/raid1/www/Hosts/bankrupt/TCRAP_Public/200110.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, January 10, 2020, Vol. 23, No. 8
Headlines
A U S T R A L I A
ABSOLUTE SAFETY: First Creditors' Meeting Set for Jan. 17
BARDOT PTY: To Shut Retail Stores; 530 Workers to Lose Jobs
CABLE BEACH: First Creditors' Meeting Set for Jan. 17
ELITE BUILDING: First Creditors' Meeting Set for Jan. 17
GROCON: Settles With Dexus Over Debts Owed by Collapsed Units
LEEDERVILLE 139 NEWS: First Creditors' Meeting Set for Jan. 16
MOUNT PLEASANT WINES: First Creditors' Meeting Set for Jan. 20
WALKER GRAPHICS: First Creditors' Meeting Set for Jan. 16
C H I N A
CENTRAL CHINA REAL: Fitch Assigns BB- Rating to New USD Sr. Notes
KAISA GROUP: Fitch Assigns B Rating on Proposed USD Unsec. Notes
KAISA GROUP: Moody's Assigns B2 Rating on New USD Sr. Unsec. Notes
QINGHAI SALT: To Initiate Court-Led Debt Restructuring
YANGO GROUP: Fitch Assigns B Rating on Proposed USD Sr. Notes
I N D I A
ADISHAKTI CARS: ICRA Cuts Rating on INR6.10cr LT Loan to B+
AMBER INT'L: ICRA Withdraws B+ Rating on INR0.25cr Loan
BESTO MINING: ICRA Keeps B+ on INR19cr Loans in Not Cooperating
BHIMSERIA AGRO: Ind-Ra Moves 'BB' Issuer Rating to Not Cooperating
CHAUDHARY INGOTS: Insolvency Resolution Process Case Summary
GURU ASHISH: ICRA Withdraws B+ Rating on INR9cr Cash Loan
HANS INDUSTRIES: ICRA Withdraws B+ Rating on INR45cr Loan
HARANAI SAHAKARI: ICRA Lowers Rating on INR4.12cr Loan to B+
JAMPANA CONSTRUCTION: ICRA Cuts Rating on INR14cr LT Loan to B+
JANANI FOODTEK: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
LAKSHMIDURGA TEXTILES: ICRA Reaffirms B+ Rating on INR4.5cr Loan
MANTRA PACKAGING: ICRA Keeps B on INR5cr Loan in Not Cooperating
NATURAL SUGAR: ICRA Keeps D on INR150cr Loans in Not Cooperating
PACIFIC PIPE: Insolvency Resolution Process Case Summary
PAVAN COTTON: ICRA Moves B on INR5.5cr Loan in Not Cooperating
PRISTINE COMMERCIALS: ICRA Cuts Rating on INR9.75cr Loan to B+
QURESHI INT'L: ICRA Cuts Rating on INR9.90cr Loan to B+
RELIGARE FINVEST: Targets $815 Million Debt Revamp by March
RIDDHI SIDDHI: Insolvency Resolution Process Case Summary
SAHUWALA CYLINDERS: ICRA Cuts Rating on INR31cr Loan to B+
SHREEJI VITRIFIED: ICRA Withdraws B+ Rating on INR6.3cr Loan
SIDY DATACOM: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
SIMOLA TILES: ICRA Assigns 'D' Rating to INR42.26cr Term Loan
SONHIRA SAHAKARI: ICRA Hikes Rating on INR75cr LT Loan to B+
THREE C HOMES: Insolvency Resolution Process Case Summary
UNITED COKE: ICRA Withdraws B+ Rating on INR5cr Cash Credit
UNIVERSAL INDUSTRIAL: Insolvency Resolution Process Case Summary
WHEEL FLEXIBLE: ICRA Lowers Rating on INR11cr Cash Loan to B+
YADADRI LIFE: NCLT Orders Insolvency Process Against Company
I N D O N E S I A
BAYAN RESOURCES: Fitch Assigns 'BB-' Rating to Proposed USD Notes
BAYAN RESOURCES: Moody's Assigns Ba3 Rating to New Unsec. Notes
J A P A N
JAPAN DISPLAY: Ends Bailout Talks With Chinese-Taiwanese Group
L A O S
LAOS: Moody's Assigns First-Time 'B3' LongTerm Issuer Ratings
S I N G A P O R E
HYFLUX LTD: Creditors to File Proofs of Claim by Feb. 5
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A U S T R A L I A
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ABSOLUTE SAFETY: First Creditors' Meeting Set for Jan. 17
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Absolute
Safety (Australia) Pty Ltd, trading as Absolute Workwear & Safety,
will be held on Jan. 17, 2020, at 10:30 a.m. at the offices of
Level 22, Tower 5, Collins Square, at 727 Collins Street, in
Docklands, Victoria.
Matthew James Byrnes and Ahmed Bise of Grant Thornton were
appointed as administrators of Absolute Safety on Jan. 7, 2020.
BARDOT PTY: To Shut Retail Stores; 530 Workers to Lose Jobs
-----------------------------------------------------------
Stephanie Chalmers at ABC News reports that women's fashion
retailer Bardot will shut the vast majority of its stores over the
next two months, with 530 workers to lose their jobs.
Bardot will drastically shrink its store network by shutting 58
stores, ABC discloses. Only 14 stores will remain open, confined to
New South Wales and Victoria.
Fifty-six stores are scheduled to close by March, says ABC. Two
stores - in Hobart and Knox, Victoria - already shut in early
December.
The fashion chain entered administration in November, one of a slew
of retailers to do so last year as conditions in the sector
deteriorated. Bardot had 72 stores across all states and
territories and employed around 800 staff at the time it fell into
administration, ABC notes.
According to the report, administrators from KPMG said they are
still pursuing the sale of the remaining business and that the
store closures were "a very difficult decision".
"I would like to thank Bardot staff for their hard work and efforts
during this process."
Administrators have now confirmed that 530 workers would lose their
jobs as a result of the store closures.
In November, Bardot's chief executive Basil Artemides blamed a
competitive retail environment for its financial woes.
"Despite double-digit growth in online sales . . . Bardot's retail
stores in Australia are competing in a highly cluttered, and
increasingly discount-driven market," the report quotes Mr.
Artemides as saying.
Ryan Reginald Eagle and Brendan John Richards of KPMG were
appointed as administrators of Bardot Pty on Nov. 28, 2019.
CABLE BEACH: First Creditors' Meeting Set for Jan. 17
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Cable Beach
Operations Pty Ltd will be held on Jan. 17, 2020, at 2:00 p.m. at
the offices of Pitcher Partners, Level 13, at 664 Collins Street,
in Melbourne, Victoria.
Andrew Reginald Yeo and Gess Michael Rambaldi of Pitcher Partners
were appointed as administrators of Cable Beach on Jan. 7, 2020.
ELITE BUILDING: First Creditors' Meeting Set for Jan. 17
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Elite
Building and Renovations Pty Limited will be held on Jan. 17, 2020,
at 10:00 a.m. at the offices of Bernardi Martin, at 195 Victoria
Square, in Adelaide, SA.
Hugh Sutcliffe Martin of Bernardi Martin was appointed as
administrator of Elite Building on Jan. 7, 2020.
GROCON: Settles With Dexus Over Debts Owed by Collapsed Units
-------------------------------------------------------------
Sarah Danckert at The Sydney Morning Herald reports that Grocon has
resolved a dispute with property group Dexus after reaching a
settlement deal with the listed landlord and other creditors,
including the tax office, over debts of more than AUD39 million
owed by two collapsed Grocon subsidiaries.
Under the deed of company arrangement proposed for both entities
and filed with the corporate regulator this week, Grocon Group
Holdings will pay creditors including Dexus a total of AUD4 million
in four instalments between March 2020 and December 2020, SMH
discloses. The Australian Taxation Office had claimed a AUD9
million debt against the Grocon entities - Grocon Constructors Vic
and Grocon Constructors Qld.
In addition to the AUD4 million, Grocon Group Holdings will pay
Dexus an unspecified amount to resolve its dispute with the listed
group, the report says.
SMH notes that the Grocon creditors, led by Dexus, voted in favor
of a revised deed of company arrangement put forward by Grocon at a
creditors meeting on Dec. 13.
The parties have reached a settlement of the disputes between them
with respect to the amount claimed by Dexus, the report relates.
"The parties have reached a settlement of the disputes between them
with respect to the amount claimed by Dexus without admission of
liability," according to the minutes of the December 13 creditors'
meeting cited by SMH.
"The settlement includes a payment by Grocon Group Holdings to
Dexus in consideration of the mutual releases extending to
outstanding amounts claimed by Dexus against Grocon."
SMH adds the affirmative vote came after the listed property group
voted against the first deed of company arrangement put forward by
Grocon in November.
A spokeswoman for Dexus declined to comment saying the settlement
amount was "commercial in confidence," SMH says.
A Grocon spokeswoman also declined to comment on the Dexus
settlement and the tax position of the entities. She confirmed
Grocon and its related entities contributed AUD4 million to the
deed of company arrangement, says SMH.
According to SMH, Grocon called in administrators on October 25
following a Federal Court dispute with Dexus over nearly AUD29
million in debts owed by Grocon's entities to Dexus for rent and
lease payments relating to the 480 Queen Street office tower it
purchased from Grocon in Brisbane.
SMH relates that the administration sparked a war of words between
Dexus and Grocon with Grocon saying the administration was the
result of Dexus escalating its demands for payment during the court
process and describing Dexus's attitude as "unreasonable and
disappointing".
Dexus hit back in an ASX announcement saying Grocon's media release
was "factually incorrect", adding the debts were three-years-old
and that Grocon had issued court proceedings after Dexus issued
statutory demands against the Grocon entities. "Dexus is following,
and intends to continue to follow, the court's direction," it
said.
Grocon has said the two entities were inactive and had no workforce
employees, SMH notes.
John Park and Kelly Trenfield of FTI Consulting were appointed as
administrators of Grocon Constructors on Oct. 25, 2019.
LEEDERVILLE 139 NEWS: First Creditors' Meeting Set for Jan. 16
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Leederville
139 News Pty Ltd will be held on Jan. 16, 2020, at 11:00 a.m. at
the offices of Hamilton Murphy Advisory, Unit 18, at 28 Belmont
Avenue, in Rivervale, WA.
Stephen Robert Dixon of Hamilton Murphy Advisory was appointed as
administrator of Leederville 139 on Jan. 7, 2020.
MOUNT PLEASANT WINES: First Creditors' Meeting Set for Jan. 20
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Mount
Pleasant Wines Pty Ltd and McWilliam's Wines Group Ltd will be held
on Jan. 20, 2020, at 11:00 a.m. at Wesley Conference Centre, at 220
Pitt Street, in Sydney, NSW.
Ryan Reginald Eagle, Gayle Dickerson and Tim Mableson of KPMG were
appointed as administrators of Mount Pleasant on Jan. 8, 2020.
WALKER GRAPHICS: First Creditors' Meeting Set for Jan. 16
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Walker
Graphics Pty Ltd, trading as Canned Heat Media & Marketing, Inky
Tee, Vivid Print Services and Worldwide Online Printing - Fyshwick,
will be held on Jan. 16, 2020, at 12:00 p.m. at Ground Floor, at 15
National Circuit Barton, in ACT.
Grahame Robert Ward and Domenic Calabretta of Mackay Goodwin were
appointed as administrators of Walker Graphics on Jan. 6, 2020.
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C H I N A
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CENTRAL CHINA REAL: Fitch Assigns BB- Rating to New USD Sr. Notes
-----------------------------------------------------------------
Fitch Ratings assigned a 'BB-' rating to Central China Real Estate
Limited's (BB-/Stable) proposed US dollar senior notes. The notes
are rated at the same level as CCRE's senior unsecured rating, as
they represent its direct, unconditional, unsecured and
unsubordinated obligations.
CCRE's ratings are supported by the company's position as a leading
real-estate developer in China's Henan province, with broad
housing-product diversification and a growing non-property
development business in rental properties and project management.
The ratings also reflect the company's healthy financial profile,
with leverage, measured by net debt/adjusted inventory that
proportionately consolidates its joint ventures, falling to 31% by
end-2018, from 34% at end-2017.
KEY RATING DRIVERS
Strong Presence in Henan: Fitch believes CCRE's record supports its
plan to increase its market share in Henan to 10%-13% in the next
one to three years, from 9% in 2018. CCRE has been developing
residential properties almost entirely in the province for more
than 27 years and it has projects in 18 prefecture-level cities and
an established reputation. CCRE's lower average selling price (ASP)
of CNY7,284 per sq m in 2018, compared with peers' ASP of above
CNY11,000/sq m, reflects its wide product exposure, which includes
projects in smaller cities.
Sales, Market Share to Increase: CCRE's total contracted sales in
2018 were strong at CNY53.7 billion, rising by 76.5% from 2017, and
continued increasing in 1H19 by 24% yoy to CNY39.6 billion. This
was driven by a larger share of sales from lower-tier cities in
Henan. Fitch expects CCRE's annual contracted sales to increase to
CNY61 billion-68 billion in 2019-2020, while the company's market
share in Henan province is likely to expand to more than 10% in the
medium term. The company remained the largest developer in the
province in 2018.
CCRE's expansion into project management of residential-property
developments in the province's smaller towns drove the increase in
EBITDA from non-development businesses. CCRE had 110 projects under
this asset-light business model as of December 2018. The company
expects these to provide CNY3.5 billion of revenue over the next
three to four years. Revenue from the asset-light model more than
doubled to CNY675 million in 2018, with a gross margin of 91%.
