRISIL Maintains D Rating in Not Cooperating
AEON MEDICAL: CRISIL Maintains 'B' Rating in Not Cooperating
ANANDAMELA ELECTRONICS: CRISIL Keeps B Rating in Not Cooperating
ANJAN INFRASTRUCTURE: CRISIL Cuts Rating on INR3cr Loan to B+
APOLLO CREATIONS: CRISIL Withdraws 'B+' Rating on INR15cr Loans
ARORA YARN: CRISIL Withdraws B+ Rating on INR5cr Cash Loan
AZURE POWER: Fitch Rates $350.1M Sr. Notes Final BB, Outlook Stable
BINAYAK HI-TECH: CRISIL Withdraws 'B' Rating on INR8cr Loan
COSMO GRANITES: CRISIL Lowers Rating on INR30cr Loan to 'B'
ESSEL FINANCE: CRISIL Lowers Rating on INR141.5cr Loan to 'D'
INDIRA ENTERPRISES: CRISIL Migrates B+ Rating to Not Cooperating
INNOPUS SOFTWARE: CRISIL Migrates B Rating to Not Cooperating
MACO PRIVATE: CRISIL Cuts Rating on INR6.0cr Loan to B-
MANAF P.B.: CRISIL Migrates 'D' Rating to Not Cooperating
NIRMITEE ROBOTICS: CRISIL Assigns B+ Rating to INR10cr LT Loan
OMAR INTERNATIONAL: CRISIL Migrates B+ Rating to Not Cooperating
PANSURIYA IMPEX: CRISIL Lowers Rating on INR127.66cr Loan to D
PARANJAPE SCHEMES: CRISIL Lowers Rating on INR8cr Loan to 'B'
PRIYANJALI ENTERPRISES: CRISIL Moves B Rating to Not Cooperating
RELIANCE COMMUNICATIONS: CoC Extends Asset Bid Deadline to Nov. 22
SAM INDUSTRIAL: CRISIL Lowers Rating on INR7.5cr Cash Loan to D
SICAGEN INDIA: CRISIL Withdraws B+ Rating on INR37cr Loan
SIMPLEX ENGINEERS: CRISIL Hikes Rating on INR.5cr Loan to B-
VIKAS ROAD: CRISIL Lowers Rating on INR22cr Cash Loan to 'B'
VR EARTH: CRISIL Lowers Rating on INR3cr Loan to 'D'
ZAIBUNCO INDUSTRIES: CRISIL Hikes Rating on INR23cr Loan to B+
J A P A N
JAPAN DISPLAY: Posts JPY108.67BB Net Loss in H1 Ended Sept. 30
N E W Z E A L A N D
TAMARIND TARANAKI: Placed Under Voluntary Administration
S I N G A P O R E
TRIYARDS HOLDINGS: Gets Summons to be Placed under JM
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A U S T R A L I A
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AMAJAMA PTY: First Creditors' Meeting Set for Nov. 22
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Amajama Pty
Ltd, trading as Cleveland Cleaning Supplies, will be held on Nov.
22, 2019, at 10:00 a.m. at the offices of Hall Chadwick Chartered
Accountants, Level 40, at 2 Park Street, in Sydney, NSW.
Brent Kijurina of Hall Chadwick was appointed as administrator of
Amajama Pty on Nov. 12, 2019.
BUILD CLEAN: First Creditors' Meeting Set for Nov. 25
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Build Clean
Site Solutions Pty Ltd will be held on Nov. 25, 2019, at 11:00 a.m.
at the offices of Deloitte Financial Advisory Pty Ltd, Eclipse
Tower, Level 19, at 60 Station Street, in Parramatta, NSW.
David Ian Mansfield and Neil Robert Cussen of Deloitte Financial
Advisor were appointed as administrators of Build Clean on Nov. 13,
2019.
GLOBAL FREIGHT: First Creditors' Meeting Set for Nov. 25
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Global
Freight & Logistics (Aust) Pty Ltd will be held on Nov. 25, 2019,
at 11:00 a.m. at Level 17, 200 Queen Street, in Melbourne,
Victoria.
Michael Carrafa and Fabian Kane Micheletto of SV Partners were
appointed as administrators of Global Freight on Nov. 13, 2019.
GRAINCORP LIMITED: Swings to AUD113 Million Loss, Axes Dividend
---------------------------------------------------------------
Darren Gray at The Sydney Morning Herald reports that the
competition watchdog's looming decision on whether it will allow a
AUD350 million sale of part of GrainCorp Limited has taken on extra
significance after the company plunged to a AUD113 million loss
thanks to one of the "worst droughts on record".
SMH says GrainCorp became the latest ASX-listed agribusiness to
reveal the punishing effects of drought, confirming the drought had
a AUD114 million adverse impact on its 2019 full year earnings
before interest, tax, depreciation and amortisation (EBITDA).
The bulk grain handler and diversified agribusiness was forced to
axe its final dividend; last year it paid a 16 cents final
dividend, the report notes.
According to the report, GrainCorp is expecting a decision by the
Australian Competition and Consumer Commission (ACCC) on November
15 on its proposed deal to sell its bulk liquids terminal business
for AUD350 million.
SMH relates that Morgans analyst Belinda Moore said GrainCorp had a
stretched balance sheet and today, Nov. 15 was looming as a big
day.
"All eyes are on tomorrow and the ACCC's decision," the report
quotes Ms. Moore as saying. "They desperately need those funds to
restore the balance sheet . . . GrainCorp clearly needs the AUD350
million from selling those terminals to pay down debt and have
gearing ratios much more conservative than they currently are."
"After three years of severe east coast drought conditions, its
balance sheet is now stretched," she added, notes the report.
GrainCorp recorded underlying EBITDA of AUD69 million, well below
last year's AUD269 million, SMH discloses. In addition to drought
the company said "trade disruptions", including the impact of
China's decision to undertake an anti-dumping investigation into
barley imports from Australia, and the US-China trade war had a
AUD65 million adverse impact on its EBITDA, SMH relates.
In an interview with The Age and The Sydney Morning Herald,
GrainCorp chief executive Mark Palmquist said the drought had cut
crop production, with the company's grain receivals and exports
falling in response, the report relays. "It [the drought] is truly
catastrophic for most areas of grain production in east coast
Australia," he said.
SMH adds that the company shipped more than 2 million tonnes of
grain from other states, including Western Australia, to meet the
demand for grain on the east coast, he said.
SMH relates that the amount of grain received by the company in the
2019 financial year more than halved to 3.1 million tonnes, while
exports slumped to just 300,000 tonnes, down from 2.7 million
tonnes.
The company also warned the current grain harvest in the eastern
states would be significantly below average, the report adds.
According to SMH, GrainCorp is pressing ahead with plans to demerge
its malt business from its grain operations, a move that will form
two separate ASX-listed agribusinesses. The company said the scheme
booklet about the demerger would be sent to shareholders in the
first quarter of 2020, adds SMH.
Graincorp Operations Ltd. provides agricultural services. The
Company buys, markets, sells, stores, and transports grain and
related agricultural products such as wheat, barley, oats, sorghum,
and canola. Graincorp Operations serves its products
internationally.
GRANITE POWER: Second Creditors' Meeting Set for Nov. 22
--------------------------------------------------------
A second meeting of creditors in the proceedings of Granite Power
Limited has been set for Nov. 22, 2019, at 4:00 p.m. at the offices
of Pitcher Partners NSW, Level 16, at Tower 2 Darling Park 201
Sussex Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Nov. 21, 2019, at 4:00 p.m.
Bryan Kevin Hughes and Daniel Johannes Bredenkamp of Pitcher
Partners were appointed as administrators of Granite Power on Oct.
18, 2019.
INDEEP PLANNING: First Creditors' Meeting Set for Nov. 22
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Indeep
Planning Pty Ltd will be held on Nov. 22, 2019, at 11:00 a.m. at
the offices of Smith Hancock Chartered Accountants, at Level 4, at
88 Phillip Street, in Parramatta, NSW.
Michael John Morris Smith of Smith Hancock was appointed as
administrator of Indeep Planning on
Nov. 13, 2019.
INH ADELAIDE: In Liquidation; Creditors' Meeting Set for Nov. 29
----------------------------------------------------------------
Timothy Clifton of Clifton Hall was appointed as Liquidator of INH
Adelaide South Pty Ltd on Nov. 11, 2019.
A meeting of creditors will be held on Nov. 29, 2019 at 10:00 a.m.
at Clifton Hall, Level 3, at 431 King William Street, in Adelaide,
South Australia.
ONE OF A KIND: All Stores Except Tamworth to Close Soon
-------------------------------------------------------
Jessica Worboys at Namoi Valley Independent reports that All One of
a Kind stores, with the exception of Tamworth, will soon close.
According to the report, the charity association appointed an
administrator in early October because of concerns that "cash
inflows [weren't] sufficient to cover future outflows".
Namoi Valley Independent relates that administrator Andrew Barnden,
of Sydney's Rodgers Reidy, said creditors and members of the
association's committee me on Nov. 14 to discuss the future.
"There has been a proposal put forward by current and former
members for a deed of company arrangement proposal," the report
quotes Mr. Barnden as saying. "If accepted by creditors it will
see one of the association's buildings in Tamworth sold and then
leased back and those proceeds of the sale from the property will
be used to pay creditors including staff pays in full through the
normal process."
Namoi Valley Independent adds that Mr. Barnden said trouble first
began when the chief executive officer and the operations manager
took time off for worker's compensation.
"Both went on workers compensation around the same time in around
June and . . . that has resulted in the association not having the
chief executive officer to run the business as efficiently as it
should," he said, notes the report. "Several staff raised concerns
as to the trading viability with the committee members and, at that
stage, they were comfortable but as time went on the drought has
also affected the quality of donations and turnover through the
shops and people do not come through the town as often."
Staff will lose their jobs, but the exact date of the closure is so
far "unknown" to the administrator, the report says.
"Any employees that will lose their job will be entitled to . . .
redundancy priority in accordance of the Corporations Act and that
includes superannuation," Mr. Barnden, as cited by Namoi Valley
Independent, said.
One of a Kind stores include Gunnedah, Tamworth, Narrabri, Armidale
and Toowoomba.
SIMPLY ITALIAN: Second Creditors' Meeting Set for Nov. 21
---------------------------------------------------------
A second meeting of creditors in the proceedings of Simply Italian
Cairns Pty Ltd has been set for Nov. 21, 2019, at 10:00 a.m. at the
offices of BDO (NTH QLD), Level 1, 15 Lake Street, Cairns in the
State of 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 Nov. 20, 2019, at 4:00 p.m.
Todd William Kelly of BDO (NTH QLD) was appointed as administrator
of Simply Italian on Oct. 11, 2019.
SPORTCOR: Creditor Seeks to Wind Up Smart Cricket Ball Company
--------------------------------------------------------------
Colin Kruger at The Sydney Morning Herald reports that the company
behind Australia's pioneering smart cricket ball technology,
SportCor, faces a financial stumping by its ASX-listed investor and
creditor QMS Media.
QMS, which was the subject of a recent AUD420 million cash takeover
bid, applied to wind up SportCor last month over a AUD329,000 debt
which was due October last year, SMH relates citing documents
lodged with the Supreme Court of Queensland.
SMH relates that former Test cricketer and SportCor chairman
Michael Kasprowicz insisted the company no longer faces liquidation
at the hands of QMS after reaching an agreement on their financial
differences.
"The issue with QMS has been resolved and QMS' solicitors have
signed an order dismissing the application," Kasprowicz told The
Sydney Morning Herald and The Age. "They've come back and agreed
there is no case to answer whatsoever."
SportCor has filed a notice of appearance and the matter was
scheduled to go back before the courts on November 14.
SportCor has been touting its smart cricket balls which have been
developed with local cricket ball maker Kookaburra but has yet to
find a competition to use the new ball, and generate some revenue
for the company.
SportCor claims the SmartBall delivers instant statistics on
speed--at release point, pre-bounce and post-bounce--that are more
comprehensive and accurate than a normal radar. It also measures
revolutions at the same points, which is unprecedented in-game data
for spinners, according to the company.
The company has hopes the ball will assist the umpiring and
Decision Review System (DRS) process by showing whether a ball has
definitively hit the bat--or help determine catches that are
otherwise too close to call, SMH adds.
TEG PTY LTD: S&P Assigns 'B' Preliminary ICR, Outlook Stable
------------------------------------------------------------
On Nov. 13, 2019, S&P Global Ratings assigned its 'B' preliminary
issuer credit rating to TEG Pty Ltd. (TEG). S&P also assigned its
'B' preliminary issue rating to the company's A$404 million (US$285
million) first-lien term loan B with a recovery rating of '3',
reflecting meaningful (50%-70%; rounded estimate: 65%) recovery
prospects in a payment default. S&P also assigned its 'CCC+'
preliminary issue rating to TEG's A$162 million (US$100 million)
second-lien term loan B with a recovery rating of '6', reflecting
minimal (0%-10%) recovery prospects in a payment default.
The rating on TEG primarily reflects the company's established
market-leading position in the live entertainment industry in
Australia and New Zealand. The company has a dominant position in
the narrow ticketing services segment, where TEG benefits from
long-dated exclusive contracts with major event venues. Tempering
these strengths are the company's highly leveraged capital
structure, sensitivity to global touring schedules, susceptibility
to volatile consumer discretionary spending, and limited service
and geographic diversity.
