/raid1/www/Hosts/bankrupt/TCRAP_Public/200113.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, January 13, 2020, Vol. 23, No. 9
Headlines
A U S T R A L I A
4D JOINERY: Second Creditors' Meeting Set for Jan. 17
ALITA RESOURCES: Told to Apply for Extension Over Court Hearing
DESIGN LANDSCAPES: Second Creditors' Meeting Set for Jan. 17
GLOBAL TRAVEL: First Creditors' Meeting Set for Jan. 22
KHMD PTY: Second Creditors' Meeting Set for Jan. 20
KLEENMAID GROUP: Founder Found Guilty of Fraud, Insolvent Trading
MCWILLIAM'S WINES: Appoints KPMG as Administrators
MILLENNIUM MINERALS: Second Creditors' Meeting Set for Jan. 17
NOTORIOUS BRICKLAYERS: Second Creditors' Meeting Set for Jan. 16
SAMSON OIL: Extends CEO's Employment Until March 31
SYMBOL MINING: Second Creditors' Meeting Set for Jan. 20
WHIM CREEK: Second Creditors' Meeting Set for Jan. 17
C H I N A
BAOSHANG BANK: Regional Lender to Buy Part of Assets & Liabilities
CBAK ENERGY: Completes $1.67 Million Note Financing with Atlas
CBAK ENERGY: Regains Compliance with NASDAQ Bid Price Requirement
CENTRAL CHINA REAL: Moody's Rates New USD Unsec. Bond Rating B1
IDEANOMICS INC: YA II PN Invests Additional $1 Million
ORIGIN AGRITECH: BF Borgers Replaces BDO as Accountants
REMARK HOLDINGS: Fails to Comply with Nasdaq's Market Value Rule
ROAN HOLDINGS: Changes Ticker Symbol Following Change of Name
SEAZEN HOLDINGS: S&P Assigns 'BB' LongTerm Issuer Credit Rating
ZHENJIANG TRANSPORTATION: S&P Withdraws 'B+' Issuer Credit Rating
[*] CHINA: Shell Firms Buy Cash-Strapped Companies for First Time
I N D I A
A C POLYCOATERS: CARE Lowers Rating on INR6cr LT Loan to B
AHAN ADD: CARE Reaffirms 'B+' Rating on INR16.87cr LT Loan
AISHWARYA CONSTRUCTION: CARE Assigns B+ Rating to INR49.5cr Loan
AMT BUILDERS: CRISIL Assigns B+ Rating to INR1.25cr Loan
ASHIYANA CONSTRUCTIONS: CRISIL Revokes Suspension on Debt Ratings
ASM TRAXIM: CARE Lowers Rating on INR45cr LT Loan to B+
AVINASH ASSOCIATES: CARE Cuts Rating on INR6.50cr LT loan to B
CLS ENTERPRISES: Insolvency Resolution Process Case Summary
DOVIAZ RETAIL: Insolvency Resolution Process Case Summary
G K STEEL AND ALLIED: Insolvency Resolution Process Case Summary
GAURINANDAN FASHION: Insolvency Resolution Process Case Summary
INCOM WIRES: Insolvency Resolution Process Case Summary
JANTA SHIKSHAN: CRISIL Assigns B+ Rating to INR1cr Proposed Loan
KAAISER OILS: Insolvency Resolution Process Case Summary
KARTHIK ALLOYS: Insolvency Resolution Process Case Summary
KPR CHEMICALS: Insolvency Resolution Process Case Summary
KRISH AGRO: CARE Lowers Rating on INR12cr LT Loan to 'D'
KUNAL LOHACHEM: CARE Reaffirms 'B' Rating on INR6cr Loan
MAA SARADESWARI: CRISIL Lowers Rating on INR6.2cr Loan to 'D'
MAHALAXMI TECHNOCAST: CARE Reaffirms B+ Rating on INR25cr Loan
MANDAKINI HEAVEN: CRISIL Assigns 'D' Rating to INR7.15cr Loan
NARAIN SINGH: CRISIL Cuts Rating on INR3.75cr Bank Loan to B-
OSHINA EXPO: CARE Hikes Rating on INR5cr LT Loan to BB-
PRITS LEATHER: Ind-Ra Raises LongTerm Issuer Rating to 'B+'
QUANTUM CONCRETE: Insolvency Resolution Process Case Summary
SONA WIRES: CARE Raises Rating on INR2.50cr LT Loan to B+
SONAL FABRICATORS: CARE Cuts Rating on INR3cr Loan to B-
STERLING GATED: CARE Lowers Rating on INR60cr NCD to 'B'
TANUJ ROSHI: CARE Lowers Rating on INR7.90cr LT Loan to 'B'
TEAMWORK CABLES: Insolvency Resolution Process Case Summary
TRADING ENGINEERS: Insolvency Resolution Process Case Summary
[*] INDIA: A Record $83 Billion Bond Bill is Looming Over Firms
I N D O N E S I A
LIPPO KARAWACI: S&P Alters Outlook to Negative & Affirms B- ICR
MEDCO ENERGI: Moody's Raises CFR to B1 & Alters Outlook to Stable
MEDCO ENERGI: S&P Raises ICR to 'B+', Outlook Stable
SAKA ENERGI: S&P Lowers Issuer Credit Rating to BB, Outlook Stable
SOECHI LINES: Fitch Affirms B LongTerm IDR, Outlook Stable
M A L A Y S I A
APFT BHD: Plans to Exit PN17 Status with QEOS Energy Stake Buy
S I N G A P O R E
TEE LAND: Net Loss Widens to SGD6.97MM in Q2 Ended Nov. 30
- - - - -
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A U S T R A L I A
=================
4D JOINERY: Second Creditors' Meeting Set for Jan. 17
-----------------------------------------------------
A second meeting of creditors in the proceedings of 4D Joinery Pty.
Ltd has been set for Jan. 17, 2020, at 11:00 a.m. at the offices of
BDO, Collins Square, Tower Four, Level 18, at 727 Collins Street,
in Docklands, Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2020, at 5:00 p.m.
Andrew Fielding and Nicholas Martin of BDO were appointed as
administrators of 4D Joinery on Dec. 3, 2019.
ALITA RESOURCES: Told to Apply for Extension Over Court Hearing
---------------------------------------------------------------
The Business Times reports that the Singapore Exchange's regulatory
arm (SGX RegCo) has directed Alita Resources to apply for an
extension of time for an Australian court hearing, related to its
rescue plan that would see all shares in the Catalist-listed
lithium miner transferred to another firm for nil consideration.
Alita is also required to hold an information session for Singapore
shareholders, said SGX RegCo in a notice of compliance on Jan. 8,
BT relates.
Alita went into administration in August 2019. In December, its
creditors approved a deed of company arrangement (DOCA) proposed by
China Hydrogen Energy and its subsidiary Liatam Mining, which would
see Alita's eventual delisting.
Under the DOCA, the administrator has to obtain a Section 444GA
court order, allowing the transfer of 100 per cent of Alita shares
to Liatam for zero consideration.
In this process, shareholders have the right to provide their
views. Under a timetable announced by Alita, the deadline for
providing views is Jan. 29, with the court hearing scheduled for
Jan. 30, the report notes.
According to BT, the Section 444GA application was made on the
basis that Alita's shares have no value. An expert report on the
value of Alita's shares is being prepared, with both this and an
explanatory statement on the Section 444GA process meant to be
available to shareholders by Jan. 3, BT says.
However, on Jan. 3, the administrators said the report and
statement would only be issued on or around Jan. 10. The other
relevant dates were not changed, BT relates.
Under Australian law, the court may approve a Section 444GA
application if it is satisfied that this compulsory transfer would
not unfairly prejudice the interests of shareholders, BT states.
Noting this, SGX RegCo said it is of the view "that it is
important, and in the interest of shareholders, that sufficient
time be given for shareholders to carefully review the expert
report and provide their views . . . for due consideration," BT
relays.
It added that the administrators have so far not publicly provided
information to shareholders on what efforts have been made to
safeguard their interests when proposing the DOCA.
BT says SGX RegCo thus requires the administrators to apply to the
court for an extension of time, and hold a session for Singapore
shareholders to understand the matter - the implications of the
DOCA, the Section 444GA application, its process, and their rights
and interests - and provide a platform for them to share their
views collectively.
Failure to comply with requirements imposed by SGX shall be deemed
a contravention of Catalist rules, it added, says BT.
About Alita Resources
Alita Resources Limited operates as a mineral exploration and
excavation company. The Company explores and produces lithium and
tantalum concentrates. Alita Resources offers its services in
Australia.
John Bumbak of Kordamentha was appointed as administrator of Alita
Resources, et al. on Aug. 28, 2019.
In December 2019, the company's creditors approved a deed of
company arrangement (DOCA) proposed by China Hydrogen Energy and
its subsidiary Liatam Mining for the acquisition of Alita's
assets.
DESIGN LANDSCAPES: Second Creditors' Meeting Set for Jan. 17
------------------------------------------------------------
A second meeting of creditors in the proceedings of Design
Landscapes Australia Pty Ltd has been set for Jan. 17, 2020, at
11:00 a.m. at the offices of Jirsch Sutherland, Level 27, at 259
George Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2020, at 5:00 p.m.
Trent Andrew Devine and Andrew John Spring of Jirsch Sutherland
were appointed as administrators of Design Landscapes on Dec. 4,
2019.
GLOBAL TRAVEL: First Creditors' Meeting Set for Jan. 22
-------------------------------------------------------
A first meeting of the creditors in the proceedings of:
- Global Travel Holdings Pty Ltd
- Excite Holidays (Australia) Pty Ltd
- Global Travel Specialists Pty Ltd
- Events NG Pty Ltd
- Travel Serv Co Pty Ltd
will be held on Jan. 22, 2020, at 11:00 a.m. at the offices Wesley
Conference Centre, 220 Pitt Street, in Sydney, NSW.
Morgan John Kelly, Phil Quinlan and Amanda Coneyworth of KPMG were
appointed as administrators of Global Travel on Jan. 10, 2020.
KHMD PTY: Second Creditors' Meeting Set for Jan. 20
---------------------------------------------------
A second meeting of creditors in the proceedings of KHMD Pty Ltd,
trading as Meraki For Hair, has been set for Jan. 20, 2020, at
11:00 a.m. at the offices of Hamilton Murphy Advisory, Unit 18, at
28 Belmont Avenue, in Rivervale, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 17, 2020, at 4:00 p.m.
Stephen Robert Dixon of Hamilton Murphy Advisory was appointed as
administrator of KHMD Pty on
Oct. 21, 2019.
KLEENMAID GROUP: Founder Found Guilty of Fraud, Insolvent Trading
-----------------------------------------------------------------
Former director and founder of the Kleenmaid group of companies,
Andrew Eric Young, on Jan. 10, 2020, was found guilty in the
District Court of Queensland on 19 charges arising from the
collapse of the national white goods distributor.
Following a trial lasting 59 days, the jury found Mr. Young guilty
of:
* one count of fraud by dishonestly gaining loan facilities
from Westpac in November 2007 totalling AUD13 million;
* two counts of criminal insolvent trading of debts of
AUD3.5 million relating to two additional loan facilities
from Westpac in July 2008;
* 15 counts of criminal insolvent trading of debts amounting
to more than AUD750,000 that were incurred during the period
October 2008 to April 2009; and
* a further count of fraud by dishonestly causing AUD330,000 to
be removed from a Kleenmaid company bank account just prior
to administrators being appointed and transferred to a bank
account held by a company in which Mr Young held an interest
and from which he and his wife would benefit from the
payment.
The guilty verdict comes after similar court action against
Kleenmaid directors Gary Collyer Armstrong, sentenced to five and a
half years jail, and Bradley Wendell Young, sentenced to nine years
imprisonment.
'The action ASIC has taken against the former directors of
Kleenmaid should send a clear message that where a director fails
in their duty to prevent a company from incurring debts while it is
insolvent, ASIC will take action, particularly where the director's
conduct has been dishonest and to the detriment of creditors and
consumers,' said ASIC Commissioner John Price.
Bail was refused and Mr. Young was remanded in custody pending
sentencing on Feb. 7, 2020.
The matter was prosecuted by the Commonwealth Director of Public
Prosecutions after a referral from ASIC.
About Kleenmaid
Kleenmaid was a white goods importer and retailer which operated a
chain of company and franchised stores across Australia. The
business was founded by Andrew Young in 1980.
Administrators were appointed to the Kleenmaid group of companies
on April 9, 2009. The consolidated debts of the Kleenmaid group
amounted to approximately AUD96 million, which included AUD26
million in customer deposits that had been paid for appliances yet
to be delivered.
In August 2015, Gary Collyer Armstrong, pleaded guilty to one count
of fraud and two counts of insolvent trading in relation to the
collapse of Kleenmaid.
A trial against Andrew Young and his brother Bradley Young
commenced on April 4, 2016. On April 26, 2016, the trial was
discontinued against Andrew Young.
On Aug. 12, 2016, Bradley Young was sentenced to nine years
imprisonment for fraud and a total of three and a half years
imprisonment for insolvent trading charges. Bradley Young, who is
not eligible for parole until November 2022, has appealed his
conviction and sentence. Judgment has been reserved for a
decision.
The trial in relation to Andrew Young commenced again on Aug. 28,
2017, however on Oct. 20, 2017, Judge Devereaux discharged the jury
due to the health of Mr. Young.
MCWILLIAM'S WINES: Appoints KPMG as Administrators
--------------------------------------------------
Ben Potter at Australian Financial Review reports that McWilliam's
Wines Group, one of Australia's oldest family-owned winemakers, has
called in administrators from KPMG to seek new capital or a buyout
after a decline in financial performance.
KPMG partners Gayle Dickerson, Tim Mableson and Ryan Eagle were
appointed to the role on Jan. 8, AFR discloses.
According to AFR, Gayle Dickerson, restructuring partner at KPMG,
said, "The company will continue to operate as normal and we are
working with the McWilliam's family with the support of its
employees while we work hard to try to preserve one of Australia's
oldest winemakers.
"We are seeking expressions of interest to recapitalise or acquire
the Group to take this heritage brand forward in the future both
locally and globally.
"There are significant wine assets in the Riverina district and the
Hunter Valley, long-established distribution channels and
relationships with global international distributor brands," she
added.
Jim Brayne, chairman of McWilliam's, said the decision to enter
into voluntary administration hadn't been made lightly, but a
changing wine market and a shortage of capital had led to a decline
in performance, AFR relays.
"We will work closely with the Administrator during the process in
order to strengthen the prospects of a positive outcome for all
involved," AFR quotes Mr. Brayne as saying.
A meeting of the creditors of the company is scheduled for January
20.
McWilliam's Wines Group is an unlisted publicly owned company which
has been operating for over 141 years across six generations of
family ownership. Its range includes the McWilliam's and Mount
Pleasant wine brands, as well as sole Australian distribution
rights for Champagne Taittinger, Mateus, Henkell and Mionetto.
MILLENNIUM MINERALS: Second Creditors' Meeting Set for Jan. 17
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Millennium
Minerals Limited has been set for Jan. 17, 2020, at 1:00 p.m. at
the offices of Perth Convention and Exhibition Centre, River View
Room 4, at 21 Mounts Bay Rd, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2020, at 5:00 p.m.
Matthew Donnelly and Richard Hughes of Deloitte were appointed as
administrators of Millennium Minerals on Nov. 24, 2019.