Aggressive Land Acquisitions Drive Leverage: CCRE acquired 13.5
million sq m in attributable gross floor area of land for CNY17.0
billion in 2018. The company achieved a land acquisition/contracted
sales value ratio of 0.28x in 2018, in line with the 0.2x-0.3x in
previous years. Fitch expects the acquisitions to drive up the
company's leverage, measured by net debt/adjusted inventory on a
proportionate consolidation basis, to above 33% in 2019-2020, from
about 31% in 2018. Leverage fell in 2018 from 34% in 2016-2017
thanks to strong contracted sales growth.
Fitch believes CCRE's leverage will not rise above 40% as the
company has the flexibility to slow down its land acquisitions due
to a bigger attributable land bank of 34.7 million sq m that is
sufficient for development over the next five to six years.
Stabilising Margin: Fitch estimates CCRE's EBITDA margin (deducting
capitalised interest from cost of sales) to have been higher than
20% in 2019 (2018: 22%). The EBITDA margin fell to 16% in 2017,
from 17% in 2016, affected by CCRE's strategy to accelerate
inventory clearance in 1H15. Higher contracted sales than revenue
also squeezed the EBITDA margin as the selling, general and
administrative expenses, which are more a function of its
contracted sales, are apportioned to a much lower level of revenue.
Fitch expects CCRE's EBITDA margin to expand when it starts to
recognise revenue from previous contracted sales.
DERIVATION SUMMARY
CCRE's contracted sales of CNY53.7 billion in 2018 are comparable
with those of 'BB-' rated peers, although it has maintained a
healthier financial profile. Yuzhou Properties Company Limited
(BB-/Stable) had contracted sales of CNY56.0 billion in 2018 and
KWG Group Holdings Limited (BB-/Stable) had CNY65.5 billion.
CCRE's leverage ratio, measured by net debt/adjusted inventory on a
proportionately consolidated basis, was 31% at end-2018, well below
the 'B+' and 'B' rated peers' ratio of 40%-60% and in line with
'BB-' rated peers' ratio of 20%-45%. However, CCRE's leverage ratio
may remain at 31%-33% in 2019-2020.
CCRE's EBITDA margin of 22% in 2018 was in the middle of the 'BB-'
peers' range of 18%-25%. However, Fitch expects CCRE's EBITDA
margin to rise to 24%-25% in 2019-2020 as revenue from projects
with a higher contracted sales ASP will start to be recognised and
there will also be revenue increases from the company's
higher-margin rental property and project-management businesses.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Total contracted sales by gross floor area to increase by 13%
in 2019 and 11% in 2020
- Average selling price for contracted sales to increase by up to
1% a year in 2019-2020
- EBITDA margin (excluding capitalised interest) to reach 24%-25%
in 2019-2020
- Land acquisition budget to be 22%-24% of total contracted sales
for 2019-2020 for the company to maintain its land bank at
approximately five years of contracted sales (32% in 2018).
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory on a
proportionately consolidated basis, persistently at 30% or below,
while the company maintains its leading position in Henan province
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- A decline in contracted sales for a sustained period
- Leverage at 40% or above for a sustained period
- EBITDA margin at below 18% for a sustained period
LIQUIDITY
Ample Liquidity: The company had total cash of CNY23.8 billion
(including restricted cash of CNY4.6 billion) as of June 2019,
sufficient to cover short-term debt of CNY7.0 billion maturing in
one year.
Diversified Funding Channels: CCRE had total debt of CNY25.8
billion as of June 2019, consisting of bank loans, other loans,
senior notes and corporate bonds, and unutilised banking facilities
of CNY24.1 billion. CCRE is listed on the Hong Kong stock exchange
and raised about CNY800 million in an equity placement in 1H18.
Stable Funding Cost: The average cost of borrowing was 7.0% in
2018, slightly higher than the 6.8%-6.9% in 2016-2017.
KAISA GROUP: Fitch Assigns B Rating on Proposed USD Unsec. Notes
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Fitch Ratings assigned China-based homebuilder Kaisa Group Holdings
Limited's (B/Stable) proposed US dollar senior unsecured notes a
rating of 'B' with a Recovery Rating of 'RR4'. The proceeds will be
used to refinance medium- to long-term offshore debt, which is due
within one year.
The proposed notes are rated at the same level as Kaisa's senior
unsecured rating as they constitute the company's direct and senior
unsecured obligations.
Kaisa's ratings are underpinned by a strong asset base that
supports scale expansion, which is at a level comparable with 'BB'
category homebuilders. The company had a large and well-located
land bank consisting of 167 projects in 47 cities across five major
economic regions at end-1H19. Its geographical diversification
mitigates project and region-related risks and gives it more
flexibility when launching new projects to support sales growth.
Kaisa's ratings are constrained by high leverage - measured by net
debt/adjusted inventory (urban renewal projects (URP) and
investment properties at original cost) - of 72% at end-1H19,
although this is mitigated by high profitability.
Fitch believes Kaisa will start deleveraging from 2020, supported
by its enlarged scale and increased margin, with more high-margin
URPs being recognised. Kaisa is able to secure a large land bank at
low cost in China's Greater Bay Area through its URP business,
which supports its high EBITDA margin of over 30%. The wider margin
of the URP business, at over 40%, will help deleveraging. However,
Kaisa's leverage will remain high if it expands its scale at the
same pace as in 2017 and 2018, as URPs only contributed 30% of
contracted sales in 2018.
KEY RATING DRIVERS
URPs a Business Strength: Fitch believes Kaisa's URP business
offers operational flexibility, as its high profitability enables
the company to sustain price cuts in a market downturn. Kaisa can
also sell stakes in its URPs, if needed, at a profit because of
their low land cost. Kaisa's long experience in the URP business
has enabled it to secure a large land bank with a high gross profit
margin of over 40%, supporting the company's EBITDA margin,
excluding capitalised interest in cost of goods sold (COGS), of
30%-35%. A large URP pipeline of 128 projects, covering a site area
of 32 million sq m, also allows for a consistent stream of projects
entering the sales phase.
Kaisa has converted an average gross floor area (GFA) of 940,000 sq
m a year for the past 10 years; this offers some operational
flexibility with land replenishment. Nevertheless, the URP business
has limited scope to build scale and will become a less important
driver at higher rating levels. URPs require a longer development
cycle and thus funds will be trapped for a longer period and incur
higher funding without immediate cash flow generation or profit
contribution, raising Kaisa's leverage above that of peers without
as large an exposure to URPs. The nature of the business and the
high profitability mean Kaisa can operate at a higher leverage than
other Chinese homebuilders for a sustained period.
High Leverage Constrains Ratings: Fitch estimates that Kaisa's
leverage, measured by net debt/adjusted inventory, stayed above 70%
in 2019 but will fall below that level thereafter. Kaisa's sales
scale in 2019 would be insufficient to support deleverage due to
its high tax and interest burden. Reliance on the non-URP
homebuilding business, which has a lower margin, and growth at the
business that is faster than Fitch expects, may limit Kaisa's
capacity to deleverage. However, Fitch thinks there may be
improvement once the company's attributable sales rise above CNY100
billion from 2020, as its sales efficiency - contracted sales/gross
debt - will exceed 0.8x and support stronger fund flow from
operation.
Large and Premium Land Bank: Fitch believes Kaisa's quality land
bank will support robust sales growth in the next two years. Its
premium asset base can also buffer liquidity if conversion of its
URP land bank takes longer than the company expects, as it can
easily find buyers for its well-located URPs, especially in
Shenzhen. Kaisa's land bank totalled 25.8 million sq m (estimated
sellable resources of CNY501 billion) at end-1H19, of which 14.1
million sq m, or 54.6%, was in the Greater Bay Area and 3.2 million
sq m in Shenzhen.
Robust Contracted Sales Growth: Fitch thinks Kaisa will continue to
see robust sales growth due to the supportive policies in the
Greater Bay Area and the company's well-located land bank. Kaisa's
total contracted sales rose by 26% to CNY88.1 billion in 2019,
supported by GFA growth of 21% and average selling price increase
of 4%. This followed a sales growth of 57% in 2018 and 50% in
2017.
DERIVATION SUMMARY
Kaisa's attributable sales scale in 2019 was comparable with those
of 'BB' category peers, such as Logan Property Holdings Company
Limited (BB/Stable) and China Aoyuan Group Limited (BB-/Positive),
and exceeded the CNY40 billion-50 billion sales of Yuzhou
Properties Company Limited (BB-/Stable), KWG Group Holdings Limited
(BB-/Stable) and Times China Holdings Limited (BB-/Stable). Over
half of Kaisa's land bank GFA is in the Greater Bay Area, a similar
level to that of Logan, China Aoyuan and Times China. Kaisa's
EBITDA margin of over 30% is at the higher end of 'BB' category
peers due to its high-margin URPs.
Kaisa's leverage of over 70% is at a similar level to that of
Oceanwide Holdings Co. Ltd. (B-/Stable), Xinhu Zhongbao Co., Ltd.
(B-/Stable) and Tahoe Group Co., Ltd. (B-/Stable). Kaisa's business
profile is much stronger than that of Oceanwide and Xinhu, with a
larger sales scale and more diversified land bank. Its churn,
measured by contracted sales/total debt, of 0.64x is also healthier
than the ratios of the two peers, which are below 0.25x. Kaisa and
Tahoe, whose land bank is more exposed to the Pan-Bohai Area, the
Yangtze River Delta and Fujian province, have similar scale and
margin. However, Tahoe's shorter land-bank life of two to three
years pressures its leverage and Tahoe's liquidity is much tighter
than that of Kaisa.
Kaisa's closest peer among 'B' category issuers is Yango Group Co.,
Ltd. (B+/Stable). Yango's sales scale is larger than that of Kaisa
and its land bank is also more diversified, although Yango's EBITDA
margin, excluding capitalised interest, of around 28% is narrower
than Kaisa's more than 30%. Yango's leverage, measured by net
debt/adjusted inventory, of below 65% in 2019 is lower than its
expectation of Kaisa's leverage. Yango's moderately stronger
business and financial profiles justifies the one-notch
difference.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales to rise by 20% in 2020 (2019:
26%)
- Attributable land premium/contracted sales at 28% in 2019 and
31% in 2020 (2018: 23%)
- Cash collection rate of around 80% in 2019 and 85% in 2020
(2018: 75%)
- Construction cost/sales proceeds at around 30% in 2019 and 2020
(2018: 30%)
- Dividend payout ratio of 20% of net income (2018: 19%)
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory, sustained
below 60%
- EBITDA margin, excluding capitalised interest in COGS,
sustained above 30%
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Leverage, measured by net debt/adjusted inventory, above 75%
for a sustained period
- EBITDA margin, excluding capitalised interest in COGS, below
25% for a sustained period
LIQUIDITY
Cash Meets Short-Term Obligations: Kaisa had cash and cash
equivalents of CNY28 billion at end-1H19, including restricted cash
of CNY7 billion, against CNY22 billion in short-term debt. The
company also had total credit lines of CNY165 billion, of which
CNY119 billion was unused. In addition, Kaisa obtained approval
from the Shenzhen Stock Exchange to issue four asset-backed
securities, consisting of CNY5 billion linked to supply-chain
financing (CNY555 million issued), CNY3 billion linked to long-term
rental apartments, CNY685 million secured by mortgage balloon
payments (issued) and CNY475 million backed by income from its
shipping business (issued). Kaisa's average funding cost stayed
flat at 8.4% in 2018.
KAISA GROUP: Moody's Assigns B2 Rating on New USD Sr. Unsec. Notes
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Moody's Investors Service assigned a B2 senior unsecured rating to
the proposed USD notes to be issued by Kaisa Group Holdings Ltd (B1
stable).
Kaisa plans to use the notes' proceeds to refinance its existing
medium to long-term offshore debt due within one year.
RATINGS RATIONALE
"The proposed bond issuance will support Kaisa's liquidity and
lengthen its debt maturity profile," says Danny Chan, a Moody's
Assistant Vice President and Analyst.
"The issuance will not materially affect its credit metrics,
because the company will use the majority of the proceeds to
refinance existing debt," adds Chan.
Kaisa reported 25.8% year-on-year contracted sales growth (together
with its joint ventures and associates) to reach RMB88.1 billion
for the 12 months ended December 2019, from RMB70.1 billion for the
same period a year earlier.
Supported by robust contracted sales, Moody's expects Kaisa's
revenue to continue to grow strongly over the next 12-18 months. As
a result, the company's revenue/adjusted debt should improve to
60%-65% in 2020 from 38% for the 12 months ended June 2019.
Similarly, the company's adjusted EBIT/interest coverage should
trend towards 2.5x from 1.9x over the same period.
Kaisa's liquidity profile is good. Moody's expects that Kaisa's
cash holdings along with its operating cash flow will be sufficient
to cover its maturing and committed land payments over the next
12-18 months. As of June 2019, the company's cash holdings of RMB28
billion could cover about 1.2x of its RMB22.6 billion of short-term
debt.
Kaisa's B1 corporate family rating (CFR) reflects its strong brand
and sales execution in the Guangdong-Hong Kong-Macao Bay Area (the
Greater Bay Area), its established track record of completing
high-margin urban redevelopment projects, its quality land bank in
high-tier cities such as Shenzhen, and its good liquidity.
However, the rating is constrained by Kaisa's high debt leverage
and track record of debt restructuring.
The B2 senior unsecured rating is one notch lower than its
corporate family rating due to structural subordination risk. This
risk reflects the fact that the majority of Kaisa's claims are at
its operating subsidiaries and have priority over claims at the
holding company in a bankruptcy scenario. In addition, the holding
company lacks significant mitigating factors for structural
subordination.
Kaisa's stable outlook reflects Moody's expectation that the
company will maintain its contracted sales growth and good
liquidity over the next 12-18 months.
Moody's could upgrade Kaisa if the company (1) maintains its good
liquidity; (2) diversifies its funding channels; and (3) improves
its adjusted EBIT/interest coverage to above 3.0x-3.5x and
revenue/adjusted debt to above 75%-80% on a sustained basis.
On the other hand, downward rating pressure could emerge if the
company fails to achieve sales growth or aggressively acquires land
beyond Moody's expectation, such that its financial metrics and
liquidity deteriorate.
Credit metrics that could trigger a rating downgrade include (1)
revenue/adjusted debt falling below 50%; (2) adjusted EBIT/interest
coverage falling below 2.0x; or (3) cash to short-term debt falling
below at 1.0x-1.5x on a sustained basis.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Kaisa Group Holdings Ltd engages in real estate development in
China, including urban redevelopment projects in the Greater Bay
Area. At June 30, 2019, the company's land bank comprised an
aggregate gross floor area of 25.8 million square meters of
saleable resources across 47 cities in China.
QINGHAI SALT: To Initiate Court-Led Debt Restructuring
------------------------------------------------------
Bloomberg News reports that a Chinese fertilizer maker is being
watched closely after it became a rare state-owned company to
initiate a court-led debt restructuring, that could result in
losses for some of its onshore creditors.
Qinghai Salt Lake Industry Co. is a state-owned firm located in
sparsely-populated province in northwest China that mainly produces
potash, the report discloses. A local court in the province threw a
lifeline to Qinghai Salt Lake in September by accepting a
creditor's request to restructure the firm amid its financial
troubles, Bloomberg recalls.
Bloomberg says court-led bankruptcy proceedings are rare in China
and regulators have been calling for more orderly debt workouts.
They released draft guidelines last month to improve the mechanism
of dealing with bond defaults and resolving credit risk more
effectively.
The company has defaulted on three outstanding bonds amounting to
about CNY6.2 billion (US$894 million). It owes a total of CNY45
billion to its creditors, according to an initial confirmation by
the bankruptcy administrators, the company said in a filing on Dec.
26, Bloomberg relates.
Qinghai Salt Lake had made "too aggressive" investments in the
magnesium business, which has become a big source of loss, Wu Rui,
executive director for mezzanine and credit investment at CDH
Investments said earlier this week, according to Bloomberg.
Qinghai Salt Lake had assets of CNY73 billion and total liabilities
of CNY55 billion as of end-June, Bloomberg discloses citing the
company's semi-annual report. It had a net loss of CNY424 million
in that period, following a CNY3.5 billion loss in 2018.
Three months into a formal bankruptcy reorganization procedure,
Qinghai Salt Lake proposed a debt restructuring plan that offers
non-bank ordinary creditors the option of getting repaid in
installments or receiving equity as payment, according to people
familiar with the matter, Bloomberg relays.
Each creditor that's owed CNY500,000 or below can get full
repayment in cash, said the people. For amounts above CNY500,000n,
creditors can opt to swap the debt for the company's equity at a
price of 13.1 yuan per share, or choose to be paid in installments,
they said.
According to Bloomberg, Chinese bond investors are closely watching
the outcome of Qinghai Salt Lake's debt restructuring for clues on
the magnitude of losses creditors may have to incur. Few state-run
firms in the nation have undergone such a process and even though
local bond defaults hit a record high in China last year, the
nation's private firms make up a bulk of that volume.
Overall, about a third of Chinese bond issuers that went into
bankruptcy reorganizations are state-owned enterprises, and only
two of them have announced court-approved restructuring plans,
according to Bloomberg calculations.
Out of the 414 onshore bonds that had defaulted as of end 2019,
only 74 completed "proper debt restructurings", according to Tan
Chang, an analyst at China Chengxin International Rating Co,
Bloomberg relays.
Investor caution toward state-run firms has risen after Tewoo Group
Co. recently became the biggest dollar bond defaulter in two
decades, Bloomberg adds.
YANGO GROUP: Fitch Assigns B Rating on Proposed USD Sr. Notes
-------------------------------------------------------------
Fitch Ratings assigned Chinese homebuilder Yango Group Co., Ltd.'s
(B+/Stable) proposed US dollar senior notes a 'B' rating and a
Recovery Rating of 'RR5'. The proposed notes will be issued by its
wholly owned subsidiary, Yango Justice International Limited. The
notes are rated at the same level as Yango's senior unsecured
rating as they will be unconditionally and irrevocably guaranteed
by the company.
The one-notch difference between Yango's senior unsecured rating
and its Long-Term Issuer Default Rating reflects the subordination
of its unsecured debt to secured debt. Secured debt accounted for
68% of Yango's total borrowings as of end-September 2019, and was
equivalent to around 80% of Fitch-estimated liquidation value.
KEY RATING DRIVERS
Falling Leverage Record: Yango was successful in deleveraging in
2018 and 1H19 from a peak in 2017, fulfilling management's
commitment. Its leverage, measured by net debt/adjusted inventory,
including guarantees provided to and net assets of joint ventures
and associates, improved to 67.8% in 2018 and dropped further to
63.8% in 1H19, after the company cut back on land acquisitions.
Yango spent only 46% and 41% of sales receipts on an attributable
basis for land acquisition in 2018 and 11M19, respectively,
compared with 80% in 2016 and above 100% in 2017.
Fitch believes the company can consistently deleverage towards 55%
over the next three years based on its current controlled
land-acquisition pace, and keep land acquisitions at 45%-50% of
annual sales receipts - a level that would maintain a three-year
land bank and support sustainable business development. Fitch also
thinks Yango's milder appetite for growth will lower its risks as
growth prospects in the industry become more challenging and ease
the pressure to acquire land, helping the company cut its leverage.
Yango has been targeting moderate total contracted sales growth
from 2019, slowing from 80%-90% yoy over 2017-2018.
Business Scale Supports Ratings: Yango's business scale is larger
than that of most 'BB' rating-category issuers and is a key
business profile strength that gives it diversification benefits.
The company had achieved CNY116.4 billion in attributable sales in
11M19, almost meeting its full-year target of CNY117 billion.
Yango's well-located saleable resources, mainly in strategic
second-tier cities, will continue to support the company's growth.
Quality, Diversified Land Bank: Yango had 44 million square metres
(sq m) in total land bank (attributable: 28.7 million sq m) at
end-June 2019, supporting property sales for around three years.
The company's land bank is nationwide, with about 20% of land bank
by saleable value in tier-1 cities and more than 60% in tier-2
cities across major economic zones. Yango plans to continue
focusing on core tier-2 and strong tier-3 cities, where Fitch
thinks demand is still resilient and would support mild sales
growth for the company.
Healthy Margin: Yango's EBITDA margin, after adding back
capitalised interest in cost of goods sold, was healthy at 29% in
1H19 (2018: 28%). Yango had CNY76.6 billion in unrecognised revenue
as of end-June 2019 with an estimated gross profit margin of 27%,
which will support its margin for the coming year. Average
land-bank cost was low at CNY3,576/sq m at end-1H19, accounting for
28% of estimated average selling prices. Fitch expects its EBITDA
margin to be maintained above 25% in the next one to three years,
helped by Yango's multipronged land-acquisition strategy to keep
its land cost low.
Improvement in Debt Structure: Yango has optimised its debt
structure, with short-term debt dropping to 27% of total debt by
end-September 2019, from 40% at end-2017 and end-2018. The company
is also replacing non-bank financing with bank loans in a
tightening funding environment, with non-bank financing decreasing
to 31% of total debt by end-1H19, from 53% at end-2018. Fitch
believes the improvement in the debt structure reflects better
access to financing that gives the company greater financial
flexibility, as the funding environment for homebuilders remains
challenging.
DERIVATION SUMMARY
Yango's diversified nationwide portfolio and large scale are
comparable with those of 'BB' rated Chinese homebuilders, such as
CIFI Holdings (Group) Co. Ltd. (BB/Stable) and stronger than those
of 'BB-' rated peers, which have contracted sales of CNY40
billion-60 billion, including Yuzhou Properties Company Limited
(BB-/Stable). In addition, half of Yango's land bank is located in
tier-1 and core tier-2 cities, which Fitch believes have resilient
demand to cushion against the impact of a homebuilding-sector
slowdown, compared with lower-tier cities.
However, Yango's higher leverage has constrained its rating at
'B+'. The company has taken measures to consistently reduce
leverage over the last two years, but it remains higher than that
of 'B+' rated peers, whose leverage is between 40% and 50%, such as
Zhenro Properties Group Limited (B+/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales of CNY110 billion-130
billion during 2019-2021
- Land premium accounting for 45%-50% of sales receipts
per year during 2019-2021
- Construction expenditure accounting for 25%-30% of sales
receipts per year during 2019-2021
- Cash collection rate at 80% (2018 and 2019: 80%)
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Net debt/adjusted inventory sustained below 50%
- EBITDA margin sustained above 25%
- Attributable contracted sales/gross debt sustained above 1.2x
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Net debt/adjusted inventory above 65% for a sustained period
- EBITDA margin below 20% for a sustained period
LIQUIDITY AND DEBT STRUCTURE
Improved Liquidity Profile: Yango's liquidity position has improved
due to a better debt structure. Unrestricted cash on hand was
CNY38.6 billion at end-September 2019, which can more than cover
short-term debt of CNY32.5 billion. Its cash/short-term debt
coverage ratio improved to 1.2x, from 0.7x-0.8x at end-2017 and
end-2018.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
=========
I N D I A
=========
ADISHAKTI CARS: ICRA Cuts Rating on INR6.10cr LT Loan to B+
-----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Adishakti Cars Private Limited (ACPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Loan– 6.10 [ICRA]B+(Stable) ISSUER NOT
Fund Based Limit COOPERATING; Rating downgraded
(Cash Credit) from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Long Term– 1.40 [ICRA]B+(Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
Limits from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating is downgraded because of lack of adequate information
regarding ACPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Adishakti Cars Private Limited, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Adishakti Cars Private Limited (ACPL) was set up in 2008 at
Shimoga, Karnataka as a 3-S (sales, service and spares) dealership
of Tata Motors Limited (TML) passenger cars. The company currently
operates from three places – Shimoga, Davangere and Sagara in
Karnataka and offers complete solution, i.e. sales, service,
spares, accessories and finance for TML passenger car customers
under single roof. ACPL is a part of Shakti Group of Companies
which comprises of Shakti Enterprises, authorised stockist for Hero
Honda spare parts, Shakti Automart, authorised distributor for
Maruti Suzuki genuine spares in Karnataka and Shakti Cars Private
Limited, authorised dealer of Toyota Cars in Shimoga, Karnataka.
AMBER INT'L: ICRA Withdraws B+ Rating on INR0.25cr Loan
-------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Amber
International, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund
based limit 0.25 [ICRA]B+(Stable) Withdrawn
Short-term fund
based limit 5.00 [ICRA]A4 Withdrawn
Short-term fund
based limit (3.00) [ICRA]A4 Withdrawn
Rationale
The ratings assigned for the bank facilities of the company have
been withdrawn at the request of the company and based on the No
Dues Certificate received from its banker. However, ICRA does not
have information to suggest that the credit risk has changed since
the time the ratings were last reviewed.
Established as a proprietorship concern by Mrs. Chandrika Shah in
2008, Amber International deals in home textiles like face towels,
hand towels, bathrobes, table cloths, etc. The manufacturing of the
products is outsourced to suppliers in Maharashtra and Tamil Nadu.
AI exports its products to countries such as Argentina, Canada,
France, and Italy, among others.
BESTO MINING: ICRA Keeps B+ on INR19cr Loans in Not Cooperating
---------------------------------------------------------------
ICRA said the rating for the INR19.10 crore bank facilities of
Besto Mining India Private Limited continues to remain under
'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]B+ (Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 2.50 [ICRA]B+ (Stable) ISSUER NOT
Based/CC COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Long Term-Fund 13.53 [ICRA]B+ (Stable) ISSUER NOT
Based TL COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Long Term– 3.07 [ICRA]B+ (Stable) ISSUER NOT
Unallocated COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best limited information
on the issuers' performance. Accordingly, the lenders, investors
and other market participants are advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity.
Besto Mining (India) Private Ltd. (BMPL) was incorporated as
private concern by Mr. Manoj Shetty, Mr. Roy Kurian, Mr. Alex PJ
and Mr. Vincent Joseph in 2014. The company produces M
(Manufactured) Sand & Aggregate from its 5 stage 300 tonnes per day
(tpd) plant located at Yalganhalli village in Chikballapur district
(Bangalore).
BHIMSERIA AGRO: Ind-Ra Moves 'BB' Issuer Rating to Not Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Bhimseria Agro
Private Limited's (BAPL) 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:
-- INR93.2 mil. Term loan due on December 2022 migrated to non-
cooperating category with IND BB (ISSUER NOT COOPERATING)
rating; and
-- INR34.5 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 27, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
BAPL was incorporated in 2011 as a private limited company in
Muzaffarpur, Bihar. The company has a rice mill with a production
capacity of 14 tons of paddy per hour. The company began commercial
operations from February 2016. BAPL majorly markets its products in
northeast India and Bihar.
CHAUDHARY INGOTS: Insolvency Resolution Process Case Summary
------------------------------------------------------------
Debtor: Chaudhary Ingots Private Limited
Village Vehlana Meerut Road
Muzaffar Nagar
Uttar Pradesh 251003
Insolvency Commencement Date: January 3, 2020
Court: National Company Law Tribunal, Allahabad Bench
Estimated date of closure of
insolvency resolution process: July 1, 2020
(180 days from commencement)
Insolvency professional: Devendra Singh
Interim Resolution
Professional: Devendra Singh
ATS Greens Paradiso
Flat No. 02054, Tower-2
Plot No. GH-03, Sector-CHI-04
Greater Noida, Uttar Pradesh 201308
E-mail: dev_singh2006@yahoo.com
cirp.cipl@gmail.com
Last date for
submission of claims: January 17, 2020
GURU ASHISH: ICRA Withdraws B+ Rating on INR9cr Cash Loan
---------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Guru
Ashish Shipbreakers, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based- 9.00 [ICRA]B+(Stable) ISSUER NOT
Cash Credit COOPERATING; Withdrawn
Non-Fund Based- 66.00 [ICRA]A4 ISSUER NOT
Letter of Credit COOPERATING; Withdrawn
Rationale
The long-term and short-term ratings assigned to Guru Ashish
Shipbreakers have been withdrawn at the request of the company,
based on the no-objection certificate provided by its banker. ICRA
is withdrawing the ratings and it does not have information to
suggest that the credit risk has changed since the time the ratings
were last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
Guru Ashish Shipbreakers is a Partnership firm incorporated in
1997, with Mr. Sukesh Aggarwal and Mr. Balkrishna Aggarwal as its
partners. It is a part of the Bhavnagar based Aggarwal Group run by
Mr. Balkrishan Aggarwal with the help of his two sons. The entity
is primarily engaged in ship breaking. The business operations are
carried out from Bhavnagar and the ship breaking activity is
conducted at the plot leased by Gujarat Maritime Board in the Alang
Ship Recycling Yard. The Group is also involved in other businesses
like steel re-rolling, scrap trading and coke manufacture.
HANS INDUSTRIES: ICRA Withdraws B+ Rating on INR45cr Loan
---------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Hans
Industries Private Limited (HIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based- 45.00 [ICRA]B+(Stable) ISSUER NOT
Cash Credit COOPERATING; Withdrawn
Non-Fund Based- 12.00 [ICRA]A4 ISSUER NOT
Bank Guarantee COOPERATING; Withdrawn
Non-Fund Based- (10.00) [ICRA]A4 ISSUER NOT
Letter of Credit COOPERATING; Withdrawn
Rationale
The long-term rating and short-term ratings assigned to HIPL have
been withdrawn at the request of the company, based on the
no-objection certificate provided by its banker. ICRA is
withdrawing the ratings and it does not have information to suggest
that the credit risk has changed since the time the ratings were
last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
Hans Industries Private Ltd. (HIPL) was acquired in 2006-07 by the
Bhavnagar based UB Aggarwal Group which is held by Mr. Balkrishan
Aggarwal and Family. The Company is engaged in steel rolling and
manufacturing of mild steel beam, channels and angles. The
operations of the company are carried out at its 13 acre plant site
located at Ghangli in Bhavnagar district with an overall capacity
of 40000 MTPA. The promoter group is also involved in other related
businesses like ship breaking, coke manufacturing, steel rolling
and scrap trading.
HARANAI SAHAKARI: ICRA Lowers Rating on INR4.12cr Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Haranai
Sahakari Soot Girni Ltd (HSSGL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 3.55 [ICRA]B+(Stable) ISSUER NOT
Based/CC COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
continues to remain in the
'Issuer Not Cooperating'
Category
Long Term-Fund 4.12 [ICRA]B+(Stable) ISSUER NOT
Based TL COOPERATING; Rating downgraded
(Proposed) from [ICRA]BB-(Stable) and
continues to remain in the
'Issuer Not Cooperating'
Category
Rationale
The rating downgrade is because of lack of adequate information
regarding HSSGL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Haranai Sahakari Soot Girni Ltd., ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
HSSGL was registered in 1994 under the Maharashtra Co-operative
Society Act, 1960 for setting up a spinning unit of 25,000 ring
spindles, though it became operational in October 2009. HSSGL
manufactures carded warp cotton yarn of count 20s to 40s using long
staple cotton. The society in Phase I has installed 13,780 spindles
which became operational FY2016. In Phase II, the company intends
to take the total spindle count to 35,616 spindles, the said
project is expected to be completed and operational in FY'2019.
JAMPANA CONSTRUCTION: ICRA Cuts Rating on INR14cr LT Loan to B+
---------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Jampana
Construction Private Limited (JCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 14.00 [ICRA]B+ (Stable) ISSUER NOT
Based/CC COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable);
Rating continues to remain
under 'Issuer Not Cooperating'
category
Long Term-Fund 7.00 [ICRA]B+ (Stable) ISSUER NOT
Based TL COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable);
Rating continues to remain
under 'Issuer Not Cooperating'
category
Short Term-Non 94.00 [ICRA]A4 ISSUER NOT
Fund Based COOPERATING; Rating downgraded
from [ICRA]A4+; Rating
continues to remain under
'Issuer Not Cooperating'
Category
Long Term/Short 1.50 [ICRA]B+ (Stable)/[ICRA]A4
Term-Unallocated ISSUER NOT COOPERATING;
Rating downgraded from
[ICRA]BB+ (Stable)/[ICRA]A4+;
Rating continues to remain
under 'Issuer Not Cooperating'
category
Rationale
The rating downgrade is because of lack of adequate information
regarding JCPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Jampana Construction Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 2003, Jampana Construction Private Limited (JCPL)
is a Bengaluru based civil contactor engaged in the construction of
commercial and residential buildings, bridges, hospitals, layout
development etc. JCPL undertakes direct as well as subcontracted
orders. The clientele of the Company includes, Hindustan Steelworks
Construction Limited (HSCL), National Building Construction
Corporation (NBCC), Karnataka Housing Board (KHB), Karnataka Road
Development Corporation Limited (KRDCL), Karnataka Health System
Development Research Projects (KHSDRP), Nagarjuna Construction
Company Limited (NCCL), Bangalore Development Authority (BDA),
Military Engineer Services (MES), Rashtriya Madhyamika Sikshana
Abhiyan (RMSA), RITES Limited, and other state and central
government agencies.
JANANI FOODTEK: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Janani Foodtek (I)
Private Limited's (JFPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB- (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR85 mil. Term loan due on April 2025 migrated to non-
cooperating category with IND BB- (ISSUER NOT COOPERATING)
rating; and
-- INR60 mil. Fund-based limits migrated to non-cooperating
category with IND BB- (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 10, 2019. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
JFPL is engaged in the milling of flour. The company was set up on
July 18, 1995 by the Gupta family to engage in the trading of wheat
and wheat products.
LAKSHMIDURGA TEXTILES: ICRA Reaffirms B+ Rating on INR4.5cr Loan
----------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of
Lakshmidurga Textiles Private Limited's (LTPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based–
Cash credit 4.50 [ICRA]B+ (Stable); Reaffirmed
and removed from issuer not
cooperating category
Fund based–
Term loan 1.05 [ICRA]B+ (Stable); Reaffirmed
and removed from issuer not
cooperating category
Rationale
The rating considers LTPL's small scale of operations in a highly
fragmented ginning industry, limiting its financial flexibility.
The rating factors in the commoditised nature of the product,
leading to a low pricing power. LTPL has a weak financial risk
profile, characterised by a high gearing of 1.7 times as on March
31, 2019 and stretched coverage indicators with interest coverage
ratio of 1.4 times and NCA/Total debt ratio of 6% in FY2019. The
rating further takes into account the agro-climatic risks, which
can affect the availability of raw materials in adverse weather
conditions.
The rating, however, positively factors in the extensive track
record of the promoters in the cotton trading and ginning business
and their established relationships with suppliers and customers.
Besides, LTPL's ginning unit is located close to the cotton growing
areas of Telangana that provides with easy access to raw materials
and results in low transportation costs.
The Stable outlook reflects ICRA's belief that LTPL will continue
to benefit from the extensive experience of its promoters in the
cotton industry along with its favourable location.
Key rating drivers and their description
Credit strengths
Significant experience of promoters in cotton industry: The
promoters have over three decades of experience in the cotton
industry, resulting in established relationship with customers and
suppliers.
Proximity to cotton-growing areas: LTPL's plant is located near
major cotton growing areas of Telangana, resulting in easy
availability of raw materials and savings in transportation costs.
Credit challenges
Small scale of operations: LTPL's small scale of operations with a
capacity to produce 350 bales of cotton per day and an operating
income (OI) of INR50.1 crore in FY2019 limit its financial
flexibility.
Weak financial profile characterised by high gearing and stretched
coverage indicators: LTPL has a weak financial profile,
characterised by a high gearing of 1.7 times as on March 31, 2019
and stretched coverage indicators with an interest coverage ratio
of 1.4 times and NCA/total debt ratio of 6% in FY2019.
Intense competition in the industry: The cotton ginning industry is
highly fragmented with presence of many small and medium-sized
units that limit its margins.
Vulnerability to agro-climatic risks: The cotton ginning industry
is vulnerable to agro-climatic risks, which can affect the
availability of raw materials in adverse weather conditions.
Liquidity position: Adequate
LTPL's liquidity position is adequate with expected retained cash
flows (INR4.4 crore), muted capex plans and low term loan repayment
obligations of INR0.36 crore for the next 12 months. The company
has limited buffer in working capital limits, given the high
utilisation of 85%.
Rating sensitivities
Positive triggers: ICRA may upgrade LTPL's rating if the company
demonstrates a sustained improvement in its revenues and margins.
Specific credit metrics that may lead to an upgrade of LTPL's
rating include TOL/TNW below 1.5 times on a sustained basis.
Negative triggers: Negative pressure on LTPL's rating may arise if
its liquidity position weakens due to any stretch in working
capital intensity.
Lakshmidurga Textiles Private Limited, incorporated in 2010, is
involved in ginning and pressing of cotton lint, trading of cotton
lint and seed, and has 48 gins to process 350 bales of cotton per
day. The company is located in Chilakamarri village of Nalgonda
district in Telangana.
LTPL reported an operating income (OI) of INR50.1 crore and a net
profit of INR0.2 crore in FY2019 against an OI of Rs.45.4 crore and
a net profit of INR0.3 crore in FY2018.
MANTRA PACKAGING: ICRA Keeps B on INR5cr Loan in Not Cooperating
----------------------------------------------------------------
ICRA said the ratings for the INR7.00 crore bank facilities of
Mantra Packaging Private Limited continues to remain under 'Issuer
Not Cooperating' category. The ratings are denoted as "[ICRA]B
(Stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term, Fund 5.00 [ICRA]B (Stable) ISSUER NOT
Based Limits COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Short-term, Non 2.00 [ICRA]A4 ISSUER NOT
Fund Based Limit COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Short-term, (2.25) [ICRA]A4 ISSUER NOT
Interchangeable COOPERATING; Rating continues
Limit to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Mantra Packaging Pvt. Ltd. (MPPL) was incorporated as a private
limited company in June 2010 and commenced manufacturing operations
from September 2011. MPPL is engaged in the manufacturing of
various types of plastic bags that find applications as grocery
bags, retail shopping and apparel bags, garbage can liners,
industrial, food, and agricultural packaging and protective
covering for painting, etc. The company's registered office is in
Mumbai and its manufacturing facility is at Silvassa (Dadra & Nagar
Haveli).
NATURAL SUGAR: ICRA Keeps D on INR150cr Loans in Not Cooperating
----------------------------------------------------------------
ICRA has continued the long-term ratings for the bank facilities of
Natural Sugar and Allied Industries Limited to the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 140.00 [ICRA]D ISSUER NOT COOPERATING;
Based/CC Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term-Fund 10.00 [ICRA]D ISSUER NOT COOPERATING;
Based TL Rating continues to remain in
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Incorporated in 1998, Natural Sugar and Allied Industries Limited
('the company/NSAIL) is mainly involved in manufacture of sugar and
by products. NSAIL is based out of Ranjani in Osmanabad district of
Maharashtra and operates an integrated sugar unit having 5000 tons
per day (TCD) of sugar crushing capacity, 23 Mega Watt (MW) power
cogeneration unit and 30 Kilo Litres per day (KLPD) distillery
unit. The company has another sugar unit in Yawatmal with 2500 TCD
crushing capacity, which was acquired in March 2016. NSAIL is also
involved in manufacture of processed milk and milk products and
has a processing unit with 70,000 litres per day of installed
capacity. The company is promoted by Mr. B.B. Thombare who as over
40 years of experience in the industry.
PACIFIC PIPE: Insolvency Resolution Process Case Summary
--------------------------------------------------------
Debtor: Pacific Pipe Systems Private Limited
Building No. 9, Sigma Corporate
Behind Rajpath Club
Off. S.G. Road, Bokadev
Ahmedabad 280054
Gujarat
Insolvency Commencement Date: January 4, 2020
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: July 2, 2020
(180 days from commencement)
Insolvency professional: Mr. Chandra Prakash Jain
Interim Resolution
Professional: Mr. Chandra Prakash Jain
D-501, Ganesh Meridian
Opp. Gujarat High Court
S.G. Road
Ahmedabad 380060
E-mail: jain_cp@yahoo.com
Last date for
submission of claims: January 18, 2020
PAVAN COTTON: ICRA Moves B on INR5.5cr Loan in Not Cooperating
--------------------------------------------------------------
ICRA has moved the ratings for the INR10.53-crore bank facilities
of Pavan Cotton Products Private Limited (PCPPL) to 'Issuer Not
Cooperating' category'. The ratings are denoted as
"[ICRA]B(Stable)/A42 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 5.50 [ICRA]B(Stable); ISSUER NOT
Based/CC COOPERATING; Moved to 'Issuer
Not Cooperating' category
Long Term-Fund 3.64 [ICRA]B(Stable); ISSUER NOT
Based TL COOPERATING; Moved to 'Issuer
Not Cooperating' category
Long Term– 1.15 [ICRA]B(Stable); ISSUER NOT
Unallocated COOPERATING; Moved to 'Issuer
Not Cooperating' category
Short Term-Non 0.24 [ICRA]A4; ISSUER NOT
Fund Based COOPERATING; Moved to 'Issuer
Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Incorporated in 1992, PCPPL is a cotton spinning mill based in the
Guntur district of Andhra Pradesh. Promoted by Mr. V. Gopal Rao,
PCPPL is a 100% promoter held company which was initially engaged
in cotton ginning and trading. The promoter has significant
experience in the cotton ginning and trading business.
PRISTINE COMMERCIALS: ICRA Cuts Rating on INR9.75cr Loan to B+
--------------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of
Pristine Commercials Private Limited (PCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Short-term, 30.00 [ICRA]A4 ISSUER NOT COOPERATING;
Non-fund Rating continues to remain under
Based Limits 'Issuer Not Cooperating'
Category
Long-term, (9.75) [ICRA]B+ (Stable) ISSUER NOT
Interchangeable COOPERATING; Rating downgraded
Limit from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Short-term, (2.00) [ICRA]A4 ISSUER NOT COOPERATING;
Interchangeable Rating continues to remain under
Limit 'Issuer Not Cooperating'
Category
Rationale
The ratings downgrade is because of lack of adequate information
regarding PCPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Pristine Commercials Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 2007, Pristine Commercials Private Limited (PCPL)
is involved in the trading of steel products viz. flat products
like gal valume coils, hot-rolled coils/sheets, cold-rolled
coils/sheets and long products like TMT bars, mild steel beams,
stainless steel pipes etc. The operations of the company are
collectively managed by Mr. Nar Narayan Saraf and his son Mr.
Nikunj Saraf who have over a decade of experience in the steel
trading business. The registered office of the company is located
at Nariman Point, Mumbai.
QURESHI INT'L: ICRA Cuts Rating on INR9.90cr Loan to B+
-------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Qureshi
International Private Limited (QIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term– 9.90 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating downgraded
from [ICRA]BB- (Stable) and
moved to 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding QIPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with QIPL, ICRA has been trying to seek information from the entity
so as to monitor its performance, but despite repeated requests by
ICRA, the entity's management has remained non-cooperative. In the
absence of requisite information and in line with SEBI's Circular
No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Qureshi International Private Limited(QIPL) is established in 1974
by Mr. Hajid Mohd Yaqoob Qureshi and is engaged in processing of
fresh and frozen halal boneless buffalo meat and edible offals. The
company sources buffalo carcass from butchers who are part of
Qureshi community. The butchers use government slaughtering
facility and sell to QIPL. QIPL's processing facility has
provision for deboning, packaging and storing in the chilling plant
which has a capacity of 12000MT/year. The processed meat is sold
under 3 brands, Maira, Al-Saad and QI as slices or trimmings.
RELIGARE FINVEST: Targets $815 Million Debt Revamp by March
-----------------------------------------------------------
Suvashree Ghosh and Bijou George at Bloomberg News report that
Religare Finvest Ltd., an Indian financier sanctioned by the
nation's central bank, is "hopeful" of revamping INR58.5 billion
(US$815 million) of debt by March, the shadow lender said.
Religare is in talks with its creditors to retain 51% of the
obligations as that can be serviced by the company's cash flows,
while tagging the rest as "unsustainable debt," the company said in
an emailed statement on Jan. 8, Bloomberg relays. The firm expects
to pay the principal on the "unsustainable" loans over a period of
time, Religare said without giving a time frame.
"The company has made lot of progress in the recovery of underlying
assets, which are secured towards unsustainable debt," the company
said in the statement. Once the resolution plan is implemented,
"the same would be paid to the lenders," it said.
Bloomberg says any debt restructuring at Religare Finvest, which is
being acquired by TCG Advisory Services Ltd., will be the first
among Indian shadow lenders since the credit market squeeze started
in 2018 and roiled Asia's third-largest economy. It could be
considered as an early sign of a winding down of that crisis.
Religare Finvest, which had faced allegations of financial
irregularities under the previous owners, had since January 2018
been under the Reserve Bank of India's so-called corrective action
plan. That status restricts the financier from making new loans,
the report states.
RIDDHI SIDDHI: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Riddhi Siddhi Cotspin Private Limited
Swati 301 B, 1/17 Jagnath Plot
Gujarat 360001
Insolvency Commencement Date: January 1, 2020
Court: National Company Law Tribunal, Delhi Bench
Estimated date of closure of
insolvency resolution process: June 29, 2020
Insolvency professional: Atul Mittal
Interim Resolution
Professional: Atul Mittal
174, BALCO Apartments
Plot No. 58, IP Extn.
Patparganj, Delhi 110092
E-mail: a.mittalmc@gmail.com
- and -
163, BALCO Apartments
Plot No. 58, IP Extn.
Patparganj, Delhi 110092
E-mail: irp.rp.amittal@gmail.com
Last date for
submission of claims: January 20, 2020
SAHUWALA CYLINDERS: ICRA Cuts Rating on INR31cr Loan to B+
----------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of
Sahuwala Cylinders Private Limited (SCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 31.00 [ICRA]B+(Stable) ISSUER NOT
Based/CC COOPERATING; Rating downgraded
from [ICRA]BB- (Stable) and
Continues to remain under the
'Issuer Not Cooperating'
Category
Long Term-Non 2.50 [ICRA]B+(Stable) ISSUER NOT
Fund Based COOPERATING; Rating downgraded
from [ICRA]BB- (Stable) and
Continues to remain under the
'Issuer Not Cooperating'
Category
Long Term- 1.50 [ICRA]B+(Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
from [ICRA]BB- (Stable) and
Continues to remain under the
'Issuer Not Cooperating'
Category
Rationale
The rating downgrade is because of lack of adequate information
regarding SCPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sahuwala Cylinders Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Sahuwala Cylinders Private Limited (SCPL) is a manufacturer of LPG
Cylinders and supplies to public sector oil companies like Indian
Oil Corporation Limited (Crisil AAA/A1+) , Hindustan Petroleum
Corporation Limited (Crisil AAA/A1+) and Bharat Petroleum
Corporation Limited (Crisil AAA/A1+). The company was incorporated
in 1982 and started commercial operations in 1983. The company also
supplies LPG cylinders to private sector clients. The company also
sells to private sector clients. Since year 2001, SCPL has also
commenced manufacturing of Auto LPG Containers used in automobiles
and supplies to clients like Bajaj, Tata, Maruti, Hyundai, etc.
SHREEJI VITRIFIED: ICRA Withdraws B+ Rating on INR6.3cr Loan
------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Shreeji Vitrified Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 5.08 [ICRA]B+ (Stable); Withdrawn
Cash Credit 6.30 [ICRA]B+ (Stable); Withdrawn
Bank Guarantee 1.50 [ICRA]A4; Withdrawn
Rationale
The long-term and short-term ratings assigned to Shreeji Vitrified
Private Limited have been withdrawn at the request of the company,
based on the no-objection certificate provided by its banker. ICRA
is withdrawing the ratings and it does not have information to
suggest that the credit risk has changed since the time the ratings
were last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
SVPL is a double charge vitrified tiles manufacturer with its plant
situated at Morbi, Gujarat. The company was incorporated in 2010 by
Mr. Harilal K. Patel and family members. The commercial operations
for the company started from June 2011 onwards. SVPL markets its
tiles through brand names – Artica, Euro and Simex. The company
manufactures double charge vitrified tiles in two sizes, viz. 600
mm x 600 mm and 800 mm x 800 mm. SVPL has an installed capacity for
manufacturing 45,990 MT of tiles per annum.
SIDY DATACOM: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Sidy Datacom
Private Limited's Long-Term Issuer Rating to 'IND D (ISSUER NOT
COOPERATING)' from 'IND B+ (ISSUER NOT COOPERATING)'. 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 instrument-wise rating action is:
-- INR250 mil. Fund-based working capital limit (Long-term/
Short-term) downgraded with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: Based on the best available
information
KEY RATING DRIVERS
The downgrade reflects Sidy Datacom's delays in debt servicing, the
details of which are not available.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months would be positive for the ratings.
COMPANY PROFILE
Incorporated in 2012, Sidy Datacom trades electronic appliances of
various brands.
SIMOLA TILES: ICRA Assigns 'D' Rating to INR42.26cr Term Loan
-------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Simola Tiles LLP
(STL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 42.26 [ICRA]D; Assigned
Cash Credit 21.00 [ICRA]D; Assigned
Bank Guarantee 4.00 [ICRA]D; Assigned
Unallocated Limits 7.74 [ICRA]D; Assigned
Rationale
The assigned rating primarily considers the delays in servicing
debt obligations by STL owing to its poor liquidity position. The
delay is caused by lower-than-anticipated profit margins, high
working capital requirements and impending repayment obligations
arising from the bank term loans availed to set up its
manufacturing unit, which have resulted in a tight cash flow
position. The rating is further constrained by the firm's weak
financial risk profile, characterised by leveraged capital
structure and weak debt coverage indicators. The rating also
factors in the intense competition in the ceramic industry and the
exposure of STL's profitability to volatility in raw material and
fuel prices. The ratings, however, favourably factor in the
extensive experience of the partners in the ceramic industry and
the proximity to raw material sources by virtue of its presence in
Morbi (Gujarat).
Key rating drivers and their description
Credit strengths
Extensive experience of partners in ceramic industry: The key
partners of the firm have extensive experience in the ceramic
industry vide their association with other ceramic entities that
operate in the same business sector. STL also derives support from
the marketing and the distribution network of its associate
concerns.
Location-specific advantage: The manufacturing facility of the
firm is located in the ceramic hub of Morbi (Gujarat), which
provides easy access to quality raw materials such as body clay,
feldspar and glazed frit in Gujarat and Rajasthan.
Credit challenges
Delays in servicing debt obligations: The firm has delayed in
servicing the debt obligations of its term loan and cash credit
facilities. Lower-than-anticipated profit margins, high working
capital requirements and high debt repayment obligations have
resulted in a tight cash flow position, resulting in the delay.
Weak financial risk profile: The firm's capital structure is
leveraged, with gearing of 2.93 times as on March 31, 2019. Also,
the debt coverage indicators are below average with interest
coverage of 1.03 times, TD/OPBDITA of 9.87 times, DSCR of 0.64
times and NCA/Debt of 1% in FY2019.
Intense competition puts pressure on margins: The ceramic tile
manufacturing industry is highly fragmented with competition from
the organised as well as the unorganised segments, most of which
are located in Gujarat and operate on low cost structures, creating
pressure on the prices. Further, the real estate industry accounts
for the maximum uptake of ceramic tiles. Hence STL's profitability
and cash flows are likely to remain vulnerable to the cyclicality
in the real estate industry.
Vulnerability of profitability to fluctuations in raw material and
energy costs: Raw material and fuel are the two major components
determining the cost competitiveness in the ceramic industry. The
firm has, however, little control over the prices of its key inputs
such as natural gas/coal and raw materials. Thus, STL's margins are
expected to remain exposed to the movement in raw material and
gas/coal prices and the ability to pass any upward movements to its
customers.
Liquidity position: Poor
STL's liquidity position is poor as reflected by delays in debt
servicing of term loans and working capital limits. Also, its
working capital limits of INR15.00 crore stood almost fully
utilised from June 2018 to November 2019. The expected cash
accruals of ~INR6.88–8.60 crore, against scheduled debt
repayments of INR8.49 crore over FY2020-FY2021 will keep the firm's
liquidity position tight in the near future. Further, infusion of
capital by partners/unsecured loan or enhancement in working
capital limits will remain crucial to support the liquidity and
timely debt servicing.
Rating sensitivities
Positive Triggers
* Regularisation in debt servicing with efficient management of
working capital will be the key aspect for higher rating
Negative Triggers
* Not applicable
STL was established as a limited liability partnership firm in July
2016 by Mr. Kamalshil Shirvi and eight other partners. The firm has
been manufacturing glazed vitrified tiles from December 2017. The
manufacturing unit is located at Morbi, Gujarat, with an installed
capacity to produce 8000 boxes per day. It manufactures large as
well as medium-sized glazed vitrified tiles in dimensions –
1200mmX1200mm, 1200mmX2400, 800mmX1600mm, 800mmX800mm, 800mmX2400mm
and 900mmX1800mm. The firm is managed by Mr. Kamlashil Shirvi, who
has more than five years' experience, while Mr. Rajesh Shirvi and
Mr. Harish Shirvi have an experience of more than a decade in the
ceramic industry via their association with other ceramic entities
involved in similar business.
SONHIRA SAHAKARI: ICRA Hikes Rating on INR75cr LT Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sonhira
Sahakari Sakhar Karkhana Limited (SSSK), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 75.00 [ICRA]B+(Stable) upgraded to
Based Term Loan from [ICRA]B(Stable) for
existing amount and assigned
to enhanced portion; Removed
from "Issuer Not Cooperating"
category
Short Term-Fund 200.00 [ICRA]A4 reaffirmed; Removed
Based from "Issuer Not Cooperating"
category
Rationale
The rating revision reflects expected improvement in profitability
of SSSK, in the backdrop of favorable government initiatives and
consequent impact on sugar realization. Raw sugar export subsidy
and interest free loans to repay cane arrears granted by the
government, has improved the operating environment for sugar
manufacturers. The ratings draws comfort from long operating
history of SSSK in the sugar business along with forward integrated
operations which make cane crushing more viable and cushion against
cyclicality in the sugar business. The company being a co-operative
unit undertakes several cane development initiatives and has
established relations with cane growing farmers and members which
ensure adequate availability of cane for crushing. However,
company's ability to source adequate sugarcane in the backdrop of
recent floods in Sangli region continue to remain a key monitorable
over the next 12-18 months. ICRA takes a note of good quality of
sugarcane available to the company due to favorable soil and
climatic conditions results in healthy sugar recovery of around
12.20-12.40%, which improves viability of cane crushing. The
ratings also take into account relatively flexible FRP based cane
pricing regime in Maharashtra that offers some hedging during times
of supply induced pressures on sugar prices.
The ratings however remain constrained by stretched financial
profile of the company marked by leveraged capital structure and
weak coverage indicators. Increasing sugarcane cost has a bearing
on the margins and overall profitability of the company during last
few years. The working capital intensity of the company is high in
line with trend in the sugar industry though the same has increased
further in FY2019 on account of higher inventory levels maintained
by the company. Moreover, the company remains exposed to regulatory
risks regarding cane pricing, export regulations and agro-climatic
risks and cyclical trends inherent in the sugar industry. Going
forward, ensuring adequate crushing period, managing the cane cost,
maintaining adequate inventory levels along with favorable sugar
realisationas and continued government support will remain key
ratings sensitivities.
Key rating drivers
Credit strengths
Long operating history of the company in the sugar business:
Incorporated in 2000, SSSK is involved in the manufacturing of
sugar and its allied products. The promoters have more than 15
years of experience in the sugar industry and wide acceptance among
the local farmers which facilitates adequate and timely cane
procurement and ensures adequate crushing period.
Forward integration of sugar operations provides better competitive
position and cushion against cyclicality in sugar business: The
operations of the company are forward integrated with co-generation
unit of 22 megawatt (MW) which provides some cushion against
cyclicality and seasonality in the sugar business. SSSK also has
distillery unit of 60 kilo litres per day (KLPD), though the same
is not operational right now.
Established relations with farmers and members along with cane
development initiatives ensuring good availability of sugarcane:
Established relationship with the farmers along with various
support initiatives and timely payments ensure supply of good
quality cane from farmers in the command area.
Healthy sugar recovery resulting in improved viability of cane
crushing: Good quality of cane available to the company due to
favorable soil and climatic conditions results in healthy sugar
recovery of around 12.20-12.40%, which improves viability of cane
crushing.
Credit challenges
Leveraged capital structure and stretched coverage metrics: On
account of high debt levels and thin accruals the capital structure
and coverage metrics of the company remain stretched with gearing
of 7.1 times as on March 2019.
High working capital intensity inherent in the sugar industry: The
company has high working capital intensity (around 79.3% in FY2019)
resulting from high inventory levels prevalent in the sugar
business. Timely liquidation of sugar stock at adequate prices
remains one of the critical factors for maintaining profitability.
Operations remain exposed to government regulations prevalent in
the sugar industry: The company's operations remain exposed to
various government regulations prevalent in the sugar industry such
as cane pricing and export/import norms. Owing to absence of any
rationale linkage between cane price and sugar realisation, the
profitability of sugar mill operations remains exposed to external
demand supply fluctuations.
Cost structure of the company remains exposed to agro-climatic
risks and cyclical trends in sugar business: Cost structure and
capacity utilisation of the company is dependent upon various
agro-climatic conditions including monsoon and cyclicality in the
sugar business.
Liquidity position: Stretched
Company's liquidity profile is stretched because of low cash &
liquid investments of around INR10 crore and modest profits.
Company's ability to timely liquidate sugar inventory remain
crucial to allay liquidity concern in the near term.
Rating sensitivities
Positive triggers: Positive trigger for SSSK's rating will be in
case of substantial improvement in leverage and coverage
indicators, with gearing below 4 times and interest cover above 2
times on sustain basis.
Negative triggers: Negative pressure on SSSK's rating could arise
in case of any adverse movement in cane prices, agro-climatic
conditions or any adverse regulatory measures impacting company's
profitability indicators and liquidity position shall have a
bearing on the rating of the firm are based on the standalone
financial profile of the company.
Incorporated in 2000 by Late Mr. Patangrao Kadam, SSSK is involved
in the manufacturing of sugar and its allied products. The company
operates a sugar mill of 5000 TCD (tonnes crushed per day)
installed capacity which is forward integrated with distillery
unit of 60 KLPD (kilo litres per day) and co-generation unit of 22
MW (mega-watt). The manufacturing facilities of the company are
located at Mohanrao Kadamnagar in Sangli district of Maharashtra.
THREE C HOMES: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: M/s. Three C Homes Private Limited
Registered office:
C-23 Greater Kailash Enclave
Part-I, New Delhi 110048
Address other than R/o where all or any books of
account and papers are maintained:
Tech Boulevard, Central Block
Plot No. 6, Sector-127
Noida 201301
Uttar Pradesh
Insolvency Commencement Date: September 6, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: March 4, 2020
Insolvency professional: Gaurav Katiyar
Interim Resolution
Professional: Gaurav Katiyar
D-32, East of Kailash
New Delhi 110065
E-mail: cagauravkatiyar@gmail.com
3chomes.cirp@gmail.com
- and -
The Insolvency and Bankruptcy
Board of India (IBBI)
7th Floor, Mayur Bhawan
Shankar Market, Connaught Circus
New Delhi 110001
Classes of creditors: Allotee under real estate project
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Shyam Arora
96, Aravali Apartment
Alaknanda, New Delhi 110019
E-mail: arora.shyaam@yahoo.com
Mr. Manoj Kumar Singh
203, 2nd Floor
10 Sikka Complex Community Centre
Preet Vihar, Delhi 110092
E-mail: cma.msingh@gmail.com
Mr. Vijay Kishore Saxena
3rd Floor, 100 Kailash Hills
East of Kailash
New Delhi 110065
E-mail: vksaxena2159@gmail.com
Last date for
submission of claims: January 2, 2020
UNITED COKE: ICRA Withdraws B+ Rating on INR5cr Cash Credit
-----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of United
Coke Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based- (5.00) [ICRA]B+(Stable) ISSUER NOT
Cash Credit^ COOPERATING; Withdrawn
Non-Fund Based- 35.00 [ICRA]A4 ISSUER NOT
Letter of Credit COOPERATING; Withdrawn
^ interchangeable limit
Rationale
The long-term and short-term ratings assigned to United Coke
Private Limited have been withdrawn at the request of the company,
based on the no-objection certificate provided by its banker. ICRA
is withdrawing the ratings and it does not have information to
suggest that the credit risk has changed since the time the ratings
were last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
United Coke Private Limited is a part of the Bhavnagar based UB
Aggarwal Group. The company is engaged in the production of low ash
metallurgical coke. The business operations are carried out from
Bhavnagar and the manufacturing unit with a capacity of 54,000MT is
located in Anjar, near Kandla port. The group is also involved in
other related businesses like ship breaking, steel re-rolling and
scrap trading.
UNIVERSAL INDUSTRIAL: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: Universal Industrial Equipment &
Technical Services Pvt. Ltd.
Plot No. C-72, MIDC Industrial Area
Hingna Road, Nagpur
Maharashtra 440028
India
Insolvency Commencement Date: December 23, 2019
Court: National Company Law Tribunal, Nagpur Bench
Estimated date of closure of
insolvency resolution process: June 20, 2020
Insolvency professional: Megha Agrawal
Interim Resolution
Professional: Megha Agrawal
001, Shivranjini Apartments
In Circle of Congress Nagar Garden
Congress Nagar, Nagpur 440012
E-mail: megs9june@yahoo.com
- and -
13, 2nd floor, NKY Towers
Wardha Road, Nagpur 440010
E-mail: ip.universalindustrial@gmail.com
cirp.universalindustrial@
gmail.com
Last date for
submission of claims: January 6, 2020
WHEEL FLEXIBLE: ICRA Lowers Rating on INR11cr Cash Loan to B+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Wheel
Flexible Packaging, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 3.38 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Fund based- 11.00 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating downgrade is because of lack of adequate information
regarding Wheel Flexible Packaging performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Wheel Flexible Packaging, ICRA has been trying to seek
information from the entity to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Wheel Flexible Packaging was established in the year 1999 as a
partnership firm by Mr. A.C.B Nambiar and three other partners.
Currently Mr. A.C.B Nambiar, Mr. P.A. Mohammed Abdulrehaman, Ms.
Vidya Pathak, Mr. Zaidalibabu Mohammed Kutty and Mr. Abhilash
Nambiar are looking after the management of the firm. The firm is
located in zero tax industrial area of Dadra. The firm is engaged
into manufacturing of plastic packaging material i.e. printed,
nonprinted, laminated rolls and pouches. Design of packing material
is provided by the client. The plant is currently operating with an
input capacity of processing 7500 MTPA.
YADADRI LIFE: NCLT Orders Insolvency Process Against Company
------------------------------------------------------------
The Economic Times reports that the National Company Law Tribunal
(NCLT) has ordered insolvency resolution process against a company
in probably the first such case in India where the petitioner that
approached the bankruptcy court alleging payment default is a firm
that had earlier provided it services on insolvency resolution.
ET relates that the NCLT's Hyderabad bench has ordered the
proceedings at Sri Yadadri Life Sciences (SYLS) for the alleged
default in payments to Adroit Financial Services (AFS) for advice
given on insolvency resolution and services towards capital
structuring and settlement of debt through a one-time settlement
(OTS) with its lender.
According to the report, SYLS entered into an agreement with AFS
after its sole financial creditor, State Bank of India, initiated
auction process against it under the Sarfaesi Act in May 2018. ET
says AFS advised SYLS on the initiation of proceedings under
Section 10 of the Insolvency and Bankruptcy Code (IBC). Under
Section 10 of the IBC, a defaulting company has the right to
approach the adjudicating authority to declare it insolvent, giving
protection from creditors. Sections 7 and 9 of the IBC allow the
creditors of a defaulting company to move against it for rendering
the firm insolvent, the report notes.
After SBI gave the company another opportunity for an OTS of debt,
SYLS asked AFS to withdraw the insolvency petition, ET relates. AFS
then obtained orders from the NCLT for the withdrawal of the case
in September 2018.
Later, AFS moved the NCLT Hyderabad bench claiming that SYLS had
defaulted on an invoice of INR12.98 lakh raised in September 2018
for the professional services rendered to it. It filed the petition
under Section 9 of the IBC. Citing an agreement entered into with
AFS in March 2018 to arrange finances to meet the liability under
the OTS, SYLS argued that AFS had failed to render services as
agreed upon, resulting in failure of the first deal with SBI,
according to ET. It also pointed to a dispute over the financial
services rendered by AFS. ET relates that the NCLT bench comprising
judicial member Ratakonda Murali and technical member Narender
Kumar Bhola observed that SYLS had availed of the services of AFS
for insolvency petition through a May 2018 agreement and defaulted
on the payment.
ET adds that the tribunal observed that the March 2018 agreement
over arranging finances had no connection to the May 2018 agreement
for insolvency services. "The amount payable to the operational
creditor falls under the definition of 'operational debt' as it
refers to the payment for the services rendered to the corporate
debtor," the bench observed, while admitting the petition after
noting that "there is debt and default of operational debt".
The tribunal on Jan. 6 also appointed G Madhusudhan Rao as the
corporate resolution professional, ET discloses.
=================
I N D O N E S I A
=================
BAYAN RESOURCES: Fitch Assigns 'BB-' Rating to Proposed USD Notes
-----------------------------------------------------------------
Fitch Ratings assigned PT Bayan Resources Tbk's (BB-/Stable)
proposed US dollar-denominated notes a rating of 'BB-'.
The notes will constitute Bayan's direct, unconditional and
unsecured obligations. Bayan's rating reflects the low-cost
position of its key coal mine, adequate reserves, diversified
customer base and a strong financial profile. This is partially
offset by mine concentration, regulatory risk and the cyclical
nature of the coal industry.
KEY RATING DRIVERS
Low Cost Position: Bayan benefits from the low-cost structure at
its key mine, Bara Tabang, which contributes from the company's
Tabang concessions. Their average life-of-mine strip ratio of
around 3.6x (2018: 2.60x) along with the well-connected
infrastructure and logistics of Bayan's mines contribute to its
low-cost structure. Bayan owns and operates the Balikpapan coal
terminal, one of Indonesia's largest, along with floating transfer
stations. Bayan's other mines, which have stable production levels,
have higher cost structures and are more vulnerable to lower coal
prices.
Robust Cash Flow: Its expectation of higher sales volume of about
37 million tonnes (mt) in 2020 (9M19: 23.6mt), driven mainly by the
Tabang concessions should further support Bayan's robust operating
cash flow in the medium term, despite Fitch's lower coal price
assumptions compared with 2019. The rising volumes, together with
strong coal prices, supported improvement in Bayan's average
EDITDA/tonne to USD25 in 2018, from around USD13 in 2016. Fitch
estimates that the EBITDA/tonne was around USD14 in 2019, which was
still higher than most of its peers in Indonesia, in spite of
volatile prices in the year.
Operational Issues at Tabang: Bayan has intermittently faced
operational challenges in shipping coal from Bara Tabang due to low
river levels; it implemented a month-long force majeure in March
2019 and faced similar issues in October-November 2019, August 2019
and in 2018, although for shorter duration. However, in all these
instances, Bayan was able to ship the stockpiled coal in the
following months, limiting the effect on overall sales volume.
Fitch believes frequent or prolonged recurrence of such events
could hurt Bayan's reputation as a reliable supplier and its
ability to renew or sign new contracts in the long term. This could
affect the company's plan to increase sales volume to over 40mt by
2023.
Bayan has started construction of a 100 kilometre direct coal-haul
road from its Tabang mine to the Mahakam River to provide an
alternative route to ship its coal. The company started building
the road in non-forested areas in December 2019 and expects to
complete the project by end-2022, subject to timely receipts of
permits. The road will help Bayan reduce operational risk related
to low water levels at the tributaries used for barging coal to the
Mahakam River.
Customer Diversification: Fitch expects Bayan's diversified
customer base to support stable demand for its coal over the medium
term. Bayan's customer base is geographically more diversified than
those of most peers. Bayan's exports were mainly to India (26%),
Philippines (20%), Malaysia (13%) and China (12%) in 9M19. It also
has a diverse product offering, as its coal ranges from Tabang's
4000-4300kcal low-sulphur and ash content coal to high calorific
value (over 6000kcal) coal from its other mines.
Increasing Production Scale: Fitch expects production to increase
to 32.5mt in 2020 (9M19: 26mt), driven primarily by production from
Tabang. The company targets 40mt of annual production over the
medium term, supported by further ramp up at Tabang and
contribution from North Pakar (scheduled to start production in
2022-2023), which is an extension of the Tabang concession and is
currently under exploration and development. Bayan's infrastructure
can support sales of about 45mt; capacity will expand to 50mt by
the end of the year when capacity at Balikpapan will increase to
25mt, from 20mt.
Adequate Reserves: Bayan's proved (1P) reserves are 612mt, which
results in reserve life of around 15 years based on the planned
increase in production to around 40mt over the medium term and the
1P reserves. Bayan's 2P reserves rose to about 964mt (excluding
South Pakar), from 764mt at end-2018, after the company completed a
feasibility study in the North Pakar region. Bayan's acquisition of
the remaining stake in Kangaroo Resources Limited in 2018 also
increased its reserve life. Fitch estimates Bayan's reserve life
based on the 2P reserves to be at around 25 years, up from its
previous estimate of 15 years based on its medium-term production
scale of 40mt.
Limited Mine Diversity: Tabang (including North Pakar) accounts for
more than three quarters of Bayan's 2P reserves and total
production. Fitch expects Tabang's contribution to remain high, as
most of the ramp up in production is likely to come from existing
operational mines at Tabang and the North Pakar concession. That
said, Fitch believes risks related to Bayan's coal mining
operations itself are minimised by its contracts with PT Petrosea
Tbk and PT Bukit Makmur Mandiri Utama (BB-/Stable), two of
Indonesia's largest coal mining contractors.
Strong Financial Profile: Fitch expects Bayan's financial profile
to continue to remain strong, based on its coal price assumptions
supported by its rising production volume and low-cost position.
Bayan's financial profile improved substantially after it prepaid
all its restructured debt in 2017 and improved its profitability
post commencement of its Tabang operation and from higher coal
prices. Bayan paid a dividend of USD300 million in 2H19 which, in
its view, would change its net cash position to net debt in 2019.
Fitch expects Bayan to maintain a strong financial profile over the
medium term, in light of its dividend assumptions and limited
capex.
Cyclicality of Coal Industry: Bayan remains vulnerable to the
commodity cycle, as its earnings and cash flow are linked to the
thermal coal industry. However, these risks are mitigated by the
low-cost position of its key mine.
DERIVATION SUMMARY
Bayan's closest peer is PT Indika Energy Tbk (BB-/Stable). The two
companies have comparable business profiles; Indika's larger
production scale, longer operating record of its key coal asset -
Kideco Jaya Agung - and integrated operation are offset by Bayan's
better cost position and stronger financial profile. Fitch expects
both companies to maintain a healthy cash balance over the medium
term, with adequate cash flow. This would also give Indika the
flexibility to address its lumpy debt maturities.
PT Golden Energy Mines Tbk (B+/Stable) has higher reserves and
reserve life than Bayan, but this is balanced by Bayan's larger and
increasing production scale and better cost structure. Both
companies have strong financial profiles.
KEY ASSUMPTIONS
- Coal price assumptions in line with Fitch's mid-cycle at
Newcastle 6000kcal price assumptions, adjusted for the
difference in calorific value; coal price for 2020 at
USD73/mt, 2021 at USD72/mt and 2022 at USD70/mt
- Coal sales to increase to 37mt in 2020 and 40mt thereafter.
Fitch expects the Tabang concession to be the key driver of
production growth.
- Dividend payout to remain at 50%.
- Total capex of around USD328 million until 2023, of which
USD238 million is estimated for infrastructure expansion
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- Increase in scale to about 40mt a year, with an average
remaining reserve life of around 15-20 years, while
maintaining a low-cost position and stable financial
profile, with funds from operations (FFO) adjusted net
leverage below 1.5x (2018: -0.2x)
- Material progress towards infrastructure enhancement to
ensure continuity of operations, limiting the company's
exposure to weather-related issues.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Weaker cash-flow generation than Fitch expects due to adverse
industry conditions, higher capex or larger-than-expected
cash outflow leading to a deterioration of credit metrics
for a sustained period
- FFO adjusted net leverage above 3.0x (2018: -0.2x)
- FFO fixed-charge coverage falling below 4.0x (2018: 111x)
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Bayan's proposed bonds would be the company's
only debt, as it would be used to repay all its outstanding
short-term loans used for working-capital purposes. Bayan paid a
dividend of USD300 million in July 2019 (payout of 52% based on
2018 net income), which led to a net debt position for 2019.
However, Fitch assumes that Bayan will be able to return to a net
cash position over the next two years with modest capex and
positive free cash-flow generation, and maintain high liquidity
over the next two to three years.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on Bayan, either due
to their nature or the way in which they are being managed by the
company.
BAYAN RESOURCES: Moody's Assigns Ba3 Rating to New Unsec. Notes
---------------------------------------------------------------
Moody's Investors Service assigned a Ba3 senior unsecured rating to
the proposed senior notes to be issued by Bayan Resources Tbk
(P.T.) (Ba3 stable).
The outlook is stable.
Bayan plans to use the proceeds to refinance its working capital
facilities and for general corporate purposes.
RATINGS RATIONALE
The Ba3 rating on the proposed notes is in line with Bayan's Ba3
corporate family rating, as the presence of upstream guarantees
from major subsidiaries mitigates structural subordination risk for
bondholders. In addition, the planned notes proceeds will be used
to repay all of Bayan's existing working capital facilities.
"The proposed bond issuance will support Bayan's liquidity and
lengthen its debt maturity profile," says Maisam Hasnain, a Moody's
Assistant Vice President and Analyst.
Despite a modest increase in total debt following the notes
issuance, Bayan's credit metrics will remain strong over the next
12-18 months, with adjusted leverage -- as measured by adjusted
debt/EBITDA -- to remain 1.0x - 1.5x.
"Bayan's Ba3 rating reflects its strong profitability, supported by
its low-cost structure and growing thermal coal production
following the ramp-up at its Tabang mines, which have a long
reserve life," adds Hasnain, also Moody's Lead Analyst for Bayan.
At the same time, Bayan's Ba3 rating is constrained by its
single-commodity exposure to thermal coal and the geographic
concentration of its mines in Kalimantan, Indonesia.
The rating also considers Bayan's exposure to environmental, social
and governance (ESG) risks as follows.
Bayan faces elevated environmental risks associated with the coal
mining industry, including carbon transition risks as countries
seek to reduce their reliance on coal power. However, this risk is
somewhat mitigated as Bayan's customers are primarily located in
Asia, a region with growing energy needs.
Bayan will also remain exposed to weather-related risks, and in
particular to the risk of dry weather that can lead to low water
levels in the Kedang Kepala River and Belayan River, which are
currently the company's principal waterways for the transport of
coal to transshipment points from its Tabang mine.
Bayan is also exposed to social risks associated with the coal
mining industry, including health and safety, responsible
production and societal trends.
With respect to governance, Bayan's ownership is concentrated in
Dato' Low Tuck Kwong, who holds an approximate 54% stake in the
company. However, this risk is somewhat balanced by Bayan's listed
status, the presence of other large shareholders including Korea
Electric Power Corporation (KEPCO, Aa2 stable) which owns a 20%
stake, and Bayan's considerable debt reduction in recent years,
which suggests adherence to prudent financial policies.
The stable outlook on the rating reflects Moody's expectations that
Bayan will continue to grow its production volumes while
maintaining a financial profile appropriate for its Ba3 rating.
An upgrade of the rating is unlikely over the next 12-18 months,
given Bayan's current scale and lack of diversification.
Nonetheless, upward rating pressure could develop over the longer
term if Bayan increases production meaningfully, or improves
diversification in relation to geography or product while
maintaining a strong credit profile.
Moody's could downgrade the rating if (1) Bayan experiences a
material disruption in its operations; (2) industry fundamentals
deteriorate, leading to a decline in earnings; or (3) there is a
material change in its underlying financial or operational
strategy, including higher-than-expected capital spending, material
debt-funded acquisitions, or a more aggressive dividend payment
policy.
Specific financial indicators for a downgrade include adjusted
debt/EBITDA approaching 3.5x or adjusted EBIT/interest expense
trending down to 2.0x.
The principal methodology used in this rating was Mining published
in September 2018.
Listed on the Indonesian Stock Exchange in 2008, Bayan is engaged
in surface open cut mining of coal mines primarily located in East
and South Kalimantan. It has a 90% interest in its largest
producing asset at Tabang, which will contribute around 80% of its
total production volume of around 32 million tons in 2019.
Bayan's founder Dato' Low Tuck Kwong is the largest shareholder
with a 53.9% stake, Korea Electric Power Corporation owns 20%
through its subsidiaries, and PT Sumber Suradaya Prima owns 10%.
Bayan's management and founders hold an 11.8% stake, and the
balance is publicly owned.
=========
J A P A N
=========
JAPAN DISPLAY: Ends Bailout Talks With Chinese-Taiwanese Group
--------------------------------------------------------------
The Japan Times reports that Japan Display Inc. said on Jan. 8 it
had formally ended talks with a Chinese-Taiwanese consortium on a
bailout plan that has effectively been stalled since September.
The Japan Times relates that the struggling display supplier for
Apple Inc. said the group led by Chinese Harvest Tech Investment
Management Co. did not provide financial aid by the deadline of
Dec. 31, despite an agreement in August under which the consortium
had pledged to offer up to JPY80 billion (US$738 million).
According to the report, Japan Display said it would focus on
negotiations for a new rescue plan with Japanese private fund
Ichigo Asset Management Ltd., after unveiling a plan in December to
receive a capital injection of up to JPY90 billion from the new
domestic sponsor.
The panel-maker said it aims to complete the fresh bailout in
February or March after finalizing all negotiations with Ichigo
later this month, the Japan Times relays.
Japan Display was established in 2012 through the merger of the
operations of Sony Corp., Hitachi Ltd. and Toshiba Corp. with
support from state-backed fund INCJ Ltd.
The cash-strapped company incurred a net loss for the fifth
straight year in the year ended March 2019 due to slumping demand
for smartphone displays, the report notes.
=======
L A O S
=======
LAOS: Moody's Assigns First-Time 'B3' LongTerm Issuer Ratings
-------------------------------------------------------------
Moody's Investors Service assigned a first-time local and foreign
currency long-term issuer rating of B3 to the Government of Laos
with a positive outlook.
The factors supporting the rating are:
1. Economic strength of "ba3", which balances Laos's high economic
growth potential against relatively low incomes, the small size of
the economy and exposure to environmental risks.
2. Institutions and governance strength of "b3", which balances
weak executive institutions, low administrative capacity, and very
limited transparency and accountability against a lengthening track
record of effective monetary management.
3. Fiscal strength of "caa1", which reflects a high government debt
burden for the size of the economy and the government's narrow
revenue base that constrains fiscal flexibility, although the
largely concessional debt supports debt affordability.
4. Susceptibility to event risk of "ba", driven by external
vulnerability risk given structural current account deficits and
low foreign exchange reserve buffers.
The positive outlook reflects Moody's assessment that effective
implementation of ongoing infrastructure investment and fiscal
reforms would deliver net positive benefits to the economy and the
government's fiscal position. This would in turn strengthen Laos's
credit metrics to be consistent with a higher rating.
Moody's has also assigned local currency bond and deposit ceilings
of Ba3, a foreign currency bond ceiling of B1, and a foreign
currency deposit ceiling of Caa1. The local currency bond ceiling
reflects the maximum credit rating achievable in local currency for
a debt issuer domiciled in Laos (similarly for a bank deposit). The
ceilings on foreign currency bonds and bank deposits capture
foreign currency transfer and convertibility risks.
RATINGS RATIONALE
RATIONALE FOR THE B3 RATING
HIGH ECONOMIC GROWTH POTENTIAL BALANCED AGAINST RELATIVELY LOW
INCOMES, THE SMALL SIZE OF THE ECONOMY AND EXPOSURE TO
ENVIRONMENTAL RISKS
Laos's "ba3" economic strength is underpinned by the country's high
growth potential. Moody's expects real GDP growth to remain high
around 6.5-7% over the next few years, supported by the ongoing
implementation of hydropower projects, which will contribute to
exports, and mining production. Moody's further expects the
completion of the China-Laos railway project by the end of 2021 to
increase physical connectivity, lower the cost of transport and
logistics, and raise economic competitiveness, albeit from
relatively low levels.
At the same time, relatively low household incomes and the small
size of the economy compared to similarly rated peers reduce the
economy's capacity to absorb shocks.
Moody's assessment of economic strength also takes into account the
country's exposure to environmental risks. In particular, increased
frequency of droughts due to climate change would reduce Laos's
hydropower production potential and weigh on economic growth and
government finances.
WEAK EXECUTIVE INSTITUTIONS, LOW ADMINISTRATIVE CAPACITY, VERY
LIMITED TRANSPARENCY AND ACCOUNTABILITY BALANCED AGAINST EFFECTIVE
MONETARY MANAGEMENT
Moody's assessment of Laos's "b3" institutions and governance
strength is in part informed by the country's weak scores in the
Worldwide Governance Indicators (WGI), across various dimensions.
Administrative capacity and transparency are low, affecting the
effectiveness of policymaking, although data availability is
gradually increasing. There are also no effective checks and
balances and very limited separation of powers and accountability,
which together with high levels of corruption points to weak
governance. Moreover, in Moody's assessment the regulation of the
banking system is relatively weak, with large, unreported,
nonperforming assets despite a long period of high economic
growth.
However, macroeconomic policymaking institutions continue to
demonstrate a lengthening track record of effective monetary
management. This is marked by low inflation and inflation
volatility in recent years and the absence of boom-bust economic
cycles, which Moody's expects will continue over the next few
years.
Recently, adherence to fiscal consolidation, despite the negative
impact of natural disasters on government finances, points to
potential improvements in fiscal policy credibility and
effectiveness from very low levels.
HIGH GOVERNMENT DEBT BURDEN AND NARROW GOVERNMENT REVENUE BASE
CONSTRAINS FISCAL FLEXIBILITY, ALTHOUGH LARGELY CONCESSIONAL DEBT
SUPPORTS DEBT AFFORDABILITY
Laos's "caa1" fiscal strength reflects a high government debt
burden for the size of the economy and the government's narrow
revenue base that constrains fiscal flexibility.
At around 15-16% of GDP, government revenue is among the lowest
across sovereigns that Moody's rates. Ongoing fiscal reforms and
the gradual expiration of tax exemptions for hydropower projects
will likely raise revenue over time, but infrastructure spending
needs will continue to limit the policy room for fiscal manoeuvre
in light of the government's commitment to narrower fiscal
deficits. Moody's expects the government's fiscal deficit to
average around 3.5% of GDP over 2020-21, compared to 4.6% in 2018.
As fiscal consolidation proceeds, Moody's also expects the debt
burden to gradually decline over the next few years, falling
towards 53% of GDP by 2022-23, compared to Moody's estimate of the
debt burden at around 60% of GDP for 2019. However, a track record
of sustained fiscal consolidation has yet to be established and the
debt burden will remain relatively high compared to similarly rated
peers.
High debt affordability supports fiscal strength, since government
debt is mostly owed to bilateral and multilateral partners at
concessional terms.
EXTERNAL VULNERABILITY RISK DUE TO LOW FOREIGN EXCHANGE RESERVE
BUFFERS DRIVE SUSCEPTIBILITY TO EVENT RISKS
Laos's "ba" susceptibility to event risk is driven by external
vulnerability risk. External vulnerability risk stems from the
country's low foreign exchange reserves adequacy, particularly
given structural current account deficits. Foreign exchange
reserves only cover slightly more than one month of imports, while
coverage of external debt due over the next year is also very low.
Very low reserves coverage is partly mitigated by the existence of
foreign currency deposits held in nostro accounts at the central
bank and the fact that, while the current account deficit is wide,
it is almost entirely financed by stable foreign direct investment.
Moody's also expects the current account deficit to narrow to
around 4-5% of GDP over the next two years, compared to an average
deficit of more than 8% of GDP over 2016-18.
Meanwhile, Moody's assesses Laos's banking sector risk to be "baa".
This in part reflects Moody's view that low levels of reported
nonperforming loans do not accurately reflect banks' asset quality
that is much weaker. Two smaller state-owned banks remain
undercapitalised and high levels of dollarisation raise foreign
exchange risks for the system as a whole. However, the structure of
the banking sector limits contingent liability risk, given the
sizeable share of foreign bank branches that Moody's expects will
receive head office support in times of crisis.
Government liquidity risk is also "baa", which balances modest
gross borrowing requirements given the concessional nature of
external debt, against Laos's reliance on external financing.
Limited domestic liquidity, in part related to high dollarisation
levels, will continue to constrain the development of domestic
capital markets, which remain very shallow. Although the government
has been successful in tapping foreign investors in foreign
currency, particularly in the Thai market, it does not have a
broader a track record of being able to exercise a wide range of
options for external financing.
Moody's assesses political risk in Laos to be "a", reflecting the
stable political environment. This is in part due to economic and
social policies that have contributed to consistent income growth.
Furthermore, the government continues to prioritise sustainable
development, including through its Vision 2030 based on "leaving no
one behind". Political risks relate to a very low probability,
moderate impact scenario of external political influence that has
the potential to disrupt policymaking, reform implementation and
debt consolidation in Laos.
RATIONALE FOR THE POSITIVE OUTLOOK
The positive outlook is driven by Moody's assessment that the
implementation of large infrastructure projects, including the
hydropower dams and the China-Laos railway, if managed effectively,
would deliver net positive benefits to the economy and raise
government revenue and exports. This would allow for a faster
reduction in the debt burden and alleviate external risks compared
with Moody's current expectations.
Ongoing fiscal reforms, including efforts to widen the tax base and
strengthen expenditure and debt management, also have the potential
to shore up fiscal strength and Laos's credit profile over time.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Environmental considerations are material to Laos's credit profile,
as the country is vulnerable to climate change risk. Natural
disasters, including storms, floods, landslides and droughts, have
adversely affected agricultural conditions and weighed on economic
growth. Increased frequency of droughts due to climate change would
also reduce Laos's hydropower production potential. Furthermore,
substantial reconstruction and rehabilitation costs following
natural disasters constrain fiscal flexibility.
Social considerations are relevant to Laos's credit profile. Laos's
economic strength score incorporates social considerations related
to the low level of human capital and limited access to quality
healthcare and education. That said, the country benefits from a
young population, while per capita incomes have doubled over the
past 10 years given strong and stable economic growth.
Governance considerations are material to Laos's credit profile.
The country's rankings on the WGI are low and point to weak rule of
law and control of corruption. Transparency and accountability in
government policymaking remain limited owing to the institutional
setup that is closely intertwined with the political structure,
notwithstanding recent improvements in data availability.
WHAT COULD CHANGE THE RATING UP
Prospects of a substantial and sustained reduction in the debt
burden, including through fiscal consolidation or revenue expansion
beyond Moody's current expectations, would be credit positive. This
could happen in the context of effective implementation of the
large infrastructure projects that raises economic competitiveness
and prospects for diversification, increasing the resilience of the
economy to shocks, and raise government revenue. In addition, a
reduction in external vulnerability risk, in particular through a
sustained accumulation of foreign exchange reserve buffers would
also place upward pressure on the rating.
WHAT COULD CHANGE THE RATING DOWN
The positive outlook signals that a rating downgrade is unlikely
over the near term. Downward pressures on the rating would be
likely in case of a further weakening of Laos's external position,
indicated in a decline of already low foreign exchange reserves
coverage of imports and external debt. A weakening of Laos's fiscal
and debt metrics either because government revenue is not keeping
up with the pace of expenditure growth and/or because of the
crystallisation of contingent liabilities on the government's
balance sheet pointing to a sustained and material rise in the debt
burden would also put downward pressure on the rating. Finally,
further failures in the banking system that involved material
fiscal costs and weighed on growth on a prolonged basis because of
constrained credit supply would weigh on the rating.
GDP per capita (PPP basis, US$): 7593.7 (2018 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 6.4 (2018 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 1.5 (2018 Actual)
Gen. Gov. Financial Balance/GDP: -4.6 (2018 Actual) (also known as
Fiscal Balance)
Current Account Balance/GDP: -8.0 (2018 Actual) (also known as
External Balance)
External debt/GDP: 92.9 (2018 Estimate)
Level of economic development: "b1" level of economic resilience
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On November 11, 2019, a rating committee was called to discuss the
rating of the Laos, Government of. The main points raised during
the discussion were: the issuer's Economic Strength, Institutions
and Governance Strength, Fiscal Strength and Susceptibility to
Event Risk, with a view to assigning a first-time public issuer
rating to the Government of Laos.
The principal methodology used in these ratings was Sovereign
Ratings Methodology published in November 2019.
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S I N G A P O R E
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HYFLUX LTD: Creditors to File Proofs of Claim by Feb. 5
-------------------------------------------------------
The Business Times reports that Hyflux Ltd on Jan. 9 called for its
creditors to file proofs setting out their claims for the purpose
of the scheme meetings to vote on the Utico plan.
Parties who have claims against Hyflux Ltd, Hyflux Engineering,
Hyflux Membrane Manufacturing (S) and Hydrochem (S) are to file by
5:00 p.m. on Feb. 5, the report says.
According to the report, the proofs will form a basis for the
creditors --which include bank lenders and trade creditors -- to
vote on the scheme proposals and to receive payments.
However, holders of the company's notes, perpetual securities and
preference shares (PnP) are not required to file any proof, BT
notes.
This is because the notes and PnP holdings are recorded in the
Central Depository Pte Ltd (CDP), and Hyflux will seek the
Singapore High Court's leave to file a proof on the holders' behalf
based on those records, says BT.
BT relates that the date of the meetings, to be held in March, will
be announced once ordered by the court.
Creditors including the PnP investors and noteholders will vote to
approve or reject Middle Eastern utility firm Utico's proposed
rescue deal at the scheme meetings.
Separately, Aqua Munda is also inviting Hyflux noteholders and
unsecured creditors to offer their debts for purchase at a minimum
discount of 85 per cent. The invitation from the
Singapore-registered company expires on Jan. 23, BT notes.
According to BT, the proposed chairman for the upcoming Hyflux
scheme meetings is either Angela Ee Meng Yen or Glenn Peter, who
are both partners at Ernst & Young Solutions.
The debt-laden water firm owes SGD900 million in PnP principal
value to some 34,000 mom-and-pop investors, BT discloses. Also
outstanding are the company's SGD100 million, 4.25 per cent notes
due in 2018, the SGD65 million, 4.6 per cent notes due in 2019, and
SGD100 million 4.2 per cent notes due in 2019.
In March last year, when the rescue package from Indonesian
investment group Salim-Medco was still on the table, 73 parties had
filed proofs of claim amounting to SGD3.51 billion ahead of scheme
meetings scheduled for April 2019, recalls BT.
Back then, the retail PnP investors filed for some of the largest
claim amounts. Holders of the SGD500 million, 6 per cent perps
filed claims worth SGD540.7 million, while holders of the SGD400
million, 8 per cent preference shares filed claims of SGD429.3
million. The medium-term noteholders were also claiming a combined
SGD277.7 million.
Claimants among the other creditors included project company
Tahlyat Myah Magtaa SpA, the Singapore branch of Mizuho Ban, KfW
Ipex-Bank, ESR-Reit, Ascendas Reit, and DBS Bank, the report
discloses.
About Hyflux
Singapore-based Hyflux Ltd -- https://www.hyflux.com/ -- provides
various solutions in water and energy areas worldwide. The company
operates through two segments, Municipal and Industrial. The
Municipal segment supplies a range of infrastructure solutions,
including water, power, and waste-to-energy to municipalities and
governments. The Industrial segment supplies infrastructure
solutions for water to industrial customers. It has business
operations across Asia, Middle East and Africa.
As reported in the Troubled Company Reporter-Asia Pacific on May
24, 2018, Hyflux Ltd. said that the Company and five of its
subsidiaries, namely Hydrochem (S) Pte Ltd, Hyflux Engineering Pte
Ltd, Hyflux Membrane Manufacturing (S) Pte. Ltd., Hyflux Innovation
Centre Pte. Ltd. and Tuaspring Pte. Ltd. have applied to the High
Court of the Republic of Singapore pursuant to Section 211B(1) of
the Singapore Companies Act to commence a court supervised process
to reorganize their liabilities and businesses. The Company said
it is taking this step in order to protect the value of its
businesses while it reorganises its liabilities.
The Company has engaged WongPartnership LLP as legal advisors and
Ernst & Young Solutions LLP as financial advisors in this process.
In November 2019, Hyflux entered into a restructuring deal with
United Arab Emirates-based utility Utico FZC, according to
Reuters.
*********
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 2020. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
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