S&P said, "TEG's highly leveraged capital structure is a constraint
on the rating. We expect proforma S&P Global Ratings-adjusted
leverage to be at the 5x range over the next two years after the
sale of TEG to financial sponsor Silver Lake Partners. Given TEG's
international growth strategy, we do not expect meaningful
deleveraging over the intermediate term given that TEG will utilize
earnings to invest in growth opportunities.
"Also constraining the rating is TEG's ownership by Silver Lake. We
expect Silver Lake to remain committed to TEG's existing growth
strategy, including retaining the company's senior leadership team.
Maintaining effective working relationships with stadium management
is key to TEG's success and the management team has been able to
continue the relationships.
"Our expectation is that TEG will generate steady revenue growth
over the next 12-24 months, supported by consistent ticketing
revenue generation and stable touring schedules. TEG has a
capital-light operating model and we expect the company to generate
sustainably positive free operating cash flow (FOCF)." Cash flow
should increase over the coming years as the company benefits from
additional earnings generated through an expanded international
segment.
Constraining TEG's business is the company's narrow service
offering, limited geographic diversification, minimal barriers to
entry, and potential for earnings volatility due to direct exposure
to any adverse shift in the economic environment. The live
entertainment industry is significantly exposed to global tour
schedules. Changing public tastes and an economic downturn, if
consumer discretionary spending decreases, could adversely affect
the business if TEG is unable to adapt to the changes.
S&P said, "However, we view the ticketing segment as providing more
stability and predictability, largely driven by the exclusive
multiyear contracts the company has with major event venues. We
view these exclusive long-dated contracts as providing somewhat of
a barrier to entry for potential competitors of scale. We also note
that the majority of the major event venues in Australia and New
Zealand are government-owned and the tenures of these ticketing
service contracts illustrate the propensity of government owners to
prefer longevity in these contracts and ticketing agents who have a
track record and provide stability.
"We also believe that the limited geographic diversity renders the
company beholden to global touring schedules. Despite the
Australian market consistently delivering disproportionately strong
attendance of live events given the population size, it still
presents as a less economically viable market when compared with
major regions such as Europe or the U.S., who boast numerous
densely populated major cities.
"Given that live music tours are typically booked several months in
advance, we view this as a key risk for TEG. These tours carry
pre-fixed guaranteed amounts paid to artists, and any cancellations
or rescheduling of tours could have a significantly detrimental
impact on TEG."
TEG's integrated business model helps to partially temper these
risks. Holding the majority of exclusive, major venue ticketing
contracts, TEG is able to funnel its promoted artists and one-off
sporting events to these venues. TEG can then generate revenues
through ticket sales, concessions, high-margin corporate
sponsorships, and event promotion.
S&P said, "We view TEG's international geographic diversity as
limited. Despite recent international acquisitive activity, the
international division accounts for less than 10% of TEG's group
earnings. However, these recent acquisitions do increase the
company's exposure to emerging Southeast Asian markets and the
major market of the U.K. We note that revenue growth is predicated
on market penetration, gains in venue contracts, and TEG becoming
ticketing agents of choice in these regions.
"We view a data or cybersecurity breach as a material event risk,
given the magnitude and sensitivity of confidential data handled by
the company. The impact of a breach could result in reputational,
legal, and/or financial damage that could impinge on the overall
creditworthiness of the business. That said, TEG has a robust
security framework, which should help protect against
cyber-attacks.
"The stable outlook reflects our expectation that TEG will maintain
a debt-to-EBITDA ratio (after S&P Global Ratings' adjustments) at
no greater than the mid-5x range over the next one year at least.
We also expect the company to achieve modest revenue growth,
underpinned by its market position and integrated business model."
Rating stability is predicated on our assumption that management
will effectively sequence global tour schedules, cater to shifting
consumer tastes, and cope with discretionary spending that may be
constrained in a softening economy.
S&P said, "We could lower the rating if the company sustains S&P
Global Ratings-adjusted leverage above 5.5x or free operating cash
flow to debt below 4%. This could occur if there were to be a
greater-than-expected erosion in market share, or the economy
weakened sharply such that discretionary spending on live
entertainment is affected, or a large debt-funded transaction or
shareholder friendly actions are undertaken that further weaken the
highly leveraged capital structure.
"We consider an upgrade to be unlikely given the financial sponsor
ownership."
Founded in 1979, TEG Pty Ltd. has grown to become the
market-leading live entertainment company in Australia and New
Zealand. TEG's integrated business model offers ticketing services
for live events and venues, as well as promotion of live sports and
entertainment shows. TEG also offers data analytics, digital
marketing, customer research, and e-commerce services.
THUNDER FINCO: Moody's Assigns B2 CFR, Outlook Stable
-----------------------------------------------------
Moody's Investors Service assigned a first-time B2 corporate family
rating to Thunder Finco Pty Limited.
In addition, Moody's assigned a B2 senior secured rating to Thunder
Finco's proposed USD285 million first lien term loan facility, and
a B3 senior secured rating to Thunder Finco's USD100 million second
lien term loan facility.
The outlook on all ratings is stable.
The proceeds of the borrowings will be used to fund the acquisition
of TEG Pty Limited by private equity firm Silver Lake Partners.
Silver Lake announced in October 2019 that it had signed a
definitive agreement to acquire TEG from funds advised by Affinity
Equity Partners. The transaction is subject to approval by the
Australian Foreign Investment Review Board.
Upon completion of the transaction, TEG will become the wholly
owned operating subsidiary of Thunder Finco, which in turn is owned
by Silver Lake.
RATINGS RATIONALE
"Thunder Finco's B2 corporate family rating reflects the credit
profile of TEG, which is in turn supported by its position as the
leading integrated live entertainment company in Australia and New
Zealand, operating across ticketing, live entertainment promotion,
data analytics and digital marketing," says Ian Chitterer, a
Moody's Vice President and Senior Credit Officer.
Moody's views the integrated nature of TEG's business as credit
positive, as the various segments support each other.
TEG operates Ticketek, the market leader in ticketing in Australia
and New Zealand, which contributed over 60% of EBITDA over the past
few years.
Ticketek's market position is protected by several factors,
including its exclusive ticketing service agreements with the
largest venues in Australia, its solid ticketing capability, as
well as event pipeline generation through its live entertainment
promotion business.
TEG's credit profile also benefits from secular trends supportive
of the live entertainment sector. Moody's expects that these trends
will allow the company to achieve further organic earnings growth,
building on its track record of steady earnings growth, high
margins and solid cash generation.
However, the ratings are constrained by Thunder Finco's high
financial leverage, the potential for acquisitions, and the
discretionary nature of live events.
Following the transaction, Moody's expects Thunder Finco's adjusted
debt/EBITDA to register around 5.2x (based on fiscal 2019 adjusted
EBITDA, and incorporating pro forma EBITDA from the recent MJR
acquisition). However, Moody's subsequently expects leverage to
decline to the mid to high 4x range over the next 12-18 months,
supported by earnings growth.
The ratings also take into consideration environmental, social and
governance (ESG) factors. The key social risk for TEG relates to
data security, as the company collects a large amount of personal
data through ticketing transactions. Given the sensitive nature of
some of the data collected, such as credit card details and
personal information, any data breaches would have the potential to
trigger to legal, regulatory or reputational consequences.
As for governance factors, TEG's ownership structure, following the
completion of the transaction, will present some governance risk,
to the extent that private equity firms tend to prioritize more
aggressive growth plans and strategies, including a tolerance for
higher leverage.
The B2 senior secured rating assigned to the first lien term loan
facility is at the same level as the B2 corporate family rating,
reflecting the facility's preponderance of debt in the capital
structure. The B3 senior secured rating for the second lien term
loan facility reflects its subordinated position relative to first
lien debt.
Rating Outlook
The stable outlook reflects Moody's expectation that TEG will
operate within the financial parameters expected for the rating.
Factors that Could Lead to an Upgrade
Moody's could upgrade the ratings if Thunder Finco's adjusted
debt/EBITDA reaches 4x and is expected to remain at this level or
continue improving.
Factors that Could Lead to a Downgrade
Moody's could downgrade the ratings if: (1) Thunder Finco's
adjusted debt/EBITDA approaches 6x; (2) the company experiences a
significant deterioration in its market share; or (3) the company's
liquidity profile weakens substantially.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in Sydney, Australia, Thunder Finco Pty Limited's
operating subsidiary, TEG Pty Limited, is an integrated live
entertainment company. TEG operates ticketing services, promotes
live sports and entertainment, and provides data analytics and
digital marketing.
WAYLIE TREES: First Creditors' Meeting Set for Nov. 21
------------------------------------------------------
A first meeting of the creditors in the proceedings of Waylie Trees
Pty Ltd will be held on Nov. 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 Domenico Calabretta of Mackay Goodwin were
appointed as administrators of Waylie Trees Pty Ltd on Nov. 12,
2019.
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BINHAI INVESTMENT: Fitch Cuts LT IDR BB+, Alters Outlook to Stable
------------------------------------------------------------------
Fitch Ratings downgraded China-based city-gas operator Binhai
Investment Company Limited's Long-Term Foreign- and Local-Currency
Issuer Default Ratings to 'BB+' from 'BBB-'. The Outlook is has
been revised to Stable from Negative. Fitch has also downgraded
Binhai's senior unsecured rating and the rating on its USD300
million senior unsecured bond due 2020 to 'BB+' from 'BBB-'.
The downgrade follows a revision of Fitch's rating approach for
Binhai as Fitch no longer maintains an internal credit assessment
of Binhai's immediate parent, TEDA Investment Holding Company Ltd.,
due to a lack of sufficient information, and therefore Fitch now
rates Binhai under the Government-Related Entities Rating Criteria,
instead of Parent and Subsidiary Rating Linkage. Fitch believes the
Tianjin government has channels to provide support directly to
Binhai, if needed, and the existence of TEDA will not prevent
Binhai from receiving timely support.
Fitch believes the likelihood of support directly from the Tianjin
municipal government, assessed under the GRE criteria, warrants a
one-notch uplift to Binhai's Standalone Credit Profile (SCP) of
'bb'. This reflects the government's moderate track record and
expectations of support and moderate incentives to provide support
for Binhai, as well as its weak control over Binhai's operations.
KEY RATING DRIVERS
'Weak' Status, Ownership, Control: The Tianjin government owns 60%
of Binhai indirectly through TEDA, with TEDA controlling the
majority of Binhai's board. However, the government has minimal
involvement in Binhai's operations and has not exerted any
influence over the company's key investment and financing
activities. The Tianjin government is open to introducing
mixed-ownership reform at Binhai and other municipal state-owned
enterprises (SOEs), which could further reduce the government's
stakes.
'Moderate' Support Record and Expectations: The 'Moderate'
assessment mainly reflects the city government's earlier support
for Binhai's predecessor, Wah Sang Gas Hld Ltd, between 2004 and
2009 when it was in distress. Ongoing subsidies and grants have
been minimal as Binhai has been financially healthy. However, Fitch
believes some support is forthcoming if needed.
'Moderate' Implications of Default: Fitch assesses the
social-political implications of a Binhai default to be 'Moderate'.
The company supplies around 50% of the gas in Tianjin's Binhai New
District, and a default may disrupt the provision of the basic
public service; however, the impact is unlikely to be significant
due to the existence of alternative gas sources, and Binhai's share
of the supply in the entire city of Tianjin is small.
The financial implications of a default are also 'Moderate'. Binhai
is small compared with other Tianjin SOEs. However, Binhai is one
of the few offshore bond issuers held by the Tianjin government. A
default would result in reputational risk to Tianjin and weaken
investor sentiment towards other SOEs in the city.
Gas Sales Margin to Improve: Binhai's gas sales EBITDA margin
dropped 20% yoy to HKD0.25/cubic metre in 1H19. This was mainly due
to an unprecedented upstream fuel-cost increase in the non-peak
season without a pass-through being established. A mix change also
contributed to the weak EBITDA margin as residential gas sales,
which has narrower margins, increased. Fitch expects better gas
sales margins from 2H19 as progress has been made on allowing
non-peak season fuel cost pass-through after negotiations with
local governments and end-users. The gas supply and demand
situation in the peak heating season will also improve, which will
mitigate the margin decline from previous years.
Lower Gas Connections: Connection EBITDA increased 4% yoy in 1H19
on higher residential connection volume. However, Fitch expects
2019 connection EBITDA to decline from 2018 due to weaker average
selling prices. Fitch does not believe the government will cancel
gas-connection fees as this will hurt the operators' incentive to
develop new projects amid low residential gas sales margins.
However, Fitch thinks the government will monitor pricing to raise
transparency and minimise overcharging. Fitch expects
gas-connection revenue to rise from 2020 due to volume growth,
driven by new expansionary projects. Nonetheless, contribution from
connections will decline with higher EBITDA from gas sales and
transportation.
Limited Impact from Heating Contract: Binhai announced a CNY843.4
million heating supply construction contract in October 2019.
However, the impact will be small and subject to the execution
schedule as the construction will take place over 10-15 years. The
government will reimburse the company with cash for the initial
capex after Binhai passes certain acceptance inspections of key
facilities. As a result, the cash impact will be neutral, with some
time lag between the amount spent and the compensation received.
However, the contract remains positive in the long term as it
allows Binhai to expand into the stable heating business without
incurring debt for the initial capex.
Standalone Credit Profile of 'bb': Binhai's credit profile is
constrained by its small scale and high sensitivity to volume
growth and fuel-cost changes. Fitch expects its business profile to
improve over the medium term with better geographical
diversification and lower contribution from its connection
businesses.