NOTORIOUS BRICKLAYERS: Second Creditors' Meeting Set for Jan. 16
----------------------------------------------------------------
A second meeting of creditors in the proceedings of Notorious
Bricklayers Pty Ltd has been set for Jan. 16, 2020, at 11:00 a.m.
at the offices of Mackay Goodwin, Level 2, at 1 Southbank
Boulevard, in Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 15, 2020, at 4:00 p.m.
Grahame Ward and Domenic Calabretta of Mackay Goodwin were
appointed as administrators of Notorious Bricklayers on Jan. 7,
2019.
SAMSON OIL: Extends CEO's Employment Until March 31
---------------------------------------------------
Samson Oil and Gas USA, Inc. entered into an amendment to
Employment Agreement with Terence M. Barr in order to amend that
certain Amended and Restated Employment Agreement dated Jan. 1,
2018 between Mr. Barr and Samson USA.
Under the terms of the Amendment, Mr. Barr and Samson USA agreed to
extend the term of Mr. Barr's employment as president and chief
executive officer of Samson USA and Samson Oil & Gas Limited to
March 31, 2020. The remaining terms of the Employment Agreement
remain in effect, including terms relating to compensation.
About Samson Oil
Headquartered in Perth, Western Australia, Samson Oil & Gas Limited
-- http://www.samsonoilandgas.com/-- is an independent energy
company primarily engaged in the acquisition, exploration,
exploitation and development of oil and natural gas properties,
primarily with a focus in Montana and North Dakota.
Samson Oil reported a net loss of $7.15 million for the fiscal year
ended June 30, 2019, compared to a net loss of $6.04 million for
the fiscal year ended June 30, 2018. As of Sept. 30, 2019, the
Company had $38.19 million in total assets, $48.51 million in total
liabilities, and a total stockholders' deficit of $10.32 million.
Moss Adams LLP, in Denver, Colorado, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
Oct. 15, 2019, citing that the Company is in violation of its debt
covenants, incurred a net loss from operations, has cash outflows
from operations, and its current liabilities exceed its current
assets as of and for the year ended June 30, 2019. These
conditions raise substantial doubt about its ability to continue as
a going concern.
SYMBOL MINING: Second Creditors' Meeting Set for Jan. 20
--------------------------------------------------------
A second meeting of creditors in the proceedings of Symbol Mining
Limited has been set for Jan. 20, 2020, at 11:00 a.m. at Level 11,
at 12-14 The Esplanade, in Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 17, 2020, at 4:00 p.m.
Bryan Kevin Hughes and Daniel Johannes Bredenkamp of Pitcher
Partners were appointed as administrators of Symbol Mining on June
12, 2019.
WHIM CREEK: Second Creditors' Meeting Set for Jan. 17
-----------------------------------------------------
A second meeting of creditors in the proceedings of Whim Creek
Holdings Pty Ltd has been set for Jan. 17, 2020, at 10:30 a.m. at
the offices of WA Insolvency Solutions, a division of Jirsch
Sutherland, Suite 6.02, Level 6, at 109 St Georges Terrace, in
Perth, WA.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 16, 2020, at 5:00 p.m.
Jimmy Trpcevski and David Hurt of WA Insolvency were appointed as
administrators of Whim Creek on Dec. 3, 2019.
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C H I N A
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BAOSHANG BANK: Regional Lender to Buy Part of Assets & Liabilities
------------------------------------------------------------------
Wu Hongyuran and Timmy Shen at Caixin Global report that the bank
that lost billions of yuan on its investments with troubled
Baoshang Bank Co. Ltd. is now coming to its rescue, Caixin has
learned.
Hong Kong-listed Huishang Bank Corp. Ltd. has disclosed a plan to
purchase part of the assets and liabilities of a banking
institution - an institution that Caixin has learned is Baoshang
Bank, which regulators took the rare step of taking over in May.
Huishang Bank also announced that it plans to invest in a new
provincial-level commercial bank, Caixin discloses citing a filing
to the Hong Kong Stock Exchange on Jan. 7. Caixin relates that the
city commercial bank, which is based in East China's Anhui
province, said that it will make a one-off capital contribution of
no more than CNY3.6 billion (US$518.5 million), giving it a stake
up to 15% in the new bank.
This investment is also related to Baoshang Bank, sources with
knowledge of the matter told Caixin. The new commercial bank is
part of regulators' plan to defuse the troubled lender's risks.
Just like how regulators restructured scandal-plagued Anbang
Insurance Group Co. Ltd., the authorities plan to set up a new
entity - in this case a new commercial bank - to take over part of
Baoshang Bank's problematic assets, the sources said, Caixin
relays.
The assets and liabilities that Huishang Bank plans to acquire are
most likely those of Baoshang Bank's four branches, Caixin has
learned.
According to Caixin, the acquisition looks like it could provide
Huishang Bank with a backdoor to expand into other provinces. It
had 17 city-level branches nationwide as of the end of 2019, with
only one outside of Anhui.
"Large (state-owned) banks and joint-stock banks already have
branches in every province-level region," the report quotes an
executive at a joint-stock bank who was familiar with the situation
as saying, adding that only city commercial banks that don't have
that many branches outside their own regions are willing to
expand.
Huishang Bank took about CNY6 billion of losses on the interbank
investments it made with Baoshang Bank, Caixin previously
reported.
To minimize the impact of its planned investments, Huishang Bank
plans to carry out a private share placement to replenish its
capital, it said in the filing, adds Caixin.
About Baoshang Bank
Baoshang Bank Co., Ltd. provides various commercial banking
products services to individuals and corporate customers in China.
As reported in the Troubled Company Reporter-Asia Pacific on May
27, 2019, Caixin Global said China's financial regulators took
control of a small private bank as part of authorities' efforts to
break up fallen tycoon Xiao Jianhua's business empire and contain
financial risks. According to Caixin, the People's Bank of China
(PBOC) and China Banking and Insurance Regulatory Commission
(CBIRC) announced on May 24, 2019, the takeover of Baoshang Bank
Co. for a year. The rare takeover came two years after Xiao, the
billionaire founder of conglomerate Tomorrow Holding Group, went
missing from a luxury Hong Kong hotel. He is reportedly to have
been placed under graft investigation by Chinese authorities. The
regulators said the takeover reflects the "severe credit risk" the
bank poses and is intended to protect the interests of the bank's
depositors and other clients.
CBAK ENERGY: Completes $1.67 Million Note Financing with Atlas
--------------------------------------------------------------
CBAK Energy Technology, Inc. entered into a securities purchase
agreement with Atlas Sciences, LLC, pursuant to which the Company
issued a promissory note to the Lender dated as of Dec. 30, 2019.
The Note has an original principal amount of $1,670,000, bears
interest at a rate of 10% per annum and will mature 12 months after
the Closing Date, unless earlier paid or redeemed in accordance
with its terms. The Company received proceeds of $1,500,000 after
an original issue discount of $150,000 and payment of Lender's
expenses of $20,000.
The Note provides that, the Company shall have the right to prepay
the Note for an amount equal to 125% multiplied by the portion of
the Outstanding Balance (as defined in the Note) being prepaid.
Beginning on the date that is six months after the Closing Date,
the Lender has the right to redeem any amount of the Note up to
$250,000 per calendar month. Upon the occurrence of an event of
default, interest accrues at the lesser of 22% per annum or the
maximum rate permitted by applicable law and the Lender may
accelerate the Note pursuant to which the Outstanding Balance will
become immediately due and payable in cash. In addition, so long as
the Note is outstanding, in the event the common stock of the
Company is delisted from the Nasdaq Stock Market, the Outstanding
Balance will automatically be increased by 10%.
About CBAK Energy
Dalian, China-based CBAK Energy Technology, Inc., formerly China
BAK Battery, Inc. -- http://www.cbak.com.cn/-- is engaged in the
business of developing, manufacturing and selling new energy high
power lithium batteries, which are mainly used in the following
applications: electric vehicles; light electric vehicles; and
electric tools, energy storage, uninterruptible power supply, and
other high power applications.
CBAK Energy reported a net loss of $1.95 million for the year ended
Dec. 31, 2018, compared with a net loss of $21.46 million for the
year ended Dec. 31, 2017. As of Sept. 30, 2019, CBAK Energy had
$110.40 million in total assets, $98.90 million in total
liabilities, and $11.50 million in total equity.
Centurion ZD CPA & Co., in Hong Kong, China, the Company's auditor
since 2016, issued a "going concern" qualification in its report
dated April 16, 2019, on the Company's consolidated financial
statements for the year ended Dec. 31, 2018, citing that the
Company has a working capital deficiency, accumulated deficit from
recurring net losses and significant short-term debt obligations
maturing in less than one year as of Dec. 31, 2018. All these
factors raise substantial doubt about its ability to continue as a
going concern.
CBAK ENERGY: Regains Compliance with NASDAQ Bid Price Requirement
-----------------------------------------------------------------
CBAK Energy Technology, Inc. received notification from staff of
the NASDAQ Listing Qualifications on Jan. 2, 2020, that the Company
has regained compliance with the minimum bid price requirement for
continued listing set forth in NASDAQ Listing Rules 5550(a)(2). As
a result, the matter of the Company's noncompliance with the
minimum bid price requirement under NASDAQ Listing Rules, as
announced in the Company's Current Report on Form 8-K dated Sept.
26, 2019, had been closed.
About CBAK Energy
Dalian, China-based CBAK Energy Technology, Inc., formerly China
BAK Battery, Inc. -- http://www.cbak.com.cn/-- is engaged in the
business of developing, manufacturing and selling new energy high
power lithium batteries, which are mainly used in the following
applications: electric vehicles; light electric vehicles; and
electric tools, energy storage, uninterruptible power supply, and
other high power applications.
CBAK Energy reported a net loss of $1.95 million for the year ended
Dec. 31, 2018, compared with a net loss of $21.46 million for the
year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had
$110.40 million in total assets, $98.90 million in total
liabilities, and $11.50 million in total equity.
Centurion ZD CPA & Co., in Hong Kong, China, the Company's auditor
since 2016, issued a "going concern" qualification in its report
dated April 16, 2019, on the Company's consolidated financial
statements for the year ended Dec. 31, 2018, citing that the
Company has a working capital deficiency, accumulated deficit from
recurring net losses and significant short-term debt obligations
maturing in less than one year as of Dec. 31, 2018. All these
factors raise substantial doubt about its ability to continue as a
going concern.
CENTRAL CHINA REAL: Moody's Rates New USD Unsec. Bond Rating B1
----------------------------------------------------------------
Moody's Investors Service assigned a B1 senior unsecured rating to
the proposed USD bonds to be issued by Central China Real Estate
Limited (Ba3 stable).
CCRE will use the proceeds from the proposed bonds to refinance
existing medium to long-term indebtedness.
RATINGS RATIONALE
"The proposed bonds - which will be mainly used for debt
refinancing - will not have a material impact on CCRE's credit
metrics, but they will improve the company's liquidity and debt
maturity profile," says Kaven Tsang, a Moody's Senior Vice
President.
"CCRE's Ba3 corporate family rating reflects its leading market
position and long operating track record in Henan Province," adds
Tsang, who is also Moody's Lead Analyst for CCRE.
The rating also takes into consideration the company's track record
of achieving positive growth in contracted sales as well as its
adequate liquidity.
At the same time, CCRE's geographic concentration in Henan exposes
it to potential volatility in the province's economy, as well as
any changes in the local government's regulatory restrictions on
the property sector. The rating also captures execution risks and
funding needs associated with the company's fast growth plan and
sizable exposure to its joint ventures (JVs).
CCRE's contracted sales in heavy assets grew 33.8% year-on-year to
RMB71.8 billion in 2019 after growing 76.5% in 2018. This strong
sales performance will support the company's revenue growth over
the next one to two years.
Moody's expects CCRE's revenue/adjusted debt, adjusted for the
financials of its JVs, to improve to around 75%-80% over the next
12-18 months from Moody's estimate of 62% for the 12 months to June
30, 2019, mainly driven by robust revenue growth.
On the other hand, CCRE's adjusted EBIT/interest, including from
its shares in JVs, will decline to around 2.5x compared with
Moody's estimate of 2.8x during the same periods, because of an
increase in CCRE's interest expenses as a result of its higher debt
level and increased cost of funding.
Nevertheless, these projected metrics remain appropriate for CCRE's
Ba3 CFR.
On governance risks, Moody's has taken into account the company's
concentrated ownership in its controlling shareholder, Wu Po Sum,
who held a 74.84% stake in the company at June 30, 2019. This
factor is partly mitigated by (1) the company's demonstrated
discipline in land acquisitions, (2) the presence of special
committees — in particular, the audit and remuneration committees
—which are chaired by independent nonexecutive directors to
oversee corporate governance, and (3) the application of the
Listing Rules of the Hong Kong Stock Exchange and the Securities
and Futures Ordinance in Hong Kong in governing related-party
transactions.
CCRE's liquidity is adequate. It had unrestricted cash totaling
RMB19.2 billion at June 30, 2019. Adjusted cash/short-term debt
—including amounts due to and from its JVs — was at 120% at the
same date. Moody's also expects CCRE's cash holdings, plus its
operating cash flow, will be sufficient to cover its short-term
debt and committed land premiums over the next 12 months.
The B1 senior unsecured debt rating is one notch lower than the CFR
due to structural subordination risk.
This risk reflects the fact that the majority of CCRE'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.
As a result of these factors, the likely recovery rate for claims
at the holding company will be lower.
The stable outlook reflects Moody's expectation that CCRE can
maintain (1) its leadership position in Henan Province and generate
sales growth; (2) its adequate liquidity levels; and (3) a
disciplined approach to land acquisitions.
Moody's could upgrade the ratings if CCRE (1) consistently achieves
its sales targets; (2) demonstrates a track record of good
financial discipline by keeping adjusted cash/short-term debt above
2.0x, adjusted revenue/debt above 90% and adjusted EBIT/interest
above 4.0x, all on a sustained basis; with the ratios adjusted for
its JV financials; and (3) broadens its geographic coverage in a
disciplined manner and strengthens its offshore banking
relationships.
Moody's could downgrade the ratings if CCRE (1) experiences a
significant decline in sales; (2) suffers a material decline in
profit margins; (3) accelerates its expansion, such that its
liquidity position deteriorates or its debt levels rise materially,
or both; or (4) experiences more frequent construction stoppages
where the company is unable to make up for the lost time and misses
deadlines on project deliveries.
Specific indicators for a downgrade include CCRE's (1) adjusted
cash/short-term debt falling below 1.0x-1.5x, (2) adjusted
EBIT/interest staying consistently below 2.5x-3.0x, or (3) adjusted
revenue/debt falling below 70%-75% on a sustained basis. The ratios
are adjusted for its JV financials.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Central China Real Estate Limited is a leading property developer
in Henan Province, with a land bank of 37.19 million square meters
in attributable gross floor area at the end of June 2019. It was
founded in 1992 and listed on the Hong Kong Stock Exchange in June
2008.
IDEANOMICS INC: YA II PN Invests Additional $1 Million
------------------------------------------------------
Ideanomics, Inc. previously disclosed with the U.S. Securities and
Exchange Committee that it has completed the initial closing with
respect to a Securities Purchase Agreement, dated Dec. 19, 2019,
with YA II PN, Ltd., a company incorporated and existing under the
laws of the Cayman Islands, pursuant to which YA II PN agreed to
purchase from the Company up to $5,000,000 in units consisting of
secured
convertible debentures, which will be convertible into shares of
the Company's common stock at $1.50 per share, subject to
anti-dilution adjustments, and shares of the Company's Common
Stock.
On Dec. 31, 2019, the Company completed the second closing in
accordance with the Purchase Agreement pursuant to which YA II PN
invested $1,000,000 in the Company in exchange for a $1,000,000
convertible debenture and 712,329 shares of Common Stock. The
Second Closing was conditioned upon the Company filing with the
U.S. Securities and Exchange Commission a registration statement in
accordance with that certain registration rights agreement dated
Dec. 19, 2019. Such registration statement was filed with the SEC
on Dec. 31, 2019. The Note matures on Dec. 31, 2020 and accrues at
an 4% interest rate. Pursuant to the terms of the Convertible Note,
YA II PN has anti-dilution rights which adjust the $1.50 conversion
price in connection with issuances below $1.00.
About Ideanomics
Ideanomics, formerly known as Seven Stars Cloud Group, Inc., is a
global fintech advisory and Platform-as-a-Service company.
Ideanomics combines deal origination and enablement with the
application of blockchain and artificial intelligence technologies
as part of the next-generation of financial services. The company
is headquartered in New York, NY, and has offices in Beijing,
China. It also has a planned global center for technology and
innovation in West Hartford, CT, named Fintech Village.
Ideanomics reported a net loss of $28.42 million for the year ended
Dec. 31, 2018, compared to a net loss of $10.86 million for the
year ended Dec. 31, 2017. As of Sept. 30, 2019, Ideanomics had
$164.76 million in total assets, $47.26 million in total
liabilities, $1.26 million in convertible redeemable preferred
stock, and $116.24 million in total equity.
B F Borgers CPA PC, in Lakewood, Colorado, the Company's auditor
since 2018, issued a "going concern" opinion in its report dated
April 1, 2019, on the Company's consolidated financial statements
for the year ended Dec. 31, 2018, citing that the Company incurred
recurring losses from operations, has net current liabilities and
an accumulated deficit that raise substantial doubt about its
ability to continue as a going concern.
ORIGIN AGRITECH: BF Borgers Replaces BDO as Accountants
-------------------------------------------------------
The Audit Committee and the Board of Directors of Origin Agritech
Limited decided to engage BF Borgers CPA PC to replace the current
independent certified public accounts of the Company, BDO China Shu
Lun Pan Certified Public Accountants. The effective date of the end
of the BDO engagement was Jan. 2, 2020, and the commencement date
of the Borgers engagement was Jan. 3, 2020. The engagement of
Borgers was approved by the Audit Committee of the Board of
Directors and the Board of Directors.
BDO's audit reports on the Company's consolidated financial
statements as of and for the fiscal years ended Sept. 30, 2017 and
2018, did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified as to uncertainty, audit scope, or
accounting principles. The BDO's audit reports on the Company's
consolidated financial statements for fiscal years ended Sept. 30,
2017 and 2018, however, contained a modification by BDO raising
substantial doubt of the Company's ability to continue as a going
concern due to the Company having recurring losses from operations
and having a net capital deficiency.
During the Company's fiscal year ended Sept. 30, 2018, and the
subsequent annual period from Oct. 1, 2018, through Sept. 30, 2019,
and the subsequent interim period from Oct. 1, 2019 to
Jan. 2, 2020, the date of BDO's termination, (i) there were no
disagreements with BDO on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure.
During the two most recent fiscal years ended Sept. 30, 2018 and
2019, and from Oct. 1, 2019, through Jan. 3, 2020, neither the
Company nor anyone acting on its behalf consulted with Borgers
regarding either (i) the application of accounting principles to a
specific transaction, either completed or proposed; or the type of
audit opinion that might be rendered on the Company's financial
statements, and no written report was provided to the Company or
oral advice was provided that Borgers concluded was an important
factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any
matter that was the subject of either a disagreement (as defined in
Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as
described in Item 304(a)(1)(v) of Regulation S-K).
About Origin Agritech
Founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life
Science Park in Beijing, Origin Agritech Limited (NASDAQ GS: SEED)
-- http://www.originseed.com.cn/-- is an agricultural
biotechnology company, specializing in crop seed breeding and
genetic improvement, seed production, processing, distribution, and
related technical services. Origin operates production centers,
processing centers and breeding stations nationwide with sales
centers located in key crop-planting regions. Product lines are
vertically integrated for corn, rice and canola seeds.
Origin Agritech reported a net loss of RMB152.79 million for the
year ended Sept. 30, 2018, following a net loss of RMB106.26
million for the year ended Sept. 30, 2017.
BDO China Shu Lun Pan Certified Public Accountants LLP, in
Shenzhen, The People's Republic of China, the Company's auditor
since 2011, issued a "going concern" qualification in its report
dated June 3, 2019, on the Company's consolidated financial
statements for the year ended Sept. 30, 2018, citing that the
Company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability
to continue as a going concern.
REMARK HOLDINGS: Fails to Comply with Nasdaq's Market Value Rule
----------------------------------------------------------------
Remark Holdings, Inc. received written notice from the Listing
Qualifications Department of The Nasdaq Stock Market LLC on Dec.
30, 2019, notifying the Company that, for a period of 30
consecutive business days, the Company failed to maintain a minimum
Market Value of Listed Securities of $35 million required for
continued listing on the Nasdaq Capital Market pursuant to Nasdaq
Listing Rule 5550(b)(2). In accordance with Nasdaq Listing Rule
5810(c)(3)(C), the Company has 180 calendar days, or until June 29,
2020, to regain compliance. If, at any time during the 180-day
grace period, the Company's MVLS closes at $35 million or more for
a minimum of 10 consecutive business days, the Company will have
regained compliance and Nasdaq will provide the Company with
written confirmation of such.
The Company previously received written notice from Nasdaq of its
failure to comply with the $1.00 per share minimum bid price
requirement for continued listing on the Nasdaq Capital Market and
that it has until May 18, 2020 to regain compliance. If, at any
time during such grace period, the closing bid price of the
Company's common stock is at least $1.00 per share for a minimum of
10 consecutive business days, the Company will have regained
compliance and Nasdaq will provide it with written confirmation.
If the Company does not regain compliance with either of these
continued listing requirements during the applicable grace periods,
Nasdaq will give the Company written notice that its securities are
subject to delisting. In the event of such notification, the
Company may appeal Nasdaq's determination to delist its securities,
but there can be no assurance Nasdaq would grant its request for
continued listing.
The Company's common stock will continue to be listed and traded on
the Nasdaq Capital Market during the applicable grace periods,
subject to the Company's compliance with the other continued
listing requirements of the Nasdaq Capital Market.
Remark Holdings
Remark Holdings -- http://www.remarkholdings.com/-- delivers an
integrated suite of AI solutions that enable businesses and
organizations to solve problems, reduce risk and deliver positive
outcomes. The company's easy-to-install AI products are being
rolled out in a wide range of applications within the retail,
financial, public safety and workplace arenas. The Company also
owns and operates digital media properties that deliver relevant,
dynamic content and ecommerce solutions. The company is
headquartered in Las Vegas, Nevada, with additional operations in
Los Angeles, California and in Beijing, Shanghai, Chengdu and
Hangzhou, China.
Remark reported a net loss of $21.56 million for the year ended
Dec. 31, 2018, following a net loss of $106.73 million for the year
ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $21.48
million in total assets, $41.71 million in total liabilities, and a
total stockholders' deficit of $20.22 million.
Cherry Bekaert LLP, in Atlanta, Georgia, the Company's auditor
since 2011, issued a "going concern" qualification in its report
dated April 1, 2019, citing that the Company has suffered recurring
losses from operations and negative cash flows from operating
activities and has a negative working capital and a stockholders'
deficit that raise substantial doubt about its ability to continue
as a going concern.
ROAN HOLDINGS: Changes Ticker Symbol Following Change of Name
-------------------------------------------------------------
China Lending Corporation's trading symbol for ordinary shares will
be changed to "RAHGF" from "CLDOF," and its trading symbol for
warrants will be changed to "RONWF" from "CLDCF", both on the OTC
Pink Open Market and effective as of market open on Jan. 8, 2020.
The trading symbol changes follow the Company's previously
disclosed name change to Roan Holdings Group Co., Ltd. from China
Lending Corporation. The new name will also be effective on the OTC
as of market open on Jan. 8, 2020. The new Cusips of the Company's
ordinary shares and warrants are G7606D 115 and G7606D 107,
respectively.
Mr. Liu Zhigang, chief executive officer of Roan, stated, "This
name change is a company milestone that highlights an important
stage in our business upgrade plan to become an integrated non-bank
financial corporation. Such transformation underscores the
diversification of our business and expansion of our service
capabilities throughout lending, asset management, supply chain
financing, and business factoring. Additionally, this name change
also marks the first of many steps we plan to make in growing our
client base throughout the Yangtze River Delta Economic Zone via
strengthened leadership and quality, dependable services. As we
continue to solidify our position in the financial industry and
accelerate our growth, we expect to move closer towards our goal of
relisting on the Nasdaq Capital Market."
About Roan Holdings
Founded in 2009, Roan (formerly known as China Lending) is a
non-bank financial corporation and provides comprehensive financial
services to micro-, small- and medium-sized enterprises, and
individuals. Roan is engaged in asset management, supplier chain
financing, and business factoring. Roan has moved its headquarter
from Urumqi, the capital of Xinjiang Autonomous Region, to
Hangzhou, the capital of Zhejiang province.
China Lending reported a net loss US$94.13 million for the year
ended Dec. 31, 2018, compared to a net loss of US$54.78 million for
the year ended Dec. 31, 2017. As of June 30, 2019, the Company
had US$55.40 million in total assets, US$108.26 million in total
liabilities, $9.99 million in convertible redeemable Class A
preferred shares, and a total deficit of $62.85 million.
Friedman LLP, in New York, the Company's auditor since 2017, issued
a "going concern" qualification in its report dated April 26, 2019,
on the Company's consolidated financial statements for the year
ended Dec. 31, 2018, citing that the Company has incurred
significant losses and is uncertain about the collection of its
loans receivables and extension of defaulted loans. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
SEAZEN HOLDINGS: S&P Assigns 'BB' LongTerm Issuer Credit Rating
---------------------------------------------------------------
S&P Global Ratings, on Jan. 8, 2020, assigned its 'BB' long-term
issuer credit rating to Seazen Holdings, the Shanghai-listed
subsidiary of Hong Kong-listed Seazen Group (BB/Stable/--).
S&P said,"The rating and outlook on Seazen Holdings Co. Ltd.
reflect our assessment that company is the primary operating entity
in the Seazen Group Ltd. and encompasses the group's property
development and investment properties businesses. As such, we
believe the rating and outlook for Seazen Holdings and Seazen Group
will move in tandem."
Seazen Holdings' credit profile mirrors that of the Seazen Group
given their business and financial profiles are nearly identical.
Seazen Holdings' revenue and assets account for over 98% of the
group's consolidated figures, while its adjusted debt is around
90%. Outside of Seazen Holdings, Seazen Group has few stand-alone
operating activities, other than serving as the offshore financing
platform to provide additional capital access and funding
resources. Seazen Group, which owns 67.1% of Seazen Holdings, also
co-invests in some property projects as a minority stakeholder with
its subsidiary. But such arrangements are primarily set up to
facilitate financing and simplify the upstreaming of project-level
cash flows.
S&P said, "We expect the operational overlaps between Seazen
Holdings and Seazen Group to continue under the current corporate
structure. All of Seazen Group's operating assets including its
property development inventories and investment property portfolio
are consolidated into Seazen Holdings. We believe changes in the
shareholding structure or asset reorganization are unlikely in the
foreseeable future under the regulatory oversight by both the
Shanghai Stock Exchange and the Hong Kong stock exchange, where
Seazen Holdings and Seazen Group are listed, respectively.
"Seazen Holdings' business performance will directly mirror that of
the Seazen Group, in our view. We believe Seazen Holdings' property
sales will be flat in 2020, given a lack of land acquisitions in
2019 will likely cap its contracted sales growth for the year.
However, revenue recognition should gradually increase over the
next two years, and we expect strong growth from a lower base in
the company's investment properties portfolio and rental income.
"In our opinion, Seazen Holdings' need for land replenishment will
become more acute in 2020 if it wants to maintain its current
operating scale. The company has acquired only about Chinese
renminbi (RMB) 2.5 billion of new land parcels since July 2019,
compared with total land purchases of RMB73 billion in the first
half of the year. We estimate its total saleable residential gross
floor area (GFA) (including joint venture projects) will fall to
about 65 million square meters (sq m) by end-2019. This can sustain
about 2.5 years of sales at its current total sales volume, which
is relatively short in our view.
"The company's main challenge will be to balance fast-rising
construction spending against increasingly urgent land
replenishment needs at a time when external financing activities
remain hampered due to the ex-chairman being detained in July 2019.
The group's access to funding has been improving over the past
several months. We expect this continue, however it may not fully
normalize over the next 12 months.
"In our view, Seazen Holdings' rapid expansion in recent years has
been propelled by its financing capability, helped by its China
"A-share" listing status. The company has been one of the most
active issuers in the domestic debt capital markets with
significant amount of funds raised from medium-term notes,
corporate bonds, and asset-backed securities. Seazen Holdings has
also significantly ramped up its offshore U.S.-dollar denominated
bond issuance over the past two years, with an outstanding balance
now exceeding notes issued directly by Seazen Group.
"We anticipate Seazen Group will continue serving as an important
secondary financing platform and providing funding support to
Seazen Holdings. Seazen Group has a longer track record in the
offshore debt capital market, as well as established relationships
with a number of Hong Kong-based financial institutions for
obtaining offshore syndicated loans. In addition, we believe Seazen
Group will continue to actively pledge Seazen Holdings' shares to
obtain financing on a need basis. The parent group channels funding
to Seazen Holdings through an existing shareholder loan agreement
capped at RMB10 billion, as well as directly supporting specific
projects through minority interest capital or short-term payables.
"The arrest of the ex-chairman, and the ensuing financing halt,
heavily strained Seazen Group as a whole. Seazen Holdings bore the
brunt as it borrows the bulk of the group's debt, including project
development loans and debt securities. We view Seazen Holdings'
gradually increasing loan drawdowns and successful debt
transactions in November and December of 2019 as important progress
in demonstrating funding access recovery. Yet, the monthly amount
of loan drawdowns remains materially below pre-July 2019 levels at
this point.
The restoration of market confidence following last year's incident
is critical for Seazen Holdings, in our view. Debt securities
remain the largest component in the company's debt structure,
accounting for nearly 50% of its total borrowing. If investor
demand wanes, the company may need to use internal operating cash
flow for the repayment of its onshore and offshore bonds maturing
in the next 12 months. Seazen has nearly RMB13 billion in domestic
company bonds, medium-term notes and offshore senior notes maturing
in 2020, which would test its refinancing access in the debt
capital market.
"We expect funding costs on new bank borrowings to remain high over
the next 12 months. The company is allowing some cost flexibility
to strengthen existing bank relationships and establish new ones.
We believe there is still a risk that the volume of new bank loans
will be insufficient for the company's continually rising
construction spending requirements, due to its large sold but
unrecognized backlog. This could lead to greater pressure on the
company's operating cash flow, thus limiting the flexibility on
land replenishment, which could ultimately affect its scale in the
next 12-24 months, and result in a slippage in revenue
recognition.
"We estimate Seazen Holdings' leverage to be marginally lower than
that of Seazen Group's, as the parent has issued slightly more debt
on its own as a financing vehicle. But we believe this small
difference to be technical in nature and Seazen Holdings' leverage
and debt profile are closely aligned with the group's. Therefore,
we expect Seazen Holdings' leverage ratios to mildly trend up in
2020 and 2021, on a similar trend to the group."
The stable outlook mirrors that on Seazen Holdings' parent company,
Seazen Group.
S&P said, "The stable outlook on the parent reflects our
expectation that Seazen Group will maintain steady sales and its
current operating scale over the next 12-18 months. We believe the
company's financing activities will continue to normalize, while
leverage will slightly increase after improving in 2019. This
leverage trend is largely driven by healthy operating cash inflow
and a more pressing need for land replenishment and construction
expenditure that could require debt financing.
"We could downgrade Seazen Holdings if we lower the rating on
Seazen Group.
"We may lower the rating on Seazen Group if its property delivery
execution and revenue recognition are weaker than our expectation.
We may also downgrade the company if its sales start to decline
noticeably due to insufficient land banks, such that its leverage
worsens more than we expected. The debt-to-EBITDA ratios on both a
consolidated and "see-through" (after proportionally consolidating
joint ventures) basis persistently staying above 5.5x could
indicate such a scenario. We could also lower the rating if Seazen
Group's financing access fails to improve. A substantially weakened
ability to draw down on bank lending and material execution
difficulties or cost increases in onshore and offshore debt
issuance could signal such a deterioration.
"We could upgrade Seazen Holdings if we raise the rating on Seazen
Group.
"We could upgrade Seazen Group if it maintains robust sales and
operating cash flow, and sufficient land replenishment, while
improving leverage such that the consolidated and see-through
debt-to-EBITDA ratios fall toward 4x."
Seazen Holdings Co. Ltd. (formally known as Future Land Holdings)
is the dominant operating subsidiary of Seazen Group Ltd. (formally
known as Future Land Development) and has been listed on the
Shanghai Stock Exchange since 2015. The company is 67.1%-owned by
Seazen Group and holds all of the group's property development and
investment properties businesses. In 2018, the company's revenue
was RMB54.1 billion out of the group's RMB54.8 billion.
Seazen Group is a China-based property holding company that focuses
on residential and mixed-use commercial complex projects
nationally. It ranks eighth nationally in terms of 2019 contracted
sales and has a strong market position in the Yangtze River Delta.
The company has over 60 shopping malls branded Wuyue Plaza in
operation and another 60 in development as of 2019 year-end.
ZHENJIANG TRANSPORTATION: S&P Withdraws 'B+' Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings said that it has withdrawn its 'B+' long-term
issuer credit rating on Chinese local government financing vehicle,
Zhenjiang Transportation Industry Group Co. Ltd., at the issuer's
request. The outlook was negative at the time of withdrawal.
[*] CHINA: Shell Firms Buy Cash-Strapped Companies for First Time
-----------------------------------------------------------------
Reuters reports that local government shell companies in China
bought into struggling privately run listed firms for the first
time last year, veering from their typical remit of financing
infrastructure projects to pump over $2 billion into cash-strapped
businesses.
Local government financing vehicles (LGFVs) acquired controlling or
near-dominant stakes in 11 China-listed firms, showed Reuters
calculations based on stock exchange filings. They also bought into
a handful of small, capital-starved banks.
According to Reuters, the stimulus comes amid central government
calls to aid struggling private-run businesses at a time when
economic growth has slowed to its weakest pace in almost 30 years.
At the same time, the government has moved to curb LGFV activity to
stem financial risk, calling on them to operate independently and
banning local authorities from offering them implicit guarantees,
Reuters says.
Reuters relates that buying into struggling firms, however, raises
concern about the weight of LGFVs' own debt pile which S&P Global
Ratings said was as much as $6 trillion in October 2019 - a year in
which they sold a record $430 billion worth of bonds.
Of last year's 11 deals, the biggest was the $500 million Jinan
Urban Construction Group Co Ltd paid for 26% of textile
conglomerate Shandong Ruyi, which has racked up substantial debt
after an international luxury brand buying spree, Reuters
discloses.
In another deal, Harbin Economic Development & Investment Co and
another government-backed asset manager bought a 48% controlling
stake in Harbin Bank Co Ltd, loosening the lender's ties with
embattled conglomerate Tomorrow Holdings Co Ltd, the report says.
According to Reuters, LGFVs flourished in the aftermath of the 2008
global financial crisis as local authorities used them to finance
infrastructure projects while skirting central government budget
limits.
Today, some weaker LGFVs are themselves flirting with default and
not all will get a local government bailout, Ivan Chung, head of
Greater China Credit Research at Moody's said, Reuters relays.
"If a company has a relatively big debt problem or operational
issue, rescuing it today could lead to bigger woes tomorrow,"
Reuters quotes Mr. Chung as saying.
In one sign of stress, an LGFV in Inner Mongolia narrowly missed a
bond default in December, prompting calls from central bank
advisors to draw up rescue plans for LGFVs themselves, reports
Reuters.
To minimize systemic risk, the central government should gradually
let weak businesses fail - including LGFVs - rather than rescue
them indiscriminately, said economist Chi Lo at BNP Paribas Asset
Management, Reuters relates.
"I believe eventually it will allow more and bigger LGFVs to exit
the system," Reuters quotes Mr. Lo as saying.
=========
I N D I A
=========
A C POLYCOATERS: CARE Lowers Rating on INR6cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of A C
Polycoaters Private Limited (ACP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable on the basis
of best available information
Short term Bank 0.40 CARE A4; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from ACP to monitor the rating
vide e-mail communications dated December 20, 2019 and e mail
communications dated December 19, 2019, December 18, 2019, December
9, 2019 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the extant SEBI guidelines
CARE's rating on A C Polycoaters Private Limited bank facilities
will now be denoted as CARE B; Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The long term rating of the company has been revised on account of
foreign exchange fluctuation risk, exposure to raw material price
volatality and highly competitive nature of the industry.
Key Rating Weaknesses
Foreign exchange fluctuation risk: The company exports ~20% of its
products to countries like Nepal, Bangladesh, Sri Lanka etc. while
the company majorly purchases its raw material domestically. The
unhedged foreign currency exposes the company to foreign exchange
fluctuation risk as any sharp appreciation of rupee against foreign
currency may impact its cash accruals.
Exposure to raw material price volatility: ACP's main raw materials
include PVC (Poly Viny Chloride) granules, DOP (Dioctyl Phthalate)
liquid, polyester fabric etc. The prices of which are volatile as
these products are crude oil derivatives. Also, the company does
not have any long term contracts with its suppliers. Given the thin
margins the company is operating at and competitive and fragmented
nature of industry, volatility in the raw material prices can have
significant impact on the company's profitability.
Highly fragmented and competitive nature of industry: ACP operates
in the textile industry which is highly fragmented and has various
organized and unorganized players due to low capital investment
which resulted into low entry barriers. Further there is a low
product differentiation among the players. These factors resulted
into high competition among players.
A C Polycoaters Private Limited (ACP), an ISO 9001:2008 certified
private limited company was incorporated in June, 2009 and is
currently being managed by Mr. Narender Kumar Arora and Mr.
Manmohan Chawla. The company is engaged in manufacturing of coated
textile fabric at its manufacturing facility located at
Bahadurgarh, Haryana with an installed capacity of 60,000 metres of
coated textile fabric per annum as on September 30, 2018. Besides
ACP, the promoters are also associated with group concern namely,
Arora Vinyl Private Limited (AVP) is a private limited company,
incorporated in 1996 and is engaged in manufacturing of coated
textile fabric and Rajdhani Rexin Store (RRS) is a proprietorship
firm established in 1980 and is engaged in manufacturing of coated
textile fabric.
AHAN ADD: CARE Reaffirms 'B+' Rating on INR16.87cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Ahan
Add Chem Private Limited (AACPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 16.87 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of AACPL continues to
remain constrained on account of its nascent scale of operation
along with net loss reported in 11MFY19 (Audited refers to period
May 01, 2018 to March 31, 2019), highly leveraged capital structure
and weak debt coverage indicators and stretched liquidity. The
rating further continues to remain constrained due to its presence
in competitive chemical industry and susceptibility of profit
margins to volatility in raw material prices.
The rating, however, continues to draw strength from experienced
promoters.
Rating Sensitivities:
Positive Factors
* Increasing revenue by more than 10-15 folds with improvement in
profitability marked by PBILDT margin in range of 6-8%
* Improvement in capital structure marked by gearing ratio in range
of 1 to 1.50 times
* Improvement in debt coverage parameters marked by interest
coverage ratio above 3 times with total debt to GCA ratio of below
10 times
Negative factors
* Blockage of funds in inventory and debtors resulting in to
elongation in working capital cycle by 30 days putting pressure
on liquidity
* Any adverse change in government policies related to chemical
industry
* Significant increase in prices of key raw chemicals by more than
10% resulting into pressure on the operating margins of the
company
* Withdrawal of support extended by promoters in the form of
unsecured loans
Detailed description of the key rating drivers
Key Rating Weaknesses
Nascent scale of operations with net loss
AACPL is engaged into the business of manufacturing of Intermediate
Chemicals. As AACPL has commenced its operation from May 2018,
hence FY20 will be the second major year of operation. During
11MFY19 (Audited) AACPL has reported TOI of INR0.20 crore mainly
due to lower sales realization owing to low demand. Further, AACPL
has reported operating loss of INR3 crore owing high raw material
consumption cost being first year of operations. Consequently, with
higher depreciation and interest and finance charges AACPL has
reported net loss of INR5.48 crore during the year. Till December
23, 2019 in current year (Prov.), AACPL has achieved turnover of
INR 1.50 Crore.
Highly leveraged capital structure and weak debt coverage
indicators
As on March 31, 2019, capital structure was highly leveraged owing
to negative networth base as a result of accumulation of losses
during the year. On the back of reporting operating and cash loss
during the year, debt coverage indicators also remained weak.
However, promoters are regularly infusing unsecured loan to meet
its debt repayment obligation as well as working capital
requirement. As AACPL has infused additional unsecured loan of
INR6.44 crore in FY19 and INR 7.70 crore in 8MFY20(Prov) to meet
interest payment, principal debt repayment obligations and working
capital requirements.
Presence in competitive chemical industry
The Indian Chemical Industry is characterized by high fragmentation
and competitive intensity, resulting from low capital intensity and
technical complexity along with lower product differentiation.
However, AACPL's promoters have developed good relationship in the
market through their previous association in other
companies/firms.
Susceptibility of profit margins to volatility in raw material
prices
AACPL's main raw materials include Bromination, Nitration,
Hyderogenation, Friedel Craft reactions and Organophosphinates
which account for nearly majority of its total cost of raw material
consumption and the same will be procured from the domestic market.
The prices of raw materials are market driven owing to which
operating margin remains volatile subject to market prices. Any
adverse fluctuation in the material prices is likely to impact the
profit margins of AACPL.
Key Rating Strengths
Experienced promoters
Mr. Rakesh Saraiya, promoter of the proposed project, has done B.E.
Chemical and holds experience of more than 20 years in the chemical
industry by serving as top management in few companies. whereas
another promoter, Mr. Kamlesh Shah, he has done chemical
engineering from USA, has successfully managed its family company
named "BMS Chemie", holds very good experience in import-export
activities and also served at various in Exim Club (An association
of Exporters and Importers in Gujarat).
Liquidity:
Stretched liquidity
Liquidity is marked by reporting cash loss against its high
repayment obligations, highly utilized bank limits and modest cash
balance. Liquidity remained stretched marked by reporting cash
negative net cash flow from operations of INR 3.70 crore during
FY19. Further, company has reported cash loss of INR4.51 crore
against rupee term loan obligation of INR1.40 crore of FY20.
However, directors have supported in form of additional unsecured
loans of INR6.44 crore in FY19 and INR7.70 crore in current year
till December 27, 2019 in order to meet the working capital
requirements as well as debt obligations. As on March 31, 2019,
cash and bank balance was low at INR 0.02 crore. Further, working
capital utilization remained at 45% for past twelve months ended
November 2019.
Vadodara (Gujarat) based Ahan Add Chem Private Limited was
incorporated in 2010 by Mr. Rakesh Saraiya, Mr Kamlesh Shah and
Mrs. Malini Sanghvi. The company was incorporated to undertake
manufacturing of organic chemicals which are used in
Pharmaceuticals, Chemical and Agrochemical industries. The company
had completed a Greenfield project for manufacturing of organic
chemicals and commenced its commercial operation from May 2018
onwards. AACPL is operating from its sole manufacturing unit
located at Padra, Dist. Vadodara, Gujarat having installed capacity
of plant is 828 MT per annum as on March 31, 2019 for manufacturing
of organic chemicals.
AISHWARYA CONSTRUCTION: CARE Assigns B+ Rating to INR49.5cr Loan
----------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Aishwarya Construction (AC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 49.50 CARE B+; Stable Assigned
Detailed Rationale & Key rating drivers
The rating assigned to the bank facilities of AC is constrained by
nascent stage of operations, concentrated customer profile, highly
competitive industry due to predominant operations in fragmented
and tender driven nature of business and partnership nature of
constitution restricting financial flexibility. The above
constraints outweigh the comfort derived from prior experience of
promoters in the EPC segment, healthy order book position and
achievement of financial closure leading to adequacy of resources
available for execution of projects.
Rating Sensitivities
Positive factors
* Execution of order book position at hand in timely manner and
timely receipts from customer to execute pending orders.
* Stabilization and improvement in scale of operations and
profitability
* Maintaining capital structure marked by overall gearing less than
1x
Negative factors
* Any delay in execution of orders and/or delay in customer
receipts leading lower revenue generated than at envisaged levels
* Deterioration in the liquidity position of the firm
Detailed description of the key rating drivers
Key Rating Weaknesses
Nascent stage of operations: The operations of AC commenced in
April 2019 and the firm has not booked any revenue in the last
eight months ended November 30, 2019. However, the firm has an
outstanding contract order of INR414.73 crore to be executed by
December 2020 providing revenue visibility over medium term.
Further, nascent stage of operations coupled with low net worth
base as on March 31, 2019 restricts the financial flexibility of
the firm during stress.
Highly competitive industry because of the fragmented and
tender-driven nature of business: The engineering procurement and
construction (EPC) industry is fragmented in nature with a large
number of small and medium scale players present at regional level.
This coupled with the tender-driven nature of contracts poses huge
competition and puts pressure on the profit margins of the players.
AC is a regional player with civil and structural works contracts
primarily concentrated towards single customer. Furthermore, AC
faces fierce competition from other companies for tenders of
contracts.
Partnership nature of constitution: Being a partnership firm, AC is
exposed to the risk of withdrawal of capital by partners due to
personal exigencies, dissolution of firm due to retirement of
partners and restricted financial flexibility due to inability to
explore cheaper sources of finance leading to limited growth
potential. This also limits the firm's ability to meet any
financial exigencies.
Key Rating Strengths
Experience of promoters in EPC segment: The partner of the firm Mr.
Suryabhan K. Bhosale has around four decades of experience in the
EPC segment, including construction of roads through his
partnership firm "Renuka Constructions" and various other entities.
Further, the other partner Mrs. Sangeeta Mangrule has more than two
decades of experience of investing and handling real estate, EPC
projects through "SR Engineers" and is also trustee at "Shreeyash
Pratishthan" an educational trust which runs school and engineering
college at Aurangabad. Extensive experience of the promoters and
management would help AC in bidding for new tenders, strategic
planning and execution of the projects.
Healthy order book position albeit concentrated customer base: The
firm presently has an outstanding order book position of INR414.73
crore as on November 30, 2019 to be executed by December 2020,
providing revenue visibility in the medium term. Despite healthy
order book status, the customer base is concentrated with orders
emanating from single customer, OSD-BEED-LATUR AU-1 Stateways
Private Limited (OBLSPL) (SPV of Kalyan Toll Infrastructure
Limited). The same may adversely impact the financial risk profile
of AC in case of delay in receipts.
Achievement of financial closure leading to adequacy of resources
available for execution of projects: AC is project stage entity
with less than a year of operations and is majorly dependent on
capital infusion by promoters and working capital borrowing from
the banks. Further, AC has achieved financial closure specifically
for execution of the projects at hand leading to adequate
availability of resources for execution of projects. However,
timely receipt of payments from the customers is also crucial for
execution of projects.
Liquidity: Stretched
Liquidity is stretched characterized by highly utilized bank limits
as on November 30, 2019 although negligible debt repayment
obligations. Further, AC is highly dependent on timely receipts
from customer for execution of the orders in hand.
AC was established in November 2018 and is promoted by Mr.
Suryabhan K. Bhosale and Mrs. Sangeeta Mangrule. The firm is
engaged in the business of execution of Engineering Procurement and
Construction (EPC) projects in the infrastructure segment primarily
in construction, up gradation, repair and maintenance of roads.
AMT BUILDERS: CRISIL Assigns B+ Rating to INR1.25cr Loan
--------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of AMT Builders Private Limited (ABPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund-
Based Bank Limits .75 CRISIL B+/Stable (Assigned)
Bank Guarantee 4.00 CRISIL A4 (Assigned)
Overdraft 1.25 CRISIL B+/Stable (Assigned)
The ratings reflect the small scale of operations in a highly
fragmented industry, large working capital requirements and
below-average financial risk profile. These rating weaknesses are
partially offset by the promoters' extensive experience in the
civil construction industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations in a highly fragmented industry: With
an operating income of INR12 crore in fiscal 2019, scale of
operations is modest. Besides, the civil construction industry is
characterized by low entry barriers leading to high fragmentation.
Tender-based business and intense competition limit the scalability
and operating margin. Further, an outstanding order book of around
INR40 crore as of December 2019, which to be executed over the next
1.5 years, provides moderate revenue visibility.
* Large working capital requirements: Company has working capital
intensive nature of operations, reflected in gross current assets
of 140 days, driven by inventory and receivables of 53 days and 32
days, respectively as on March 31, 2019. Working capital
requirements are funded by bank lines and creditors which stood at
267 days as on March 31, 2019.
* Below-average financial risk profile: Owing to modest scale of
operations, company has a small networth of INR2.51 crore as on
March 31, 2019. Owing to low debt level, gearing is low at 0.78
time as on March 31, 2019. However, high reliance on creditors has
resulted in high total outside liabilities to tangible networth
(TOLTNW) ratio of 3.37 times as on March 31, 2019. Debt-protection
metrics are comfortable: interest coverage and net cash accruals to
adjusted debt ratio of 4.61 times and 0.39 time, respectively as on
March 31, 2019.
Strength:
* Extensive experience of promoters in the civil construction
industry: Promoters have been engaged in the civil construction
industry for over 3 decades. Over their tenure, they have gained a
strong understanding of local market dynamics and have developed
healthy relations with customers and suppliers.
Liquidity Poor
Company has poor liquidity, with moderately high utilization in
bank lines, averaging at 88% over the 10 months ended November
2019. Net cash accruals are expected at INR1.3-1.7 crore per
fiscal, which are adequate to cover minimal debt repayments of
around INR0.03 crore per fiscal, over the medium term. Company has
low unencumbered cash & bank balance of INR0.11 crore; while
encumbered cash was INR2.14 crore as on March 31, 2019. Current
ratio was low at 0.59 time as on March 31, 2019 owing to high
reliance on creditors.
Outlook: Stable
CRISIL believes ABPL will continue to benefit from the extensive
industry experience of its promoters.
Rating Sensitivity Factors:
Upward Factors:
* Significant increase in the scale of operations along with
sustenance of operating margin at 9-10%
* Lower reliance on creditors leading to improvement in
TOLTNW ratio
Downward Factors:
* Delay in execution of orders resulting in decline in revenue
* Decline in operating margin below 6%
* Further stretch in working capital cycle leading to higher
reliance on creditors or higher contraction of debt thus
leading to further deterioration of TOLTNW ratio
ABPL, incorporated on 05th August 2013, is engaged in civil
construction work mainly buildings, roads, sewer, overhead tanks,
pipelines, etc. for government authorities in Uttar Pradesh and
Haryana, by biding through tenders. Company is promoted by Mohd.
Taufeeq, Ms. Nasheem Jahan, Mr. Wamiq Jamal, and Mr. Wasiq Jamal.
ASHIYANA CONSTRUCTIONS: CRISIL Revokes Suspension on Debt Ratings
-----------------------------------------------------------------
CRISIL has revoked the suspension of its ratings on the bank
facilities of Ashiyana Constructions (AC) and has assigned its
'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of AC.
CRISIL had, on April 14, 2016, suspended the ratings as AC had not
provided the necessary information for a rating review. It has now
shared the requisite information, enabling CRISIL to assign
ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3 CRISIL A4 (Assigned;
Suspension Revoked)
Cash Credit 2 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Bank 3.5 CRISIL A4 (Assigned;
Guarantee Suspension Revoked)
Proposed Cash 1.5 CRISIL B+/Stable (Assigned;
Credit Limit Suspension Revoked)
The ratings reflect the modest scale of operations, susceptibility
to tender-based nature of business, leveraged capital structure and
working capital intensive operations. These rating weaknesses are
partially offset by the extensive experience of the partners in the
construction industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations and susceptibility to risks inherent
in tender-based business: Scale of operations remains modest, as
indicated by topline of INR5.8 crore in fiscal 2019. Revenue and
profitability depend on the firm's ability to win tenders. Intense
competition also forces players to bid aggressively, which may
further impact profitability.
* Leveraged capital structure: Financial risk profile remains
constrained by modest networth and the leveraged capital structure.
Networth and gearing stood at INR1.4 crore and about 2.6 times,
respectively, as on March 31, 2019. Debt protection metrics were
also moderate, as indicated by interest coverage and net cash
accrual to total debt ratios of 2.1 times and 0.08 time,
respectively, for fiscal 2019.
* Working capital intensive operations: Gross current assets were
high at 376 days as on March 31, 2019, led by large
work-in-progress inventory (90 days as on same date), and security
deposits and retention money.
Strength:
* Extensive experience of the partners: The two-decade-long
experience of the partners, their strong understanding of local
market dynamics, and established relationships with suppliers and
customers, will continue to support the business risk profile.
Liquidity Stretched
Liquidity is stretched marked by small cash accrual of over INR60
lakh expected in medium term, against no maturing debt. Fund-based
bank limit was moderately utilised, at 87% on an average, over the
six months through November 2019. Current ratio was moderate at 1.5
times as on March 31, 2019. Unsecured loans extended by partners
(INR1.14 crore as on March 31, 2019), will continue to support
liquidity.
Outlook: Stable
CRISIL believe AC will continue to benefit from the extensive
experience of its partners, and established relationships with
clients.
Rating sensitivity factors:
Upward factors
* Stronger business risk profile, with sustained growth in
revenue and stable operating margin, leading to sizeable cash
accrual
* Improvement in financial risk profile, with gearing operating
below 1.5 times
Downward factors
* Weakening of operating performance, leading to cash accrual
of less than INR40 lakh
* Constrained financial risk profile, especially liquidity,
due to large, debt-funded capital expenditure or elongated
working capital cycle.
AC was formed as a partnership firm of Mr Abdul Jabbar, Mr Zulfekar
Ali and Mr Saif Ul Jabbar in 1995. The Ranchi-based firm undertakes
civil construction works for government bodies such as Jharkhand
State Building Construction Corporation Ltd (JSBCCL), and the
Central Public Works Department (CPWD).
ASM TRAXIM: CARE Lowers Rating on INR45cr LT Loan to B+
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of ASM
Traxim Private Limited (ATPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 45.00 CARE B+; Stable Revised from
Facilities CARE BB; Stable
Short term Bank 5.00 CARE A4 Reaffirmed
Facilities
Detailed Rationale & Key Rating Drivers
The revision in the long-term ratings assigned to the bank
facilities of ATPL takes into account stretched liquidity position,
continued weak financial performance in FY19 (refers to the period
from April 1 to March 31) with low profitability margins and weak
debt service coverage indicators. The ratings also factor in the
working capital intensive nature of operations and highly
competitive and fragmented nature of the industry with low entry
barriers. The rating however continues to derive strength from the
experience of the promoters with their established track record.
Rating Sensitivities
Positive Factors
* Sustainability of total operating income at a level of INR700
crore and improvement in gross cash accruals of INR2 Crore on a
sustainable basis and improved liquidity.
Negative Factors
* Weak operational performance with decline in total operating
income by more than 30% leading to lower cash accruals on a
sustainable basis.
* Further deterioration in liquidity position leading to
overdrawals in working capital facilities
Detailed description of the key rating drivers
Key Rating Weaknesses
Stretched Liquidity
Inherently low profitability margin and cash flow mismatches have
stretched the liquidity of the company. The average fund based
working capital limit utilization was 99.88% for the trailing 12
months ending November, 2019. There have been occasional instances
of overdrawals in the cash credit account which were regularized
within a period of 2-3 weeks.
Dependence on external borrowing to fund inventory
Almond trading requires high inventory holding as almonds being
seasonal commodity is only available for 2-3 months (July-August)
of the year as it takes 7-8 months to grow. Traders have to
maintain adequate stock during the entire year thereby resulting in
high working capital requirements. ATPL's average inventory holding
period remained high at 67 days as on March 31, 2019 against 59
days as on March 31, 2018, resulting in an operating cycle at 64
days as on March 31, 2019 (PY: 55 days). However, the company
provides minimal credit period to its customers and therefore has a
relatively short collection period which stood at 3 days as on
March 31, 2019 (PY: 3 days).
Highly competitive and fragmented nature of industry
ASM is involved in trading of almonds and spices. The commodity
nature of traded goods makes the industry highly fragmented with
numerous players in the market. There are several small operators
which do not do end-to end processing and merely procure and sell
to large traders. Presence of small players makes the business
environment highly competitive.
Weak Financial Risk Profile
The company has moderate financial risk profile marked by low
profitability margins and moderate debt coverage indicators. During
FY19, the total operating income declined by 21.11% over previous
year to INR 484.00 Cr in line with company's decision to
discontinue low profit yielding agro commodities leading to
improved PBILDT margin of 1.75% (PY: 1.71%). However, the company's
PAT margin continues to remain low owing to higher dependence on
working capital borrowing, trading nature of business operations
coupled with intense market competition given the highly fragmented
nature of industry with limited entry barriers. The overall gearing
ratio improved marginally to 2.36x as on March 31, 2019 (PY: 2.81x)
primarily on account of lower working capital borrowing as on
balance sheet date. The debt profile of the company as on March 31,
2019 comprise of working capital borrowings (79.12% of total debt)
and remaining via unsecured loans from promoters (20.88% of total
debt).
Key Rating Strengths
Experienced promoters
ASM Traxim Pvt. Ltd. (ATPL) is closely held Private Limited
Company. Mr. Himanshu Garg and Mr. Vipul Aggarwal look after the
day-to-day affairs of the company. Though the company has been
engaged in trading business for about 12 years, the promoters have
been in the similar line of business for over 18 years and have
established long-term relationships with its customers and
suppliers.
Liquidity: Stretched - Stretched liquidity is marked by nearly full
fund based working capital utilization at all times. The operating
cycle of ATPL was high at 64 days in FY19 (55 days in FY18) which
was largely on account of high inventory holding period. Current
ratio of the company improved moderately to 1.64x as on March 31,
2019 (1.56x as on March 31, 2018). The company had free cash and
bank balance of INR 10.38 Cr as on March 31, 2019, however the
temporary cash flow mismatches during the year have led to
occasional overdrawals in the Cash Credit account.
ASM Traxim Pvt. Ltd. (ATPL), incorporated in 2005, is a closely
held company engaged in trading of almonds, poppy seeds and spices
like clove, cinnamon, cumin etc. The major item traded by the
company is almond, which contributes more than 85% of the total
sales. The company sources almonds domestically and sells in the
domestic market to wholesalers through brokers. The company also
sources a very small percentage of almonds through imports from
USA.
AVINASH ASSOCIATES: CARE Cuts Rating on INR6.50cr LT loan to B
--------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Avinash Associates (AVA), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.50 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from AVA to monitor the rating
vide e-mail communications dated December 20, 2019 and e mail
communications dated December 19, 2019, December 18, 2019, December
9, 2019 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. The rating on Avinash Associates bank
facilities will now be denoted as CARE B; Stable; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The long term rating of the company has been revised on account of
proprietorship nature of constitution and fragmented and
unorganized nature of textile business.
Key Rating Weaknesses
Constitution of the entity being a proprietorship firm: AVA's
constitution as a proprietorship firm has the inherent risk of
possibility of withdrawal of the proprietor's capital at the time
of personal contingency and firm being dissolved upon the
death/retirement/insolvency of proprietor.
Fragmented and unorganized nature of the textile business: Textile
industry is characterized by highly fragmented and unorganized
nature of industry due to numerous small players with high
concentration in the northern part of India. Low entry barriers and
low investment requirement makes the industry highly lucrative and
thus competitive. Smaller companies in general are more vulnerable
to intense competition due to their limited pricing flexibility,
which constrains their profitability as compared to larger
companies who have better efficiencies and pricing power
considering their scale of operations.
Avinash Associates (AVA) was established in 2005 as a
proprietorship firm by Mr. Avinash Goyal. The firm is an authorized
dealer of Raymond Limited for men's shirt and suit fabric and the
firm is also engaged in trading of blankets (mink, polar and fleece
blankets) at its facility located in Rohtak, Haryana. Apart from
AVA, the proprietor is associated with four other group concerns
i.e. Ramayni Gurgaon, established in 2013 as a proprietorship firm.
Ramayni Rewari, established in 2015 as a proprietorship firm.
Ramayni Hissar, established in 2017 as a proprietorship firm and
Ramesh and Company, established in 1988 as a partnership firm. All
these group entities are engaged in trading of blankets and
fabric.
CLS ENTERPRISES: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: CLS Enterprises Private Limited
1st Floor, Rishabh Corner
Office No. 120, Plot No. 93
Sector-8, Gandhidham
Gujarat 370201
Insolvency Commencement Date: December 31, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: June 28, 2020
Insolvency professional: Mr. Keyur Jagdishbhai Shah
Interim Resolution
Professional: Mr. Keyur Jagdishbhai Shah
408, Chitrarath Complex
Opp. Municipal Market
Off C.G. Road
Behind Hotel President
Navrangpura, Ahmedabad 380009
Gujarat, India
E-mail: ip.keyurjshah@gmail.com
cs.keyurshah@gmail.com
Last date for
submission of claims: January 18, 2020
DOVIAZ RETAIL: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Doviaz Retail Limited
2, Transport Depot Road
Kolkata 700088
Insolvency Commencement Date: December 11, 2019
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: June 8, 2020
(180 days from commencement)
Insolvency professional: IP Koushik Dutta
Interim Resolution
Professional: IP Koushik Dutta
1st Floor 12, Lenin Sarani
Kolkata 700013
E-mail: rpkd2019@gmail.com
doviazcirp@gmail.com
Last date for
submission of claims: January 10, 2020
G K STEEL AND ALLIED: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: G K Steel and Allied Industries Limited
1077, Avinashi Road
Coimbatore 641018
Tamil Nadu
Insolvency Commencement Date: December 20, 2019
Court: National Company Law Tribunal, Chennai Bench
Estimated date of closure of
insolvency resolution process: June 17, 2020
(180 days from commencement)
Insolvency professional: J. Karthiga
Interim Resolution
Professional: J. Karthiga
Sri Nivas, New No. 1, Old No. 1052
41st Street, Korattur
Chennai 600080
E-mail: karthigasri@hotmail.com
Last date for
submission of claims: January 7, 2020
GAURINANDAN FASHION: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: Gaurinandan Fashion Private Limited
4th Floor, Shop No. 6405
Raghukul Market, Wing-D
Ring Road, Anjana Surat
Gj 395002
IN
Insolvency Commencement Date: January 1, 2020
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: June 29, 2020
(180 days from commencement)
Insolvency professional: Mr. Bhupendra Singh Narayan Singh Rajput
Interim Resolution
Professional: Mr. Bhupendra Singh Narayan Singh Rajput
A-309, ATMA House
Opp. Old RBI
Ashram Road
Ahmedabad 380009
E-mail: cabsrajput309@gmail.com
Last date for
submission of claims: January 17, 2020
INCOM WIRES: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: Incom Wires and Cables Limited
C-46, Mayapuri Industrial Area
Phase-II, New Delhi
DL 110064
India
Insolvency Commencement Date: January 3, 2020
Court: National Company Law Tribunal, Principal Bench, Delhi
Estimated date of closure of
insolvency resolution process: June 30, 2020
Insolvency professional: Rakesh Jindal
Interim Resolution
Professional: Rakesh Jindal
II E-64, Nehru Nagar
Ghaziabad 201001
E-mail: ca.rakeshjindal@gmail.com
- and -
RR Insolvency Professionals LLP
C-51, RDC
Opp. Dr. Lal Pathlabs
Raj Nagar, Ghazibad 201002
E-mail: rp.incomwires@rrinsolvency.com
Last date for
submission of claims: January 17, 2020
JANTA SHIKSHAN: CRISIL Assigns B+ Rating to INR1cr Proposed Loan
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of Janta Shikshan Sansthan (JSS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund- 1 CRISIL B+/Stable (Assigned)
Based Bank
Limits
The rating reflects the trust's small scale of operations and weak
financial risk profile. These weaknesses are partially offset by
extensive experience of the trustees, in running an old-age home
and providing manpower to different agencies of UP government.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: Revenue stood at INR3.18 crore
in fiscal 2019, and may remain low over the medium term,
constrained by the small scale of operations.
* Weak financial risk profile: Financial risk profile was
marked by a very small networth of INR14 lakh as on
March 31, 2019, however against no debt.
Strength
* Longstanding presence of the trust: The trust has been
running an old-age home in Ballia, UP with the capacity
of 150 people. It also provides manpower to different
agencies of UP government. The trust also operates a
degree college in Ballia, UP.
Liquidity Poor
Cash accrual of INR3 lakh per fiscal, though low, will provide a
liquidity buffer, in the absence of any maturing debt over the
medium term. Current ratio was modest at 1.39 times as on
March 31, 2019. The board members have provided donations to
support various activities undertaken by the society.
Outlook: Stable
CRISIL believes that JSS will continue to benefit from the
extensive experience of its trustees, and established relationships
with the government authorities.
Rating sensitivity factors
Upward Factors
* Sustained and significant growth in revenue, and stable
operating margin of over 2%
* Substantial increase in networth, strengthening financial
risk profile.
Downward Factors
* Any major debt-funded capital expenditure, causing total
outside liabilities to tangible networth ratio (TOLTNW)
to exceed 3 times
* Weakening of operating efficiency, either due to decline
in margin or stretch in working capital cycle.
JSS was registered as society in 1993, under Societies Registration
Act, Uttar Pradesh. It is engaged in providing man power supply
services and rural employment training as well as education such as
handicrafts training camps. Mr. Sanjay Kumar Singh is current
chairman of the society.
KAAISER OILS: Insolvency Resolution Process Case Summary
--------------------------------------------------------
Debtor: Kaaiser Oils Private Limited
P-79, Nanigopal Roychowdhury Avenue
(C.I.T. Road), 2nd Floor
Kolkata 700014
Insolvency Commencement Date: December 13, 2019
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: June 10, 2020
(180 days from commencement)
Insolvency professional: Saurabh Basu
Interim Resolution
Professional: Saurabh Basu
Alapan Appartment, 3rd Floor
10/6/2 Raja Rammohan Roy Road
Kolkata 700008
E-mail: pcs.saurabhbasu@gmail.com
kaaaiser2019@gmail.com
Last date for
submission of claims: January 8, 2020
KARTHIK ALLOYS: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Karthik Alloys Limited
L6L7 Cuncolim Industrial Estate
Cuncolim Salcette
Goa 403703
Insolvency Commencement Date: December 17, 2019
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: June 13, 2020
Insolvency professional: Anneel Saraogi
Interim Resolution
Professional: Anneel Saraogi
P1, Hyde Lane
7th Floor, Suite-7B
Kolkata 700015
E-mail: anneelsaraogi@gmail.com
cirpkarthikalloys@gmail.com
Last date for
submission of claims: January 17, 2020
KPR CHEMICALS: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: M/s KPR Chemicals Limited
S.No. 22/3 & 31/1
Biccavolu East Godavari
Andhra Pradesh 533343
Insolvency Commencement Date: December 13, 2019
Court: National Company Law Tribunal, Delhi NCR Bench
Estimated date of closure of
insolvency resolution process: June 10, 2020
(180 days from commencement)
Insolvency professional: Devvart Rana
Interim Resolution
Professional: Devvart Rana
Apt No. 4 and 5, Swastik Apts
1056, Ward no. 8, Mehrauli
New Delhi 110030
E-mail: devvartrana@gmail.com
- and -
Unit no. 007, Narmada Towers N-06
Sector D-06, Vasant Kunj
New Delhi 110070
E-mail: ipkprcl@gmail.com
Last date for
submission of claims: January 2, 2020
KRISH AGRO: CARE Lowers Rating on INR12cr LT Loan to 'D'
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Krish Agro Farms Private Limited (KAFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 12.00 CARE D Revised from CARE BB-;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of KAFPL
takes into account the delay in debt servicing of the company.
Rating Sensitivities
Positive Factors
* Track record of timely servicing of debt obligations for at
least 90 days.
* Sustained improvement in financial risk profile, especially
liquidity.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in debt servicing: There are recent instances of delay in
debt servicing of the company due to mismatch in cash flow.
Liquidity Indicator
Liquidity: Poor - Poor liquidity as reflected by its highly
utilised bank limits. This could constrain the ability of the
company to repay its debt obligations on a timely basis.
Kolkata-based Krish Agro Farms Private Limited (KAPL) was
incorporated in August 2013 for setting up a rice milling and
processing plant. The company was promoted by Mr Chandra Jeet Shaw,
Mrs Chitra Rekha Shaw and Mr Ravi Jaiswal. The company is into
milling and processing of non-basmati rice and it has started
commercial operations from November 27, 2015 onwards. The milling
unit of KAPL is located at Hooghly, West Bengal with processing
capacity of 100,000 Metric Ton Per Annum (MTPA). KAPL procures
paddy from farmers & local agents and sells its products through
the wholesalers and distributors across West Bengal.
KUNAL LOHACHEM: CARE Reaffirms 'B' Rating on INR6cr Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Kunal
Lohachem Private Limited (KLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term bank
Facilities 6.00 CARE B; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of KLPL continue to
remain constrained by its small scale of operation, moderate
financial performance in FY19 (refers to the period April 1 to
March 31), leveraged capital structure with weak debt protection
metrics and presence in the highly competitive and fragmented
industry. The rating, however, derives strength from KLPL's
experienced promoters.
Rating Sensitivities
Negative Factors
* Maintaining Overall gearing above 3.25x on a sustained basis.
Positive Factors
* PBILDT margin exceeding beyond 3% on a sustained basis.
* Total debt to gross cash accruals reducing below 12x.
* Maintaining operating cycle below 60 days on a sustained
basis.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation: KLPL is a small player in steel wire
trading segment, having an annual turnover of INR41.98 crore &
total capital employed of INR28.41 crore in FY19. The small size
deprives the company of benefits of economies of scale and
restricts the financial flexibility of the company in times of
stress.
Moderate financial performance in FY19: KLPL's total operating
income fell by about 10.12% y-o-y to INR41.98 crore in FY19 in view
of decline in trading opportunities.
Given the trading nature of business and intense competition, KLPL
continues to operate on a thin margin. However, the PBILDT margin
improved from 2.17% in FY18 to 2.54% in FY19 due to decrease in
employee expenses. The interest coverage ratio was stable at 1.13x
in FY19 vis-à-vis 1.08x in FY18. Furthermore, KLPL generated cash
accruals of INR0.09 crore in FY19 (Rs. 0.07 crore in FY18).
Leveraged capital structure and weak debt protection metrics:
Overall gearing of the company deteriorated from 6.00x as on March
31, 2018 to 7.03x as on March 31, 2019 due to infusion of funds of
INR4.25 crore in the form of preference share capital, resulting an
increase in total debt. Total debt/GCA still stood on an
astronomically higher level at 269.47x in FY19. Presence in highly
competitive and fragmented industry The steel wire trading industry
is highly fragmented and competitive marked by presence of numerous
players across India. Hence the players in the industry lacks
pricing power and exposed to competition induced pressures on
profitability.
Key Rating Strengths
Experienced promoters and long track record of operation: KLPL was
promoted by Mr. Praveen Kumar Jain, having around a decade of
experience in trading of steel products and is involved in the
strategic planning and running the day to day operations of the
company. Furthermore, KLPL commenced operations in May 1997 and
accordingly has track record of around two decades.
Liquidity: Stretched
The liquidity profile of KLPL continued to remain stretched with
utilisation to the tune of 80%-85% of its cash credit limits during
the last 12 months ended on November, 2019. The working capital
cycle of the company improved from 66 days in FY18 to 8 days in
FY19 due to increase in its average creditors period from 63 days
in FY18 to 144 days in FY19. The average inventory period decreased
from 17 days in FY18 to 9 days in FY19 whereas the average
collection period increased from 111 days in FY18 to 144 days in
FY19. The company reported free cash & bank balance of INR 0.22
crore as on March 31, 2019. The company reported cash profits of
INR0.09 crore in FY19 against nil repayment obligations.
Kunal Lohachem Pvt. Ltd. (KLPL) incorporated in May, 1997 was
promoted by Mr. Praveen Kumar Jain of Raipur. KLPL is engaged in
the trading of Hard Bright (H.B) wire, Galvanised Iron (G.I) wire
and MS Round bar, Barbed wire and Wire Nails. Apart from this, the
company is also engaged in job work for converting H.B wire into
G.I wires. The products sold by KLPL are largely used in industries
like power, construction, automobile, engineering, etc. The company
mainly sells its products to dealers and retailers located in
Chhattisgarh. The day-to-day affairs of the company are looked
after by Mr. Praveen Kumar Jain, Director.
MAA SARADESWARI: CRISIL Lowers Rating on INR6.2cr Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Maa Saradeswari Heemghar Private Limited (MSHPL) to 'CRISIL D'
from 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.2 CRISIL D (Downgraded from
'CRISIL B/Stable')
Overdraft .7 CRISIL D (Downgraded from
'CRISIL B/Stable')
Proposed Long Term 3.7 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL B/Stable')
Term Loan 4.4 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delays in servicing debt instalments because
of weak liquidity.
MSHPL is also exposed to government regulations and intense
competition in the cold storage industry, and has a weak financial
risk profile driven modest net worth and weak debt protection
metrices. However, the company benefits from the extensive
experience of its promoter.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to government regulations and intense competition: The
potato cold storage industry in West Bengal is regulated by the
West Bengal Cold Storage Association, with rental rates fixed by
the department of agricultural marketing, West Bengal. The fixed
rental will continue to limit players' ability to earn profits
based on their respective strengths and geographical advantages.
Pressure to offer discounts to ensure healthy utilisation of
storage capacity, especially given the high fragmentation, will
also constrain profitability.
* Weak financial risk profile: Networth remained small at INR2.67
crore as on March 31, 2019, despite marginal improvement in recent
years due to modest accretion to reserves. Gearing was high at 3.69
times because of loans extended to farmers, especially around
fiscal-end. Debt protection metrics are likely to remain average;
interest coverage and net cash accrual to total debt ratios were
1.20 times and 0.03 time, respectively, in fiscal 2019.
Strength
* Extensive experience of the promoter: Presence of more than two
decades in the cold storage segment has enabled the promoter to
establish healthy relationships with farmers and traders and ensure
healthy utilisation of storage capacity.
Liquidity Poor
Liquidity may continue to be stretched as cash accrual projected
per annum over the medium term remains inadequate to meet yearly
debt repayment.
Rating Sensitivity factors
Upward factors
* Track record of timely debt servicing for at least 90 days
* Sustainable improvement in financial risk profile, especially
liquidity.
Incorporated in 2012 and promoted by Mr Shyamal Dandapat, MSHPL
provides cold storage facilities in Tamluk, West Bengal, to potato
farmers and traders; it also trades in potatoes.
MAHALAXMI TECHNOCAST: CARE Reaffirms B+ Rating on INR25cr Loan
--------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Mahalaxmi Technocast Limited (MTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 25.00 CARE B+; Stable Reaffirmed
Detailed Rationale and Key Rating Drivers
The reaffirmation in the rating assigned to the bank facilities of
MTL continues to remain constrained by customer concentration risk,
moderate financial performance during FY19 (refers to the period
from April 1 to March 31), weak financial risk profile,
susceptibility to fluctuations in the prices of steel and presence
in highly competitive and fragmented industry(ies) coupled with
cyclical nature of steel industry. The rating, however, derives
strength from the experienced promoters with long track record in
business.
Positive Rating Sensitivity
* The ability of the company to improve its scale of operations
marked by increase in operating margin above 3% on a sustained
basis.
Negative Rating Sensitivity
* Working capital utilization above 95% on a sustained basis.
Detailed description of key rating drivers
Key rating Weaknesses
Customer Concentration risk: MTL caters to its group companies
namely Mahamaya Steel Industries Limited and Abhishek Steel
Industries Limited. MTL needs to expand its customer base in order
to mitigate the customer concentration risk.
Moderate financial performance during FY19: The total operating
income declined (~11% y-o-y) from INR178.74 crore in FY18 to
INR159.59 crore in FY19 mainly on account of lower sales volume.
PBILDT margin however improved from 0.25% in FY18 to 0.45% in FY19
on account of improvement in the sales realization. MTL reported
PAT of INR0.19 crore in FY19 as against loss of INR0.94 crore in
FY18. Gross Cash Accruals (GCA) of the company stood at INR0.28
crore in FY19 (cash loss of INR0.92 crore in FY18) vis-à-vis nil
term debt repayment obligation. PBILDT interest coverage remained
below unity in FY19. However, the same was made good out of
non-operating income(Late payment charges from debtors, Interest on
loans, Interest on IT refund, Interest on FDR and Interest to Bank
on LC).
Weak financial risk profile: The overall gearing of the company
remained in line with FY18 and stood at 0.52x as on March 31, 2019.
Total Debt/GCA stood at 66.93x as on March 31, 2019.
Susceptibility to price fluctuation in steel products: Prices of
steel products in the domestic market are quite volatile in nature
since they are driven by changes in global prices. Hence, any
adverse fluctuation in the prices can adversely affect the
profitability margins of the company. However, the price
fluctuation is mitigated to an extent as the company maintains
back-to-back order arrangement where company places order with
suppliers only upon receipt of order from its customers.
Presence in highly competitive and fragmented industry: The iron &
steel industry is highly fragmented and competitive marked by
presence of numerous players across India. The steel sector is
characterized by existence of large number of small and medium
sized trading players working at regional level. Accordingly, there
is stiff competition.
Cyclical nature of steel industry: The steel industry is sensitive
to the shifting business cycles, including the changes in the
general economy, interest rates and seasonal changes in the demand
and supply conditions in the market. Furthermore, the producers of
steel & related products are essentially price-takers in the
market, which directly expose their cash flows and profitability to
volatility of the steel industry.
Key rating strengths
Experienced promoters with long track record in business: MTL was
promoted by Mr. Rishikesh Dixit (Age 48, B.Com) in 2002. He has
long standing experience of more than a decade in the field of iron
and steel trading. He looks after the day to day affairs of the
company along with the support from a team of experienced
professionals.
Liquidity Analysis: Stretched
The liquidity profile of the company is characterized by tightly
matched accruals to repayment obligations, highly utilized bank
limits of around 81% and moderate cash balance of INR3.32 crore in
FY19.
Mahalaxmi Technocast Limited (MTL) was incorporated in January 18,
2000 by Raipur based Mr. Rishikesh Dixit. The company is engaged in
trading of iron and steel products (such as billets, sponge iron,
binding wires, pig iron, H.B wires rod, MS bars etc.) since 2015
(prior to this the company used to trade in equity shares). The
company mainly sells to its group companies i.e. Abhishek Steel
Industries Ltd and Mahamaya Steel Industries Limited. The day to
day affairs of the company is looked after by after by Mr.
Rishikesh Dixit along with the support from a team of experienced
professionals.
MANDAKINI HEAVEN: CRISIL Assigns 'D' Rating to INR7.15cr Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
facility of Mandakini Heaven Huts Private Limited (MHHPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 7.15 CRISIL D (Assigned)
The firm has delayed its interest payment obligations for more than
30 days in past 3 months
The rating also reflects the modest scale of operations, weak
financial risk profile and vulnerability to cyclicality in the
hospitality industry. These weaknesses are partially offset by
extensive experience of the promoters.
Key Rating Drivers & Detailed Description
The firm has delayed its interest payment obligations for more than
30 days in past 3 months
Weaknesses:
* Vulnerability to cyclicality in the hospitality industry: The
hotel industry remains vulnerable to changes in the domestic and
global macroeconomic scenario, and typically follows a six-year
cycle. Companies having a high financial leverage, are more
vulnerable to cyclicality, given their fixed financial
commitments.
* Modest scale of operations: Intense competition in the hotels &
resorts industry, may continue to restrict scalability and
operating flexibility.
* Weak financial risk profile: Debt protection metrics were weak,
due to high gearing and low accrual from operations. Interest
coverage and net cash accrual to total debt ratios stood at 1.10
times and 0.01 time, respectively, for fiscal 2019.
Strength:
* Extensive experience of promoters: The two-decade-long experience
of the promoters, in the hotels & resorts industry, their strong
understanding of market dynamics, and established relationships
with suppliers and customers, will continue to support the business
risk profile.
Liquidity Poor
Bank limit utilisation was high, averaging around 89% for the 12
months ended October, 2019. Cash and bank balance stood at INR0.03
crore as on March 31, 2019.
Rating Sensitivity factors
Upward Factors:
* Track record of timely debt servicing for at
least 90 days, with utilisation of working
capital within limit.
* Significant improvement in operating performance,
with adequate cash accrual and stronger debt
protection metrics.
MHHPL was set up in 2011, by the Kanpur-based Kukreja family. The
company operates four banquets, and one party hall and restaurant.
Daily operations are managed by Mr Abhay Kukreja and his family
members.
NARAIN SINGH: CRISIL Cuts Rating on INR3.75cr Bank Loan to B-
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank loan
facility of Narain Singh Bundela and Co. (NSBC) to 'CRISIL
B-/Stable' from 'CRISIL B/Stable', while reaffirming short-term
rating at 'CRISIL A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.57 CRISIL A4 (Reaffirmed)
Cash Credit 3.75 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects significant deterioration in the business
risk profile as no orders have been executed in the past two
fiscals. Revenue was INR0.9 crore in fiscal 2019 and around only
INR0.1 crore in the first three quarters of fiscal 2020. With two
orders in hand worth around INR18.5 crore, there is revenue
visibility for the next 18-24 months; hence, revenue is expected to
increase over the medium term. Any deviation from CRISIL's
expectation will remain a key rating sensitivity factor.
The ratings continue to reflect a small scale of operations,
geographically concentrated revenue, and a low operating margin.
These weaknesses are partially offset by a moderate financial risk
profile, and the extensive experience of the proprietor in the
construction industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations: Since revenue is mainly derived from
Uttar Pradesh and Madhya Pradesh, the scale remains modest,
reflected in an operating income of INR86 lakh for fiscal 2019. The
scale is likely to remain subdued over the medium term because of
modest orders.
* Exposure to high fragmentation and segment concentration: The
civil construction industry is intensely competitive, with several
unorganised players operating on a small scale. However, as all
orders are from government entities, project execution and sales
depend highly on timely clearances from customers.
Strengths:
* Extensive experience of the proprietor: A presence of around
three decades in the civil construction industry has enabled the
proprietor to secure repeat tenders from the Indian Railways. The
firm also constructs canals in the irrigation sector.
* Moderate financial risk profile: As working capital is mostly
funded through payables, security deposits from sub-contractors,
and cash accrual, reliance on bank debt is low. While the networth
was moderate at INR10.92 crore, the gearing was healthy at 0.26
time, as on March 31, 2019. The gearing is expected to be
maintained over the medium term.
Liquidity Poor
There has been continuous capital withdrawal in in the past two
fiscals. However, average bank limit utilisation was low at around
46.32% during the 12 months through November 2019. The current
ratio was also healthy at 2.14 times on March 31, 2019.
Outlook: Stable
CRISIL believes NSBC will continue to benefit from the extensive
experience of its proprietor.
Rating sensitivity factors:
Upward factors
* Improvement in the net cash accrual to repayment
obligation ratio to more than 1.5 times
* Significant and sustained increase in revenue
Downward factors
* Significant capital withdrawal, impacting net cash accrual
* Further decline in the scale of operations
* Large, debt-funded capital expenditure, weakening the
capital structure
NSBC was set up in 1988 in Jhansi, Uttar Pradesh, as a
proprietorship firm by Mr Narain Singh Bundela. The firm undertakes
civil construction works for the railways, irrigation, and road
departments. It constructs bridges and canals and undertakes
ancillary works for railway lines.
OSHINA EXPO: CARE Hikes Rating on INR5cr LT Loan to BB-
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Oshina Expo Private Limited (OEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 5.00 CARE BB-; Stable; Revised from
Facilities CARE B+; Stable
Short term Bank
Facilities 1.00 CARE A4 Reaffirmed
Detailed Rationale and key rating drivers
The ratings assigned to the bank facilities of OEPL have been
revised taking into account experienced promoters, diversified
customer base, improvement in financial risk profile and moderate
operating cycle. However, the ratings continue to remain
constrained by modest scale of operations, stretched liquidity
position, susceptibility of profit margins due to volatile material
prices and presence in competitive and fragmented and labor
intensive industry.
Rating Sensitivities
Positive Factors
* Increase in the scale of operations as marked by
total operating income to around INR 150 crore on
sustained basis
* Any reduction in debt level leads to improvement in
the capital structure which in turn further improves
the gearing to below 2 times on sustained basis
Negative Factors
* Elongation in its working capital cycle to around 90-100
days on sustained basis
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters
OEPL is managed by Mr. Samit Jain, Mrs. Suchitra Jain and Ms.
Neelam Mehta who have rich experience for more than two decades in
the footwear industry. All the promoters are assisted by
experienced management team in the field of accounts, sales and
production to carry out day-to-day operations of the company.
Company has presence in the unorganized market in Northern states
with some of the major group brands being "Ektta", "Tucson",
"Nicholas" and "Prozone".
Diversified customer base
The company has a diverse customer base. Its products are sold
through offline channel to retail stores in Uttar Pradesh, the
company has distribution channel of around 125-150
sub-distributors.
Improvement in financial risk profile
The profitability of the company has been continuously improving
over the past three financial years, FY17-FY19, though the margins
continue to remain low as marked by PBILDT margin of 2.51% in FY19
as against 2.73% in FY18. The slight deterioration in the PBILDT
margin was on account of increase in cost of sales. The company
partially transferred the increase in cost of production due to
price rise to the customers and settled for little margin of
profit. Consequently, Further, PAT margin stood low at 0.62% in
FY19 as against 0.42% in FY18. Further, the gross cash accruals
also improved from INR1.13 crore in FY18 to INR1.46 crore in FY19
on account of better profitability.
Capital structure of OEPL has been improving as on last three
balance sheet dates ending March 31, 2017, '18 and '19 as marked by
overall gearing ratio of 3.39x as on March 31, 2019 as against
4.18x as on March 31, 2018, though it continues to remain
leveraged. The improvement in the capital structure over the
previous years was on account of repayment of rupee term loans and
car loan. Owing to better profitability and higher GCA levels, the
debt coverage indicators have also improved over the previous
years, though continue to remain weak as marked by interest
coverage and total debt/GCA of 2.84x and 7.27x respectively for
FY19 as against 2.33x and 9.01x respectively for FY18.
Moderate operating cycle
The operating cycle of the company stood moderate as marked by 31
days for FY19 majorly on account of improvement in creditors' days
from 75 days to 57 days in FY19. The company extended credit period
of around 50-80 days to its customers and stood 68 days in FY19.
The company is required to maintain adequate inventory for meeting
the demand of its customers and inventory period stood 20 days. The
company receive credit period of around two months from its
supplier's resultant into credit period of around 57 days for FY19.
The working capital borrowings of the company remained 80-90%
utilized during the past 12 months ending November 30, 2019.
Key Rating Weaknesses
Modest scale of operations
The scale of operations of the company remain modest as marked by
total operating income and gross cash accruals of INR113.34crore
and INR1.46 crore respectively in FY19 as against INR 92.34 crore
and INR 1.13 crore in FY18 owing to higher quantity sold to
existing customers as well as addition of new customers in
company's portfolio. However, the tangible net worth of the company
stood small at INR3.14 crore due to low capitalization during past
which further limits the financial flexibility of the company to
the extent. The modest scale limits the company's financial
flexibility and deprives it from scale benefits. Though, the risk
is partially mitigated by the fact that the scale of operation is
growing continuously. OEPL's total operating income grew from INR
94.26 crore in FY17 to INR 113.34 crore in FY19 reflecting a
compounded annual growth rate of 6.34%. Furthermore, during 8MFY20
(FY refers to the period April 01 to November 30; based on
provisional results), the company has achieved total operating
income of INR92.10 crore for 8MFY20.
Liquidity analysis: Stretched
Liquidity is stretched on account of highly utilized bank limits to
the extent of almost 80-90% and lowest cash and bank balance of
INR0.34 crore as on March 31, 2019. The current and quick ratio
stood 1.14x and 0.92x as on 31 March, 2019 as against 1.11x and
0.86x in 31 March, 2018 respectively.
Susceptibility of profit margins due to volatile material prices:
The material is the major cost driver (constituting about 50% of
total cost of sales in FY19 and 85% of total cost of sales in
FY18) and the prices of the same are volatile in nature therefore
cost base remains exposed to any adverse price fluctuations in the
prices of the products. Footwear being major cost components
amongst all material materials is volatile in nature. Accordingly,
the profitability margins of the company are susceptible to
fluctuation in raw material prices. With limited ability to pass on
the increase in material costs in a competitive operating spectrum,
any substantial increase in raw material costs would affect the
company's profitability.
Presence in competitive and fragmented and labour intensive
industry: Company operates in a highly competitive and fragmented
valve industry. The company witnesses intense competition from both
the other organized and unorganized players domestically. This
fragmented and highly competitive industry results into price
competition thereby posing a threat to the profit margins of the
companies operating in the industry. Further the operations are
labour intensive as it is dependent on skilled and availability of
labour.
Oshina Expo Private Limited (OEPL) was established as a
proprietorship concern in 2002 by Mr Samit Jain and his family and
the firm was converted in 2012 into a private limited company. OEPL
is engaged in the business of trading (constitutes 100% of total
sales) of footwear such as shoes, sandals and slippers, etc. for
both men and women. The company has four associate companies M.B.
Rubber Pvt. Ltd, JRS Footwears Pvt .Ltd, Lakhani Infinity Footcare
Pvt. Ltd and Zee Footwears Pvt. Ltd. which are engaged in the same
line of business.
PRITS LEATHER: Ind-Ra Raises LongTerm Issuer Rating to 'B+'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Prits Leather Art
Private Limited's (PLAPL) Long-Term Issuer Rating to 'IND B+' from
'IND D'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR135.00 mil. Fund-based limit upgraded with IND
B+/Stable/IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects PLAPL's timely debt servicing over the three
months ended November 2019.
Liquidity Indicator – Stretched: PLAPL's liquidity remains
stretched with about 86.64% average peak utilization of its
fund-based limits during the 12 months ended November 2019. Its
cash flow from operations turned positive to INR119.44 million in
FY19 (FY18: negative INR88.11 million), owing to an improvement in
debtor realization in FY19. It had INR16.88 million of cash and
cash equivalents at FYE19 (FYE18: INR3.75 million). PLAPL's cash
conversion cycle, although modest, deteriorated to 11 days in FY19
(FY18: 3 days) owing to a reduction in creditor days.
The ratings also factor in PLAPL's moderate scale of operations as
indicated by revenue of INR971.41 million (FY18: INR836.90
million). The growth in revenue in FY19 was on account of an
increase in demand from existing customers and the addition of new
customers as the company's new segment textiles started
operations.
The ratings continue to benefit from the company's
volatile-yet-healthy EBITDA margin, with an improvement to 10.32%
in FY19 (FY18: 8.27%), resulting from a fall in raw material prices
along with the existing buffer stock of FY18 being utilized in
FY19. The company's return on capital employed was 28.89% in FY19
(FY18: 22.72%).
The ratings remain supported by PLAPL's comfortable credit metrics
as indicated by net adjusted leverage (net debt/operating EBITDA)
of 1.08x in FY19 (FY18: 2.46x) and EBITDA interest coverage
(operating EBITDA/gross interest expense) of 7.62x (4.96x). The
improvement in credit metrics was attributed to an increase in
operating EBITDA to INR100.26 million in FY19 (FY18: INR69.21
million).
The ratings also benefit from over two decades of experience of
PLAPL's promoters in the leather industry, leading to the company's
established relationships with customers and suppliers.
RATING SENSITIVITIES
Negative: Any dip in the revenue or operating profitability leading
to deterioration in the credit metrics on a sustained basis with
interest coverage below 1.8x and/or the elongation in the net
working capital cycle will be negative for the ratings.
Positive: Substantial growth in the revenue along with an increase
in the operating profitability leading to an improvement in the
credit metrics on a sustained basis will be positive for the
ratings.
COMPANY PROFILE
Headquartered in Uttar Pradesh, PLAPL manufactures and exports
leather products including garments, bags, belts, and accessories.
QUANTUM CONCRETE: Insolvency Resolution Process Case Summary
------------------------------------------------------------
Debtor: Quantum Concrete LLP
25B Arbindra Nath
Thakur Sarani
6th floor, Flat-6C
Kolkata 700016
Insolvency Commencement Date: January 1, 2020
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: June 29, 2020
Insolvency professional: Satish Patodia
Interim Resolution
Professional: Satish Patodia
34 Bangur Avenue
Block B, 4th Floor
Kolkata 700055
E-mail: spaindia@yahoo.com
quantum.cirp@gmail.com
Last date for
submission of claims: January 20, 2020
SONA WIRES: CARE Raises Rating on INR2.50cr LT Loan to B+
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Sona
Wires Private Limited (SWPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 2.50 CARE B+; Stable; Revised from
Facilities CARE D; Stable
Short term bank
facilities 0.27 CARE A4 Revised from CARE D
Detailed rationale and key rating drivers
The revision in the ratings assigned to the bank facilities of SWPL
takes into account the default free track record for more than
eight months.
The ratings assigned to the bank facilities of SWPL continue to
remain constrained by its small scale of operations, deterioration
in financial performance in FY19 (refers to the period April 1 to
March 31), thin profit margins, profitability susceptible to
volatility in raw material prices, working capital intensive nature
of operations and presence in highly competitive and fragmented
industry. However, the ratings continue to derive strength from its
experienced promoters and long track record of operation and
moderate capital structure albeit weak debt protection metrics.
Rating Sensitivities
Negative Factors
* PBILDT margin remaining below 3% on a sustained basis.
* Total debt to gross cash accruals remaining above 21x on a
sustained basis.
Positive Factors
* Operating cycle reducing below 60 days.
* Maintaining overall gearing below 0.30x.
Detailed description of the key rating drivers
Key Rating Weaknesses
Small scale of operation: SWPL is a small player having an annual
turnover of INR34.32 crore in FY19 and total capital employed of
INR 13.09 crore as on March 31, 2019. The small size deprives the
benefits of economies of scale and restricts the financial
flexibility of the company in times of stress.
Deterioration in financial performance in FY19: SWPL's total
operating income increased by about 38.50% y-o-y to INR34.32 crore
in FY19 driven by mainly due to increase in trading activity of
H.B. wires, Binding Wire and Stay Wire. However, the PBILDT margin
deteriorated from 1.86% in FY18 to 0.72% in FY19 due deterioration
of gross margins. Interest coverage ratio though remained below
unity at 0.66x in FY19, the servicing of the interest was done out
of PBILDT of INR0.25 crore and non-operating income of INR0.19
crore. The company generated cash accruals of INR0.04 crore in FY19
against nil debt repayment obligations.
Thin profit margins: Given the high proportion (94%) of trading
sales in the total revenue and intense competition in the operating
spectrum, SWPL operates on thin profit margins. The PBILDT margin
continued to remain thin at 0.72% in FY19 vis-a-vis 1.86% in FY18.
PAT margin also continued to remain thin at 0.07% in FY19 (0.13% in
FY18).
Profitability susceptible to volatility in raw material prices:
The major raw materials of SWPL are wire rod, Hard bright (H.B)
wire etc., the prices of which are highly volatile. Since cost of
raw materials is major portion of the total cost incurred
(excluding cost of traded goods), hence any adverse movement in raw
material prices may affect the profitability of the company.
Working capital intensive nature of operation: SWPL's operations
are working capital intensive in nature as the company needs to
extend higher credit period to its clients due to its low
bargaining power attributable to its small size. Furthermore, the
company usually maintains high inventory although the average
inventory period has improved from 116 days in FY18 to 44 days in
FY19 due to decrease in absolute level of raw material and finished
goods inventory as on March 31, 2019. The average creditors' period
of the company has also increased drastically from 5 days in FY18
to 60 days in FY19. Therefore the operating cycle of the company
has improved from 180 days in FY18 to 94 days in FY19.
Presence in highly competitive and fragmented industry: The steel
wire trading industry is highly fragmented and competitive marked
by presence of numerous players across India. Hence the players in
the industry lacks pricing power and exposed to competition induced
pressures on profitability.
Key Rating Strengths
Experienced promoters and long track record of operation: The
promoter of SWPL, Mr. Surendra Kumar Jain, is having more than
three decades of experience in manufacturing of wires, ferro alloys
and trading activities of steel and steel related products.
Presently, the day to day operations of the company is looked after
by Mr. S.K. Jain. Moreover, SWPL is in operations for about three
decades and thereby having an established track record of
operations.
Moderate capital structure albeit weak debt protection metrics:
The capital structure continued to remain comfortable, marked by
its comfortable overall gearing ratio at 0.30x as on March 31, 2019
as against 0.37x respectively as on March 31, 2018. However, Total
debt/GCA deteriorated marginally from 71.66x in FY18 to 74.76x in
FY19 due to decline in cash profit.
Liquidity: Stretched
The liquidity profile of SWPL continued to remain stretched owing
to its low cash accrual and elongated operating cycle. The average
utilisation of fund based limits and non-fund based limits stood
around 80% and 100% respectively during last 12 months ended
November 30, 2019. The current ratio of the company was 1.38 as on
March 31, 2019 and the cash & cash equivalent balance as on March
31, 2019 was INR0.03 crore. The company generated cash accruals of
INR0.04 crore in FY19 against nil debt repayment obligations.
Sona Wires Private Limited (SWPL) was incorporated in July, 1986 by
Mr. Surendra Kumar Jain of Raipur, Chhattisgarh along with his
family members. SWPL is engaged manufacturing of Galvanised Iron
(G.I.) wire (installed capacity 5200 TPA), Stay wires (installed
capacity 2564 TPA) and G.I. barbed wires (installed capacity 400
TPA). The company is also engaged in trading of HB wires, GI wires
& MS Bar Coils. The products sold by SWPL are largely used in
industries like power, construction, automobile, engineering, etc.
Presently, the day-to-day affairs of the company are looked after
by Mr. Surendra Kumar Jain, (Director) with adequate support from
the other director Mr. Pramod Kumar Jain.
SONAL FABRICATORS: CARE Cuts Rating on INR3cr Loan to B-
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sonal Fabricators Private Limited (SFP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 3.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B; Stable on the basis
of best available information
Short term Bank 2.52 CARE A4; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SFP to monitor the rating
vide e-mail communications dated December 20, 2019 and e mail
communications dated December 19, 2019, December 18, 2019, December
9, 2019 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
and for monitoring the ratings. The rating on Sonal Fabricators
Private Limited bank facilities will now be denoted as CARE B- ;
Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The long term rating of the company has been revised on account of
susceptibility of margins to fluctuations in raw material prices
and highly competitive nature of the industry.
Key Rating Weaknesses
Small scale of operations along with low profitability margins:
The total operating income of the company increased from INR16.41
cr in FY18 to INR 34.20 crore in FY19, the same however continued
to remain small. The small scale of operations limits the company's
financial flexibility in times of stress and deprives it from scale
benefits. Furthermore, the profitability margins also stood low
marked by PBILDT margin and PAT margin of 5.47% and 0.87% in FY19.
Weak overall solvency position: The overall solvency position of
the company stood leveraged marked by the overall gearing ratio of
8.10x as on March 31, 2019 (PY: 4.95x). Furthermore, the debt
coverage indicators stood weak marked by interest coverage ratio
and total debt to GCA 1.87x and 17.37x respectively as on March 31,
2019 (PY: 1.07x and 19.48x, respectively).
Susceptibility of margins to fluctuations in raw material prices:
The main raw materials used by the company are steel plates, steel
rims and channels etc. Raw material cost is a major contributor to
total operating cost, thereby making profitability sensitive to raw
material prices mainly due to the reason that the major raw
material is commodity in nature and witnesses frequent price
fluctuations. The prices of steel are driven by international
prices, apart from domestic demand supply factors and therefore
remain volatile. Thus any adverse change in the prices of the raw
material may affect the profitability margins of the company.
Highly fragmented and competitive industry: The spectrum of the
iron and steel industry in which the company operates is highly
fragmented and competitive marked by the presence of numerous large
and small players in India which led to fluctuations in the total
operating income in the past. Hence, the players in the industry do
not have any pricing power and are exposed to competition induced
pressures on profitability. This apart, its products are subjected
to the risks associated with the industry like cyclicality and
price volatility.
Key Rating Strengths
Experienced promoters with long track record of operations: The
company was incorporated in 1996 and is being managed by Mr. Vikas
Arya and Mr. Rohit Arya. Mr. Vikas Arya and Mr. Rohit Arya have 11
and 14 years of experience, respectively in the steel industry
gained through their association with SFP only. Both the directors
have adequate acumen about various aspects of business which is
likely to benefit the company in the long run. Furthermore, over
the years, the company has established healthy relationships with
customers and suppliers.
Reputed customer base though concentrated revenue stream: The
company is into manufacturing of LPG gas tankers and is supplying
to various reputed players like Indian Oil Corporation Limited,
Hindustan Petroleum Corporation Limited etc. The sales to top two
customers constituted around 50% of the total revenue in FY18.
However, SFP has been able to receive repetitive orders from these
customers on account of quality products being delivered.
Association with reputed players enhances the image of the company
in the market.
Sonal Fabricators Private Limited (SFP), an ISO 9001:2008 certified
company, was incorporated in July, 1996 as a private limited
company and is currently being managed by Mr. Vikas Arya and Mr
Rohit Arya. SFP is engaged in manufacturing of pressure vessels
like Liquefied Petroleum Gas (LPG) gas tankers at its manufacturing
facility located in Rohtak, Haryana having an installed capacity of
2400 tonnes of LPG gas tankers per annum as on June 30, 2018. The
company sells its products directly to various transporters based
in Jharkhand, Delhi, Rajasthan, West Bengal, Punjab, Assam,
Haryana, Himachal Pradesh, Mizoram etc. under the brand name of
"Sonal Fabricators". Furthermore, the orders undertaken by the
company for the government are secured through tender process.
STERLING GATED: CARE Lowers Rating on INR60cr NCD to 'B'
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Sterling Gated Community Private Limited (SGCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 60 CARE B; Stable Revised from
Debenture issue CARE B+; Stable
Detailed Rationale & Key Rating Drivers
The revision in rating of Non-Convertible Debenture (NCD) Issue of
SGCPL is on account of more than anticipated time taken for launch/
sale of project resulting into increasing accrued interest on NCD
and high refinancing risk of NCD with bullet repayment falling due
in June 2020. These rating weaknesses are partially offset by
promoter's extensive experience in the real estate industry.
Rating Sensitivities
Positive:
Launch of project by the company and achieving financial closure
with repayment terms linked to construction progress.
Negative:
Company unable to refinance the NCD on or before due date.
Detailed description of the key rating drivers
Key Rating Weaknesses
High refinancing risk of NCD
Company has high refinancing risk of existing NCD considering the
project is not yet launched due to unfavorable market condition for
launch of luxury project. In the meantime, company is exploring
various options for bringing in new investor to repay the existing
NCD.
As per the original terms of repayment of NCDs (raised in Oct 21,
2014), the first coupon payment (16% p.a. coupon rate) was supposed
to be on June 30, 2015 with redemption dates of NCD being June 30,
2017 and October 31, 2017. However, as the project was not
launched, due date of repayments is being deferred by investors
each year, currently being June 30, 2020. With no progress in the
project, interest accrued/ provision on NCD is also increasing,
further enhancing refinancing risk.
Key Rating Strengths
Experienced Promoters
The Sterling group, promoted by Mr Ramani Sastri and Mr Shankar
Sastri, has presence in the Bangalore real estate market since 1983
and has an experience in developing apartments, villas and
commercial complexes across Bangalore. The Sterling developers
group till date has developed over 30 projects in total.
Liquidity: Poor
Liquidity position of the company is poor considering the project
is not launched and therefore has not generated any cash flows.
Interest payments are being accrued and timely refinancing of NCD
is critical which is falling due on June 30, 2020.
SGCPL is a special purpose vehicle (SPV) formed by Mr. Ramani
Sastri and Mr. Shankar Sastri, who have more than 30 years of
experience in developing real estate projects in Bangalore and
founders of the Sterling group. SGPCL is developing a real estate
apartment project in Whitefield, Bangalore. The project is
residential project with the total of 600 units of 1BHK, 2BHK
and 3 BHK, planned over a part of larger land parcel owned by an
associate company, Sterling Urban development Private Ltd (SUDPL).
The project has seen inordinate delays and is not yet launched due
to unfavorable market conditions for luxury segment projects.
TANUJ ROSHI: CARE Lowers Rating on INR7.90cr LT Loan to 'B'
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Tanuj Roshi Poultry Farm, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 7.90 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable on the basis
of best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking no default statement from Tanuj Roshi Poultry
Farm to monitor the rating vide e-mail communications dated,
December 16, 2019, December 13, 2019, December 10, 2019, December
9, 2019, December 6, 2019, and numerous phone calls. However,
despite CARE's repeated requests, the firm has not provided no
default statement for monitoring the rating. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the publicly available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating. The rating on
Tanuj Roshi Poultry Farm's bank facilities will now be denoted as
CARE B; Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating has been revised by taking into account non-availability
of no default statement due to non-cooperation by TRP with CARE'S
efforts to undertake a review of the rating outstanding. CARE views
information availability risk as a key factor in its assessment of
credit risk.
TEAMWORK CABLES: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Teamwork Cables Private Limited
Plot No. 75, G-2
Suryabhanu Housing Association
GIDC Colony
Umbergaon Gj 396171
Insolvency Commencement Date: December 20, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: June 17, 2020
(180 days from commencement)
Insolvency professional: Mr. Umesh Harjivandas Ved
Interim Resolution
Professional: Mr. Umesh Harjivandas Ved
304, Shoppers Plaza-V
Opp. Municipal Market
C G Road, Navranpura
Ahmedabad 380009
E-mail: umesh@umeshvedcs.com
umeshvedcs.office@airtelmail.in
Last date for
submission of claims: January 13, 2020
TRADING ENGINEERS: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Trading Engineers (International) Limited
806, Devika Tower
6, Nehru Place
New Delhi 110019
Insolvency Commencement Date: December 17, 2019
Court: National Company Law Tribunal, Special Bench (Court-II)
New Delhi
Estimated date of closure of
insolvency resolution process: June 14, 2020
Insolvency professional: Mr. Kanti Mohan Rustagi
Interim Resolution
Professional: Mr. Kanti Mohan Rustagi
E-7, Kailash Colony
New Delhi 110048
E-mail: kanti.rustagi@
patanjaliassociates.com
- and -
Resurgent Resolution Professionals LLP
905, 9th Floor, Tower C
Unitech Business Zone
The Close South, Sector-50
Gurugram, