/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/191129.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 29, 2019, Vol. 22, No. 239 Headlines A U S T R A L I A ADVANCED ACADEMY: First Creditors' Meeting Set for Dec. 5 BOARD EXPRESS: Second Creditors' Meeting Set for Dec. 5 CIRARV PTY: First Creditors' Meeting Set for Dec. 5 CYNEAST PTY: First Creditors' Meeting Set for Dec. 5 ELIZA HOLDINGS: Second Creditors' Meeting Set for Dec. 11 FIRSTMAC MORTGAGE 4-2019: S&P Assigns Prelim BB Rating on E Notes FLEXI ABS 2019-2: Fitch Assigns BB+sf Rating on Class E-G Notes JETA HOLDINGS: Second Creditors' Meeting Set for Dec. 4 NATURAL GROCERY: First Creditors' Meeting Set for Dec. 5 PEPPER RESIDENTIAL 18: Moody's Hikes Class F Notes Rating to Ba2 ROMEO'S FINE: First Creditors' Meeting Set for Dec. 6 B A N G L A D E S H BANGLALINK DIGITAL: S&P Withdraws 'BB-' LT Issuer Credit Rating C H I N A TIBET FINANCIAL: Moody's Affirms Ba2 CFR & Alters Outlook to Neg. [] CHINA: Troubled Banks Struggle to Raise Funds I N D I A A M VINYL PRIVATE: Insolvency Resolution Process Case Summary AIKYA CHEMICALS: Ind-Ra Affirms 'B+' Issuer Rating, Outlook Stable ANKITA IMPEX: CARE Keeps B Rating in Not Cooperating Category AVIVA LIFE: Settles Insolvency Case in NCLT BRIJBASI HI-TECH: CARE Hikes Rating on INR8cr Loan to B+ EARTHEN TREASURES: CARE Keeps 'D' Rating in Not Cooperating EASTERN AUTOMOTIVE: CARE Keeps 'B' Rating in Not Cooperating GARE BROTHERS: CARE Maintains B- Rating in Not Cooperating GENERAL GARMENTS: Insolvency Resolution Process Case Summary HARDIK CONSTRUCTION: CARE Lowers Rating on INR4cr Loan to 'B' IBC LIMITED: CARE Withdraws B/A4 Rating on Bank Facilities JOSHI ENTERPRISE: CARE Reaffirms B Rating on INR5.0cr LT Loan JUBILANT PHARMA: S&P Affirms BB- ICR on Chemicals Segment Demerger KOTAK AGRO: CARE Hikes Rating on INR9.13cr LT Loan to 'BB-' MAGNA RESEARCH: Insolvency Resolution Process Case Summary MANAPPURAM FINANCE: Fitch Assigns BB- LT IDRs, Outlook Stable MANAPPURAM FINANCE: S&P Assigns 'BB-/B' ICRs, Outlook Stable MANAPPURAM FINANCE: S&P Rates US$750MM Sec. Euro MTN Program 'BB-' MEENAKSHI ENERGY: NCLT Orders Insolvency Proceedings vs. Firm OTTO PROJECTS: Insolvency Resolution Process Case Summary PASSION INDUSTRIES: CARE Keeps B+ Rating in Not Cooperating RELIANCE MEDIAWORKS: CARE Cuts Rating on INR638.20cr NCD to B- RR COTTONS: Ind-Ra Migrates BB+ Rating to Non-Cooperating SEM INDUSTRIAL: CARE Lowers Rating on INR3.75cr LT Loan to B SHARMA CONSTRUCTION: CARE Keeps B+ Rating in Not Cooperating SHIVAM PROTEIN: CARE Lowers Rating on INR9.69cr Loan to 'D' SHRI SARAVANA: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating SIRI CONSTRUCTIONS: Ind-Ra Migrates BB+ Rating to Non-Cooperating SVG GRANITES: Ind-Ra Affirms 'B' LT Issuer Rating, Outlook Stable J A P A N PANASONIC CORP: Sell Loss-Making Chip Business to Nuvoton M A L A Y S I A ICON OFFSHORE: Cash Call, Debt Restructuring Plans Approved LONDON BISCUITS: RHB Bank Sues PN17 Firm Over MYR22.6MM Owed S I N G A P O R E HIAP SENG: Seeks Trading Suspension Amid Going Concern Uncertainty RHT HEALTH: May Not Proceed with Winding Up; Seeks to Adjourn EGM S O U T H K O R E A KOREA RESOURCES: S&P Revises Stand-Alone Credit Profile to 'b' V I E T N A M NUTIFOOD NUTRITION: S&P Withdraws Prelim. 'B' Issuer Credit Rating - - - - - ================= A U S T R A L I A ================= ADVANCED ACADEMY: First Creditors' Meeting Set for Dec. 5 --------------------------------------------------------- A first meeting of the creditors in the proceedings of Advanced Academy Pty. Limited will be held on Dec. 5, 2019, at 12:00 p.m., at Jarara-lluka Rooms, Level 2, The Grace Hotel, at 77 York Street, in Sydney, NSW. Benjamin Michael Carson of Farnsworth Carson was appointed as administrator of Advanced Academy on Nov. 25, 2019. BOARD EXPRESS: Second Creditors' Meeting Set for Dec. 5 ------------------------------------------------------- A second meeting of creditors in the proceedings of Board Express Pty Limited has been set for Dec. 5, 2019, at 4:00 p.m. at the offices of Veritas Advisory, Level 5, at 123 Pitt 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 Dec. 4, 2019, at 4:00 p.m. Steve Naidenov of Veritas Advisory was appointed as administrator of Board Express on Oct. 31, 2019. CIRARV PTY: First Creditors' Meeting Set for Dec. 5 --------------------------------------------------- A first meeting of the creditors in the proceedings of Cirarv Pty Ltd, trading as Bhajune Hair & Make Up Artist, will be held on Dec. 5, 2019, at 11:00 a.m. at Level 2, at 9 Phillip Street, in Parramatta, NSW. Gavin Moss and Desmond Teng of Chifley Advisory were appointed as administrators of Cirarv Pty on Nov. 25, 2019. CYNEAST PTY: First Creditors' Meeting Set for Dec. 5 ---------------------------------------------------- A first meeting of the creditors in the proceedings of Cyneast Pty Ltd will be held on Dec. 5, 2019, at 11:00 a.m. at Jarara-lluka Rooms, Level 2, The Grace Hotel, at 77 York Street, in Sydney, NSW. Benjamin Michael Carson of Farnsworth Carson was appointed as administrator of Cyneast Pty on Nov. 25, 2019. ELIZA HOLDINGS: Second Creditors' Meeting Set for Dec. 11 --------------------------------------------------------- A second meeting of creditors in the proceedings of Eliza Holdings Queenstown Pty Ltd has been set for Dec. 11, 2019, at 11:30 a.m. at the offices of BPS Reconstruction And Recovery, Level 5, Suite 6, at 350 Collins Street, in Melbourne, Victoria. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Dec. 10, 2019, at 4:00 p.m. Simon Patrick Nelson of BPS Reconstruction was appointed as administrator of Eliza Holdings on Nov. 7, 2019. FIRSTMAC MORTGAGE 4-2019: S&P Assigns Prelim BB Rating on E Notes ----------------------------------------------------------------- S&P Global Ratings assigned preliminary ratings to seven of the eight classes of prime residential mortgage-backed securities (RMBS) to be issued by Firstmac Fiduciary Services Pty Ltd. as trustee for Firstmac Mortgage Funding Trust No.4 Series 4-2019. The ratings reflect: -- S&P's view of the credit risk of the underlying collateral portfolio, including the fact that this is a closed portfolio, which means no further loans will be assigned to the trust after the closing date. -- S&P's view of the credit support, which is sufficient to withstand the stresses we apply. Credit support for the rated notes comprises note subordination, excess spread, and lenders' mortgage insurance on 21.5% of the portfolio. -- S&P's expectation that the various mechanisms to support liquidity within the transaction, including a liquidity reserve equal to 1.0% of the outstanding note balance, subject to a floor of A$500,000, and the principal draw function are sufficient to ensure timely payment of interest. -- The extraordinary expense reserve of A$150,000, funded from day one by Firstmac Ltd., available to meet extraordinary expenses. The reserve will be topped up via excess spread if drawn. -- The fixed- to floating-rate interest-rate swap provided by Australia and New Zealand Banking Group Ltd. to hedge the mismatch between receipts from fixed-rate mortgage loans and the variable-rate RMBS. PRELIMINARY RATINGS ASSIGNED Firstmac Mortgage Funding Trust No.4 Series 4-2019 Class Rating Amount (A$ mil.) A-1 AAA (sf) 425.00 A-2 AAA (sf) 35.00 AB AAA (sf) 17.50 B AA (sf) 9.00 C A (sf) 6.00 D BBB (sf) 3.40 E BB (sf) 2.00 F NR 2.10 NR--Not rated. FLEXI ABS 2019-2: Fitch Assigns BB+sf Rating on Class E-G Notes --------------------------------------------------------------- Fitch Ratings assigned final ratings to Flexi ABS Trust 2019-2's asset-backed floating-rate notes. The issuance consists of notes backed by a pool of first-ranking Australian unsecured consumer receivables, branded as 'humm', and originated by Certegy Ezi-Pay Pty Ltd, a wholly owned subsidiary of FlexiGroup Limited. The notes have been issued by Perpetual Corporate Trust Limited in its capacity as trustee of Flexi ABS Trust 2019-2 (the issuer). RATING ACTIONS Flexi ABS Trust 2019-2 Class A1 AU3FN0051660; LT AAAsf New Rating; previously AAA(EXP)sf Class A1-G AU3FN0051678; LT AAAsf New Rating; previously AAA(EXP)sf Class B-G AU3FN0051686; LT AA+sf New Rating; previously AA+(EXP)sf Class C-G AU3FN0051694; LT Asf New Rating; previously A(EXP)sf Class D-G AU3FN0051702; LT BBBsf New Rating; previously BBB(EXP)sf Class E-G AU3FN0051710; LT BB+sf New Rating; previously BB+(EXP)sf Class F; LT NRsf New Rating; previously NR(EXP)sf TRANSACTION SUMMARY The transaction has been upsized to AUD265 million, from AUD245 million, since the expected ratings were assigned on October 29, 2019. The increased pool consists of 93,793 receivables with an average balance of AUD2,825 at the October 30, 2019 cut-off date. The receivables are retail point-of-sale, buy-now-pay-later consumer-finance loans used to finance a wide variety of products, such as solar equipment (47.9% of the portfolio), home items (16.3%), jewellery (10.5%) and other items. KEY RATING DRIVERS Obligor Default Risk: Default rates have been stable since 2015, despite falling weighted-average (WA) customer-deposit rates. A greater proportion of Certegy's originations are from repeat customers with a demonstrated performance history. Fitch assumed a WA default rate of 5.0% based on the sound performance of Certegy's portfolio and previous transactions and a WA default multiple of 5.0x for 'AAAsf', which reflects the default data of a benign economic period, the data's relative volatility and a higher default base case for jewellery and other items. Fitch expects stable asset performance, supported by sustained economic growth in Australia. Fitch forecasts GDP growth of 2.3% in 2020, a stable labour market and low interest rates to support the Outlook of the rated notes. Cash Flow Dynamics: Fitch completed full cash-flow modelling and determined that full and timely payment of principal and interest was made in all rating scenarios. Structural Risk: A liquidity facility is available to ensure stable cash flow for classes A1 to E-G notes as well as trust expenses. The transaction includes fixed-rate swaps with notionals based on fixed schedules and derivative reserve accounts to trap excess spread to the extent that voluntary prepayments and defaults cause the transaction to be overhedged. Counterparty Risk: The transaction includes structural mechanisms to ensure remedial action takes place if the ratings of the swap providers or trust account bank fall below a certain level. Servicer, Operational Risks: Fitch reviewed the originator's underwriting and the servicer's capabilities and found that the operations of the originator and servicer were comparable with those of other consumer-finance lenders. Flexirent Capital Pty Ltd (servicer) is not rated and servicer disruption risk is mitigated via back-up arrangements. The nominated back-up servicer is illion Australia Pty Ltd, which has live access to the servicer's systems and can step in immediately upon servicer termination. Residual Value Risks: Residual value risk is not a driver for this transaction as each receivable is contracted to amortise to a zero balance at its respective maturity date. RATING SENSITIVITIES Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than Fitch's base case and is likely to result in a decline in credit enhancement and remaining loss-coverage levels available to the notes. Decreased CE may make certain note ratings susceptible to negative rating action, depending on the extent of the coverage decline. Hence, Fitch conducts sensitivity analysis by stressing a transaction's initial base-case assumptions. Class: A1/A1-G/B-G/C-G/D-G/E-G Expected Rating: AAAsf/AAAsf/AA+sf/Asf/BBBsf/BB+sf Expected impact on expected rating of increased defaults: Increase defaults by 10%: AAAsf/AAAsf/AAsf/Asf/BBB-sf/BB+sf Increase defaults by 25%: AAAsf/AAAsf/AA-sf/BBB+sf/BB+sf/BBsf Increase defaults by 50%: AAsf/AAsf/Asf/BBBsf/BBsf/BB-sf USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Prior to the transaction closing, Fitch sought to receive a third-party assessment conducted on the asset portfolio information, but none was available for this transaction. As a part of its ongoing monitoring, Fitch conducted a review of a small targeted sample of the originator's files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis, according to its applicable rating methodologies, indicates that it is adequately reliable. SOURCES OF INFORMATION The information below was used in the analysis: - historical static loss data provided by flexigroup as of August 2019; - loan-by-loan data provided by flexigroup at October 30, 2019; and - transaction documentation provided by Clayton Utz, the issuer's counsel. The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public. JETA HOLDINGS: Second Creditors' Meeting Set for Dec. 4 ------------------------------------------------------- A second meeting of creditors in the proceedings of Jeta Holdings Pty Ltd, trading as Stow Smash Repairs, has been set for Dec. 4, 2019, at 10:00 a.m. at the offices of DW Advisory, Level 2, at 32 Martin Place, 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 Dec. 3, 2019, at 5:00 p.m. Anthony Elkerton and Cameron Gray of DW Advisory were appointed as administrators of Jeta Holdings on Oct. 30, 2019. NATURAL GROCERY: First Creditors' Meeting Set for Dec. 5 -------------------------------------------------------- A first meeting of the creditors in the proceedings of The Natural Grocery Company Pty Ltd, trading as Flannerys, Kunara Cafe & Garden Centre and Fundies, will be held on Dec. 5, 2019, at 11:30 a.m. at Banjo Paterson Room, The Mariott Hotel, at 30 Pitt Street, in Sydney, NSW. Timothy Cook of Balance Insolvency was appointed as administrator of Natural Grocery on Nov. 25, 2019. PEPPER RESIDENTIAL 18: Moody's Hikes Class F Notes Rating to Ba2 ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings on six classes of notes issued by two Pepper Residential Securities Trust RMBS. The affected ratings are as follows: Issuer: Pepper Residential Securities Trust No. 17 Class D Notes, Upgraded to Aa1 (sf); previously on Mar 15, 2019 Upgraded to Aa2 (sf) Class E Notes, Upgraded to A1 (sf); previously on Mar 15, 2019 Upgraded to A3 (sf) Class F Notes, Upgraded to Baa3 (sf); previously on May 7, 2018 Upgraded to Ba2 (sf) Issuer: Pepper Residential Securities Trust No. 18 Class D Notes, Upgraded to Aa2 (sf); previously on Mar 15, 2019 Upgraded to Aa3 (sf) Class E Notes, Upgraded to Baa1 (sf); previously on Mar 15, 2019 Upgraded to Baa2 (sf) Class F Notes, Upgraded to Ba2 (sf); previously on Dec 4, 2017 Upgraded to Ba3 (sf) RATINGS RATIONALE The upgrades were prompted by the credit enhancement available to the affected notes and by transaction portfolio performance that has been better than Moody's assumptions at closing. Since the last respective rating actions, the credit enhancement available to all affected classes of notes has increased or remained broadly the same. The transactions are currently making pro-rata principal repayments among all rated notes. In both transactions, the Class F Notes currently benefit from additional principal repayments from the turbo principal allocation, which is used to make principal repayments to the rated notes in reverse sequential order starting with the Class F Notes. Pepper Residential Securities Trust No. 17 Following the October 2019 payment date, the subordination available to the Class D and Class E Notes remained at 9.2% and 6.5%, unchanged from the levels at the time of the last rating action in March 2019. Meanwhile, the subordination available to the Class F Notes increased to 4.9%, from 3.0% at the time of their last rating action in May 2018. As of September 2019, 4.2% of the outstanding pool was 30-plus day delinquent, and 1.5% was 90-plus day delinquent. The deal has incurred AUD820,898 of losses to date, which have been reimbursed by excess spread. Based on the observed performance and outlook, Moody's has revised its expected loss assumption to 3.0% of the outstanding pool by projecting the future defaults on delinquent and defaulted loans. Moody's initial loss assumption for the transaction was 1.6% of the original pool balance. Moody's decreased its MILAN CE assumption to 12.1% from 12.8% since the last rating action in March 2019, based on the current portfolio characteristics. Pepper Residential Securities Trust No. 18 Following the October 2019 payment date, the subordination available to the Class D and Class E Notes was at 8.1% and 5.6%, largely flat from 8.0% and 5.6% at the time of the last rating action in March 2019. Meanwhile, the subordination available to the Class F Notes increased to 4.0%, from 2.0% at the time of their last rating action in December 2017. As of September 2019, 3.8% of the outstanding pool was 30-plus day delinquent, and 1.4% was 90-plus day delinquent. The deal has incurred AUD103,325 of losses to date, which have been reimbursed by excess spread. Based on the observed performance and outlook, Moody's has revised its expected loss assumption to 3.0% of the outstanding pool by projecting the future defaults on delinquent and defaulted loans. Moody's initial loss assumption for the transaction was 1.7% of the original pool balance. Moody's decreased its MILAN CE assumption to 12.6% from 13.3% since the last rating action in March 2019, based on the current portfolio characteristics. Moody's has also run various expected loss scenarios based on the observed performance and outlook. The scenarios include maintaining the closing expected loss assumption as a percentage of the original pool balance and using a lower expected loss assumption. The MILAN CE and expected loss assumptions are the two key parameters used by Moody's to calibrate the loss distribution curve, which is one of the inputs into the cash-flow model. The transactions are Australian residential mortgage backed securities (RMBS) secured by portfolios of residential mortgage loans, originated by Pepper Group Limited, an Australian nonbank mortgage lender. A portion of the portfolios consist of loans extended to borrowers with impaired credit histories or made on a limited documentation basis. The principal methodology used in these ratings was "Moody's Approach to Rating RMBS Using the MILAN Framework" published in July 2019. Factors that would lead to an upgrade or downgrade of the ratings: Factors that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expectations, and (2) an increase in the credit enhancement available to the notes. Factors that could lead to a downgrade of the ratings include (1) performance of the underlying collateral that is worse than Moody's expectations, (2) a decrease in the credit enhancement available to the notes, and (3) a deterioration in the credit quality of the transaction counterparties. ROMEO'S FINE: First Creditors' Meeting Set for Dec. 6 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Romeo's Fine Food Pty Ltd will be held on Dec. 6, 2019, at 3:00 p.m. at Level 30, at 264 George Street, in Sydney, NSW. Peter Paul Krejci of BRI Ferrier was appointed as administrator of Romeo's Fine on Nov. 26, 2019. =================== B A N G L A D E S H =================== BANGLALINK DIGITAL: S&P Withdraws 'BB-' LT Issuer Credit Rating --------------------------------------------------------------- S&P Global Ratings said that it had withdrawn the long-term issuer credit rating on Banglalink Digital Communications Ltd. at the company's request. At the time of withdrawal, the rating was 'BB-'. The stable outlook at the time of withdrawal reflected S&P's expectation that the parent company, VEON Ltd., will extend necessary and timely financial support to the company to meet its upcoming debt maturity. Banglalink successfully refinanced the maturity of its US$300 million unsecured notes due on May 6, 2019 with a syndicated term loan. The new term loan, guaranteed by VEON Holdings B.V., has a bullet maturity in April 2020. ========= C H I N A ========= TIBET FINANCIAL: Moody's Affirms Ba2 CFR & Alters Outlook to Neg. ----------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 long-term issuer rating, corporate family rating and senior unsecured rating of Tibet Financial Leasing Co., Ltd. The company's Baseline Credit Assessment has also been affirmed at b1. At the same time, Moody's has changed the entity level outlook to negative from stable to reflect the uncertainties surrounding Tibet Financial Leasing's strategy and funding costs due to the liquidity problems at its largest shareholder, Tunghsu Group Co., Ltd, and the potential change in its shareholding. The rating action follows the announcements by Dongxu Optoelectronic Technology Co., Ltd., a subsidiary of Tunghsu Group, on November 19, 2019 that the company is unable to repay its medium term notes, and that its ultimate parent, Dongxu Optoelectronic Investment Co., Ltd., plans to sell 51.46% stake in Tunghsu Group, to Shijiazhuang State-owned Assets Supervision and Administration Commission (Shijiazhuang SASAC). RATINGS RATIONALE The change in Tibet Financial Leasing's outlook to negative from stable reflects the high uncertainty with regards to widespread negative impact of Tunghsu Group's financial difficulties and the potential change of control on the company's large shareholder. Tibet Financial Leasing relies on short-term wholesale funding, including borrowings from banks and other financial leasing companies, to support its long-term leasing business. The resulting mismatch between the tenor of its assets and liabilities exposes it to high refinancing risk. Moody's expects the company's funding costs and ability to refinance will be sensitive during this period due to the financial difficulties at Tunghsu Group. This risk is somewhat mitigated by the proposed transaction that Shijiazhuang SASAC will become Tunghsu Group's largest shareholder. However, it will take time to complete this transaction and is subject to regulatory approvals. The affirmation of Tibet Financial Leasing's Ba2 ratings reflects Moody's view that (1) the financial difficulties of Tunghsu Group and its subsidiaries will not have a direct impact on Tibet Financial Leasing's day-to-day operations, and (2) Tibet Financial Leasing will continue to receive a moderate level of indirect support and have a high level of dependence from the Government of China (A1 stable) via the Government of the Tibet Autonomous Region through some of its shareholders, under Moody's joint-default analysis for government-related issuers, resulting in a two-notch uplift from its BCA of b1. While Tunghsu Group holds a 48.5% stake in Tibet Financial Leasing, Tunghsu Group is only a financial investor without direct involvement in the operations of Tibet Financial Leasing. It only has two out of five seats on Tibet Financial Leasing's Board of Directors, which avoids potential dividend upstreams that could weaken Tibet Financial Leasing's credit profile. Moreover, the company maintains strict corporate governance and avoids related-party transactions, thereby mitigating the contagion risk from the financial difficulties at Tungshu Group. Moreover, as an entity that is 29.3% owned by the Government of the Tibet Autonomous Region via the Tibet Autonomous Region Investment Co Ltd, Bank of Tibet Co., Ltd, and Tibet Autonomous Region State-owned Assets Management Company, and as the sole financial leasing company in the region, Tibet Financial Leasing plays an important role in supporting the development of financial services in the Tibet Autonomous Region and helps attract investments from other provinces. In August 2019, the company issued RMB2 billion of bonds in the interbank bond market. The terms of the bonds require Tibet Financial Leasing to spend all of the bond proceeds in Tibet Autonomous Region, while the majority of the company's leasing businesses are located in other provinces in China and outside of the Tibet Autonomous Region. Moody's assumption of a moderate level of support is reinforced by China Banking and Insurance Regulatory Commission's regulation on financial leasing companies, which requires the originators and major shareholders including Government of the Tibet Autonomous Region to include a commitment in Tibet Financial Leasing's Article of Association to provide liquidity and capital support in times of stress. The high level of dependence reflects the company and Chinese government are exposed to some common credit risks. The b1 BCA takes into account Tibet Financial Leasing's sound financial metrics, specifically, its good profitability and asset quality. In the first nine months of 2019, the company's unaudited net profit was RMB846 million which was higher the full year net profit of 2018. Moreover, the company maintained a good asset quality. While the company reported some small amounts of impaired loans in 2019, the non-performing loan ratio was very low. On the other hand, the BCA is constrained by the company's (1) short operating history and unseasoned asset quality, (2) rapid asset growth which puts pressure on its risk management and capital adequacy, and (3) high liquidity risk due to asset and liability mismatches. WHAT COULD CHANGE THE RATING UP Given the negative outlook, Moody's is unlikely to upgrade Tibet Financial Leasing's ratings. Nevertheless, Tibet Financial Leasing's outlook could return to stable if (1) the company retains its financial profile and refinancing ability, with no material impact from the financial difficulties at Tunghsu Group, (2) it reduces the tenor mismatch between its assets and liabilities, or (3) its relationship with the Government of the Tibet Autonomous Region further strengthens, for example through an increase in the government's stake to over 50%, or through the provision of more explicit support from the central government via the Government of the Tibet Autonomous Region. WHAT COULD CHANGE THE RATING DOWN Moody's could downgrade Tibet Financial Leasing's ratings if the company's financial profile and refinancing ability are materially affected by the financial difficulties at Tunghsu Group. The company's rating could also be downgraded in case of (1) a weakening in support from the Chinese government via the Government of the Tibet Autonomous Region, (2) a significant reduction in the shareholding by the Government of the Tibet Autonomous Region, (3) a significant deterioration in the company's asset quality, due to weak risk management, and/or (4) a decline in tangible common equity/tangible managed assets to below 11%, due to higher than expected asset growth. The issuer rating and senior unsecured rating could also be downgraded if Tibet Financial Leasing's structurally senior and/or secured debt increases materially. The methodologies used in these ratings were Finance Companies Methodology published in November 2019, and Government-Related Issuers published in June 2018. Headquartered in Beijing, Tibet Financial Leasing Co., Ltd. reported unaudited assets of RMB56 billion at the end of September 2019. [] CHINA: Troubled Banks Struggle to Raise Funds ------------------------------------------------ Don Weinland at The Financial Times reports that troubled banks in China are struggling to raise funds as concerns over the health of the financial system grow and confidence in state-led bailouts falters. China's banking system is facing its greatest challenge in nearly 20 years after years of runaway growth and mounting bad debt levels, which have topped 40 per cent of loans at some small lenders, the FT says. The FT relates that the government has had to intervene in the operations of three local banks this year, starting with the takeover of Baoshang Bank in May, marking the first instance of a direct state takeover of a lender in two decades. Partial bailouts at two more lenders, Bank of Jinzhou and Hengfeng Bank, were also carried out this year with the hopes of calming nerves in the interbank market and avoiding a liquidity crisis for troubled banks that are heavily reliant on borrowing from the market, the report says. Despite those efforts, many banks are facing deteriorating funding conditions, the FT notes. Troubled banks have been able to secure only 20-40 per cent of the funds they have sought to raise in the interbank market for negotiable certificates of deposit, a vital source of funding for many smaller lenders, since the takeover of Baoshang Bank, the FT, citing research from UBS, discloses. "They clearly have some liquidity issues," said May Yan, UBS's head of greater China financials equity research, the FT relays. According to the FT, some of China's weakest banks have been forced to offer up the country's highest yields on investment products, in a sign of desperation to raise funds. Bank of Jinzhou, which received a partial bailout from ICBC in July, offers investors a 4.83 per cent return on wealth management products it sells, the highest rate in the country, according to data compiled by Rong360, an online financial services group, relays the FT. Bank of Dandong, which was hit by US sanctions for links to North Korea in 2017, will pay 4.43 per cent on wealth management products, the FT adds. Bank of Dalian, which has been bailed out twice since 2015, offers up 4.29 per cent on investment products, putting it among the top 10 highest offerings on bank investment products. "This means investors do not fully trust the government interventions," the report quotes Alicia García-Herrero, chief Asia-Pacific economist at Natixis as saying. "The market is saying there are serious doubts about these banks." The FT says funding from wealth management products does not bolster banks' balance sheets but has become an important source of income. According to the report, China's central bank warned this week that about 13 per cent of lenders in the country, or 586 institutions, presented a "high risk". Many of those risky banks, according to an annual report on the financial system from the People's Bank of China, are concentrated in rural areas, the FT relates. The funding constraints will probably increase the level of risk smaller banks are forced to take in order to pay back depositors and investors, analysts said. "The key risk of offering higher wealth management product rates is that banks may match these funds by investing in riskier assets," the FT quotes Harry Hu, a senior director at S&P Global Ratings, as saying. ========= I N D I A ========= A M VINYL PRIVATE: Insolvency Resolution Process Case Summary ------------------------------------------------------------- Debtor: A M Vinyl Private Limited As per MCA website: 323, 3rd floor, Hemkunt Chambers 89 Nehru Place New Delhi 110019 Insolvency Commencement Date: September 4, 2019 Court: National Company Law Tribunal, New Delhi Bench Estimated date of closure of insolvency resolution process: March 2, 2020 Insolvency professional: Sujata Sharma Interim Resolution Professional: Sujata Sharma D-650, Saraswati Vihar Pitampura New Delhi 110034 E-mail: sujatasharma2205@gmail.com - and - Integrated Insolvency & Restructuing (P) Ltd. 13, Community Centre 2nd Floor East of Kailash New Delhi 110065 E-mail: cirp.amvinyl@gmail.com Last date for submission of claims: September 19, 2019 AIKYA CHEMICALS: Ind-Ra Affirms 'B+' Issuer Rating, Outlook Stable ------------------------------------------------------------------ India Ratings and Research (Ind-Ra) has affirmed Aikya Chemicals Pvt Ltd.'s (ACPL) Long-Term Issuer Rating at 'IND B+'. The Outlook is Stable. The instrument-wise rating actions are: -- INR45 mil. Fund-based limits affirmed with IND B+/Stable rating; -- The 'IND B+' rating on the INR78.7 mil. Long-term loan due on July 2019 are withdrawn (paid in full); and -- INR10 mil. Non-fund-based limits affirmed with the IND A4 rating. KEY RATING DRIVERS The affirmation reflects ACPL's continued small scale of operations, as indicated by revenue of INR101 million in FY19 (FY18: INR108 million). Revenue declined on a YoY basis owing to poor market conditions. However, the company turned profitable at the operating level in FY19 due to a decrease in raw material costs. ACPL recorded absolute EBITDA of INR15 million in FY19 (FY18: negative INR26 million), and a modest EBITDA margin of 15%. The company's return on capital employed remained negative in FY19. The ratings reflect ACPL's weak credit metrics. The metrics improved in FY19 owing to the improvement in the company's EBITDA and a fall in interest expenses due to the repayment of long-term loans. The interest coverage was 1.78x in FY19 and net leverage was 22.76x. Liquidity Indicator – Stretched: The average maximum utilization of fund-based limits was about 88% for the 12 months ended in October 2019. The cash flow from operations turned positive at INR15.36 million in FY19 (FY18: negative INR48.68 million) on account of favorable changes in working capital. The networking capital cycle elongated further to 184 days in FY19 (FY18: 141 days) on account of an increase in inventory days and a decline in creditor's days. In FY19, ACPL had a cash balance of INR0.64 million (FY18: INR0.64 million). The ratings, however, are supported by the ACPL's raw material tie-up with Gujarat Minerals Development Corporation Ltd, a state government entity that also holds a 25.99% stake in the company. RATING SENSITIVITIES Negative: Any deterioration in the overall credit metrics could be negative for the ratings. Positive: A substantial improvement in the scale of operations and overall credit metrics could be positive for the ratings. COMPANY PROFILE Incorporated in 2011 by Sanjay Shah, ACPL manufactures manganese sulfate at its unit in Vadodara, which has an annual production capacity of 18,000 metric tons. ANKITA IMPEX: CARE Keeps B Rating in Not Cooperating Category ------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Ankita Impex continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 0.52 CARE B; ISSUER NOT COOPERATING; Facilities Based on best available Information Short term Bank 4.92 CARE A4; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated December 10, 2018, placed the rating of Ankita Impex under the 'issuer noncooperating' category as Ankita Impex had failed to provide information for monitoring of the rating. Ankita Impex continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated November 6, 2019, November 5, 2019, November 4, 2019. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of rating on December 10, 2018 following were the rating strengths and weaknesses: Key Rating Weaknesses Small scale of operations with low net-worth base Despite being in operations for more than one decade, the firm's scale of operations has remained small marked by Total Operating Income (TOI) of INR17.55 crore in FY16 and net-worth base of INR0.92 crore as on March 31, 2016. The small scale limits the firm's financial flexibility in times of stress and deprives it from scale benefits. Leveraged capital structure ANI has a leveraged capital structure marked by overall gearing ratio of 4.45x as on March 31, 2016 on account of high dependence upon borrowings and low net-worth base. Exposure to raw material price volatility The entities in textile industry are susceptible to fluctuations in raw material prices. Cotton (one of the main raw material) being an agricultural product, its demand supply situation depends on various natural conditions like monsoons, drought and floods. It being a globally traded product, its price is very volatile depending on the demandsupply situation in the global markets. The price of other raw material, i.e. acrylic yarn is linked to that of crude oil. The general volatility in the cru de oil prices also has an impact on the price of this product. Constitution of the entity being a proprietorship firm ANI's constitution as a proprietorship firm has the inherent risk of possibility of withdrawal of the proprietor's capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of proprietor. Moreover, proprietorship firms have restricted access to external borrowing as the credit worthiness of proprietor would be the key factors affecting credit decision for the lenders. Highly competitive and fragmented industry resulting in stiff competition coupled with changing fashions trends ANI operates in a highly fragmented industry wherein there is presence of a large number of players in the unorganized and organized sectors. There are number of small and regional pla yers catering to the same market which has limited the bargaining power of the firm. The apparel sector is highly dependent on fashion trends, consumer spending habits as well as economic cycles. Therefore, the entities need to manage their inventories according to fashion and changing trends. At times, a fashion is short-lived, thus, there is a risk of inventory getting obsolete and does not meet the taste and preferences of the customers leading to losses. Key Rating Strengths Experienced proprietor and long track record of operations ANI has been in the manufacturing of readymade garments for more than a decade which aids in establishing relationship with both suppliers and customers. The firm is currently being managed by Mrs. Indu Dhand who has an ex perience of around 12 years in the textile industry which she gained through her association with this firm only. She is supported by a team of experienced and qualified professionals having varied experience in the technical, finance and marketing fields. Moderate profitability margins The profitability margins of the firm stood moderate as reflected by PBILDT and PAT margin of 5.29% and 1.28% respectively in FY16. PBILDT margin moderated from 7.66% in FY14 as the firm compromised on the margins to increase its market share. Consequently, PAT margin also declined from 1.33% in FY14 to 1.28% in FY16. Favourable location of operations Ludhiana is a well-established hub of manufacturing of textiles. The firm benefits from the location advantage in terms of easy accessibility to large customer base located in Ludhiana. Additionally, various raw materials required in manufacturing of textiles are readily available owing to established supplier base in the same location as well. Ankita Impex (ANI) is a proprietorship firm established in 2005 by Mrs. Indu Dhand. ANI is engaged in the manufacturing of fabric and readymade garments for women, men and kids at its manufacturing facility located at Ludhiana, Punjab, which has a total installed capacity of manufacturing 55 lakh pieces of textiles per annum, as on March 31, 2016. The product line of the firm mainly comprises sweaters, coats, jackets, tops, sports wear, shirts, trousers, kurtis, etc. AVIVA LIFE: Settles Insolvency Case in NCLT ------------------------------------------- BloombergQuint reports that Aviva Life Insurance on Nov. 27 said the insolvency case filed against the company, in a matter involving commercial dispute of INR27 lakh, has been settled. Earlier this month, the National Company Law Tribunal had ordered to initiate insolvency proceedings against Aviva Life Insurance in a case filed by Apeejay Trust, the report says. BloombergQuint relates that Apeejay Trust, which had leased its Mumbai-based (Vashi) premise to Aviva Life Insurance, claimed a default of INR27.67 lakh as an operational creditor for not receiving payments towards service tax and license fee for the premises. "We were surprised that a small commercial dispute of INR27 lakh led to an insolvency order against us given our ongoing financial strength and such orders would not ordinarily be legally passed against insurers," BloombergQuint quotes Aviva Life as saying in a statement on Nov. 27. According to BloombergQuint, Aviva India said the company remains committed to building the business and continuing the strong growth momentum of 30 percent sales increase that it achieved in second quarter of this fiscal year. With regard to the case in the NCLT, Apeejay Trust had said the life insurer had not paid license fee, car parking, maintenance/service charge and service tax. It had made its last payment in this regard on Oct. 5, 2017 and from then the debt was lying due, as per the trust, BloombergQuint says. However, Aviva had contended that there is an absolute bar under the IBC to initiate any proceedings against insurance companies, BloombergQuint relates. During the proceedings, Aviva had questioned the maintainability of Appeejay Trust's plea on the ground that it is an insurance company and thus being a financial service provider, IBC can not be applied against it. Aviva Life Insurance Company India Limited is a joint venture between Dabur Invest Corp and Aviva International Holdings Ltd., a U.K. based insurance group. BRIJBASI HI-TECH: CARE Hikes Rating on INR8cr Loan to B+ -------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Brijbasi Hi-Tech Udyog Limited (BHUL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 8.00 CARE B+; Stable rating Facilities revised from CARE B; Stable Short-term Bank Facilities 8.00 CARE A4 Reaffirmed Detailed Rationale & Key Rating Drivers The revision in the long term ratings of BHUL factors improvement in the scale of operations, capital structure and operating cycle. Further, the ratings continue to draw comfort from experienced and resourceful promoters. The ratings further continue to remain constrained by small scale of operations and thin profitability margins and modest coverage indicators. The rating is further constrained by competitive nature of business and tender driven nature of business. Key Rating Sensitivities Positive Factors * Increase in scale of operations as marked by total operating income of above INR50.00 crore on sustained basis. * Improvement in profitability margins as marked by PBILDT and PAT margins of above 13.50% and 2.00% respectively on sustained basis. * Improvement in debt coverage indicators as marked by interest coverage ratio and total debt to GCA of above 3.00x and below 10.00x respectively on sustained basis. Negative Factors * Deterioration in the capital structure as marked by overall gearing ratio of 2.00x or above. * Elongation in the operating cycle as marked by operating cycle of more than 250 days or above. Detailed description of the key rating drivers Key Rating Strengths Experienced and resourceful promoters Mr Mahesh Chandra Agarwal, Mr. Suresh Chandra Agarwal and Mr Rajesh Kumar Agarwal are directors of the company, having more than four decades of experience in manufacturing industry. Company's overall operations are managed by Mr Mahesh Chandra Agarwal. Mr Suresh Chandra Agarwal and Mr Rajesh Kumar Agarwal who look over supply chain and marketing division. Growing scale of operations BHUP has witnessed growth in its TOI over the past three years (FY17-FY19) at a compounded annual growth rate (CAGR) of 53.29%. During FY19, the company has registered growth of 70.09% in its total operating income which stood at INR29.75 crore in FY19 as against INR17.49 crore in FY18. The growth was attributed due to increase in quantity sold to existing and new customers. Furthermore, the company has achieved total operating income of INR15.00 crores during 7MFY20 (period from April 1 to October 31; based on provisional results). In addition, the company has unexecuted orders amounting to INR23.00 crore out of which INR17.00 crore orders are to be executed by March, 2020. Improvement in capital structure The capital structure of the company improved as marked by overall gearing ratio of 1.64x as on March 31, 2019 as against 1.93x as on March 31, 2018. The improvement was on account of reduced dependence on external borrowings to meet its working capital requirements coupled with accretion of reserves. Improvement in operating cycle The operating cycle of BHUL stood at 196 days in FY19 as against 334 days in FY18. The improvement in operating cycle was on account of better management of the inventory and realization of the receivables. However, it still remains elongated on account of high inventory holdings and collection period of 173 days and 92 days in FY19. High inventory days are on account of offering of varied range of variants', for which they need to maintain stock of spare and parts in order to meet the customer's demand, which also necessitates maintaining of adequate inventory in form of raw material and work–in-progress for smooth running of its production process. BHUL's high collection period is owing to long clearance process with the government departments with regards to clearance of bills raised to customers. The company procures raw material from traders and manufactures located in overseas and domestic market and enjoys a credit period of 3-4 months resulting in an average creditor period of 69 days in FY19. Key Rating Weakness Small scale of operations The scale of operations continues to remain small as marked by total operating income of INR29.75 crore and GCA of INR0.44 crore for FY19 (refers to the period April 1 to March 31) . Besides, the company's net worth base also continues to remain relatively modest at INR7.27 crore as on March 31, 2019. The small scale limits the company's financial flexibility in times of stress and deprives it from scale benefits. Furthermore, the company has achieved total operating income of INR15.00 crores during 7MFY20 (period from April 01 to October 31; based on provisional results). Thin Profitability Margins and modest coverage indicators The profitability margins of BHUP are directly associated with technical aspect of the contract. Further, the profitability varies with the project due to tender driven nature of the business owing to varying margins in the different projects undertaken by the company. The profitability margins of the company stood thin as marked by the PBILDT and PAT margins of 7.17% and 0.85% respectively in FY19. The coverage indicators continue to remain modest owing to thin profitability levels as marked by interest coverage ratio and total debt to gross cash accruals which stood at 1.39x and 27.38x respectively in FY19 as against 1.27x and 34.34x in FY18.The improvement in coverage indicators was on account of reduced debt levels in FY19. Competitive nature of business and tender driven nature of business BHUL operates in a competitive market for fire-fighting vehicles marked by the presence of number of players in the unorganized sector and organized sector. The company majorly supplies fire-fighting vehicles to government organizations, which are awarded through tender-based system. The company is exposed to the risk associated with tender-based business, which is characterized by intense competition. The growth of business depends on its ability to successfully bid for the tenders and emerge as the lowest bidder. Furthermore, any changes in the procurement policy or government organization's spending on fire-fighting are likely to affect the revenues of the company. Liquidity: Stretched - Liquidity is stretched marked by almost fully utilized bank limits for the past 12 months, period ending October 31, 2019 along with modest cash balance of INR0.31 crore as on March 31, 20 19. Mathura-based (Uttar Pradesh) Brijbasi Hi-Tech Udyog Limited (BHUL) incorporated in 1972 by Mr Mahesh Chandra Agarwal, Mr Suresh Chandra Agrawal and his family members. The company is engaged in the manufacturing and assembling of fire fighting vehicles viz. fire vans, water tenders, water bourses, foam tender, DCP tenders, crash fire tenders. BHUL is selling its product under its own brand name i.e. "Brijbasi". Hot Rolled (HR), Cold Roll (CR) coil, Aluminum sheet, diesel engine etc. are key raw material for the manufacturing and assembling of fire fighting vehicles. The company procures HR/CR coil from the traders located in the Delhi –NCR. Furthermore, company procures equipment from intermediaries such as Idex India, MCD (France). The company's operations are mainly order based and orders are acquired through process of tender. EARTHEN TREASURES: CARE Keeps 'D' Rating in Not Cooperating ----------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Earthen Treasures Natural Resources Private Limited (ETNRPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.00 CARE D; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated July 4, 2018, placed the rating of ETNRPL under the 'issuer non-cooperating' category as ETNRPL had failed to provide information for monitoring of the rating. ETNRPL continues to be non-cooperative despite repeated requests for submission of information through emails, phone calls and email dated October 7, 2019. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating on July 4, 2018 the following were the rating weaknesses (updated for the information available from Registrar of Companies. Key Rating Weaknesses Delay in debt servicing obligations: As per the interaction with the banker during last review, there were continuous overdrawals in cash credit facility and the account was classified as NPA. ETNRPL was established in April 2013. Promoted by Mr Aniket Jain and Mr Pratyush Bharatiya, operations of the company began from April 22, 2013. ETNRPL is currently engaged in quarrying, production and trading of granite. ETNRPL has leased the quarry measuring 2.13 acres from M/S Brothers Granite Exporter and has acquired rights of selling, supplying, and transporting of black granite blocks for a lease period of 7 years. The quarry of the entity is located in Chamrajnagar, Karnataka. EASTERN AUTOMOTIVE: CARE Keeps 'B' Rating in Not Cooperating ------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Eastern Automotive continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 8.00 CARE B; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers The rating assigned to the bank facility of Eastern Automotive is constrained by its proprietorship nature of constitution, small scale of operation with moderate profitability margin, intensely competitive nature of the industry with presence of many unorganized players, exposure to volatility in raw material prices, working capital intensive nature of business and weak capital structure with weak debt coverage indicators. However, the aforesaid constraints are partially offset by its experienced proprietor and close proximity to raw material sources. The ability of the entity is to increase its scale of operations along with improvement in profitability margin and ability to manage working capital effectively would be the key rating sensitivities. Detailed description of the key rating drivers At the time of last rating in August, 2018 the following were the rating strengths and weaknesses: Proprietorship nature of constitution Eastern Automotive, being a proprietorship entity, is exposed to inherent risk of the proprietor's capital being withdrawn at time of personal contingency and entity being dissolved upon the death/retirement/insolvency of the proprietor. Furthermore, proprietorship entity has restricted access to external borrowing as credit worthiness of partners would be the key factors affecting credit decision for the lenders. Small scale of operation with moderate profitability margin The entity is a relatively small player vis-a-vis other players in the auto component industry marked by its total operating income of INR3.87 crore (Rs.3.75 crore in FY17) with a PAT of INR0.11 crore (Rs.0.15 crore in FY17) in FY18 (Provisional). The small size restricts the financial flexibility of the entity in terms of stress and deprives it from benefits of economies of scale. Due to its relatively small scale of operations, the absolute profit levels of the entity also remained low. Furthermore, the profitability margins of the entity remained moderate marked by PBILDT margin of 15.83% (FY17: 10.67%) and PAT margin of 2.91% (FY17: 3.98%) in FY18 (Provisional). This apart, the entity has achieved sale of INR0.85 crore during 4MFY19. Intensely competitive nature of the industry with presence of many unorganised players Auto components industry is highly fragmented and competitive in nature due to presence of many small and medium players in this sector owing to its low entry barriers and due to low capital requirement. High competition restricts the pricing flexibility of the industry participants and has a negative impact on the profitability. Exposure to volatility in raw material prices The entity is engaged in manufacturing of automobile components. The major raw materials required for the same are iron, steel coils etc. The entity purchases raw materials from the domestic market at spot prices. Since the prices of the raw materials such as iron and steel coils are volatile in nature and it is basically determined by demand and supply situation at a particular time. Thus the entity is exposed to volatility in raw materials prices. Working capital intensive nature of business The operations of the entity remained working capital intensive as it maintains adequate inventory of raw materials for smooth running of its production process. Accordingly, the average inventory period remained around a month. The inventory also remains in the work in progress stage as the auto component manufacturing involves various manufacturing processes like cutting of steel coils, fabrication, welding, drilling, turni ng making sub-assemblies, painting which also resulted in working capital intensity of its operations. Accordingly, the average working capital utilization remained around 95% during last 12 months ended July, 2018. Weak capital structure with weak debt coverage indicators The capital structure of the entity was weak marked by negative net worth in FY18 on account of carried forward past losses. Furthermore, the debt coverage indicators remained weak with total debt to GCA ratio of 34.25x in FY18 (provisional). Interest coverage ratio remained moderately low at 1.25x in FY18 (provisional). Key Rating Strengths Experienced proprietor with satisfactory track record of operation The entity is into auto component business since March 2007 and thus has around 11 years of operational track record. Mr. Sanjay Dubey (Proprietor), who has 20 years of experience in the similar line of business look after the day to day operation of the entity. The entity is further supported by a team of experienced professionals. Close proximity to raw material sources Automobile components manufacturing unit is located in Jamshedpur. Most of the raw materials are met from the nearby location. Accordingly the entity is able to save simultaneously on transportation cost and automobile component cost. Liquidity The liquidity position of the firm was moderate as reflected by current ratio and quick ratio remained at 0.95x and 0.87x respectively as on March 31, 2018. The entity has generated gross cash accrual of INR0.12crore during FY18 (provisional). Eastern Automotive was established in March 2007. The objective of the entity is to manufacture different types of automobile components like beam, MS channel, MS sheet, axle, rim, suspension, rim, hydraulic cylinder, fasteners etc. The manufacturing unit of the entity is located at NH-33, Beliguma, Mango, Dist: East Singhbhum, Jamshedpur-831018 with an installed capacity of 500 complete trailers per annum of various automobile components. The entity is also involved in trading of automobile components. The entity earned around 15% revenue by trading of automobile components in FY18. Mr. Sanjay Dubey (Proprietor), who has 20 years of experience in the similar line of business look after the day to day operation of the entity. The entity is further supported by a team of experienced professionals. GARE BROTHERS: CARE Maintains B- Rating in Not Cooperating ---------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Gare Brothers (GB) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.00 CARE B-; ISSUER NOT COOPERATING; Facilities Based on best available Information Short term Bank 1.50 CARE A4; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated July 13, 2018, placed the ratings of GB under the 'issuer noncooperating' category as GB had failed to provide information for monitoring of the rating. GB continues to be non-cooperative despite repeated requests for submission of information through email dated October 7, 2019 and numerous phone calls. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating in July 13, 2018, following were the rating strengths and weaknesses: Key Rating Weaknesses Small scale of operations along with partnership nature of constitution: The scale of operations of the firm remained small with TOI of INR3.43 crore in FY15. Further, the firm has a small net worth base of INR0.63 crore as on March 31, 2015 limiting its financial flexibility. Tender-based nature of operations: GB's major portion of revenue comes from tenders floated by MAHAGENCO. Furthermore, tender driven nature and lengthy bidding process can impact the waste coal procurement process and the revenue growth of the entity. Weak solvency position: The solvency position of the company remained weak with near unity overall gearing and moderate debt protection metrics. The solvency position and debt coverage indicators remained weak on account of high interest charges and dependence on working capital bank borrowings. Key Rating Strengths Experienced Promoters: GB is promoted by Mr Suresh Gare having an experience of more than two decades in trading of waste coal. Long and established relationship with customers: With the promoters' extensive industry experience coupled with marketing efforts, the company has been able to establish strong relationship with its customers. The top customers of GB include MAHAGENCO's thermal plants located in Bhusawal, Chandrapur, Khaparkheda, Parli, etc. The firm procures waste coal and sells them on cash basis to various brick manufacturers in Maharashtra. Established in 1996, Gare Brothers (GB) is a partnership firm based out of Nasik (Maharashtra) and is engaged in trading of scrap coal with two partners namely Mr. Suresh Gare and Mr. Dilip Gare sharing profit equally. GENERAL GARMENTS: Insolvency Resolution Process Case Summary ------------------------------------------------------------ Debtor: General Garments Delhi Private Limited B-II/19, Mohan Co-operative Industrial Estate, Badapur New Delhi 110044 Insolvency Commencement Date: November 8, 2019 Court: National Company Law Tribunal, Principal Bench, New Delhi Estimated date of closure of insolvency resolution process: May 6, 2020 Insolvency professional: CA Ritu Rastogi Interim Resolution Professional: CA Ritu Rastogi D-1B, 9A, D-Block Janakpuri New Delhi 110058 E-mail: ritu_rastogi1@yahoo.co.in cirpgeneralgarment@gmail.com Last date for submission of claims: November 22, 2019 HARDIK CONSTRUCTION: CARE Lowers Rating on INR4cr Loan to 'B' ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Hardik Construction Company (HCC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 4.00 CARE B; Stable; ISSUER NOT Facilities COOPERATING Revised from CARE B+; Stable; Issuer not Cooperating Based on best available information Short term Bank 6.00 CARE A4; ISSUER NOT Facilities COOPERATING; Based on best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated January 24, 2019, placed the rating of HCC under the 'issuer non-cooperating' category as Hardik Construction Company had failed to provide information for monitoring of the rating. Hardik Construction Company continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated November 6, 2019, November 5, 2019, November 4, 2019. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers The rating has been revised on account of fragmented nature of the construction sector and proprietorship nature of constitution. Key Rating Weaknesses Fragmented nature of the construction sector: The construction sector in India is highly fragmented with a large number of small and mid-sized players. This coupled with tendering process in order procurement results into intense competition within the industry. Constitution of the entity being a proprietorship firm: HCC's constitution as a proprietorship firm has the inherent risk of withdrawal of the proprietor's capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of proprietor. Hardik Construction Company (HCC) is a proprietorship firm established in 2007 by Mr. Pankaj Goel. HCC is engaged in the civil construction work in Haryana and Uttar Pradesh which includes infrastructure development and road work. The firm is registered as a class 'A' contractor with Public Works Department (PWD) of Haryana and is also registered with Yamuna Expressway (U.P). The orders undertaken by the firm are secured through the competitive bidding process. IBC LIMITED: CARE Withdraws B/A4 Rating on Bank Facilities ---------------------------------------------------------- CARE has revised the ratings assigned to the bank facilities of IBC Limited (IBC) from 'CARE B; Stable/CARE A4' to 'CARE D' and withdrawn the same with immediate effect. The revision in ratings takes into account the ongoing delays in debt servicing by the company. The withdrawal in rating has been taken at the request of IBC and 'No Objection Certificate' received from the bank that has extended the facilities rated by CARE. Detailed description of the key rating drivers Key Rating Weaknesses Delays in debt servicing: CARE as part of its due diligence exercise interacts with various stakeholders of the company including lenders to the company and as part of this exercise has ascertained that there are delays in debt servicing. Chennai based IBC Limited (IBCL) was incorporated in 1985. It was established as Indian Barytes and Chemicals, a partnership firm in 1972. IBCL is involved in the business of mining and trading of Barytes Ore and Barytes Powder which find their application in Oil and Gas exploration/drilling industry. JOSHI ENTERPRISE: CARE Reaffirms B Rating on INR5.0cr LT Loan ------------------------------------------------------------- CARE Ratings reaffirmed the ratings on certain bank facilities of Joshi Enterprise (JENT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 5.00 CARE B; Stable Reaffirmed Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of JENT continues to remain constrained on account of its modest scale of operations, thin profitability, highly leveraged capital structure, weak debt coverage indicators and stretched liquidity during FY19 (refers to the period April 1 to March 31). The rating, further, continues to remain constrained on account of proprietorship nature of its constitution, presence in highly fragmented and competitive industry with limited bargaining power with principal manufacturer and geographical concentration risk. The rating, however, continues to derive strength from vast experience of the proprietor with long industrial track record. Rating Sensitivities Positive Factors * Significant growth in total operating income (TOI) by around more than 50% with a reported PAT margin in the range of 2%-4% * Improvement in solvency position with overall gearing ratio in the range of 2 to 5 times Negative Factors * Dip in cash accruals leading to inadequate cushion against debt repayments * Deterioration in the liquidity profile along with further elongation in operating cycle Detailed description of the key rating drivers Key Rating Weaknesses Modest scale of operations coupled with thin profitability JENT is dependent on commission received from principal dealers, in the nature of trading wherein profit margins are very thin and range bound. The total operating income (TOI) of JENT has been on a decreasing trend since the past three years ended FY19, owing to discontinuation of sales of Vodafone & Idea Subscriber Identity Module (SIM) Card and Communication refills. The TOI decreased by 14% y-o-y during FY19 and stood modest at INR15.00 crore. Furthermore, during FY19, PBILDT margin stood low at 1.93% as against 1.81% during FY18, due to a slight decrease in cost of traded goods sold. The PAT margin continued to remain thin at 0.39% in FY19. Resultantly, the gross cash accrual (GCA) level stood low at INR0.10 crore in FY19. Highly leveraged capital structure and weak debt coverage indicators The capital structure of JENT stood highly leveraged as marked by an overall gearing ratio at 30.30 times as on March 31, 2019 as against 13.58 times as on March 31, 2018 on account of increase in total debt level led by higher utilization of working capital borrowings as on balance date. The debt coverage indicators as marked by total debt to Gross Cash Accruals (TDGCA) continued to remain weak at 59.09 years as on March 31, 2019 as against 64.92 years as on March 31, 2018, while the interest coverage ratio remained modest at 1.50 times during FY19. Proprietorship nature of constitution The constitution as a proprietorship firm restricts JENT's overall financial flexibility in terms of limited access to external funds. Further, there is inherent risk of possibility of withdrawal of capital and dissolution of the firm in case of insolvency of proprietor. With the modest base of own funds, its operations are susceptible to any business shock, thereby limiting its any incremental debt. Presence in highly fragmented and competitive industry along with limited bargaining power with principal manufacturer and geographical concentration risk JENT has its presence in the trading industry which is highly fragmented and competitive with presence of large number of independent small-scale dealers and few large players in organized sector catering to different brands. Furthermore, the entry barriers are low due to easy availability of traded goods and easy access to clients and suppliers leading to high level of competition. Entry of global players and emergence of Internet based online business models offering lucrative offers and discount, in the Indian market further intensifies competition and will be detrimental to its growth. Considering the existing competition, JENT would be required to offer better terms such as discounts on purchases to retain its customers and attract new ones which may create pressure on margin and earning capacity of the company. The dealers of FMCG and Tobacco products have very low bargaining power over the principal manufacturer. The margin on product is, pre-decided at a particular level by the principal manufacturer. However, at times JENT avails the benefit of discount when it does bulk purchase or receives incentive on achieving the set target. Hence the profit margins stay range bound. Further, JENT is servicing to small retailers, shopkeepers and other small establishments primarily set up within the state of Gujarat only, hence it faces the geographical concentration risk as well. Liquidity: Stretched The liquidity position of JENT continued to remain stretched marked by current ratio of 1.18 times as on March 31, 2019 while the operating cycle during FY19 remained moderate at 68 days from 55 days during FY18 on account of a moderate increase in average collection period days coupled with an increase in average inventory period days. The cash and bank balance remained low at INR0.20 crore and average working capital utilization limit stood high at 95% for the past 12 months ended October, 2019. The Net cash flow from operation remained negative at INR0.46 crore and GCA level stood low at INR0.10 crore during FY19 as against scheduled principal debt repayments pertaining to business and auto loans for FY20. Key Rating Strengths Experienced proprietor with long industrial track record The proprietor of JENT, Mr. Ashok Induprasad Joshi has a vast experience of more than 25 years in the same line of business. With long standing presence in same industry, since its inception in the year 1992, JENT has been able to establish its own business reputation and bag orders from various small retailers, shopkeepers and other small establishments, primarily set up within Panchmahal and Dahod District of Gujarat along with the help of its own established marketing network. Godhra-based (Gujarat) JENT is a proprietorship firm, established in the year 1992 by Mr. Ashok Induprasad Joshi. The entity operates as a super stockist for Fast Moving Consumer Goods (FMCG) and Tobacco products, primarily catering to the requirement of various reputed companies like WIPRO Limited (CARE AAA (Is); Stable) (WIPRO Consumer Ca re), Surya Food & Agro Limited ("Priyagold"), Zen Tobacco Private Limited (CARE B+; Stable), Dhariwal Industries Limited ("RMD Pan Masala" and "Oxyrich" packaged drinking water) and Marico Limited. JENT also used to provide SIM Card, communication refills and recharge coupons of Vodafone Idea Limited formerly known as Vodafone Essar Limited to associate distributors, which it has discontinued during Q4FY19. JUBILANT PHARMA: S&P Affirms BB- ICR on Chemicals Segment Demerger ------------------------------------------------------------------ S&P Global Ratings said it views Jubilant Lifesciences Ltd.'s (JLL) proposed demerger of its life science ingredients (LSI) business as largely credit neutral. S&P views Jubilant Pharma Ltd.'s (JPL) recent buyback of US$100 million of its 2021 senior unsecured notes as credit positive. Leverage levels at JPL and its India-based parent, JLL, continue to improve in line with S&P's expectations. On Nov. 27, 2019, S&P affirmed its 'BB-' ratings on JPL and the company's senior unsecured notes. S&P said, "We affirmed our ratings on JPL, as JLL's proposal to spin off the LSI business does not materially affect our views of JPL's credit profile. "Our credit assessment of JPL mirrors our view of JLL's credit quality because we consider JPL to be an inseparable part of JLL's operations. JPL accounted for 74.4% of JLL's EBITDA in fiscal 2019 (ended March 31, 2019), and in our view, JLL drives the strategic decisions for JPL. "We expect the proposed demerger to weaken JLL's business position, as it will take away about 40% of its revenues and the diversity benefit of an uncorrelated India-centric chemicals business. Subsequent to the demerger, JLL will become a pure pharmaceutical company led by its U.S.-centric radio pharma business. We estimate the U.S. will provide almost 80% of JLL's revenues post the demerger. "Following the demerger, we see JLL's pharmaceutical business being more comparable to its nuclear imaging peers like Curium Midco S.r.l, but better than the small-scale Lantheus Inc. We believe JLL's business position is better than Lantheus, given its other wider portfolio of allergy, solid dosage formulation (SDF), and active pharmaceutical ingredient (API) businesses. "We see the mostly commoditized LSI business to be a lower margin and highly volatile business given its very small scale. Therefore, the demerger should provide JLL with more steady operations, given the remaining pharmaceuticals business will be more stable, in our view." JLL proposes to demerge its LSI business into a new listed entity, which will mirror the existing shareholding of JLL. The demerger is subject to regulatory and shareholder approvals. S&P expects the demerger to be completed in fiscal 2021. S&P's pro forma estimates assume the demerger to be effective Sept. 30, 2020. S&P said, "On a pro forma basis, we expect JLL's profitability in terms of EBITDA margins to improve to 25%-27% in fiscal 2021, compared with our base case of 20%-22%. We also believe the demerger would improve JLL's leverage. On a pro forma basis, we expect JLL's fiscal 2021 leverage to improve to a debt-to-EBITDA ratio of 1.7x, compared with our existing base case of 1.9x. "We view the company's buyback of US$100 million 2021 senior unsecured notes on Nov. 20, 2019, as credit positive. We believe the buyback accelerates the deleveraging we were expecting in fiscal 2020. We expect the company's leverage to meet our upgrade triggers starting fiscal 2021. "JLL's operating performance in the first half of fiscal 2020 was broadly in line with our expectations. Revenue grew slightly slower at 2.3%, compared with our expectations of 4%-6%. Negative growth of 10.1% in the LSI business weighed on JLL's overall revenue growth, with the pharmaceuticals business registering a solid increase of 10.6%. Reported EBITDA margins were 20.8% compared with our estimates of 20%-21%. "We expect JLL to generate free operating cash flows of Indian rupee (INR) 3 billion-INR5 billion over the next 12 months, helping it to maintain its deleveraging trajectory in line with our expectations." JLL's generic pharmaceutical manufacturing operations based in Roorkee and Nanjangud, India, have received observations from the U.S. Food and Drug Administration. JLL continues to work on remediation and expects resolution by the end of fiscal 2020. In the first half of 2020, the company spent about INR300 million on remediation costs. S&P believes further adverse actions, such as warning letters or an import ban, remain a risk to its estimates and could affect the revenue growth of the company and its deleveraging trajectory. S&P said, "The positive outlook reflects our assumptions that despite the proposed separation of the LSI business, JPL's parent, JLL, will be able to reduce the leverage of debt-to-EBITDA ratio below 2.0x over the next 12 months. Notwithstanding the anticipated loss of scale, JLL's business should benefit from improving profitability with more stable and predictable cash flows, supporting the deleveraging. "We would upgrade JPL over the next six to nine months if the parent's leverage strengthens below 2.0x on a sustainable basis. Sustained growth in line or above our expectations with profitability above 20% should help the company achieve the milestone. We could also upgrade the company if it completes the demerger process ahead of our expectations over the next 12 months. "We would revise the outlook back to stable if the parent fails to perform in line with our expectations, causing its leverage to remain above 2.0x on a sustained basis. A sudden downturn in its business segments resulting in negative growth and margins below 18% or any significant acquisitions or shareholder distributions could indicate such a scenario." KOTAK AGRO: CARE Hikes Rating on INR9.13cr LT Loan to 'BB-' ----------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Kotak Agro Processing Private Limited (KAPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 9.13 CARE BB-; Stable rating Facilities revised from CARE B; Stable Detailed Rationale & Key Rating Drivers The revision in the rating assigned to the bank facilities of KAPL takes into account the significant improvement in the scale of operations and cash accruals along with improvement in debt coverage indicators, operating cycle and tangible networth during FY19 (refers to the period April 1 to March, 31). The rating continues to be constrained by relatively modest scale of operation, moderately lower profit margin, moderately leveraged capital structure and debt coverage indicators, stretched liquidity position, presence in the highly fragmented industry leading to stiff competition, concentrated customer base along with foreign exchange fluctuation risk. The rating however continues to derive benefit from experienced promoters and long track record of operations and comfortable operating cycle. Rating Sensitivities Positive Factors * Improvement in scale of operation despite high competition: Improvement in scale of operation to a level of around INR80 crore on sustained basis * Improvement in profitability margins: Improvement in operating margin to remain in range of 7-8% and net profit margin to remain in range of 4-5% considering competition in freight and forwarding industry * Improvement in capital structure and debt protection matrix: Ability of the company to keep its capital structure below unity level and maintained sufficient cash accruals to meet its debt obligation. Negative Factors * Stretched liquidity position: Ability of the company to keep its current ratio and quick ratio above unity level, maintained sufficient liquid investment in the form of current investment and cash bank balance and fixed deposits with banks to meet its short term requirement * Receipts of revenue from cold storage business: Non-receipts of ability of the company to generate the revenue from new business of cold storage set up at Mahape to increase its scale of operations will be critical Detailed description of Key rating drivers Key rating Weakness Concentrated customer base KAPL has a concentrated customer base with three customers contributing to around 58% share in the total sales during FY19 which shows its dependence on particular customers for procuring orders and further gener ating revenue. However the aforementioned customers as stated above are engaged into food processing thereby enabling regular flow of orders and timely receipt of payments due from such customers. Modest scale of operations KAPL's total income has significantly increased by 189.79% on y-o-y basis in FY19 as compared to that of FY18 and stood at INR66.71 crore in FY19 (vis-à-vis INR23.02 crore in FY18) mainly due to increased revenue generated from freight forwarding business which was started in FY18, whi ch contributed around 90% of total sales (as against 75% of TOI in FY18). Further, during 7MFY19 the revenue of KAPL stood at INR24.00 crore. Fluctuating and low profit margin The PBILDT margin of KAPL stood low in the range of 4.24% to 7.09% during FY16 -19, on account of inherent nature of business. The same has exhibited fluctuating trend in the past three years mainly owing to increase in the operational expenses as percentage of increase in the total scale of operations. Further the net profit margin of the company stood low in the range of 0.61% to 2.46% during last three years (FY16 -FY19), mainly on account of low PBILDT margin coupled with high interest (on account of higher reliance on external debt) and depreciation expenses. Moderately leveraged capital structure and weak debt coverage indicators KAPL's capital structure stood moderately leveraged marked by above unity overall gearing during the period FY16 -19 on account of higher reliance on external debt to fund its business operations and low net worth base. The debt coverage indicators stood moderate during past FY19 mainly on account of higher debt levels. Stretched liquidity positions: KAPL Liquidity position stood stretched marked by tightly matched accruals to repayment obligations, lower cash balance along with below unity current ratio. KAPL average utilization of working capital limit stood moderate at 54.60% for the past 7 months ended October 2019. Foreign exchange fluctuation risk: KAPL is exposed to foreign exchange fluctuation risk on account of its freight exchange during the transit of food material to different countries. The company does not engage into hedging practices making company's income susceptible to foreign exchange fluctuation risk. During FY19 KAPL has achieved foreign exchange income of INR0.13 crore as against INR0.01 crore in FY18. Key rating Strengths Long-track record of operations with experienced promoters KAPL was established in the year 1997 by Kotak family. KAPL is currently promoted by, Mr. Bhagwandas Kotak, Mr. Chetan Kotak and Mr. Kailash Kotak having an average experience of more than three decades in carrying out the business related to processing, storage and transportation of wide range of food items including fruits, vegetables, seeds, oil -seeds, pulses etc. Comfortable operating cycle KAPL's operating cycle stood comfortable at 4 days where majorly funds are blocked in receivable. Due to inherent nature of its operations, the company has to make upfront payment for the services it avails (material handling, fuel, tyre, and such other charges), however it, has to provide maximum credit period of around 10-20 days due intense competition in the low barrier industry. Kotak Agro Processing Pvt. Ltd. (KAPL) is promoted by Mr. Bhagwandas Kotak, Mr. Chetan Kotak and Mr. Kailash Kotak for carrying out the business related to logisti cs of agriculture related products, primarily storage and transportation of onions, fruits, vegetables and other perishable commodities including grading, packing and providing warehousing facilities, mechanized bulk stuffing and transporting via containers and reefers. KAPL mainly provides warehousing facility at major gateways ports ie Nhava sheva, Mundra, Kandla and Mahape. KAPL mainly caters exporters for freight business and for warehousing business wholesalers and retailers based out of PAN India. MAGNA RESEARCH: Insolvency Resolution Process Case Summary ---------------------------------------------------------- Debtor: Magna Research and Solution Private Limited GT.1651, Patil Nagar Tal. Haveli, Pune MH 412114 IN Insolvency Commencement Date: September 18, 2019 Court: National Company Law Tribunal, Pune Bench Estimated date of closure of insolvency resolution process: March 16, 2020 Insolvency professional: Dinesh Gopal Mundada Interim Resolution Professional: Dinesh Gopal Mundada 403, Fortune House Baner Pashan Link Road Baner, Pune Maharashtra 411045 E-mail: mundada2007@gmail.com Mobile: 9833866332 Last date for submission of claims: October 30, 2019 MANAPPURAM FINANCE: Fitch Assigns BB- LT IDRs, Outlook Stable ------------------------------------------------------------- Fitch Ratings assigned India-based Manappuram Finance Limited Long-Term Foreign- and Local-Currency Issuer Default Ratings of 'BB-'. The Outlook is Stable. Fitch has also assigned MFIN's USD750 million medium-term note programme a 'BB-' rating. MFIN plans to issue US dollar notes under the MTN programme. The notes will be secured by MFIN collateral and at all times rank pari passu and without any preference among themselves. Collateral includes all of the issuer's standard assets, stage-1 assets and stage-2 assets, and excludes all non-performing assets or stage-3 assets. The notes are also subject to maintenance-based covenants that require MFIN to ensure the security coverage ratio at equal or greater to 1.0x at all times. MFIN has applied to have the MTN programme listed on the Singapore Exchange. The issuer will use the net proceeds of the notes for onward lending and general corporate purposes in accordance with approvals granted by the Reserve Bank of India and directions on external commercial borrowings. KEY RATING DRIVERS IDRS MFIN's Long Term IDR is driven by its Standalone Credit Profile. The ratings take into account MFIN's moderate franchise in the niche segment of gold-backed financing, its low credit losses and satisfactory leverage. This is counterbalanced by elevated key person risk, a track record of shortcomings in governance and operational management, and growing risk appetite, as evidenced by its evolving business model. MFIN primarily caters to borrowers in rural and semi-urban geographies. The company has been pursuing higher growth in other segments in the last four years, which Fitch believes is mainly due to strict regulatory norms on various operational policies that have hindered growth for MFIN in gold loan segment, despite it having been in the gold loans business since decades. It has led the company to venture towards riskier segments such as rural microfinance loans, auto loans, and low cost rural housing, where MFIN is largely expected to be the price-taker due to well-established competition. Fitch views these products as not core to MFIN, and they could be a source of future risk with higher growth implying growing risk appetite in less familiar businesses. The share of non-gold loan products has increased to 34% of total assets under management (FY15: 3%) on a consolidated basis in a fairly short period, and is likely to substantially increase in the medium term. In MFIN's primary segment of gold-financing, the collateral is gold jewellery, which is liquid in nature and has benefited from tighter regulations since 2013 that aim to ensure propriety in loan-to-value standards. However, operational risk is still high in gold-backed financing due to its decentralised branch led disbursement approach. MFIN's intrinsic creditworthiness is also weighed down by heightened key man risk and weak governance practices which elevate regulatory risk for the business. The regulatory observations in terms of certain business and governance practices are significant and although MFIN has been working to address them, Fitch believes that more needs to be done to avert any risk of regulatory intervention on management and business. Fitch expects MFIN to continue to streamline its operational processes in order to ensure full regulatory compliance, as well as put in practice the succession plan drawn up by management to address the key person risk associated with the founding shareholder who is also the managing director. MFIN's business model benefits from a high net interest margin (14.7% in FY19), which is reflected in high profitability as blended credit costs are moderate. Healthy internal capital generation results in moderate debt to tangible equity (3.4x at end-March 2019), while current core capitalisation seems fairly commensurate with the risk. However, an increasing share of commercial vehicle loans, rural housing loans and microfinance, which typically have higher credit costs, may result in greater profit volatility. Newer businesses would also need higher capital to support growth, which will test the company's ability to maintain leverage at adequate levels. MFIN is wholesale-funded like most other Indian NBFIs, and the funding profile is relatively concentrated as banks form 65% of total borrowings, despite an incrementally more diversified funding base over the last few years. The company started accessing commercial paper (CP) in FY17 on the back of improved market access and lower interest rates. The share of funding from CP had increased to 19% by FY19. MFIN has a reasonably well matched asset liability profile, which is supported by the low tenor of gold loans, although higher growth in long tenor products would change the asset-liability profile in the medium to long term. Unutilised credit lines provide an additional liquidity buffer against any unforeseen liquidity stress. MTN Programme MFIN's MTN programme is rated at the same level as the company's Long-Term Foreign-Currency IDR, in accordance with Fitch's rating criteria. Fitch regards the secured notes that may be issued under the MTN programme as an obligation whose non-payment would best reflect uncured failure as most of MFIN's debt is secured. The company can issue unsecured debt in the overseas market, but this debt is likely to constitute a small portion of its funding and thus cannot be viewed as its primary financial obligation. There is no assurance that notes issued under the programme will be assigned a rating. RATING SENSITIVITIES IDRS The rating would be negatively sensitive to business disruptions or curtailed funding access due to adverse events arising from governance or operational risk aspects. The rating would also be sensitive to an increased risk appetite due to aggressive growth in non-gold lending segments or to rising leverage beyond 5x. Fitch believes that the ratings have limited upside potential in the near term. The company's ability to address the potential regulatory and governance risks and manage the evolving business risks will be important before Fitch can consider an upgrade. MTN Programme The rating of the MTN programme will move in tandem with MFIN's Long-Term IDR. ESG CONSIDERATIONS MFIN's governance structure is scored '5' out of '5' and customer welfare is scored '4' out of '5' on Fitch's environmental, social and governance (ESG) scale. It reflects its assessment that weak governance practices and regulatory observations relating to business operations elevate regulatory risk for the business and therefore highly affect the long term ratings. MANAPPURAM FINANCE: S&P Assigns 'BB-/B' ICRs, Outlook Stable ------------------------------------------------------------ S&P Global Ratings assigned its 'BB-' long-term issuer credit rating to Manappuram Finance Ltd. The outlook is stable. S&P also assigned its 'B' short-term issuer credit rating to the India-based finance company. The rating on Manappuram reflects the company's exposure to economic risk in India, its only market. S&P believes Indian finance companies face greater operating risk than banks because they usually have no access to central bank funding, and have less onerous regulations--notwithstanding some regulations on capital adequacy, asset quality, and asset-liability management. Gold financing companies are subjected to additional regulations such as loan-to-value restrictions and higher capital for lending against gold. Several finance companies in India have created strong niches, domain expertise, and economies of scale to support revenue stability and mitigate competitive pressure. S&P's starting point for rating financial companies in India is therefore 'bb'. Manappuram is a nonbank finance company that focuses on lending against gold across India. The loan portfolio is heavily skewed toward loans against gold jewelry and ornaments (67%; bullions and coins are not allowed by regulation), supplemented by microfinance (20%) and other lending. About 40% of the company's lending against gold is conducted online. Similar to other finance companies in India, Manappuram is looking to capitalize on growth opportunities beyond its core competency. These include insurance broking, microfinance, as well as auto, affordable housing, and small and midsize enterprise (SME) loans. The company is focused on servicing customers of similar socioeconomic backgrounds who do not have readily available financing from other formal lenders. Total loans of about Indian rupee (INR) 194 billion (US$2.8 billion) make Manappuram commensurate with peers such as Hero FinCorp Ltd. at INR197 billion (US$2.8 billion) and Muthoot Finance Ltd. at INR383 billion (US$5.3 billion). However, it is small compared with peers such as Bajaj Finance Ltd. at INR1,125 billion (US$16.1 billion) and Shriram Transport Finance Co. Ltd. at INR1,045 billion (US$14.9 billion). Despite an estimated market share of about 5% of total gold lending, it is still a relatively well-known brand in India. While its closest specialized gold lender peers are Muthoot Finance (12%) and Muthoot Fincorp (5%), there remains huge competition from banks and unregulated financiers in this highly fragmented market. S&P said, "We note that the main nonbank finance companies hold relatively large market shares in gold lending. The competitive landscape is even more intense in nongold lending, in our view." Similar to other nonbank financial institutions (NBFIs) in India, Manappuram leverages its core business' balance sheet and strong cash flows to expand organically and inorganically (e.g. Asirvad Microfinance Ltd.). Investments into sectors such as affordable housing do offer some diversification, but the company's long-term success in these sectors remains to be seen, given the influx of other new competitors. In S&P's view, these nongold businesses pose greater credit risk and business cycle fluctuations than loans against gold. The company is making investments in technology to improve the oversight and controls for these businesses. Manappurram's current managing director and CEO, Shri. V.P. Nandakumar, and his wife are the main promoters with about a third of outstanding shares. Apax Partners LLP's 10% shareholding is the largest single holding outside of the promoters, granting it a seat on the board, with Baring Private Equity Partners India Ltd. maintaining the only other material single holding of 9%. In S&P's view, the promoter's stake and position as the head of the company grant him significant influence over the company and its strategic direction. This is somewhat tempered by the sizable voting block of foreign portfolio investors, including Apax's seat on the board. S&P said, "In our view, Manappuram's management has the necessary skills and experience to ensure the long-term sustainability of the gold loan business. The acquisition of companies and management who have the skills and experience in running nongold lending businesses temper the risks of greenfield expansion. "We forecast Manappuram will sustain an extremely high risk-adjusted capital (RAC) ratio at over 30% for the next 12 to 18 months. The RAC ratio was 30.8% as of March 31, 2019. We expect the high-return gold and microfinance portfolios to help sustain capitalization despite rapid growth. We forecast the RAC will remain between 31%-35% over the next two years. "Our RAC ratio takes into account 70% of the value of collateral held against gold loans, which is in line with our criteria but is different to the Reserve Bank of India's (RBI) zero collateral offset. While we could follow the RBI's treatment, we believe that our 30% haircut sufficiently captures the potential price risk. If we were to remove the benefit of gold collateral, our RAC ratio would be 15.2%." S&P's key forecast assumptions are: -- Loan growth of 20% in fiscal 2020, tempering to 17% fiscal 2021, driven by rapid growth in the nongold business (including home finance); -- Slight deterioration in net interest margin, as the proportion of lower-yielding nongold loans grows; -- Slight increase in nonperforming loans due to general economic pressure and rapid growth in the nongold lending business that will take time to mature could lead to higher NPLs in the medium term; -- No capital raisings; and -- Dividend payout ratio of 25%. Manappuram's earnings and cash flow are superior to most NBFIs, and similar to peers such as Muthoot Finance. Net interest margins of over 15% lead to a sustained return on average assets of above 4%, which is well above those of Hero FinCorp (about 1.5%) and even Bajaj Finance (about 3.5%). The nature of Manappuram's gold business is bridge financing for low- to middle-income customers, who are willing to pay effective annual interest rates of about 22%. These high rates of interest, coupled with some incentives for early and regular repayments, result in a high short-term cash flow. The high operating earnings and cash allow Manappuram to support its periphery lending business to increase the stickiness of its customer base. Furthermore, capitalization supports high growth in these investments without external equity raisings. Industrywide complaints are predominantly regarding exorbitant interest rates charged, which creates a risk that the RBI may set interest rate caps, although we view this as low risk. In S&P's view, collateral-based lending requires a relatively low level of credit risk management sophistication. Manappuram does not assess its customers' ability to repay its loans against gold--it is purely collateral-based lending. The company has the ability to also demand that its customers repay their loans early if the value of their gold falls, although this has never been exercised. S&P understands that gold jewelry and ornaments hold some sentimental value to customers, which alleviates the propensity for willful defaulters based on the price of gold. Incentives for early and regular repayment of loans also reduce the risk of a price correction (e.g. April 2013). Further, the small-ticket/high-volume nature of the loans results in high customer diversification. Gold collateral is Manappuram's key risk mitigant. Regulatory restrictions that cap lending against loan-to-value ratios at 75% provide plenty of buffer for the finance company to protect its principal and generate significant interest over three-month loan tenors (87% gold loans). This buffer is enhanced with internal haircuts to the valuation of collateral. Loss--given defaults on gold loans--are negligible compared to auto and SME loans, and are more associated with interest rather than principal losses. Price risk over longer tenors is evident in the maximum deterioration in gold price since 2000 was 12% month-on-month, 20% over three months, and 23% annually. These may be tempered by fluctuations in the exchange rate, although the correlation is high at 94%. Given the sentimental value of gold jewelry, S&P believes reputational damage could occur if the company is seen as taking advantage of customers who are unable to repay. This reputational risk extends to the legal clause that Manappuram can demand early loan repayment, and as such can be difficult to trigger this clause. The company also faces the risk of regulatory tightening, similar to that experienced in 2012 when the central bank clamped down on loan-to-value ratios and rolled out new requirements for auctioning gold. While there is a high degree of customer granularity, the concentration of customers in the south of India remains high at about 60% of loans against gold. S&P said, "The nature of lending against gold exposes Manappuram to high operational risk, in our view. Theft and fraud are the main risks associated with the valuation and storage of gold collateral. Manappuram has undertaken a number of actions to minimize this risk. Two employees check the purity of gold via nitric acid, color, sound, and smell tests. There are regular unscheduled audits to check pledges and financial risks, while vigilance officers establish physical security. We understand that the losses associated with fraud are small as a percentage of gross lending. About 40% of these losses are written off, 30% recovered from docking staff compensation, 20% provisioned, 5% from recovery, and only 5% from insurers." Expansion into new business lines over the past five years is supportive of business diversification, by product and geography. With the exception of demonetization's impact on microfinancing, Manappuram has yet to experience a full credit cycle in these nongold loans. When coupled with plans for rapid expansion, this poses a heightened risk of asset quality issues. This is reinforced by particular growth areas such as strong competition in auto loans (e.g. Shriram Transport) or distress of more experienced lenders (e.g. affordable housing). S&P said, "While Manappuram has hired staff who have experience in these segments, we believe the company's lending experience using cash flow analysis for underwriting is limited. We understand risk management resourcing is split according to assets under management of the respective business lines. In our view, nongold lending risk management practices will likely mature over time, although we believe there could be hiccups in asset quality over the next few years." Manappuram has recently been issued a notice from the Securities and Exchange Board of India (Sebi) for selective disclosure about large losses incurred in 2013, which it shared with an analyst of a broking company. The company has subsequently amended its Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information. In 2018, the RBI's Hyderabad Office rejected Manappuram's attempt to acquire Indian School Finance Co. Pte. Ltd. S&P understands that this was a one-off event and the regulators do not have any material outstanding concerns about the quality of governance and information produced by Manappuram. Manappuram is highly exposed to short-term wholesale funding and maintains a thin stock of liquid assets, relying on strong short-term cash inflows and a slowdown in new lending to bolster liquidity if needed. Tempering this risk is that assets and liabilities are cumulatively matched funded. In S&P's view, these dynamics place the company at higher risk compared with finance company peers with more long-term stable funding profiles. Manappuram's funding is reliant on mutual funds and banks, mostly short-term and repayable on demand. Similar to the sector, costs remain elevated at up to 9.6% p.a. for shorter tenors since late 2018. Manappuram was able to raise commercial paper from six large mutual funds, although only one new short-term bank limit was obtained in late 2018. Over the first six months of 2019, Manappuram raised about INR 14 billion in new lines (mostly term loans) from about 12 creditors. In addition to these creditors was the National Bank for Agriculture and Rural Development (NABARD), which in March 2019 refinanced its INR7 billion term loan for five years. In S&P's view, Manappuram has been able to navigate current tightness in funding markets, particularly with no material negative press on the company. Cash credit, overdraft, and working capital liabilities account for about 40% of Manappuram's liabilities and are repayable on demand. S&P understands that these on-demand repayment clauses have never been triggered. However, when coupled with predominantly 60- to 90-day commercial paper accounting for another 21% of liabilities, S&P views this as a risk to funding stability. Even on a business-as-usual basis, Manappuram has to continually roll over commercial paper and other short-term funding, which leaves it at risk of a misstep. Reducing the risk of unexpected creditor withdrawal is Manappuram's high capitalization and expected reduction in the use of commercial paper as a percentage of total borrowings. The microfinance portfolio has tended to be two-thirds funded by term loans, with the rest coming from debentures and securitization. This portfolio lends itself to long-term funding, given 95% of loans have a tenor of two years. The housing loan portfolio is predominantly funded via term loan facilities from a number of banks, with an intragroup working capital loan of about 30% of total liens. Manappurram is looking to raise three-year senior secured loans, which S&P expects will fund long-term housing and microfinance loans. Manappuram's cash and equivalents covered about 50% of its borrowing repayments over one month, which--when including its undrawn but committed banking lines--increases to about 107%. Offsetting this is the strong cash flow of loan repayments, which are mostly within three months. S&P said, "Hence, we assess the company's liquidity as adequate. If there are disruptions to customer repayments, we believe the company will dramatically slow new originations to stockpile cash and meet its upcoming commitments. In our view, this is the primary mechanism for the company to survive a liquidity stress. Even if the company would be willing to recall customer loans in spite of reputational risks, and end up selling their respective gold collateral, it would take at least four weeks to auction and monetize the items. This illiquidity and associated reputational risk means we do not count this option in our stress scenario. Overall, we believe the company's strong short-term cash inflows and potential management actions to significantly reduce new lending provides it with sufficient liquidity to survive a stress scenario for 12 months." S&P said, "Our stable outlook reflects continuation of Manappuram's business franchise, capitalization, risk profile, and asset-liability mix over the next 12 months--despite the challenging environment. "The most likely downside scenario would be a material deterioration in the asset quality of its nongold businesses or--less likely in our view--changes to the gold business' operating environment (e.g. regulatory changes). "The most likely upside scenario would be a structural improvement to the stability of its funding profile. Longer-term funding would reduce the rollover risk associated with short-term wholesale funding, in our view." MANAPPURAM FINANCE: S&P Rates US$750MM Sec. Euro MTN Program 'BB-' ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB-' long-term rating on Manappuram Finance Ltd.'s US$750 million secured euro medium-term note (MTN) program. At the same time, S&P assigned its 'BB-' long-term issue rating to a proposed issue of U.S.-dollar-denominated three-year senior secured notes under the MTN. Manappuram plans to use the proceeds from the proposed issuance for onward lending, general corporate purposes, refinancing, and other activities. Notes issued from the program will constitute direct, general, and unconditional obligations of the India-based financing firm. The rating on the program and proposed notes is the same as our long-term issuer credit rating on Manappuram (BB-/Stable/B), reflecting the program's equal ranking in right of payment with all of the company's secured obligations. The notes will be secured against all current assets, book-debts, loans, advances, and receivables, including gold-loan receivables, and the associated benefits, rights, titles, interest, claims, and demands. The company must maintain a minimum security coverage ratio of at least 1.0x (excluding stage three/nonperforming assets). The rating on the proposed notes is subject to S&P's review of the final issuance documentation. MEENAKSHI ENERGY: NCLT Orders Insolvency Proceedings vs. Firm ------------------------------------------------------------- The Hindu BusinessLine reports that following a petition filed by the State Bank of India, the National Company Law Tribunal, Hyderabad, has directed insolvency proceedings against Meenakshi Energy Ltd. The Bench of Judicial Member Anantha Padmanabha Swamy and Technical Member Binod Kumar Sinha admitted the Insolvency Petition under the Banking and Insolvency Code, 2016, and appointed Ravi Shankar Devarakonda as the Interim Resolution Professional, BusinessLine discloses. While admitting the petition, the Bench declared a moratorium, which shall be operational from the date of the order till the completion of the corporate insolvency resolution process per the provisions of the Code, according to the report. BusinessLine relates that the debtor Meenakshi Energy had availed a term loan and working capital from a consortium of lenders, including SBI and SBH, in different phases to set up a 300-MW plant in Phase I and a 700-MW plant in Phase II, both coal-fired thermal power projects near Krishnapatnam. Phase II of the project incurred a cost overrun and the lenders extended additional financing for completion of the project. However, the corporate debtor defaulted in servicing the principal repayments and interest payments for Phase I and the loan was classified as a Non Performing Asset in October 2017, says BusinessLine. According to BusinessLine, the debtor contended that petitioner SBI had filed the application for insolvency as an after-thought and that the sole intention of the creditor was to armtwist and paralyse the debtor in order to meet certain arbitrary and unjust demands. It also contended that the debtor had failed to adopt a sector-agnostic approach for stress resolution, the report relates. Significantly, the debtor plant was originally owned and held by Meenakshi Energy and Infrastructure Holding Private Ltd, which subsequently reduced its shareholding -- Engie Global purchased the shares and was inducted as the promoter of the corporate debtor. However, Engie Energy, with a focus on renewable energy, decided to reduce thermal generation in its fuel mix and bid out the project, with India Power Corporation Ltd emerging the successful bidder, BusinessLine notes. BusinessLine says the transaction was completed in 2016 with transfer of a 95.7 per cent stake. However, its entire stake was fully pledged with SBI CAP Trustee Company Limited. The pledge was invoked in May 2018 and India Power Corporation filed a case. Meenakshi Energy Limited owns and operates renewable energy generation projects. The Company builds, develops, and manages coal based thermal power project. Meenakshi Energy serves clients in India. OTTO PROJECTS: Insolvency Resolution Process Case Summary --------------------------------------------------------- Debtor: Otto Projects Private Limited 4, Bishop Lefroy Road Flat No. 4, Calcutta Mansion Kolkata 700020 West Bengal Insolvency Commencement Date: October 24, 2019 Court: National Company Law Tribunal, Kolkata Bench Estimated date of closure of insolvency resolution process: April 20, 2020 Insolvency professional: Sankar Kumar Patnaik Interim Resolution Professional: Sankar Kumar Patnaik 7A, Bentinck Street Old Wing, 2nd Floor Kolkata 700001 E-mail: skpatnaikassociates@gmail.com Last date for submission of claims: November 24, 2019 PASSION INDUSTRIES: CARE Keeps B+ Rating in Not Cooperating ----------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Passion Industries Private Limited (PIPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 10.90 CARE B+; ISSUER NOT COOPERATING; Facilities Based on best available Information Short term Bank 4.00 CARE A4; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated October 4, 2018, placed the rating of PIPL under the 'issuer non-cooperating' category as Passion Industries Private Limited had failed to provide information for monitoring of the rating. Passion Industries Private Limited continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated November 6, 2019, November 5, 2019, November 4, 2019. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of rating on October 4, 2018 following were the rating strengths and weaknesses: Key Rating Weaknesses Modest scale of operations The scale of operations of the company has remained modest marked by total operating income and gross cash accruals of INR64.67 crore and INR0.89 crore respectively during FY17 (refers to the period April 1 to March 31). The small scale limits the company's financial flexibility in times of stress and deprives it from scale benefits. Low profitability and weak overall solvency position The profitability margins of the company stood low marked by PBILDT margin and PAT margin of 3.73% and 0.19% respectively in FY18 (PY 4.01% and 0.13% respectively). The capital structure of the company remained leveraged marked by overall gearing ratio of 8.27x, as on March 31, 2018 (PY 7.14x) on account of high dependence on external borrowings for managing working capital requirements. Moreover; owing to low profitability and high debt levels, the debt service coverage indicators of the company continues to remain weak maked by interest coverage ratio of 1.58x in FY18 (PY 1.61x) and total debt to GCA ratio of 25.28 in FY18 (PY 20.76x). Presence in a highly fragmented industry leading to stiff competition The company operates in the steel wire industry which is a fragmented industry with a high level of competition from both the organized and largely unorganized sector. Also, due to its small scale of operations, PIPL has low bargaining power with its customers and suppliers. Susceptibility of margins to fluctuation in raw material prices PIPL is exposed to volatility in input prices in the absence of any long-term contract with suppliers coupled with high inventory holding. Time lag between the procurement of raw material and bagging up of order exposes PIPL to volatility associated with raw material prices. Furthermore, PIPL is not able to pass on the rise in raw material prices to its end consumer due to stiff competition. Key Rating Strengths Experienced and resourceful promoter The company is currently being managed by Mr Navdeep Si ngh, Mrs Manju Lata and Mrs Tara Nati. Mr Navdeep Singh has more than half a decade experience in the iron and steel industry through association with PIPL. He is involved in the strategic planning and running the day to day operations of the company. He is being duly supported by Mrs Manju Lata and Mrs Tara Nati; both have half a decade of experience through their association with PIPL. Rohtak-based, (Haryana) Passion Industries Private Limited (PIPL), incorporated in 2013 as a private limited company and wass promoted by Mr Navdeep Singh, Mrs Manju Lata and Mrs Tara Nati. The company took over proprietorship firm "M/s Passion Steels" established by Mr Navdeep Singh in 2010. PIPL is engaged in drawing of alloy steel wires with an installed capacity of 2500 metric tonne per month as on March 31, 2017. The company procures the key raw material i e wire rods from Jindal Steels Private Limited and other local manufactures. The same is converted into thin wire as per client specification. The company sells its products to automobile component manufacturers. RELIANCE MEDIAWORKS: CARE Cuts Rating on INR638.20cr NCD to B- -------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Reliance Mediaworks Financial Services Private Limited (RMFSPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Non-Convertible 638.20 CARE B-; Outlook: Negative Debentures Revised from 'CARE BB (CE); Stable Detailed Rationale & Key Rating Drivers With deterioration in the credit profile of the Corporate Guarantee (CG) provider, Reliance Capital Limited (RCL), CARE has taken a standalone view of RMFSPL ratings without considering any credit enhancement from the CG. The rating is constrained due to weak earnings profile, weak solvency profile, and poor liquidity. The ratings also factors in experience of the management team. Outlook: Negative The outlook has been revised from Stable to Negative on account of high level of borrowings on the back of low cash-flows and dependent only on sale of investments. Rating Sensitivities Positive Factors * Improvement in earnings profile * Improvement in liquidity profile * Improvement in solvency profile Detailed description of the key rating drivers of RMFSPL Key Rating Weaknesses Weak earning Profile RMFSPL started its operation in the year 2017. Since then, the company suffering losses due to very low business activity. Total income in FY19 stood at INR1.63 crore as compared to INR2.11 crore in FY18. In FY19, RMFSPL reported a loss of INR0.03 crore. As on September 30, 2019, RMFSPL reported a loss of INR0.07 crore with zero business activity. Weak Solvency Profile RMFSPL's tangible net-worth stood at INR0.26 crore as on March 31, 2019 as compared to INR0.29 crore as on March 31, 2018. The borrowings stood at INR872.49 crores as on March 31, 2019, which comprises of INR638.20 crore of NCDs which are repayable on exercise of put option by holder or by maturity (by March 2023) and balance of INR234.29 crore borrowings taken from related parties. The NCDs are secured by way of – * First charge on RMFSPL's investment in equity shares of Prime Focus Limited * Pledge over shares of Reliance General Insurance Company Limited (RGICL) by the guarantor (Reliance Capital Limited) * First charge upto 20% only on proceeds received from any full or partial sale, transfer or disposal of the shares of Reliance Nippon Life Asset Management Limited held, and * Hypothecation on the account assets of RMFSPL along with corporate guarantee by promoter Reliance Capital Limited. Poor Liquidity As on September 30, 2019, cash and cash equivalents stood at INR40.93 crore out of which INR40.88 crore is balance with bank held as security against borrowings of NCDs. The unencumbered cash and cash equivalents is very low. Key Rating Strengths Experience Management Currently, RMFSPL is run by three people viz., Mr. Satish Kadakia who is a CA and LLB and is associated with ADAG group since 2008. Previously he has worked with Standard Industries Limited. Ms. Mangala Savla and Mr. Basant Varma, both of them are associated with ADAG group for more than one year. Liquidity: Poor As on September 30, 2019, cash and cash balance of INR40.93 crore includes INR40.88 crore which is held as security against borrowings of NCDs. Also, RMFSPL's business activity is very low to generate additional cash flows. Reliance Mediaworks Financial Services Private Limited (RMFSPL) was incorporated on March 10, 2017 which is engaged in to carry on the business of an investment company and invest, buy, sell, transfer deal in and dispose of any shares, stocks, debentures, debenture stock bonds, mortgages, obligations and securities of any kind issued or guaranteed by any company, corporation or undertaking of whatever nature whether incorporated or otherwise; and where so ever constituted or carrying on business of immovable property and rights directly or indirectly connected therewith and or bullion, including gold, silver and other precious metals and/ or precious stones such as diamonds, rubies and/or any other asset. RR COTTONS: Ind-Ra Migrates BB+ Rating to Non-Cooperating --------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated RR Cottons' Long-Term Issuer Rating to the non-cooperating category. The Outlook was Stable. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using these ratings. The rating will now appear as 'IND BB- (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR21.7 mil. Term loan due on November 2022 migrated to non- cooperating category with IND BB- (ISSUER NOT COOPERATING) rating; and -- INR150.0 mil. Fund-based limits migrated to non-cooperating category with IND BB- (ISSUER NOT COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on December 6, 2018. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE RR Cottons were established in July 2016. It is involved in the ginning and pressing of cotton in Adilabad, Andhra Pradesh. SEM INDUSTRIAL: CARE Lowers Rating on INR3.75cr LT Loan to B ------------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of Sem Industrial Syndicate (SIS), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 3.75 CARE B; Stable; ISSUER NOT Facilities COOPERATING Revised from CARE B+; Stable; Issuer not Cooperating Based on best available information Short term bank 8.75 CARE A4; ISSUER NOT facilities COOPERATING; on the basis of best available information Detailed Rationale & Key Rating Drivers CARE has been seeking information from SIS to monitor the rating(s) vide e-mail communications/letters dated August 12, 2019, August 19, 2019, October 10, 2019 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on SIS's bank facilities will now be denoted as CARE B; Stable/ CARE A4; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The revision in the long term rating assigned to the bank facilities of Sem Industrial Syndicate (SIS) factors in non availability of sufficient information and latest financial statements to arrive at a suitable rating. The ratings further remains constrained on account of relatively small and fluctuating scale of operation, moderate capital structure and debt coverage indicators, working capital intensive nature of operations and weak liquidity position, presence in competitive and fragmented industry and proprietorship nature of constitution. These factors far offset the benefits derived from established track record of operations along with experienced promoters and moderately comfortable but fluctuating profitability margin. Detailed description of the key rating drivers At the time of last rating on September 5, 2018, the following were the rating strengths and weaknesses. Key Rating Weaknesses Relatively small and fluctuating scale of operation: The scale of operation stood small and fluctuating in past, however the same grew with total operating income (TOI) of INR9.20 crore in FY18 vis-à-vis INR7.98 crore in FY17 on account of increase in number of contracts executed during that period. Further, the tangible net worth of the firm also remained small due to lower capitalization. However, the firm has moderate order book position thus providing medium term revenue visibility. Moderate capital structure and debt coverage indicators: SIS's capital structure marked by overall gearing, deteriorated in FY18 and stood moderate due to increase in the debt level on the back of increased dependenc e of working capital bank borrowings along with availment of various other long terms and interest free unsecur ed loan availed from family. The debt coverage indicators improved marginally and stood moderate in FY18 owing to growth in the gross cash accruals. Interest coverage ratio improved owing to decrease in the interest and finance cost and improvement in oper ating margins. Working capital intensive nature of operations and weak liquidity position: The operations of SIS are working capital intensive in nature on account of funds being blocked in receivables owing to liberal credit period provided to its customers. Also, EMD and retention money have to be maintained upto 1% and 10% each of the contract value. On the other hand, firm receives moderate credit from its suppliers. Hence, the working capital utilization remained high at 100% during past 12 months ended July 2018. Presence in competitive and fragmented industry: SIS operates in a highly competitive and fragmented coal handling and thermal industry. The company witnesses intense competition from both the other organized and unorganized players domestically and globally. This fragmented and highly competitive industry results into price competition thereby posing a threat to the profit margins of the companies operating in the industry. Proprietorship nature of constitution: Being a proprietorship firm, SIS has inherent risk of withdrawal of capital at the time of personal contingency. Furthermore, it has restricted access to external borrowings where net worth as well as creditworthiness of the proprietor are the key factors affecting credit decision of the lenders. Henc e, limited funding avenues along with limited financial flexibility have resulted in small scale of operations for the firm. Key rating Strengths Established track record of operations along with experienced promoters: SIS possesses an established track record of over 20 years in the business of trading and distribution of gear boxes, motors, pumps and various electro mechanical automation systems. Furthermore, firm also benefits from the experience of the promoter Mr. Chandrashekar Ashok Joshi through his association with the firm SIS since its establishment in 1996 and experience in thermal and hydro power plants. Moderately comfortable but fluctuating profitability margin: SIS's profit margin has remained moderately comfortable but fluctuating during past three years ending FY18. During FY18, operating margin of the entity increased marginally and remained moderately comfortable at 9.80% in FY18 owing to the increase in total operating income. Further PAT margin improved and stood at 5.79% in FY18 vis-à-vis 3.66% in FY17 owing to reduction in interest and finance cost and reduction in depreciation expense. Sem Industrial Syndicate (SII) was established in the year 1996 as a proprietorship concern by Mr. Chandrashekhar Ashok Joshi. The firm is engaged in the business of trading and distribution of gear box, motors, pumps and various electro mechanical automation systems. Its products find its application in the thermal power industry with customer base comprising of various thermal power stations based in Maharashtra and Madhya Pradesh. It caters to 8 thermal power stations [which are operated by MAHAGENCO (Maharashtra State Power Generation Company)] such as Nashik Thermal Power station, Khaparkheda Thermal Power Station, Koradi Thermal Power Station, Bhusawal Thermal Power station, Uran Thermal Power station and others in Maharashtra and Madhya Pradesh Thermal Power station in Madhya Pradesh. SSI is an authorized channel partner of ABB India Limited (ASEA Brown Boveri India Limited) for automation division for supply of products like DCS System (Distributed Control System), pump operating control machines, pan Maharashtra except Chandrapur (i.e. Chandrapur Thermal Power Station). For Kirloskar Brother Limited, SSI is the sole distributor for the distribution of industrial, agricultural and domestic pumps and its spare parts to Bhusawal Thermal Power station, Khaperkheda Thermal Power station and Koradi Thermal Power station. Further, it distributes gear boxes, gear motors and fluid clouping required for conveyor belts of coal handling plants and thermal power stations by procuring the same from Premium Energy Transmission Limited. SSI operates through its registered office in Mumbai, Maharashtra and Nashik, Maharashtra. SHARMA CONSTRUCTION: CARE Keeps B+ Rating in Not Cooperating ------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Sharma Construction Company continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.00 CARE B+; ISSUER NOT COOPERATING; Facilities Based on best available Information Short term Bank 3.00 CARE A4; ISSUER NOT COOPERATING; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated December 10, 2018, placed the rating of Sharma Construction Company under the 'issuer non-cooperating' category as Sharma Construction Company had failed to provide information for monitoring of the rating. Sharma Construction Company continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated November 6, 2019, November 5, 2019, November 4, 2019. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of rating on December 10, 2018 following were the rating strengths and weaknesses: Key Rating Weaknesses Despite being in operations for more than two and a half decades, the firm's scale of operations has remained low marked by Total Operating Income (TOI) of INR58.75 crore in FY17 (refers to the period April 01 to March 31) and networth base of INR5.38 crore as on March 31, 2017. The small scale limits the firm's financial flexibility in times of stress and deprives i t from scale benefits. Moderate capital structure The capital structure of SCC stood moderate at 1.56x as on March 31, 2017. The same improved from 9.46x as on March 31, 2015 on account of increase in net worth base of the firm coupled with repayment of term loans. Geographically concentrated revenue profile SCC entirely derives its revenue from the orders in the Punjab state which exposes the firm to geographical concentration risk and closely ties its fortunes to the incremental development of infrastructure projects in the state. Fragmented nature of the construction sector albeit improving growth prospects The construction sector in India is highly fragmented with a large number of small and mid-sized players. This coupled with tendering process in order procurement results into intense competition within the industry. Despite these roadblocks faced by the industry, the sector is expected to grow, given huge economic significance associated with it and rising investor interest. Constitution of the entity being a proprietorship firm SCC's constitution as a proprietorship firm has the inherent risk of possibility of withdrawal of the proprietor's capital at the time of personal contingency and firm being dissolved upon the death/retirement/insolvency of proprietor. Key Rating Strengths Experienced proprietor and established track record of entity SCC is engaged in the civil construction work and is managed by Mr. Naval KishoreSharma, having around two and a half decades of industry experience. The proprietor has gained this experience through hisa ssociation with SCC only. The proprietor has adequate acumen about various aspects of business which is likely to benefit SCC in the long term. Comfortable profitability margins with satisfactory debt coverage indicators The profitability margins of the firm remained comfortable marked by PBILDT margin and PAT margin of 9.57% and 6.13% respectively in FY17. Additionally, the debt coverage indicators remained at a comfortable level characterized by total debt to GCA ratio of 1.75x as on March 31, 2017 and interest coverage ratio of 6.72x in FY17. Further, the current ra tio and quick ratio also stood moderate at 1.09x and 0.99x respectively for FY17. Improvement in operating cycle The average operating cycle of the firm stood at -23 days for FY17. The same improved from 44 days for FY15. The firm receives payment from the client on percentage of completion basis. Nearly 95% of the bill amount raised by the firm is received within 1-2 days while the remaining payment is made after competition of the contract. The same has resulted in low collection period. Further, the average inventory period of the firm improved from 76 days for FY15 to 3 days for FY17. Furthermore, firm receives average credit period of around one month from its suppliers of raw materials. SCC is a proprietorship firm established in 1990 by Mr Naval Kishore Sharma. SCC is engaged in the civil construction work in Punjab, mainly including road work projects. The firm is registered as a 'class A1' contractor with Bridge &Road Division (B&R), Municipal Corporation and Improvement Trust of Punjab. The orders undertaken by the firm are secured through the competitive bidding process. Besides SCC, the proprietor is also engaged in another group concern, namely, Sharma Vibrotech Pipes (SVP), a partnership firm, engaged in the manufacturing of cement pipes. SHIVAM PROTEIN: CARE Lowers Rating on INR9.69cr Loan to 'D' ----------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Shivam Protein Products Private Limited (SPPPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 9.69 CARE D; ISSUER NOT COOPERATING; Facilities Based on best available Information Revised from CARE B; ISSUER NOT COOPERATING Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated July 11, 2019, placed the ratings of SPPPL under the 'Issuer non-cooperating' category as SPPPL had failed to provide information for monitoring of the ratings for the rating exercise as agreed to in its Rating Agreement. SPPPL continues to be non-cooperative despite repeated requests for submission of information through phone calls and emails dated November 7, 2019, November 18, 2019 and November 19, 2019. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The ratings on SPPPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. The revision in the ratings assigned to the bank facilities of SPPPL is primarily due to on-going delay in servicing its debt obligations. Detailed description of the key rating drivers Key Rating Weaknesses On-going delays in debt servicing: SPPPL has exhibited on-going delays in servicing its debt obligation for its term loan and cash credit facility for more than 30 days, owing to poor liquidity position. Incorporated in 2003, SPPPL is engaged in processing of turdal and trading of rice and wheat since October 2013. The processed products are sold entirely in the domestic market. Moreover, SPP is a part of Shivam group, which has other entities (namely M/s. Santosh Pulse Mill and Shivam Enterprise) engaged in similar line of business. SHRI SARAVANA: Ind-Ra Migrates B+ Issuer Rating to Non-Cooperating ------------------------------------------------------------------ India Ratings and Research (Ind-Ra) has migrated Shri Saravana Industries Private Limited's (SSIPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will now appear as 'IND B+ (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR45 mil. Fund-based facilities migrated to non-cooperating category with IND B+ (ISSUER NOT COOPERATING) / IND A4 (ISSUER NOT COOPERATING) rating; and -- INR253 mil. Non-fund-based facilities migrated to non- cooperating category with IND A4 (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on November 29, 2018. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE Founded as a proprietorship firm in 1989 by Mr. S Kandasamy, Madurai-based SSIPL undertakes hydromechanical operations, which involve the design, procurement, fabrication, manufacture, installation, testing and commissioning of complete hydro-mechanical equipment, including penstocks, steel liners, expansion joints, pressure shafts, and gates. SIRI CONSTRUCTIONS: Ind-Ra Migrates BB+ Rating to Non-Cooperating ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Siri Constructions Infrastructure Private Limited's (SCIPL) Long-Term Issuer Rating to the non-cooperating category. The issuer did not participate in the rating exercise despite continuous requests and follow-ups by the agency. Therefore, investors and other users are advised to take appropriate caution while using the rating. The rating will now appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's website. The instrument-wise rating actions are: -- INR70.0 mil. Fund-based facilities migrated to non-cooperating category with IND BB+ (ISSUER NOT COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating; -- INR230.0 mil. Non-fund-based facilities migrated to non- cooperating category with IND A4+ (ISSUER NOT COOPERATING) rating; -- INR30.0 mil. Proposed fund-based facilities migrated to non- cooperating category with Provisional IND BB+ (ISSUER NOT COOPERATING) / Provisional IND A4+ (ISSUER NOT COOPERATING) rating; and -- INR20.0 mil. Proposed non-fund-based facilities migrated to non-cooperating category with Provisional IND A4+ (ISSUER NOT COOPERATING) rating. Note: ISSUER NOT COOPERATING: The ratings were last reviewed on December 21, 2018. Ind-Ra is unable to provide an update, as the agency does not have adequate information to review the ratings. COMPANY PROFILE SCIPL executes civil construction projects namely construction of buildings, roads, and underground drainage systems, among others. SVG GRANITES: Ind-Ra Affirms 'B' LT Issuer Rating, Outlook Stable ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has affirmed SVG Granites Limited's (SVGGL) Long-Term Issuer Rating at 'IND B'. The Outlook is Stable. The instrument-wise rating actions are: -- INR102 mil. (reduced from INR110 mil.) Fund-based working capital limit affirmed with IND B/Stable rating; and -- INR28 mil. (reduced from INR32.50 mil.) Non-fund-based working capital limit affirmed with the IND A4 rating. KEY RATING DRIVERS The affirmation reflects SVGGL's moderate credit metrics, with gross interest coverage (operating EBITDA/gross interest expense) of 2.1x in FY19 (FY18: 1.9x) and net financial leverage (adjusted net debt/operating EBITDAR) of 3.7x (3.8x). The marginal improvement in SVGGL's credit metrics in FY19 was on account of lower interest expense due to a decline in the total debt levels on lower working capital utilization during the period. EBITDA margins remained modest despite improving marginally to 11.2% in FY19 (FY18: 10.4%) due to an increase in income from foreign exchange fluctuation. The return on capital employed came in at 9% in FY19 (FY18: 9%). Liquidity indicator – Poor: SVGGL's fund-based limits were overutilized at multiple instances during the 12 months ended in October 2019. However, the overutilization was regularized within 1-27 days. Furthermore, the cash flow from operations increased to INR24.91 million in FY19 (FY18: INR21.37 million) on account of lower interest expenses. The cash and cash equivalents stood at INR0.71 million at FYE19 (FYE18: INR3.33 million). The ratings also factor in SVGGL's elongated net cash cycle of 247 days in FY19 (FY18: 242 days) on account of a long inventory holding period. The inventory days increased to 172 in FY19 (FY18: 162) as SVGGL maintained a larger stock of raw material to avoid any disruption in its manufacturing process. The ratings, however, are supported by over two decades of experience of SVGGL's promoters in the granite manufacturing business. RATING SENSITIVITIES Negative: Further deterioration in the liquidity profile or a fall in the interest coverage below 1.5x will lead to negative rating action. Positive: Any improvement in the liquidity profile will lead to positive rating action. COMPANY PROFILE SVGGL processes rough granite blocks to derive granite slabs of various dimensions and exports them. The company is headed by Kishan Agarwal, Kiran Agarwal, and Naman Agarwal. Its registered office is in Secunderabad, Andhra Pradesh. ========= J A P A N ========= PANASONIC CORP: Sell Loss-Making Chip Business to Nuvoton --------------------------------------------------------- The Japan Times reports that Panasonic Corp. will sell its chip business to Taiwan's Nuvoton Technology Corp. as it steps up efforts to pull out of loss-making operations and focus more on growth areas, a source said Nov. 28. According to the report, the source said the electronics manufacturer will sell its shares in Panasonic Semiconductor Solutions Co. and TowerJazz Panasonic Semiconductor Co., a joint venture it set up with Israeli firm Tower Semiconductor Ltd. The Japan Times says the sale comes as Japanese chip manufacturers, which were once global leaders, have struggled in recent years in the face of fierce competition from South Korean and Taiwanese rivals. The Japan Times relates that the decision also reflects Panasonic's efforts to boost cost-cutting measures to make up for sluggish sales in China amid the country's prolonged trade war with the United States. The company said last week it will withdraw from all production of LCD panels by 2021, another unprofitable business, the report relays. Under its three-year business plan starting April this year, Panasonic aims to reduce costs by JPY100 billion ($913 million), saving JPY30 billion by slashing personnel costs and JPY40 billion by exiting money-losing businesses, according to The Japan Times. The company entered the semiconductor market through a joint venture with Dutch electronics maker Koninklijke Philips N.V. in 1952, the report recalls. It boosted sales of chips for use in TVs in the 1990s to 2000s but has since lost ground to its Asian rivals. According to The Japan Times, Panasonic CEO Kazuhiro Tsuga said earlier this month the company will "eradicate" all continuously loss-making businesses by the fiscal year ending March 2022 and focus on sectors such as batteries and other equipment for cars. In July, Panasonic said it will close a television production site in Mexico amid low profitability, the report relays. The Japan Times adds that Panasonic expects to report a decline in sales and group net profit for the first time in three years in the current fiscal year through next March. It projects its group net profit will fall 29.6 percent from a year earlier to JPY200 billion for the current business year ending March, and has forecast sales to slip 3.8 percent to JPY7.7 trillion, The Japan Times discloses. Headquartered in Kadoma, Japan, Panasonic Corporation, together with its subsidiaries, develops, produces, sells, and services electrical and electronic products under the Panasonic brand name worldwide. It operates through Appliances, Eco Solutions, Connected Solutions, Automotive & Industrial Systems, and Other segments. =============== M A L A Y S I A =============== ICON OFFSHORE: Cash Call, Debt Restructuring Plans Approved ----------------------------------------------------------- theedgemarkets.com reports that Icon Offshore Bhd has received the nod from its shareholders to move forward with its debt restructuring and cash call proposal, which will greatly help reduce the debt burden that has eaten into the company's earnings. theedgemarkets.com relates that Icon's second largest shareholder, Urusharta Jamaah Sdn Bhd, which owns an 8.8% stake in the group, indicated at the group's extraordinary general meeting (EGM) on Nov. 26 to support the cash call to raise up to MYR250 million, the bulk of which will be used to reduce the group's debt and gearing. This is on top of the undertaking by Icon's 42.3% shareholder Hallmark Odyssey Sdn Bhd, which is owned by Ekuiti Nasional Bhd. Icon also plans to secure an underwriting of some MYR67 million for its rights issue, the report says. "The funds coming in from the rights issue will strengthen the bottom line (with) savings of up to MYR31 million in terms of finance and depreciation costs," Icon's recently-appointed managing director Datuk Seri Hadian Hashim told reporters after the EGM, theedgemarkets.com relays. "What I and my management team will do is to improve the delivery. Over the last few months there has been cost savings of about 7%-8%," he said. In a nutshell, Icon proposes to consolidate 50 shares into one, and to raise up to MYR247 million - or around MYR10,618.55 for every 1,000 consolidated shares held based on its circular to shareholders, according to theedgemarkets.com. theedgemarkets.com says the rights shares will come with free eight-year warrants on the basis of one warrant for every four rights shares at an exercise price to be determined later. With the rights issue, combined with the plan to restructure some MYR577.16 million worth of its debt - last reported at MYR619.66 million - Icon will be able to reduce its gearing from 9.16 times to under 1.5 times, and slash annual financing costs by about MYR18 million, adds theedgemarkets.com. Icon is expecting to complete the cash call exercise by February 2020, the report notes. Icon Offshore Berhad is a Malaysia-based investment holding company. The Company operates in integrated business operations, which consists of the vessel owning/leasing activities and provision of vessel chartering and ship management services to oil and gas and related industries. It provides offshore support vessels (OSVs) in Southeast Asia. It provides logistical support services across offshore oil and gas life cycle, from exploration and appraisal, field development, operation and maintenance, to decommissioning activities. The Company's vessels are used for providing a range of services, including seismic survey, drilling operations support, towing, anchor handling and mooring of barges, repair and maintenance support, accommodation facilities for personnel and transportation of personnel and supplies to platforms. It also provides ship management services to third-party vessel owners. Its subsidiaries include Icon Ship Management Sdn. Bhd. and Icon Fleet Sdn. Bhd. LONDON BISCUITS: RHB Bank Sues PN17 Firm Over MYR22.6MM Owed ------------------------------------------------------------ Tan Xue Ying at theedgemarkets.com reports that London Biscuits Bhd is being sued by RHB Bank Bhd over a sum of MYR22.66 million allegedly owed by the Practice Note 17 (PN17) firm. According to theedgemarkets.com, the amount includes MYR4.36 million which London Biscuits is allegedly to owe the bank for an overdraft facility, MYR3.94 million for a multi trade line facility and MYR14.36 million for a revolving credit facility. The bank is also claiming interests and other costs or further reliefs, the report says. theedgemarkets.com relates that London Biscuits, in its stock exchange filing on Nov. 28, said it is "assessing the significant impact of the claim on the business, financial and operations of the remaining business of the group". On Nov. 12, London Biscuits announced it had defaulted on principal payments to RHB amounting to MYR22.52 million, the report discloses. The report says the group previously announced that it had defaulted on payments amounting to MYR89.19 million to seven banks between June 19 and Sept 20, bringing its default tally to MYR111.71 million as at Nov 12. The seven banks are Bank Islam Malaysia Bhd, Bank of China (Malaysia) Bhd, Malayan Bank Bhd, United Overseas Bank Bhd, OCBC Bank (Malaysia) Bhd, OCBC Al-Amin Bank Bhd and HSBC Bank Malaysia Bhd, theedgemarkets.com discloses. London Biscuits, whose shares settled unchanged at 9.5 sen on Nov. 28, is currently facing a winding-up petition. Lim San Peen of PricewaterhouseCoopers Advisory Services Sdn Bhd has been appointed the interim liquidator, the report notes. About London Biscuits Based in Ulu Tiram, Malaysia, London Biscuits Berhad, together with its subsidiaries, manufactures and trades in confectionary and other related foodstuffs in Malaysia, Singapore, Hong Kong, Vietnam, and internationally. It offers cake confectioneries, such as roll cakes, pie cakes, layer cakes, and novelty shaped cakes. The company also provides potato chips; and snack confectioneries, such as corn snacks, jellies and puddings, and chocolate dip biscuits under the London, Hiro, Mizu, Kinos Potato Bites, CaCa, Sumi, NiNi, and BOBO brand names. It sells its products through wholesale and retail channels. The company exports its products to approximately 35 countries. London Biscuits Bhd slipped into Practice Note 17 (PN17) status in July 2019, following its payment default amounting to MYR9.83 million to Bank of Nova Scotia Bhd. ================= S I N G A P O R E ================= HIAP SENG: Seeks Trading Suspension Amid Going Concern Uncertainty ------------------------------------------------------------------ Ng Ren Jye at The Business Times reports that Hiap Seng Engineering on Nov. 28 requested to suspend trading of its shares as it has engaged a financial consultant to review the group's financials and viability. BT relates that the board said that it is unable to conclude if the group can operate as a going concern at this stage. According to BT, the company said in its Q2 2020 results announcement that it would undergo a restructuring and realignment exercise that would include the disposal of some assets. These assets could include freehold land and buildings in Thailand, and leasehold properties in Singapore. The exercise is expected to free up cash, to be used as working capital for existing projects, as well as for repayment to existing creditors, said Hiap Seng, BT relays. Hiap Seng had narrowed its losses to SGD8.5 million from SGD22.3 million for the second quarter ended Sept 30, on the back of higher revenue and lower operating costs, the report discloses. As at Sept. 30, the group's current liabilities exceeded current assets by SGD30.1 million. Current liabilities included borrowings from banks of SGD32.2 million, trade and other payables of SGD34.2 million, and contract liabilities of SGD9.9 million, which are invoiced to customers but have yet to be recognised as revenue, adds BT. Hiap Seng Engineering Ltd provides building construction, engineering, procurement, construction, and plant maintenance services for the oil and gas, and energy sectors in Singapore, Malaysia, Thailand, Vietnam, the United Arab Emirates, and internationally. RHT HEALTH: May Not Proceed with Winding Up; Seeks to Adjourn EGM ----------------------------------------------------------------- Fiona Lam at The Business Times reports that the trustee-manager of mainboard-listed RHT Health Trust is proposing to adjourn an upcoming extraordinary general meeting (EGM) meant to seek unitholders' approval for RHT's voluntary winding up. It will be in the interests of unitholders to adjourn the EGM until RHT is able to make an informed decision as to whether and how the proposed winding up may proceed, the trustee-manager said on Nov. 28, BT relates. The EGM is scheduled for Dec. 3 at 10:00 a.m., at Temasek Club. According to BT, RHT's announcement comes after the India Supreme Court on Nov. 15 held Fortis Healthcare's founders - Malvinder Singh and Shivinder Singh - guilty of contempt of court. Fortis had purchased RHT's entire portfolio of healthcare assets in January this year, BT recalls. The Supreme Court judgment also stated that it is, prima facie, of the view that this disposal of RHT's portfolio and other transactions were in wilful disobedience of the court's order on Dec. 14, 2018. As such, RHT's Indian legal counsel advised the trustee-manager not to proceed with the voluntary winding up, the EGM and the distributions to unitholders referred to in the circular, BT relates. Otherwise, it may be viewed as being in defiance of the court, which will expose RHT to the risk of being made an alleged contemnor under the contempt proceedings, the trust said on Nov. 28, the report relays. BT adds that Fortis also wrote to RHT's trustee-manager on Nov. 25, saying that "it would be imperative" for the winding up to not proceed. The report says Fortis requested that the EGM be adjourned until either the Supreme Court has specifically allowed for the winding-up process to proceed or the court has disposed of the contempt proceedings. The disposal of RHT's entire portfolio to Fortis included its interests in 12 clinical establishments, four greenfield clinical establishments and two operating hospitals in India. RHT received 46.8 billion rupees (SGD895.6 million) in adjusted gross consideration for the sale, BT discloses. If a quorum is present at the EGM on Dec. 3, the chairman of the EGM will seek unitholders' consent to adjourn it until a later date and time to be determined by the trustee-manager, the report relays. However, if the adjournment is not approved by a simple majority of unitholders present and voting, the EGM will proceed as planned and the extraordinary resolution for the winding up will be proposed to the unitholders for approval. The court hearing for the contempt proceedings will start on Feb. 3, 2020, BT discloses. About RHT Health Trust RHT Health Trust is the first business trust to be listed on the Main Board of the Singapore Exchange Limited ("SGX-ST") with India based healthcare assets. Since listing, the investment mandate of RHT has been to principally invest in income-yielding real estate and real estate related assets used or to be used primarily as business space1 in Asia and Australasia. On Jan. 15, 2019, RHT's entire asset portfolio was sold to Fortis Healthcare Limited. Currently, RHT's assets comprise mainly of cash. Business space includes, but is not limited to, space used for information technology, information technology enabled services (includes various services ranging from call centres, claims processing, medical transcription, e-customer relationship management, supply chain management to back office operations such as accounting, data processing and data mining), high tech, science, healthcare, education, accommodation, business, industrial, logistics, warehousing and office purposes and such other supporting amenities. ===================== S O U T H K O R E A ===================== KOREA RESOURCES: S&P Revises Stand-Alone Credit Profile to 'b' -------------------------------------------------------------- S&P Global Ratings said the mining business of Korea Resources Corp. (KORES) could remain weak over the next 12-24 months, given the delayed ramp up of production at its overseas mining projects and associated impairment losses. However, the likelihood of extraordinary government support for KORES remains extremely high. Accordingly, S&P revised KORES' stand-alone credit profile (SACP) to 'b' from 'b+'. That's because S&P expects the company to generate negative EBITDA in 2019, and barely turn a profit in 2020, given the low asset quality of its major mining projects. S&P affirmed the rating because it continues to see an extremely high likelihood of extraordinary government support to KORES if the company faces financial distress. The SACP revision reflects KORES' deteriorating financial performance, stemming from weakness in its mining business. The poor performance of KORES' mining business undermines its stand-alone creditworthiness. The low quality of the company's overseas mining assets will erode already flagging profitability and make it more volatile. In particular, the increase in production at KORES' Boleo copper project in Mexico has been slower than we expected. Commercial operations at Boleo began in the fourth quarter of 2017, but the project's profitability has been weak due to disruptions and delays in production ramp-up. Stability of production volume at Boleo remains highly uncertain, given ongoing delays in ramp-up and persisting losses. In S&P's view, cost reductions and consistently higher production volumes are key to sustainable profits, which are yet to be realized. Operating losses will continue in 2019. KORES reported an operating loss of Korean won (KRW) 224 billion in the first half of 2019, of which KRW193 billion came from impairment losses at its key mining projects, including Boleo and Ambatovy. S&P anticipates these impairment losses and the continued weak performance of the company's mining business to result in significant operating losses for the company in 2019. Although KORES is pursuing means such as asset disposals and cost cutting, we believe such measures will be insufficient to sustainably improve operating cash flows and financial metrics. S&P estimates KORES' adjusted EBITDA to deteriorate to negative KRW200 billion–KRW300 billion, from negative KRW198 billion in 2018. However, EBITDA should turn around to KRW10 billion–KRW50 billion in 2020 because it assumes no major one-off events such as impairment losses or production disruptions. High debt and low earnings visibility over the next 12-24 months will keep KORES' leverage elevated. S&P expects KORES' debt to balloon on persisting negative operating cash flows despite limited capital expenditure. Performance at the company's overseas mining projects will remain sluggish and the cash interest expense on its elevated debt is sizable. S&P forecasts KORES to generate annual operating cash flows of negative KRW200 billion-KRW500 billion over the next 12-24 months. This will result in adjusted debt expanding to around KRW6.5 trillion by 2020, from KRW5.8 trillion in 2018. The potential impact, if any, of KORES' merger with MIRECO would depend on further details of the merger. On March 30, 2018, the Ministry of Strategy and Finance announced the merger of KORES with Mine Reclamation Corp. (MIRECO) into a new entity. MIRECO is wholly owned by the Korean government and focuses on damage prevention, restoration, and maintenance of mining facilities in Korea. MIRECO has a stable and consistent cash source from its gaming subsidiary Kangwon Land Inc., which provides annual dividend income of KRW70 billion–KRW80 billion. However, given the low visibility in the final outcome of the proposed bill and concrete timing of the merger, S&P has not reflected the merger under its base case. KORES continues to benefit from potential government support. S&P said, "We continue to see an extremely high likelihood that the government of the Republic of Korea (AA/Stable/A-1+) will provide KORES with extraordinary support. Our assessment reflects KORES' role as Korea's sole mandated mineral resources policy arm, and the government's full ownership, ongoing strong financial support, and tight supervision and control. We also expect the company to continue to have strong access to credit markets and benefit from low funding costs as a major government-related entity in Korea." S&P said, "The stable outlook reflects our expectation that KORES will continue to receive government support over the next 12-24 months, because it serves an essential policy role to secure mineral resources for economic development in Korea. "Although the company continues to have material exposure to the business cycles of the mineral resource sector, we believe strong and consistent government support tempers the risk. "We may lower the rating on KORES if the likelihood of government support unexpectedly weakens due to a change in the government's strategy and priorities. "We could also lower the rating if KORES' SACP were to fall to 'ccc+' or lower. The SACP could weaken as a result of KORES' overseas mining projects ramping up much slower than we anticipate, metal prices plunging, or the company facing significant liquidity pressure. "We may raise the rating on KORES if we see a material enhancement in its public role and a higher likelihood of government support. We could also upgrade KORES if we raise our sovereign ratings on Korea. "Although less likely, we may also raise the ratings on KORES if we revise its SACP upward by two notches to 'bb-'. The SACP revision could be because of a material reduction in the company's debt with a strong turnaround in its profitability and cash flows." ============= V I E T N A M ============= NUTIFOOD NUTRITION: S&P Withdraws Prelim. 'B' Issuer Credit Rating ------------------------------------------------------------------ S&P Global Ratings withdrew its preliminary 'B' issuer credit rating on Nutifood Nutrition Food Joint Stock Company. At the same time, S&P withdrew the preliminary 'B' rating on Nutifood's proposed senior unsecured notes. S&P assigned the preliminary ratings on Oct. 3, 2019, based on the company's proposed issuance of senior unsecured notes to refinance about 85% of its existing debt. However, the company no longer intends to issue the notes so S&P is withdrawing its preliminary ratings. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2019. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. *** End of Transmission ***