Binhai's EBITDA declined 12% yoy in 1H19 due to the gas sales
margin decline. Net debt also increased with weak operating cash
flow (OCF) and higher capex. However, the first half normally
accounts for less than 20% of full-year OCF due to seasonality.
Fitch expects OCF to rise in 2H19 with margin recovery and strong
working capital inflows. Receivables are set to decline due to the
replacement of old gas meters with pre-paid meters, and the
collection of long-term receivables from Tianjin Pipe. Capex will
remain high to fund expansionary projects. Fitch forecasts funds
from operations (FFO) adjusted net leverage of 4.5x in 2019,
although it will decline towards 4.0x as FFO recovers with
improving gas sales margins and volume growth.
DERIVATION SUMMARY
Binhai's IDR incorporates a one-notch uplift from its SCP,
reflecting potential support from the Tianjin municipality under
Fitch's GRE criteria. Binhai's status, ownership and control factor
is assessed as 'Weak', while that of Shanghai Construction Group
Co., Ltd. (BBB+/Stable), a GRE peer, is assessed as 'Strong' due to
the Tianjin government's lack of influence over Binhai's
operational and financial activities. However, Binhai is assessed
as 'Moderate' under socio-political implications of default, while
Shanghai Construction is assessed as 'Weak' because Shanghai
Construction operates pure commercial businesses, while Binhai's
gas-provision services are closely linked to the well-being of its
gas users, especially during the winter heating season.
Binhai's SCP assessment of 'bb' is because its scale is much
smaller than that of other Fitch-rated city-gas distributors such
as ENN Energy Holdings Limited (ENN Energy, BBB/Stable). Binhai's
gas sales dollar margin, compared with ENN Energy, is more
sensitive to fuel cost changes and its EBITDA has higher
contribution from connection services. Its financial metrics are
also weaker than that of ENN Energy.
The company's current financial metrics, both in terms of leverage
and coverage, are better than that of Greenko Dutch B.V (GBV, a
special restricted group that issued bonds with a rating of BB).
Binhai also does not face the issue of long collection days due to
counterparty risk unlike GBV. However, GBV has a clear deleveraging
path and Fitch expects its leverage ratio to decline to a similar
level as that of Binhai. In terms of business risk, Fitch believes
Binhai faces higher pricing risks as its earnings will be affected
by fuel-cost changes because there is usually a time lag and in
certain regions a full pass-through to residential users is not
allowed. Binhai's future sales volume is also subject to gas
consumption in its service area, although Fitch does not think this
will be a key issue due to the Chinese government's promotion of
gas usage. GBV's renewable business may have volume risks due to
the intermittent nature of renewable power, although mitigated by
its geographical and power source diversification, and its pricing
is determined by long-term power-purchasing agreements.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Gas sales volume, excluding pipeline gas transportation, to
increase by low teens in 2019-2021;
- Gas-connection revenue to decline from 2018 level in 2019, and
increase slightly in 2021-2022;
- Piped-gas transportation volume to increase 50% in 2019, but
transmission tariff to decline;
- Unit profit for piped-gas sales to decline in 2019, but recover
in 2020-2022;
- Capex and acquisition costs to remain high in 2019-2021;
- Redemption of redeemable preference shares of around HKD30
million per year in 2020-2022.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Higher likelihood of support from Tianjin municipality
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Adverse regulatory developments or material increase in
competition that negatively affects Binhai's market position or
margins;
- FFO adjusted net leverage sustained above 4.5x; or FFO
fixed-charge cover sustained below 3.0x;
- Lower likelihood of support from Tianjin municipality.
LIQUIDITY AND DEBT STRUCTURE
Satisfactory Near-Term Liquidity: Binhai had unrestricted cash of
HKD571.8 million as of end-1H19. This, together with its available
bank credit facilities, can cover its short-term debt of HKD329.7
million and its expected negative free cash flow.
Long-Term Refinancing: Binhai's USD300 million bond will mature in
November 2020. Currently, management is working on several
refinancing plans, including both onshore and offshore financing.
Fitch expects the company to announce a refinancing plan well ahead
of the bond maturity, and Fitch will be monitoring the refinancing
process closely.
ESG CONSIDERATION
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
FANTASIA HOLDINGS: Fitch Rates $200MM Sr. Unsec. Notes 'B+'
-----------------------------------------------------------
Fitch Ratings assigned China-based homebuilder Fantasia Holdings
Group Co., Limited's (B+/Stable) USD200 million 12.25% senior
unsecured notes due 2022 issued on July 18, 2019 a rating of 'B+',
with a Recovery Rating of 'RR4'.
Fitch also says Fantasia's proposed additional issuance of the
USD200 million senior notes will not affect the 'B+' rating on the
bond. The proposed tap issuance will carry the same terms and
conditions as the existing notes. The bonds are rated at the same
level as Fantasia's senior unsecured rating of 'B+' because they
constitute its direct and senior unsecured obligations. Proceeds
will be mainly used to refinance its debt.
Fantasia's rating is supported by land reserves that are adequate
to sustain its current business scale, healthy EBITDA margins and
moderate leverage. The company's land bank has some concentration
in Chengdu and Guilin, but it has more than 30 urban-redevelopment
projects in the Greater Bay Area that provide geographical
diversification. The company's land reserves are sufficient for
property development over the next three to four years.
Fitch expects Fantasia to maintain its 2019-2020 EBITDA margin,
excluding capitalised interest, at levels similar to the 25.8% in
2018. Fitch also forecasts Fantasia's leverage, measured by net
debt to adjusted inventory, will remain around 45%, in line with
'B+' rated peers. In addition, the expanding property-management
business under the company's listed subsidiary, Colour Life Service
Group Co., Ltd, supports Fantasia's ratings and gives it an
additional funding channel.
Fantasia's attributable contracted sales of CNY24 billion in 2018
constrain its ratings as its scale is smaller than that of 'B+'
rated peers. This smaller scale also limits the company's
land-reserve diversity, although this may improve in the future.
Fantasia's land reserves have material exposure to commercial-type
developments that have lower sales visibility as demand for these
products is more closely linked to economic cycles and more
affected by regulatory changes. Fitch expects Fantasia's
attributable contracted sales to rise by 11% in 2019.
KEY RATING DRIVERS
Adequate Land Bank and Projects: Fantasia is a mid-tier developer
with total contracted sales of CNY30 billion and an average selling
price of over CNY11,000 per sq m in 2018. The company has more than
50 projects spread across five key areas and 15 cities, with
concentration in the Chengdu-Chongqing Economic Zone and
Beijing-Hebei-Tianjin region, which made up 69% of its total land
bank at end-December 2018. The concentration in these two regions
limits Fantasia's scope to mitigate regulatory risks, but its large
number of projects helps to diversify project-specific risks.
The company had a total land bank of 11.3 million sq m at
end-December 2018 spread across the Pearl River Delta, Yangtze
River Delta and central China, in addition to the two regions in
which it has a greater concentration. More than 35% of the sites
were in Chengdu while only 22% were in the better-performing Pearl
and Yangtze River Deltas. Fantasia expects to add 1.38 million sq m
of land in Qingdao in 2019 and 0.97 million sq m of URPs in the
Greater Bay Area in 2020, and increase the URP in the Greater Bay
Area to more than 6.8 million sq m from 2021. Rising exposure to
URP projects can improve Fantasia's land bank mix and its
geographical diversification.
Property Management Supports Rating: Colour Life, which is
55.4%-owned by Fantasia, was listed in 2014 and is a leading
property-management company in China. Colour Life has expanded into
more than 200 cities, with 45% of its revenue-bearing gross floor
area (RGFA) located in the more affluent regions in China's eastern
and southern coasts. Colour Life is expanding the RGFA to boost
recurring income.
Colour Life is also collaborating with vendors, including JD.com,
Pagoda and 58Daojia, to provide services to residents that improve
their experience in residential projects. The company expects this
to give it room to increase service charges. Fitch expects
Fantasia's recurring EBITDA to gross interest expense to rise to
0.44x by 2022 from 0.36x in 2018, aided by Colour Life's strong
recurring income.
Rationalising Debt Structure and Costs: Fantasia has a healthy
liquidity position of CNY28 billion in total cash, compared with
CNY14.7 billion in short-term debt as of December 2018. This allows
the company, which had recently replaced its CFO, to focus on
restructuring its debt maturities with new offshore bonds. The
company has also increased the use of lower-cost bank loans and
reduced trust loans, onshore and offshore bonds in the debt mix.
Management said the company's overall financing cost fell to 8% in
the first five months of 2019 from 8.7% in 2018.
Healthy Leverage and Margins: Fantasia's EBITDA margin remained
healthy in 2018 due to its low land cost. Fitch expects the EBITDA
margin to remain at 26%-27% in 2019-2021 due to a better selling
and administrative cost structure. Fitch estimates leverage of
44%-46% in 2019-2020 compared with 42%-45% in 2017-2018 and expect
the ratio to fall to 39%-41% in 2021-2022 on increasing
attributable contracted sales with limited pressure to make large
land acquisitions to support its growth given its sufficient land
bank.
Scale Constrains Rating: Fantasia accelerated project development,
land replenishment and contracted sales from 2017 to try to catch
up with peers that have larger total contracted sales than its
CNY10 billion a year in 2013-2016.
Fantasia's attributable contracted sales reached CNY24 billion in
2018 (total contracted sales: CNY30 billion) from CNY16.5 billion
in 2017, but remained smaller than those of most 'B+' rated Chinese
property developers. Fitch expects Fantasia's attributable
contracted sales to rise by 6%-11% during 2019-2020. Attributable
sales are typically 75%-80% of total contracted sales.
DERIVATION SUMMARY
Fantasia's business and financial profile is comparable with those
of Helenbergh China Holdings Limited (B+/Stable) and Hong Kong
JunFa Property Company Limited (Junfa, B+/Stable).
Helenburgh's total contracted sales of CNY36 billion in 2018 were
slightly larger than Fantasia's, but Fantasia had a higher EBITDA
margin of 25% (Helenbergh: 22%) and lower leverage at 42%
(Helenburgh: 50%). Both companies are geographically diversified.
Fantasia's recurring EBITDA to gross interest expense of 0.3x
provides support to its rating, whereas Helenburgh has minimal
recurring income.
Fantasia's contracted sales scale and EBITDA margin are similar to
Junfa's, but Junfa has higher leverage of 49%. Junfa had recurring
EBITDA to gross interest expense of 0.5x in 2018, higher than
Fantasia's 0.3x, due to Junfa's offices, malls and trade centres.
Junfa is a leading homebuilder in Yunnan province and Kunming city,
while Fantasia is a more diversified developer that focuses on Tier
1-2 cities.
Fantasia has a better business profile than most of the 'B' rated
peers, except Yango Group Co., Ltd. (B+/Stable). Fantasia's
leverage is lower than Yango's although the latter has a bigger
sales scale. Fantasia's leverage is similar to that of 'BB-' rated
peers such as Times China Holdings Limited (BB-/Stable) and Yuzhou
Properties Company Limited (BB-/Stable), which have leverage of
40%-45%. However, Times and Yuzhou have slightly larger business
scales and faster churn.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales to reach CNY27 billion-34 billion
in 2019-2020 (CNY24 billion and CNY17 billion in 2018 and 2017,
respectively)
- Average selling price at CNY11,500-13,300 per sq m in 2019-2021
(CNY11,180 per sq m in 2018)
- Attributable land premium equivalent to 24%-28% of attributable
contracted sales in 2019-2021 (28% in 2018)
- EBITDA margin (excluding capitalised interest) of 25.5%-27.7%
in 2019-2021 (25.8% in 2018)
KEY RECOVERY RATING ASSUMPTIONS
- Fantasia to be liquidated in bankruptcy as it is an
asset-trading company
- 10% administration claims
- Advance rate of 70% applied to net development property
inventory, excluding joint ventures as EBITDA margin is 20%-25%
- Advance rate of 60% is applied to net investment property and
property, plant and equipment
- Excess cash of CNY17.5 billion was applied to the recovery
analysis. This is based on the company's total cash minus minimum
cash requirement, which is equal to three months of contracted
sales.
- 40% recovery rate applied to investments in money-market fund
and debt instruments
- Cash under Colour Life deducted from group cash balance, and
senior unsecured debt held under Colour Life deducted from group
debt balance.
- Residual value from Colour Life added to Fantasia's recovery
analysis.
- Accounts receivable held under Colour Life deducted from group
receivables
These assumptions result in a recovery rate within the 'RR1' range.
However, the Recovery Rating is capped at 'RR4' because under
Fitch's Country-Specific Treatment of Recovery Ratings Criteria,
China falls into Group D of creditor friendliness, and instrument
ratings of issuers with assets in this group are subject to a soft
cap at the issuer's Issuer Default Rating.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Material increase in business scale and a much more diversified
land bank
- Leverage, measured by net debt/adjusted inventory, sustained
below 40% (45% at end-2018)
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Leverage, measured by net debt / adjusted inventory, sustained
above 50%
- EBITDA margin (excluding capitalised interest) sustained below
20%
- Sales efficiency, measured by attributable contracted sales/net
inventory excluding investment property, sustained below 1.0x (1.0x
at end-2018)
LIQUIDITY
Adequate Liquidity: The company had CNY23.7 billion of available
cash and CNY1.0 billion of restricted cash at end-June 2019, which
was more than able to cover CNY11.3 billion of short-term debt.
Fantasia had CNY35 billion of credit facilities at end-2018, of
which CNY22.7 billion was unused.
XINYI CITY INVESTMENT: Fitch Rates Sr. Unsec. US$ Notes BB-(EXP)
----------------------------------------------------------------
Fitch Ratings assigned China-based Xinyi City Investment &
Development Co., Ltd.'s (XCID, BB-/Stable) proposed senior
unsecured US dollar notes an expected rating of 'BB-(EXP)'. The
proposed offshore notes will be issued by Xingang International
Holding Limited, an indirect, wholly owned subsidiary of XCID.
Proceeds will be used to refinance offshore debt that matures
within one year.
The final rating on the proposed notes is contingent upon the
receipt of final documents conforming to information already
received.
KEY RATING DRIVERS
XCID will provide an unconditional and irrevocable guarantee on the
proposed notes, which will rank at least equally with all its other
present and future unsecured and unsubordinated obligations.
RATING SENSITIVITIES
Any change in the Issuer Default Ratings of XCID will result in a
similar change in the rating of the proposed notes.
Any change to the guarantee structure will result in negative
rating action on the proposed notes.
=================
H O N G K O N G
=================
LIONBRIDGE CAPITAL: Fitch Affirms B+ LT IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings affirmed Lionbridge Capital Co., Limited's Long-Term
Issuer Default Rating at 'B+' with a Stable Outlook. Fitch has also
affirmed the 'B' rating with a Recovery Rating of 'RR5' on the
USD160 million 9.75% senior unsecured note due 2020 issued by New
Lion Bridge Co., Ltd. and guaranteed by Lionbridge Capital.
Lionbridge Capital is a holding company incorporated in Hong Kong
in 2011 with Lionbridge China, a wholly owned operating company in
China, representing nearly all of its total assets.
Lionbridge China provides commercial-vehicle financing and is
developing a niche franchise in the truck-leasing market in China.
The company has further raised its profile in the past two years by
introducing strong shareholders and strengthening its business
model. Its lease portfolio has become more concentrated on truck
leasing since the strategy recalibration in 2017, with non-core
passenger-vehicle and equipment-leasing exposures decreasing
gradually. Lease receivables from commercial-vehicle leasing
increased to around 93% of total lease receivables by end-1H19,
from 75% at end-2017.
KEY RATING DRIVERS
IDR
Lionbridge Capital's 'B+' IDR reflects the company's high leverage,
reliance on wholesale secured funding, and modest but potentially
volatile profitability, which are counterbalanced by its improving
niche franchise and more focused strategy in truck leasing, as well
as an adequate risk-management framework and satisfactory asset
quality. The rating is based on its consolidated profile, which
considers the high integration between Lionbridge Capital and
Lionbridge China and limited restrictions on the flow of funds
between the two companies.
Lionbridge Capital has also raised capital from several significant
investors, including Baidu, Inc. (A/Stable), Sunshine Insurance
Group, China Merchants Group's leasing subsidiary and CCB Trust
over the past two years. The introduction of new shareholders eased
Lionbridge Capital's capitalisation pressure and raised its company
profile. Bain Capital remains the majority shareholder of
Lionbridge Capital despite the capital raising.
Lionbridge Capital has developed a loan-facilitation model to
assist banks in providing financing to truck drivers, which places
the assets on the banks' balance sheets in exchange for fee income.
This allows the company to improve its economies of scale, boost
its profitability and strengthen its franchise and market position
without bearing the credit risk of underlying assets and increasing
its leverage. However, the volume-driven nature of this model could
increase the potential volatility of its profits if the company
faces a decline in its loan-facilitation activities.
The company's leverage remains high at around 7x compared with
international peers. Lionbridge Capital has been able to access
funding from the asset-backed securities market and has increased
its credit facilities on the back its good asset quality despite a
challenging funding environment, but the company's high reliance on
secured funding limits its financial flexibility and constrains its
funding and liquidity profile.
SENIOR DEBT AND RECOVERY RATING
The senior notes issued by New Lion Bridge constitute general,
unsecured and unsubordinated obligations of Lionbridge Capital. The
notes rank pari passu with Lionbridge Capital's other unsecured and
unsubordinated obligations, and are subordinated to the secured
debt of Lionbridge Capital and all the debt obligations of
Lionbridge China. The issuer also has options to redeem and
repurchase the notes. If there is a change of control event, where
majority shareholder Bain Capital's voting power in Lionbridge
Capital drops to below 50.1% and the bond rating is downgraded, the
issuer or the guarantor will be required to offer to purchase all
the outstanding notes above the face value.
The notes are rated one notch below Lionbridge Capital's Long-Term
IDR, with a Recovery Rating of 'RR5', to reflect the below-average
recovery prospects and structural subordination. The debt issued by
New Lion Bridge is structurally subordinated to the debt of
Lionbridge China and the recovery of Lionbridge Capital's equity
investment in Lionbridge China will be limited in the event of
liquidation as nearly all the operating assets are on Lionbridge
China's books.
RATING SENSITIVITIES
IDR, SENIOR DEBT AND RECOVERY RATING
Continued improvement of Lionbridge Capital's franchise and
business scale in the truck-leasing business with stable asset
quality and increasing cost efficiency that enable steady
profitability, a leverage ratio of close to 6x on a sustainable
basis and a meaningful reduction in its reliance on secured funding
would be positive for its ratings.
On the other hand, an increasing risk appetite characterised by
aggressive growth with leverage consistently above 7x, or
mismanagement of its underwriting and asset quality, would lead to
downward rating pressure. Unexpected liquidity events such as a
severe capital market dislocation and loss of access to the
asset-backed securities market, which would disrupt the company's
funding, could also lead to a rating downgrade.
The rating on the notes would be sensitive to changes in the
Recovery Rating, which depends on the balance sheet structures of
both Lionbridge Capital and Lionbridge China, as well as Lionbridge
China's asset quality. Any worsening of the structural
subordination that causes the bond's recovery rate to drop to or
below 10% will trigger a downgrade in the bond rating.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3' - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
Lionbridge Capital has an ESG Relevance Score of '4' for Management
Strategy Issues, driven by its operational implementation of its
strategy which, in conjunction with other factors, is relevant to
the ratings.
=========
I N D I A
=========
ABHISHEK MOTORS: CRISIL Maintains 'D' Rating in Not Cooperating
---------------------------------------------------------------
CRISIL said the ratings on bank facilities of Abhishek Motors
Private Limited (AMPL) continues to be 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 1.6 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 5.9 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AMPL for obtaining
information through letters and emails dated April 23, 2019 and
October 11, 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 AMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of AMPL continues to be 'CRISIL D Issuer not
cooperating'.
AMPL, incorporated in 1998 by Guwahati (Assam)-based Mr. Pulak
Goswami, is an authorised dealer of Tata Motor Ltd's passenger cars
in several districts of Assam. The company is also in the
transportation business.
ADITYA TIMBERS: CRISIL Assigns B+ Rating to INR5.0cr New Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Aditya Timbers (ADT).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 5 CRISIL B+/Stable (Assigned)
Proposed Overdraft
Facility 0.6 CRISIL B+/Stable (Assigned)
Overdraft 2.4 CRISIL A4 (Assigned)
Proposed Long Term
Bank Loan Facility 2.0 CRISIL B+/Stable (Assigned)
The rating reflects the firm's small scale of operation, stretched
working capital cycle, and exposure to project implementation and
funding risks. These weakness are partially offset by the extensive
experience of the partners in the wood packaging products
industry.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operation: Intense competition continues to
constrain scalability: although revenue has been increasing, it
remained small at INR14.58 crore in fiscal 2019. ADTs small scale
of operations will continue limit its operating flexibility.
* Stretched capital intensive operations: Gross current assets was
at 150 days in fiscal 2019. Though it has improved from 259 and 400
days in fiscal 2018 and 2017 respectively, it continues to remain
on a higher side. Its large working capital requirements arise from
its high debtor and inventory levels. It is required to extend long
credit period. Furthermore, due to its business need, it hold large
work in process & inventory.
* Exposure to project implementation and funding risk: The firm is
undertaking a project for the purpose of manufacturing plastic
liners. Though the construction of shed is already in progress and
orders for machinery have been placed, the project remains
susceptible to implementation risk as it is still in the early
phase, wherein funding remains a critical factor. Time taken to
stabilise operations without any cost overrun will remain a key
rating sensitivity factors.
Strength
* Extensive industry experience of the partners: The partners have
an experience of over 30 years in forest products industry. This
has given them an understanding of the dynamics of the market, and
enabled them to establish relationships with suppliers and
customers.
Liquidity: Poor
Liquidity may remain under pressure, with cash accrual expected
over INR0.85 crore per annum over fiscals 2020 to 2022 as against
yearly debt obligation estimated at around INR0.80 crore. Cash and
cash equivalents were marginal at INR0.05 crore as on
March 31, 2019. Utilisation of fund-based limit of INR2.40 crore
averaged 66% in the 12 months through September 2019.
Outlook: Stable
CRISIL believes that ADT will benefit from the extensive experience
of its partners over the medium term
Rating sensitivity factors
Upward factors:
* Improvement in scale of operation coupled with sustenance in
working capital cycle with GCA of upto 150 days.
* Sustenance in the operating margins.
Downward factors:
* Deterioration in financial risk profile with gearing of over 2
times on account of capital withdrawal by partners, lower than
expected accretion to reserves or increased debt level caused by
higher than anticipated debt or delayed implementation of ongoing
project leading to any major cost overruns.
* Lower than anticipated cash accruals thereby weakening the
overall liquidity of the firm.
ADT was established in 1972 as partnership firm. It is engaged in
manufacturing of wood packaging like wooden storage crates, wooden
cases, wooden boxes, tow way wooden and wooden pallets. It has
manufacturing facility located in Bilimora- Gujarat and owned by
Mr. Purushottam T. Patel, Mr. Tejabhai K. Patel, Mrs. Darshana P.
Patel and Mrs. Bharti Patel.
ADVANSYS (INDIA): CRISIL Maintains D Rating in Not Cooperating
--------------------------------------------------------------
CRISIL said the ratings on bank facilities of Advansys (India)
Private Limited (AIPL) continues to be 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 2.5 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 7 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AIPL for obtaining
information through letters and emails dated April 23, 2019 and
October 11, 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 AIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of AIPL continues to be 'CRISIL D Issuer not
cooperating'.
AIPL, promoted by Mr. Pankaj Balwani, is setting up a plant in Pune
for manufacturing healthcare and fitness products. The promoter has
experience of around a decade in manufacturing and trading of
wellness and healthcare products.
AEON MEDICAL: CRISIL Maintains 'B' Rating in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of Aeon Medical Private
Limited (AMPL) continues to be 'CRISIL B/Stable/CRISIL A4 Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 3 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 AMPL for obtaining
information through letters and emails dated October 22, 2019 and
October 29, 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 AMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of AMPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
AMPL, incorporated in 2005 by Mr. Rabindra Narayan Senapati,
manufactures body work and assembles high-end ambulances by
installing advanced life support systems in basic ambulances. Its
assembling facility is in Pithampur (Madhya Pradesh). Operations
are managed by Mr. Rabindra Narayan Senapati and Mr. Abani Ranjan
Tripathy.
ANANDAMELA ELECTRONICS: CRISIL Keeps B Rating in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Anandamela
Electronics Private Limited (AEPL) 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 4.95 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 1.00 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AEPL for obtaining
information through letters and emails dated April 23, 2019 and
October 11, 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 AEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AEPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of AEPL continues to be 'CRISIL B/Stable Issuer not
cooperating'.
Siliguri (West Bengal)-based AEPL, incorporated in August 1987,
distributes and retails in electronic goods for LG Electronics
India Pvt Ltd, Samsung India Pvt Ltd, and Sony India Ltd.
ANJAN INFRASTRUCTURE: CRISIL Cuts Rating on INR3cr Loan to B+
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Anjan Infrastructure
Private Limited (AIPL; part of the Anjan group) was revised to
'CRISIL B+/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL A4 (ISSUER NOT
COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Cash Credit 3 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 2.99 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with AIPL for obtaining
information through letters and emails dated April 23, 2019 and
October 11, 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 AIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of AIPL revised to be 'CRISIL B+/Stable/CRISIL A4 Issuer
not cooperating'.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of AIPL and Aqueduct Plastics Pvt Ltd
(APPL). This is because the two companies, together referred to as
the Anjan group, are in similar lines of business, under a common
management, and have inter-company transactions.
AIPL and APPL, incorporated in 2009 and 2004, respectively, are
promoted by Mr. Anjan Kumar Mazumdar of Kolkata. The group executes
civil construction work for the Public Health Engineering
Department of West Bengal; the work primarily involves digging;
erection of tube wells, pump houses, water filters, and overhead
reservoirs; and laying pipelines. The Anjan group also has a poly
vinyl chloride (PVC)-pipe manufacturing facility.
APOLLO CREATIONS: CRISIL Withdraws 'B+' Rating on INR15cr Loans
---------------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Apollo Creations Private
Limited (ACPL) to 'CRISIL B+/Stable/Issuer not cooperating'. CRISIL
has withdrawn its rating on bank facility of ACPL following a
request from the company and on receipt of a 'no dues certificate'
from the banker. Consequently, CRISIL is migrating the ratings on
bank facilities of ACPL from 'CRISIL B+/Stable/Issuer Not
Cooperating to 'CRISIL B+/Stable'. The rating action is in line
with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (Migrated from
'CRISIL B+/Stable ISSUER NOT
COOPERATING'; Rating Withdrawn)
Proposed Long Term 10 CRISIL B+/Stable (Migrated from
Bank Loan Facility 'CRISIL B+/Stable ISSUER NOT
COOPERATING'; Rating Withdrawn)
ACPL, established in 1987 by the Agrawal family, is engaged in
development of residential/commercial property in Indore. The
company is currently developing a township in Kanadia, Indore,
which involves plotting of land and construction of villas and
construction of commercial complex at Vijay nagar square; Indore.
ARORA YARN: CRISIL Withdraws B+ Rating on INR5cr Cash Loan
----------------------------------------------------------
CRISIL has withdrawn its ratings on the bank facilities of Arora
Yarn Private Limited (AYPL) on the request of the company and
receipt of a no objection certificate from its bank. The rating
action is in line with CRISIL's policy on withdrawal of its ratings
on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long Term 1.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Withdrawn)
Term Loan 1.7 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with AYPL for obtaining
information through letters and emails dated September 23, 2019 and
September 27, 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 they are arrived at without any management
interaction and are 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 AYPL. This restricts CRISIL's
ability to take a forward AYPL 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 rating on bank facilities of AYPL
continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
CRISIL has withdrawn its ratings on the bank facilities of AYPL on
the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with
CRISIL's policy on withdrawal of its ratings on bank loans.
AYPL was taken over by the present management in 2009, from BJ
Woollens Pvt Ltd. Operations are managed by Mr Krishan Kumar Arora.
The company manufactures woollen yarn at its plant in Bikaner,
Rajasthan, and has branches at Panipat (Haryana), and Badhoi (Uttar
Pradesh).
AZURE POWER: Fitch Rates $350.1M Sr. Notes Final BB, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings assigned Azure Power Solar Energy Private Limited's
USD350.1 million 5.65% senior notes due 2024 a final rating of
'BB'. The Outlook is Stable. The assignment of the final rating
follows a review of final documents that conform to the draft
documentation previously received and is in line with the expected
rating assigned on September 8, 2019.
RATING RATIONALE
The rating reflects the credit profile of a restricted group of 10
entities (Azure RGII) that operate solar generation assets across
10 states in India. The combined capacity is 647.5MW. The US dollar
notes represent joint and several obligations of APSEPL and the 10
operating entities. APSEPL plans to use the proceeds from the notes
mainly to refinance existing debt of APSEPL and the entities in the
restricted group. The rating is underpinned by Azure RGII's
long-term, fixed-price power purchase agreements (PPA) with
customers, including sovereign-backed entities and state
distribution utilities, the use of proven technology and a
financial profile commensurate with the relevant rating threshold.
Fitch applied a variation from its Renewable Energy Project Rating
Criteria with respect to counterparty risk. Typically, a debt
instrument's rating may be capped by the credit quality of its
revenue counterparties. Fitch does not currently rate Azure RGII's
revenue counterparties, which are either sovereign-backed entities
or state distribution utilities that purchase power from Azure RGII
under PPAs. However, the impact on cash flow from individual
counterparties is limited.
Under Fitch's breakeven analysis, Azure RGII could still service
debt due if all the power generated is sold in the merchant market
at a price well below the prevailing spot price in India. The
analysis indicates that the loss of all of the PPAs from this group
of customers will not result in Azure RGII defaulting on its debt
obligations. The diversified pool of customers and limited risk to
debt repayment suggests that the rating on the notes need not be
constrained by the unknown credit quality of these off-takers. In
addition, more than 60% of Azure RGII's customers are publicly
rated by well-known local rating agencies and carry ratings between
'AA+' and 'A-' on the Indian national rating scale, which supports
its view that the risk of near-term off-taker default is limited.
However, Fitch believes that it will be prudent that Azure RGII
should meet a higher threshold to achieve the same rating as other
solar generation entities receiving fully contracted revenue from
rated off-takers, all else being equal.
Hence, Fitch has based the note rating on the indicative debt
service coverage ratio (DSCR) thresholds applicable to merchant
projects instead of the ones for fully contracted projects, while
the cash flows are evaluated based on contracted prices.
KEY RATING DRIVERS
Fixed Tariff, Long-Term PPAs: Revenue Risk - Price: Stronger
Fitch assesses price risk as 'Stronger' because the entities in
Azure RGII sell power under 25-year fixed-price PPAs, which protect
the portfolio from merchant exposure and price uncertainty. Fitch
does not project any merchant market revenue in the financial
analysis.
Robust Energy Yield Forecast: Revenue Risk - Volume: Midrange
The energy yield forecast produced by a third-party expert for each
asset indicates an overall P50/one-year P90 spread of less than 6%,
which is classified as a 'Stronger' attribute under Fitch's key
rating driver assessment of renewable projects. The overall
assessment is limited to 'Midrange' because most of the assets in
Azure RGII are newly commissioned and it is not yet clear if their
generation will meet forecasts. Curtailment risk is limited as
solar plants are must-run stations and any back down by the grid
will be compensated in accordance with Indian Electricity Grid Code
2010, unless it is due to grid security or emergency events.
Proven Technology, Strong In-House O&M Capabilities: Operation
Risk: Midrange
Operation risk is assessed as 'Midrange', which is supported by a
comprehensive and well-budgeted operating and maintenance (O&M)
plan being carried out by an experienced O&M team. About 96% of
Azure RGII's capacity uses crystalline silicon panels, a technology
that Fitch sees as having lower operating cost and performance
uncertainty than other photovoltaic (PV) technologies based on its
long operating history. Fitch also believes that with the rapid
growth of solar PV and sharp drop in cost of operation in India,
replacement operators can be easily found for the assets in the
restricted group, should the incumbent fail. At the same time,
Fitch does not expect costs to increase significantly. These
strengths are partly offset by the assets' limited record and lack
of cost validation from a third party engineer.
Ringfenced Structure, Manageable Refinance Risk - Debt Structure:
Midrange
Noteholders are protected by the ringfenced structure of the
restricted group and protective covenants. The notes pay a fixed
interest rate and APSEPL expects to substantially hedge currency
risk. Noteholders benefit from a lock-up test at backward looking
1.3x DSCR for cash outflow. The restricted group does not plan to
maintain a debt service reserve account and a major maintenance
reserve account, but this is in part balanced by the excess cash
required to be retained with the restricted group in the last 2.25
years of the life of the notes. Refinancing risk is mitigated by
the solar assets' established access to banking and capital market
and supported by tenors of the PPAs, which extend beyond the
maturity of the notes.
PEER GROUP
Fitch regards another Indian renewable portfolio issuer, Adani
Green Energy Limited Restricted Group 2 (AGEL RG2, senior secured
rating: BBB-/Stable) as the closest peer to Azure RG2. Both
projects are solar-only portfolios benefitting from long-term
fixed-price PPAs and proven technology. Meanwhile, both projects
also share a number of weaknesses in operation risk - limited
operating records and operating-cost forecasts that lack
independent validation. AGEL RG2 has a stronger off-taker profile,
with 61% of its capacity contracted with sovereign-backed Solar
Energy Corporation of India (SECI), which resulted in a lower
metric threshold for rating determination. AGEL RG2 also displays
some strength in the debt structure, providing more structural
features that protect noteholders and being less exposed to
refinance risk, as 76% of its principal is amortised across 20
years. AGEL RG2 has a rating-case average DSCR of 1.45x with a
minimum DSCR of 1.30x. The stronger attributes of AGEL RG2 support
its investment-grade rating.
Fitch also regards two Canadian issuers - Axium Infinity Solar LP
(senior secured rating: BBB/Stable) and Ontario Solar Holdings LP
(senior secured rating: BBB-/Stable) - as comparable peers. Like
Azure RGII, Axium Infinity and Ontario Solar own portfolios of
solar PV projects that benefit from long-term, fixed-price PPAs.
The Canadian issuers have single revenue counterparties that have
robust credit profiles. In contrast, the credit profiles of Azure
RGII's pool of off-takers are unknown. As a result, Fitch requires
Azure RGII to meet higher thresholds to achieve the same rating as
the Canadian issuers. Azure RGII is also subject to refinancing
risk that arises from its bullet repayment structure, while the
debt of its peers is fully amortising. Axium Infinity and Ontario
Solar have DSCR profiles commensurate with investment-grade ratings
under the Fitch rating case. Axium Infinity's DSCR averages 1.29x,
while Ontario Solar's averages 1.20x; this meets the contracted
projects' threshold for a 'BBB-' rating of 1.20x DSCR.
Fitch also compares Azure RGII with Italian issuer, Andromeda
Finance S.r.l. (underlying senior secured rating: BB/Stable). Under
Fitch's rating case, 13% of Andromeda's revenue is exposed to the
merchant market and it has an average DSCR of 1.20x, which
positions it for a 'BB' rating, according to a threshold weighted
by the shares of contracted revenue and merchant revenue in total
revenue.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Negative Rating Action:
- Synthetic DSCRs persistently below 1.40x, which could be a
result of:
- energy production persistently underperforming long-term
projections due to low solar resource or operational issues or
extended payment cycles; and/or
- less favourable refinancing terms and structure (including the
cash retention in the restricted group over time) than the
assumptions made in Fitch's financial analysis.
Developments that May, Individually or Collectively, Lead to
Positive Rating Action:
- Synthetic DSCRs persistently above 1.50x.
TRANSACTION SUMMARY
The transaction is an issuance of USD350.1 million of senior
secured notes due 2024. APSEPL will use the net proceeds mainly to
subscribe for rupee-denominated debt issued or borrowed by the
entities in the restricted group. The entities in the restricted
group in turn will use the proceeds and their existing cash and
cash equivalents to repay existing debt, for capital expenditure
and for operating expenses and working capital requirements.
FINANCIAL ANALYSIS
Given the bullet structure of the notes, Fitch's financial analysis
is mainly based on synthetic DSCRs over the remaining PPA life,
assuming the notes will be refinanced upon maturity by long-term
fully amortising debt. Fitch's base-case synthetic DSCR profile
averages 1.64x (previously 1.66x). The synthetic DSCR averages
1.43x (previously 1.46x) under Fitch's rating case, which
incorporates reduced energy production, increased degradation and
higher expenses.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.
BINAYAK HI-TECH: CRISIL Withdraws 'B' Rating on INR8cr Loan
-----------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Binayak Hi-Tech Engineering
Private Limited (BHTEL) to 'CRISIL B/Stable/CRISIL A4 Issuer Not
Cooperating'. CRISIL has withdrawn its rating on bank facility of
BHTEL following a request from the company and on receipt of a 'no
dues certificate' from the banker. Consequently, CRISIL is
migrating the ratings on bank facilities of BHTEL from 'CRISIL
B/Stable/CRISIL A4 Issuer Not Cooperating to 'CRISIL
B/Stable/CRISIL A4'. The rating action is in line with CRISIL's
policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Foreign Bill 8 CRISIL B/Stable (Migrated
Purchase from 'CRISIL B/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
Packing Credit 6 CRISIL A4 (Migrated from
'CRISIL A4 ISSUER NOT
COOPERATING'; Rating
Withdrawn)
Proposed Long Term 1 CRISIL B/Stable (Migrated
Bank Loan Facility from 'CRISIL B/Stable ISSUER
NOT COOPERATING'; Rating
Withdrawn)
BHTEL, promoted by Mr. Mahesh Jhunjhunwala, his wife Ms. Kiran
Jhunjhunwala, and son Mr. Atul Jhunjhunwala, is an ISO 9001:2000
company, incorporated in 1995. BHTEL manufactures casting manhole
covers, garden benches, and fence panels, and sells about 200 kinds
of steel products.
COSMO GRANITES: CRISIL Lowers Rating on INR30cr Loan to 'B'
-----------------------------------------------------------
CRISIL has downgraded its rating on the long term bank facilities
of Cosmo Granites Private Limited (CGPL) to 'CRISIL B/Stable' from
'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 15 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Term Loan 30 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Working Capital 5 CRISIL B/Stable (Downgraded
Facility from 'CRISIL B+/Stable')
The downgrade reflects decline in the business and financial risk
profile. The company has reported a drop in the revenue at around
INR44.0 crores in 2019 as against INR68.2 crores in 2018, mainly on
account of fall in the demand from the customers. The net cash
accruals generated by the company was insufficient against the
repayment obligation during the fiscal 2019. Also, the debt
protection metrics were average marked by interest coverage of 1.5
times and net cash accruals to total debt at 4 percent during the
said period. Further, the company has reported stretch in the
working capital requirements during 2019, on account of rise in the
inventory levels.
The ratings also reflect modest scale of operations of the company.
However, the weakness is partially offset by extensive industry
experience of the promoters.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: The Company had a modest scale of
operations as reflected by the topline of INR44 crores in fiscal
2019. Going forward, the revenue is expected to be modest
considering the nature of the industry.
Strength
* Extensive industry experience of the promoters
The promoters' D H Sarath Kumar, Mr D Venkaatesh, and Mr D N'have
an experience of more than two decades in retailing flooring
materials: granite, marble, and wood. This has resulted in a strong
regional market position, a longstanding relationship with
suppliers and principals, and a diverse customer base.
Liquidity: Stretched
The company has highly utilized the bank limits as indicated by the
average utilization of 98% in the last 15 months ending August
2019. The net cash accruals are expected to be sufficient against
the repayment obligations in the medium term. Also, the need based
funding support from the promoters support the liquidity profile.
Further, the current ratio stood at around 1.43 times in 2019.
Outlook: Stable
CRISIL believes CGPL will continue to benefit over the medium term
from its promoters extensive industry experience and established
market position in the premium floor tile retail segment.
Rating sensitivity Factor
Upward Factor
*Improvement in the topline, and net cash accruals of more than
INR3 crores.
*Improvement in the working capital requirements.
Downward Factor
*Decline in the topline, and net cash accruals of less than INR1.5
crores.
*Stretch in the working capital requirements.
Incorporated in 1992, CGPL imports and retails flooring materials
such as marble, granite, wood, and ceramic tiles.
ESSEL FINANCE: CRISIL Lowers Rating on INR141.5cr Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
and debt instruments of Essel Finance Business Loans Limited
(EFBLL) to 'CRISIL D' from 'CRISIL B+/Negative'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8.5 CRISIL D (Downgraded from
'CRISIL B+/Negative')
Overdraft 5.0 CRISIL D (Downgraded from
'CRISIL B+/Negative')
Proposed Long Term 141.5 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B+/Negative')
Term Loan 45.0 CRISIL D (Downgraded from
'CRISIL B+/Negative')
The downgrade reflects delays by EFBLL in meeting debt obligations
due on October 30, 2019, and October 31, 2019, because of
inadequate liquidity. With limited visibility regarding the timing
of fund raising, CRISIL expects the servicing of other debt
instruments to be delayed as well.
Analytical Approach
For arriving at the rating, CRISIL has considered the standalone
business and financial risk profiles of EFBLL.
Key Rating Drivers & Detailed Description
Weaknesses
*Delay in debt servicing due to inadequate liquidity
EFBLL has delayed meeting some of its debt obligations (due on
October 30, 2019, and October 31, 2019) because of inadequate
liquidity. Because of limited visibility regarding fund raising,
CRISIL believes the company will delay other debt obligations as
well.
*Modest scale of operations and limited track record
The company commenced lending in fiscal 2015, and its operations
are in the early stage. It had 8 branches and assets under
management (AUM) of around INR330 crore as on September 30, 2019
(Rs 380 crore as on March 31, 2019). It mainly offers loans to
micro, small, and medium enterprises (MSMEs) against security of
property (loans against property; constituting 66% of total
portfolio). The company is also into inventory financing, equipment
financing, and receivable finance. While it started lending to
microfinance institutions and non-banking financial companies
(NBFCs) in the last fiscal, this loan book is relatively small,
albeit growing (12% of total portfolio).
*Modest asset quality
Asset quality is modest with gross NPAs (on a 90+ dpd basis) in the
overall book at 6.1% as on March 31 2019 (5.7% as on March 31,
2018). Most of the delinquent accounts pertain to disbursements
before January 2017. Post that, the company revamped operations and
strengthened credit policies and processes. The company also sold
delinquent accounts worth INR15.7 crore in the fourth quarter of
fiscal 2019. These efforts are expected to bring down the NPAs.
Strengths
*Adequate capitalisation
The company's adequate capitalisation is reflected in networth and
low gearing of INR120 crore and 2.6 times, respectively, as on
March 31, 2019 (INR106.8 crore and 2.7 times, respectively, as on
March 31, 2018).
Liquidity: Poor
The company has poor liquidity, which has led to delay in servicing
debt. With inadequate liquidity to meet debt obligation and limited
visibility regarding fund raising, CRISIL expects servicing of
other debt to be delayed as well.
Rating sensitivity factor
Upward Factor
* Track record of timely debt servicing for more than three months
* Increased availability of funds resulting in improved liquidity.
EFBLL was incorporated by the government of Maharashtra in 1996 as
Blue Blend Equity Ltd. Formerly, it was a subsidiary of Blue Blend
India Ltd and acquired the NBFC licence in 1998. The Essel group
acquired 52% stake in the company in fiscal 2014 and the remaining
in fiscal 2015. The company got its present name in April 2015. As
on March 31, 2019, EFBLL was 81.65% held by Dakshin Mercantile Pvt
Ltd which is wholly owned by the promoter family of the Essel group
(Ms Sushila Devi Goel, wife of Dr Subhash Chandra). The remaining
18.35% is held by Essel Finance Management LLP. EFBLL started
operations in fiscal 2015. It primarily provides financial services
to MSMEs.
The company reported a loss of INR6.7 crore in fiscal 2019, with a
return on assets (RoA) of negative 1.6% (profit after tax and RoA
were INR1.0 crore and 0.3%, respectively, in fiscal 2018). While
the profits are positive at pre-provisioning levels, sale of NPAs
in the fourth quarter of fiscal 2019 and the resultant haircut on
the sale resulted in losses for the fiscal.
INDIRA ENTERPRISES: CRISIL Migrates B+ Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Indira
Enterprises (IE) to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Bank 2 CRISIL A4 (ISSUER NOT
Guarantee COOPERATING; Rating Migrated)
Proposed Overdraft 3 CRISIL B+/Stable (ISSUER NOT
Facility COOPERATING; Rating Migrated)
Proposed Term Loan 3 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with IE for obtaining
information through letters and emails dated October 22, 2019 and
October 29, 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 IE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on IE is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of IE to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
IE, set up in 1995 at Chennai by Ms Indira Thiyagarajan, undertakes
civil construction works for private companies.
INNOPUS SOFTWARE: CRISIL Migrates B Rating to Not Cooperating
-------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Innopus
Software Solutions Private Limited (ISSPL) to 'CRISIL B/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 5 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with ISSPL for obtaining
information through letters and emails dated August 27, 2019 and
September 27, 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 ISSPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ISSPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of ISSPL to 'CRISIL B/Stable Issuer not cooperating'.
ISSPL was incorporated in 2012 by Mr Bhasker Rao, his wife Mrs
Sravana Karne, and Mr Joylee P. The company undertake development
of software and websites for health care industry.
MACO PRIVATE: CRISIL Cuts Rating on INR6.0cr Loan to B-
-------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Maco Private Limited (MPL) to 'CRISIL B-/Stable' from 'CRISIL
B+/Stable', and has reaffirmed its 'CRISIL A4' rating on the
short-term facility.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Inland/Import .75 CRISIL A4 (Reaffirmed)
Letter of Credit
Proposed Long Term 1.25 CRISIL B-/Stable (Downgraded
Bank Loan Facility from 'CRISIL B+/Stable')
Secured Overdraft 6.00 CRISIL B-/Stable (Downgraded
Facility from 'CRISIL B+/Stable')
The downgrade reflects weakening of financial risk profile with
interest coverage ratio of less than 1.2 times and lower level of
networth at INR4.73 crore as on March 31, 2019. Further, operations
are highly working capital intensive with gross current assets
(GCA) of 354 days driven by high inventory days. CRISIL believes
that with weakening of financial risk profile and low
profitability, MPL will not have sufficient cushion for making its
long term loan repayments. These weaknesses are partially offset by
the promoters' extensive experience in the automotive components
industry.
Analytical Approach
Unsecured loans of INR7.18 crore extended by the promoters as on
March 31, 2019, have been treated as neither debt nor equity as
they are expected to remain in the business over the medium term
and have been infused to support long-term requirements.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest financial risk profile: Financial risk profile is modest
as reflected from modest networth of INR4.73 crore along with
gearing of 2.19 times and interest coverage of 1.16 times for FY19.
CRISIL believes that financial risk profile will continue to remain
at similar level over the medium term.
* Weak liquidity position: Liquidity position is weak as evident
from cash accruals of INR30-70 lakhs against repayment obligations
of INR1.59 crore over the medium term. Bank limit utilization is
also high at around 91% over last 12 months through August 2019 and
current ratio stood at 2.47 times in fiscal 2019.
* Highly working capital intensive operations: The operations are
highly working capital intensive as reflected from gross current
assets (GCA) of 354 days ended March 31, 2019.This is mainly
because of high inventory maintenance by the company to cater the
price fluctuations. CRISIL believes that operations of MPL will
remain working capital-intensive over the medium term.
Strength
* Extensive industry experience of the promoters and their funding
support: The promoters' experience of over five decades,
established relationships with customers and suppliers, and sound
grasp of market dynamics support the business risk profile.
Furthermore, the promoters have extended need-based funding support
reflected in unsecured loans of INR7.18 crore as on March 31,
2019.
Liquidity Poor
Bank limit utilisation was high, averaging around 91% for the 12
months ended August 31, 2019. Expected cash accruals of INR30-70
lakhs will not be sufficient to cover debt obligations of INR1.59
crore over the medium term.
Outlook: Stable
CRISIL believes MPL will continue to benefit from the extensive
industry experience of its promoters.
Rating sensitivity factors
Upward factors
* Sustainable increase in revenue to around INR35 crore in fiscal
2020 with improvement in profitability leading to higher cash
accruals
* Improvement in gearing and interest coverage
Downward factors
* Decrease in revenue leading to further decline in net cash
accruals
Decline in PAT margins to less than 0.5%
* Additional debt resulting in weakening of gearing and interest
coverage
Incorporated in 1956, MPL manufactures automotive components such
as piston pins, crank pins, and connecting rods. The company
recently started manufacturing brake shoes and pads, and clutch
plates at its manufacturing facility in Sonepat, Haryana. MPL sells
majority of its products domestically to OEMs, and exports to the
US, Europe, Sri Lanka, and various South-East Asian countries,
under its own brand, MACO.
MANAF P.B.: CRISIL Migrates 'D' Rating to Not Cooperating
---------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Manaf P.B.
(MPB) to 'CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3.5 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 5.9 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1.6 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with Manaf P.B. (MPB) for
obtaining information through letters and emails dated October 22,
2019 and October 29, 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 MPB, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MPB is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' rating category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of MPB to 'CRISIL D/CRISIL D Issuer not cooperating'.
MPB was set up as a proprietorship firm at Aluva (Kerala) in 2004.
The firm undertakes civil contracts for the PWD of Kerala. Daily
operations are managed by the proprietor, Mr PB Manaf.
NIRMITEE ROBOTICS: CRISIL Assigns B+ Rating to INR10cr LT Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating on the long-term
bank loan facility of Nirmitee Robotics India Private Limited
(NRIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 10 CRISIL B+/Stable (Assigned)
Bank Loan Facility
The rating reflects initial phase of business operations, large
working capital requirements and a small networth. These weaknesses
are partially offset by extensive industry experience of the
promoters and patented technology.
Analytical Approach
Preference shares worth INR175 lakh have been treated as 75% equity
and remaining debt as they have zero coupon rate and would remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Initial phase of business operations: The Company is in business
for only past two years and has a modest scale of operations, with
revenue of INR1.97 crore in fiscal 2019. Given the small size of
the industry and competition from established players the scale of
operations is expected to remain modest, over the medium term.
* Working capital intensive operations: Gross current assets were
386 days, as on March 31, 2019, owing to large debtors. In order to
establish in the market, company provides extended credit to its
customers. This along with high year-end sales have resulted in
large debtor cycle of 247 days, as on March 31, 2019. Improvement
in working capital management amid growing revenues remains
critical.
* Small networth: Financial risk profile is constrained by a small
networth of INR1.52 crore as on March 31, 2019.
Strength
* Extensive industry experience of the promoters and patented
technology: The promoters have an extensive experience of around a
decade in this industry through other venutures. Also, the ozone
cleaning technology has been patented which enabled the company to
establish relationships with suppliers and customers within 3 years
of operations.
Liquidity: Stretched
The liquidity is expected to remain stretched over the medium term.
Cash accruals are expected to remain low at around INR50 lakh per
annum against no debt obligation. Currently, the company has no
working capital debt, however, going forward, with expected
increase in turnover, timely sanction of working capital bank limit
remains critical for effective working capital management. Further
a small networth and a modest scale constrain financial
flexibility.
Outlook: Stable
CRISIL believe NRIPL will continue to benefit from the extensive
experience of its promoters ad patented technology.
Rating sensitivity factor
Upward factor
* Sustained improvement in scale of operation and sustenance of
operating margin, leading to annual cash accruals of more than INR1
crore
* Improvement in working capital cycle.
Downward factor
* Decline in profitability or stretch in working capital cycle
* Large debt-funded capital expenditure or elongated receivables
weaken capital structure with gearing of more than 2 times.
Incorporated in 2016, based out of Nagpur, NRIPL is owned & managed
by Mr. Rajesh Admane, Mr. Jay Motghare and Mr. Karthik Shende. It
is engaged in HVAC air duct cleaning with specialisation in ozone
treatment and sterilization.
OMAR INTERNATIONAL: CRISIL Migrates B+ Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Omar
International Private Limited (OIPL) to 'CRISIL B+/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .5 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Packing Credit in 19 CRISIL A4 (ISSUER NOT
Foreign Currency COOPERATING; Rating Migrated)
Proposed Short Term 16 CRISIL A4 (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
Term Loan 14.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with OIPL for obtaining
information through letters and emails dated October 22, 2019 and
October 29, 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 OIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on OIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of OIPL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
Established in 2012 and promoted by Mr Ateeq Ahmed, Bijnor (Uttar
Pradesh)-based OIPL processes and exports frozen buffalo meat. The
integrated processing capacity is 75 tonne per day.
PANSURIYA IMPEX: CRISIL Lowers Rating on INR127.66cr Loan to D
--------------------------------------------------------------
CRISIL has downgraded its rating on the short term bank facility of
Pansuriya Impex LLP (PI) to 'CRISIL D' from 'CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Packing Credit 127.66 CRISIL D (Downgraded from
'CRISIL A4+')
The downgrade reflects one instance of delay of more than 30 days
in financing of bill under post shipment credit facility. Moreover,
the account has been classified as SMA 1 by the bank.
The rating continues to reflect large working capital requirement.
This rating weakness is partially offset by the extensive
experience of partners in the industry.
Key Rating Drivers & Detailed Description
* Delays of more than 30 days in financing of post shipment credit
bill: The downgrade reflects instance of delays of more than 30
days in financing of post shipment bill availed because of weak
liquidity.
Weakness
* Large working capital cycle: Operations have been working capital
intensive, with gross current assets, inventory, and receivables at
241 days, 134 days, and 107 days, respectively, as on March 31,
2019. Accordingly, the firm's bank limits also continue to be
highly utilized.
Strength
* Extensive experience of partners in diamond industry: The
partners have more than 3 decades of experience in the diamond
industry. All nine partners are actively involved in the business
with shared responsibilities. CRISIL believes PI will continue to
benefit from the long standing experience of the partners over the
medium term.
Liquidity: Poor
Liquidity is poor as reflected in instances of delays of more than
30 days in financing of post shipment credit bills availed because
of weak liquidity. Firm has fund based limits of INR127.66 crore
which remain highly utilised on an average.
Rating sensitivities factors
Upward factors
* Track record of timely debt servicing for at least over 90 days
* Improvement in receivable days resulting in better liquidity
profile.
PI, set up in 2000 as a proprietorship concern by Mr Paresh
Pansuriya, manufactures and sells cut and polished diamonds. The
concern was converted into a partnership firm in 2005, with family
members inducted as partners. It has manufacturing unit at Surat.
PARANJAPE SCHEMES: CRISIL Lowers Rating on INR8cr Loan to 'B'
-------------------------------------------------------------
CRISIL has revised the ratings of Paranjape Schemes (Construction)
Limited (PSCL) to 'CRISIL B/FB/Stable Issuer Not Cooperating' from
'CRISIL BB+/FB+/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 7 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Term Loan 30 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with PSCL for obtaining
information through letters and emails dated September 28, 2018,
March 7, 2019 and March 12, 2019, October 15, 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 PSCL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PSCL is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BBB' rating
category or lower'.
Based on the last available information, the ratings of PSCL is
revised to 'CRISIL B/FB/Stable Issuer Not Cooperating' from 'CRISIL
BB+/FB+/Stable Issuer Not Cooperating'.
PSCL was incorporated in 1987 by brothers Mr Shashank Paranjape and
Mr Shrikant Paranjape as a private limited company, and was
reconstituted as a public limited company in 2005.
PRIYANJALI ENTERPRISES: CRISIL Moves B Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Priyanjali
Enterprises (PE) to 'CRISIL B/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 13 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with PE for obtaining
information through letters and emails dated October 22, 2019 and
October 29, 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 PE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PE is consistent
with 'Scenario 2' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BBB' rating category or
lower'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL has migrated the rating on bank
facilities of PE to 'CRISIL B/Stable Issuer not cooperating'.
PE, established in 2015, deals in agricultural produce, mainly
betle nuts, pepper, bananas, and tender coconut. The partners, Mr
Bheemanna T. Naik and his family members, own three bars and
restaurants at Sirsi in Uttar Kannada, Karnataka. The firm is in
the process of setting-up a three-star hotel in the region.
Commercial operations are likely to start by January 2019.
RELIANCE COMMUNICATIONS: CoC Extends Asset Bid Deadline to Nov. 22
------------------------------------------------------------------
The Economic Times reports that the resolution professional (RP) of
Reliance Communications (RCom) has extended the deadline for
submission of bids for the bankrupt company to November 22 after
only two bidders, Bharti Group and Varde Partners, submitted bids
at the close of the previous deadline of November 11, according to
two bankers.
According to the report, Deloitte's Anish Nanavaty who is the RP,
granted the extension at a meeting of RCom's committee of creditors
(CoC) held on November 13 after seeking consent from bankers who
unanimously agreed to grant the extension.
RCom and two of its arms Reliance Infratel and Reliance Telecom are
undergoing insolvency proceedings under the supervision of the
National Company Law Tribunal (NCLT), ET discloses.
The two bidders submitted a common resolution plan for RCom and its
two subsidiaries, according to the bankers. The financial bids were
not yet opened. Claims of financial creditors against RCom and the
two subsidiaries exceed INR85,000 crore, the report says.
ET adds that a Bharti spokesperson said that a conditional bid has
been submitted primarily for the spectrum which is a precious
asset. "The bid conditions include that the overall consideration
will primarily be by way of the deferred spectrum payables to the
government being passed on to us on terms and schedules applicable
to such deffered payments", the spokesperson said.
About Reliance Communications
Based in Mumbai, India, Reliance Communications Ltd is a
telecommunications service provider. The Company operates through
two segments: India Operations and Global Operations. India
operations segment comprises wireless telecommunications services
to retail customers through global system for mobile communication
(GSM) technology-based networks across India; voice, long distance
services and broadband access to enterprise customers; managed
Internet data center services, and direct-to-home (DTH) business.
Global operations comprise Carrier, Enterprise and Consumer
Business units. It provides carrier's carrier voice, carrier's
carrier bandwidth, enterprise data and consumer voice services.
The Company owns and operates Internet protocol (IP) enabled
connectivity infrastructure, comprising over 280,000 kilometers of
fiber optic cable systems in India, the United States, Europe,
Middle East and the Asia Pacific region.
As reported in the Troubled Company Reporter-Asia Pacific on May
10, 2019, The Economic Times said the National Company Law Tribunal
on May 9 allowed Reliance Communications (RCom) to exclude the 357
days spent in litigation and admitted it for insolvency. With
this, RCom, which owes over INR50,000 crore to banks, has become
the first Anil Ambani group company to be officially declared
bankrupt after the NCLT on May 9 superseded its board and appointed
a new resolution professional to run it and also allowed the
SBI-led consortium of 31 banks to form a committee of creditors.
SAM INDUSTRIAL: CRISIL Lowers Rating on INR7.5cr Cash Loan to D
---------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Sam
Industrial Enterprises Limited (SIEL) to 'CRISIL D' from 'CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL A4
ISSUER NOT COOPERATING')
Cash Credit 7.5 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B-/Stable
ISSUER NOT COOPERATING')
Overdraft 1.5 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B-/Stable
ISSUER NOT COOPERATING')
CRISIL has been consistently following up with SIEL for obtaining
information through letters and emails dated September 28, 2018,
October 30, 2018 and August 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 SIEL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SIEL 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 SIEL continues to be 'CRISIL D//CRISIL D Issuer Not
Cooperating'. There is continuous overdrawals in working capital
limit from last 1.5 months as confirmed by the banker.
Incorporated in 1992 in Delhi, SIEL began operations in 2000. It
designs, prints, and binds books, brochures, and other reading
materials. The company is promoted and managed by Mr Amit Kaka. The
company does work for private publishers and jobwork for NCERT.
SICAGEN INDIA: CRISIL Withdraws B+ Rating on INR37cr Loan
---------------------------------------------------------
CRISIL has withdrawn its ratings on the bank facilities of Sicagen
India Limited (SIL; part of the Sicagen group) on the request of
the company and receipt of a no objection certificate from its
bank. The rating action is in line with CRISIL's policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 8 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Cash Credit 37 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
Channel Financing 32 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long Term 13 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with SIL for obtaining
information through letters and emails dated July 9, 2019,
September 23, 2019 and September 27, 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 they are arrived at without any management
interaction and are 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 SIL. This restricts CRISIL's
ability to take a forward SIL is consistent with 'Scenario 4'
outlined in the 'Framework for Assessing Consistency of
Information. Based on the last available information, the rating on
bank facilities of SIL continues to be 'CRISIL B+/Stable/CRISIL A4
Issuer Not Cooperating'.
CRISIL has withdrawn its ratings on the bank facilities of SIL on
the request of the company and receipt of a no objection
certificate from its bank. The rating action is in line with
CRISIL's policy on withdrawal of its ratings on bank loans.
Analytical Approach
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of SIL and its wholly-owned subsidiaries,
WCPL, Danish Steel Cluster Pvt Ltd (DSCPL) and South India House
Estates and Properties Ltd. This is because all these entities,
collectively referred to as the Sicagen group, have high
management, operational and financial integration.
SIL was incorporated in June 2004 and demerged from Sical Logistics
Ltd with effect from October 2006. The Chennai-based company trades
in building material and governing instruments, and also
manufactures drums, cables, boats, and specialty chemicals. It is
part of the MA Chidambaram group, a large business conglomerate.
The company is listed on the Bombay Stock Exchange and National
Stock Exchange.
Wilson Cables Pvt Ltd (WCPL) is a Singapore-based manufacturer of
cables used in construction and industrial applications.
DSCPL is a Bengaluru-based manufacturer of specialty steel parts
and assemblies.
SIMPLEX ENGINEERS: CRISIL Hikes Rating on INR.5cr Loan to B-
------------------------------------------------------------
CRISIL has upgraded its ratings on the bank loan facilities of
Simplex Engineers And Traders (SET) to 'CRISIL B-/Stable/CRISIL A4'
from 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .4 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit .5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Letter of Credit 6.5 CRISIL A4 (Upgraded from
'CRISIL D')
Proposed Short Term 5.1 CRISIL A4 (Upgraded from
Bank Loan Facility 'CRISIL D')
The upgrade reflects regular account conduct and timely servicing
of debt by the firm.
CRISIL's ratings continue to reflect the company's modest scale of
operations, and low operating margin, which remains susceptible to
fluctuations in foreign exchange (forex) rates. These weaknesses
are partially offset by extensive experience of SET's partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Low profitability, and vulnerability to foreign exchange
fluctuations
Operating margin has fluctuated between 3.8% in fiscal 2018 and (-)
1.7% in fiscal 2019, over fiscals 2016 to 2019. The company imports
goods to be traded from African countries. As exposure arising from
imports is unhedged, SET remains vulnerable to forex risk.
* Modest scale of operations
Modest scale of operations, as reflected in revenue of INR10.4
crore in fiscal 2019, will continue limit the operating
flexibility.
Strength
* Extensive experience of the partners
The company was mainly engaged in manufacturing of vacuum filters,
for players in the sugar and cement industries. However, due to a
slowdown in new orders and decline in revenue, the company started
trading in agricultural commodities in 2016.
Liquidity: Poor
Bank limit utilisation was moderate averaging 64.67% over the 12
months ended August 31, 2019. Cash accrual of over INR0.1 crore,
should suffice to cover the maturing term debt of INR0.02 crore,
over the medium term. Current ratio was comfortable at 1.7 times as
on March 31, 2019.
Outlook: Stable
CRISIL believes SET will continue to benefit from the extensive
experience of its partners.
Rating sensitivity factors
Upward Factors
* Increase in net cash accrual to INR30 lakh or above, on a
sustainable basis, driven by increase in revenue and/or
profitability
* Improvement in networth and debt protection metrics
Downward Factors
* Decline in net cash accrual to below INR5 lakh
* Increase in gearing or weakening of debt protection metrics
* Increase in bank limit utilisation.
SET was formed as a proprietorship firm of Mr KM Mehra in 1965.
Operations are currently managed by Mr KM Mehra, Mr Vijay Mehra and
Mr Nischint Mehra, sharing profit and losses in the ratio 40:40:20,
respectively. The firm is mainly trades in agro products, primarily
cashew nuts. It also manufactures machinery parts such as vacuum
filters and clarifiers, mainly used in sugar mills. The major raw
material being steel (stainless steel to carbon steel) is procured
from domestic manufacturers and traders.
VIKAS ROAD: CRISIL Lowers Rating on INR22cr Cash Loan to 'B'
------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Vikas
Road Carriers Limited (VRCL) to 'CRISIL B/Stable/CRISIL A4' from
'CRISIL BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL A4 (Downgraded from
'CRISIL A4+')
Cash Credit 22 CRISIL B/Stable (Downgraded
from 'CRISIL BB/Stable')
Proposed Long Term 1 CRISIL B/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB/Stable')
The downgrade reflects worsening of liquidity as reflected in
decline in net cash accrual (NCA) to INR2.92 crore in fiscal 2019
(against annual repayment obligation of INR6.3 crore) from INR7.06
crore in fiscal 2018 due to decrease in operating margin to 5.9%
from 9.1%. The poor liquidity situation is expected to continue in
fiscal 2020 due to low profitability. Profit After Tax (PAT)
margin of (-) 3.7% for fiscal 2019 led to decline in networth to
INR4.87 crore as on March 31, 2019 from INR9.17 crore a year
earlier. Debt protection metrics also witnessed decline with
interest cover and net cash accrual to adjusted debt (NCAAD)
decreasing to 1.7 times and 0.07 time in fiscal 2019 from 3.0 times
and 0.19 time in fiscal 2018.
The ratings reflect poor liquidity, exposure to intense competition
in the logistics industry, and weak financial risk profile. These
weaknesses are partially offset by the extensive experience of the
company's promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Poor liquidity: Net cash accrual (NCA) declined to INR2.92 crore
in fiscal 2019 (against annual repayment obligation of INR6.3
crore) from INR7.06 crore in fiscal 2018. Low profitability
expectation over medium term is expected to result in weak cash
accruals vis-a-vis the repayment obligations.
* Exposure to intense competition in the logistics industry: Given
the low entry barriers to the domestic road freight transport
industry, VRCL faces intense competition from organised and
unorganised players. While roadways remain the most preferred mode
of transport given the inherent advantages, users still have an
edge in pricing power, due to high fragmentation in the sector and
competition even among large-fleet transport operators.
* Modest financial risk profile: Gearing increased to 8.6 times as
on March 31, 2019 from 4.1 times as on March 31, 2018, driven by
networth erosion on account of loss after tax reported for the
fiscal. Debt protection metrics also witnessed decline with
interest cover and net cash accrual to adjusted debt (NCAAD)
decreasing to 1.7 times and 0.07 time in fiscal 2019 from 3.0 times
and 0.19 time in fiscal 2018. On account of low profitability, the
profile is expected to remain modest over the medium term.
Strength
* Extensive experience of the promoters: The promoters' experience
of three decades in the transport industry, and the company's
established market position in northern, southern, and western
India, will continue to support its business risk profile. The
company operates through 32 branches across India, and caters to an
established clientele.
Liquidity: Poor
Net cash accrual (NCA) of INR2.92 crore in fiscal 2019 was lower
than annual repayment obligation of INR6.3 crore and current ratio
was modest at 0.9 time as on March 31, 2019, though bank limit
utilization was moderate at 80%, averaged over 12 months ended Sep,
2019.
Based in Mumbai, VRCL was set up as a partnership firm by Mr H S
Chadha and his brother, Mr S S Chadha, in 1988, and was
reconstituted as a public limited company in 1995. The company
provides bulk road transport services in southern and western
India.
VR EARTH: CRISIL Lowers Rating on INR3cr Loan to 'D'
----------------------------------------------------
Due to inadequate information, CRISIL, in-line with the Securities
and Exchange Board of India guidelines, had migrated the ratings on
the bank facilities of VR Earth Movers and Constructions Private
Limited (VR) to 'CRISIL A4 Issuer Not Cooperating'. However,
management has subsequently started sharing information necessary
for carrying out a comprehensive review of the ratings.
Consequently, CRISIL has downgraded the rating on VR's bank
facilities from 'CRISIL A4 Issuer Not Cooperating' to 'CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3 CRISIL D (Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
Overdraft 2.08 CRISIL D (Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
The rating reflects instances of delay in servicing of unrated term
debt, caused by weak liquidity. Liquidity remains constrained due
to stretch in working capital cycle.
The ratings also reflect the small scale of operations in the
competitive civil construction industry and working capital
intensive operations. These weaknesses are partially offset by
extensive experience of its promoters in the civil constructions
industry.
Key Rating Drivers & Detailed Description
Weak liquidity: Liquidity is weak due to stretched working capital
cycle resulting from delays in collections from debtors.
Weaknesses
* Small scale of operations in a competitive civil constructions
industry
Scale of operations is modest as reflected in revenues estimated at
around INR25 crore in fiscal 2019. Small scale limits bargaining
power with customers, resulting in moderate operating margin.
Moreover, VR is exposed to intense competition in the civil
construction industry which is highly fragmented, with the presence
of large organised players and several unorganised players. Civil
construction of roads, water, and irrigation is intensely
competitive owing to low entry barriers. VR is exposed to intense
competition from the large organised players and other unorganised
players.
* Working capital intensive operations
The company's operations are working capital intensive primarily on
account of high debtor days. Though the company gives limited time
to its customers the receivables get stretched resulting in
stretched liquidity
Strength
* Extensive experience of promoters in the constructions industry
The business risk profile benefits from its promoters' extensive
experience in the civil construction industry. Over the past 27
years, Mr K Rajasekaran, the key promoter, has developed a keen
understanding of the civil construction industry dynamics, enabling
the company to execute projects efficiently.
Liquidity: Poor
Bank limit of INR3.5 crore is almost fully utilised due to the
large working capital requirement on account of the high
receivables from the customers. Accruals are expected to be modest
which might be just adequate to meet the term debt obligations.
Rating sensitivity factor
Upward Factor
* Track record of timely debt servicing for more than three months
* Increased availability of funds resulting in improved liquidity.
VR was incorporated in 1995 as a partnership firm by Mr K
Rajasekaran (Managing Director). In December 2010, the company was
reconstituted as a private limited company. It undertakes
constructional work such as deep excavation, footing and founding
excavation, road formation, rock and concrete demolition, and
construction of residential/hotel buildings.
ZAIBUNCO INDUSTRIES: CRISIL Hikes Rating on INR23cr Loan to B+
--------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
Zaibunco Industries Private Limited (ZIPL) to 'CRISIL B+/Stable'
from 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 13 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects a belief that ZIPL's liquidity would remain
adequate over the medium term, driven by maturing of debt timely.
Further, revenue increased to INR24.51 crore from INR11.41 crore in
the previous fiscal due to better demand, healthy order flow and
successfully completion of setting up the project timely; it is
expected to reach INR35 crore in fiscal 2020 (Rs 10 crore estimated
till August 2019) with sufficient cash accruals against maturing
debt. Liquidity was however constrained by high bank limit
utilisation, averaging 99% for the 12 months through August 2019.
The upgrade also factors in healthy-but-volatile operating margin
of 14.0-17% over the past three fiscals (15% in fiscal 2019).
The rating continues to reflect the slow ramp-up of operations and
susceptibility to any unfavourable impact of regulatory changes.
These weaknesses are partially offset by the extensive experience
of the promoters in the leather goods industry through an associate
concern.
Key Rating Drivers & Detailed Description
Weakness
* Slow ramp-up of operations: The Company is exposed to
stabilisation and demand risk in the intensely competitive leather
goods industry. As commercial operations started from May 2017,
revenue was modest at around INR24.5 crore for fiscal 2019. The
pace of ramp-up in operations and will remain a key rating
sensitive factor.
* Susceptibility to any unfavourable impact of regulatory changes:
The Company will remain exposed to the policies and quality
standards of importing countries, if the goods are exported.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of over four decades in the leather tanning and
leather goods manufacturing industry through a group concern,
Karamat Tanning Industries.
Liquidity Stretched
* High bank limit utilisation
Bank limit utilisation is high around 99 percent for the past
twelve months ended March 31, 2019. CRISIL believes that bank limit
utilization is expected to remain high on account large working
capital requirement.
* Cash accrual sufficient to meet debt obligation
Cash accrual are expected to be over INR1.6 crore which are
sufficient against term debt obligation of INR1.00 million over
the medium term. In addition, it will be act as cushion to the
liquidity of the company.
* Moderate/Low current ratio
Current ratio are moderate as on March 31, 2019.
* Support from promoters in form of infusion of unsecured loan
The promoters are likely to extend support in the form of unsecured
loans to the company to meet its working capital requirements and
repayment obligations
Outlook: Stable
CRISIL believes ZIPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised to
'Positive' if higher sales and profitability lead to substantial
cash accrual. The outlook may be revised to 'Negative' if financial
risk profile and liquidity weaken due to debt-funded capital
expenditure, stretched working capital cycle or constrained
profitability.
Rating sensitivity factors:
Upward factors:
* Improvement in operating margin to over 14%
* Sustained growth in revenue, driven by more orders from existing
customers
Downward factors:
* Weakening of financial risk profile due to excessive stretch in
working capital cycle with GCAs rising above 368 days
* Decline in operating profitability, affecting accrual
ZIPL, formerly Karamat Tanning Private Limited, was established in
2010. The company is promoted by Mr Malik Kaleemullah and Mr Malik
Barakat Ullah to manufacture leather products such as bags, belts,
and wallets. The manufacturing facility is in Kanpur, Uttar
Pradesh.
=========
J A P A N
=========
JAPAN DISPLAY: Posts JPY108.67BB Net Loss in H1 Ended Sept. 30
--------------------------------------------------------------
The Japan Times reports that Japan Display Inc. reported a group
net loss of JPY108.67 billion ($996 million) for the fiscal first
half on Nov. 13, up more than tenfold from a year earlier, due to
massive restructuring costs that saw its negative net worth also
surpass JPY100 billion.
The red ink for the six months ended Sept. 30 compared with a loss
of JPY9.52 billion in the same period last year, the report
discloses.
The Japan Times says the display maker's negative net worth widened
to JPY101.6 billion as of the end of September, compared with
JPY77.2 billion three months earlier, and its capital adequacy
ratio fell to minus 21.8 percent.
According to The Japan Times, the company posted a half-year group
operating loss of JPY35.62 billion - a deterioration from a loss of
JPY14.46 billion a year earlier - on sales of JPY237.76 billion, up
11.0 percent.
"I feel very sorry for logging the red ink in the first half, but
we finished our restructuring efforts in September and have made
our business profitable since October," the report quotes Japan
Display CEO Minoru Kikuoka as saying at a news conference.
The ailing display panel maker posted a special loss of JPY63.75
billion for overhaul steps including more than 1,200 job cuts and a
write-down of idle facilities, relates The Japan Times.
The Japan Times adds that Japan Display has said it aims to secure
a total of JPY50 billion ($460 million), including $200 million
from major client Apple Inc. and up to $180 million from Hong
Kong's Oasis Management Co. by the end of November, after a bailout
plan from a Chinese-Taiwanese consortium stalled.
"We have no problem with our financing, as we are talking with
other investors, but the official announcement (on the rescue
framework) may be delayed until December," Mr. Kikuoka, as cited by
The Japan Times, said.
He said the company expects business to turn around with solid
display sales to Apple amid continued iPhone demand, adding that
Japan Display will begin manufacturing OLED displays this month,
the report relates.
The Japan Times adds that Mr. Kikuoka also said the company's
negative net worth would turn positive following the capital
injections, and that an extraordinary shareholders' meeting is
being considered for January or February to approve the bailout
plan.
Japan Display was established in 2012 through the merger of the
display operations of Sony Corp., Hitachi Ltd. and Toshiba Corp.
with support from the state-backed INCJ Ltd. fund.
=====================
N E W Z E A L A N D
=====================
TAMARIND TARANAKI: Placed Under Voluntary Administration
--------------------------------------------------------
Mike Watson at Stuff.co.nz reports that hopes are being pinned on
three oil wells giving troubled oil and gas firm Tamarind Taranaki
the ability to pay its bills to up to 100 local suppliers.
The Malaysian-owned firm was placed into voluntary administration
after company directors issued a statement on Nov. 11 announcing it
was "insolvent, or may become insolvent," the report discloses.
A meeting has been scheduled for next week in New Plymouth between
the administrators and creditors, Stuff notes.
Stuff relates that Eanna Brennan, senior manager for administrators
Borrelli Walsh, said the firm now had a 25 day moratorium to assess
its ability to continue operating.
Stuff says the company had struggled to meet its financial
commitments since a NZD300 million well-drilling programme in the
offshore Tui field was suspended in September after the first well
proved dry.
According to Stuff, Mr. Brennan said the well was plugged and
abandoned and the company decided not to carry on with the
programme using the semi-submersible COSL Prospector rig, which had
been contracted to late 2019.
In October, Tamarind Taranaki did not renew a contract with BW
Offshore for the floating production, storage and offloading (FPSO)
vessel Umuroa after December 31 this year, putting 58 jobs at risk,
the report recalls.
The Umuroa processed crude oil from the Tui, Amokura, and Pateke
wells in the Tui field, owned by Tamarind.
Stuff relates that Mr. Brennan said once the COSL Prospector left
the drilling area there was potential to extract 1500 barrels a day
from the existing three production wells. This would provide
necessary funding to pay creditors.
The fields contains up to 5m barrels of oil, which would prolong
the life of the field to 2022, he said.
"The debt of the company was unsustainable but the underlying
business is recoverable," the report quotes Mr. Brennan as saying.
"The administrators will be trying to assess where the business is
going and identify suppliers to continue to work with."
Stuff adds that Mr. Brennan said the decision did not affect
Malaysian-based Tamarind Resources' NZD48 million onshore
acquisition of TAG Oil, or other subsidiaries of the company.
At next week's creditor's meeting there would be a vote to form a
committee to consult with the administrators and form a plan to
work together under a deed of company arrangement, or DOCA, he
said, Stuff relays.
Taranaki Chamber of Commerce ceo Arun Chaudhari said the company's
debt position was "not encouraging" but not unexpected for the oil
industry.
Financial statements provided by TT directors showed the company
made a $4.8 million loss after tax in 2018, Stuff discloses.
"Taranaki has a resilient economy and there was confidence in the
region while we transition towards 2050," the report quotes Mr.
Chaudhari as saying.
=================
S I N G A P O R E
=================
TRIYARDS HOLDINGS: Gets Summons to be Placed under JM
-----------------------------------------------------
Leila Lai at The Business Times reports that troubled marine
operator Triyards Holdings has received an originating summons and
supporting affidavit from OCBC for the company to be placed under
judicial management, the company said in a Singapore Exchange
filing.
OCBC is also seeking the appointment of interim judicial managers
over the company before the judicial management application is
heard, BT says. A pre-trial conference for the application is to be
held on Nov. 28, but no hearing dates have been fixed yet for the
judicial management and interim judicial manager applications,
according to BT.
BT relates that Triyards said it is assessing the impact of the
applications and taking legal advice. It will make further
announcements as and when there are any material developments.
Triyards shares have been suspended from trading since September
2017, the report notes.
About Triyards Holdings
Triyards Holdings Limited is a Singapore-based investment holding
company. The Company operates through Engineering and Fabrication
Services segment. The Company's geographical segments include Asia,
Europe and Other Countries. The Company provides integrated
engineering, fabrication and ship construction solutions for the
global offshore and marine industry. The Company focuses on
shipbuilding, ship conversions, medium to heavy fabrication works
and ship repairs. The Company's offerings include offshore support
vessels, liftboats, research vessels, aluminum built security
vessels, chemical tankers and windfarm service vessels. The
Company's business and facilities include specialized shipbuilding;
ship repair, maintenance and conversion; rig building, and offshore
engineering, construction and fabrication.
The Company's Strategic Marine's military portfolio includes
Inshore Patrol Vessels, Fast Response Vessels, Offshore Patrol
Vessels and Landing Craft.
The company is the yard operating arm of offshore and marine group
Ezra Holdings, which filed for bankruptcy protection in the US in
2017.
*********
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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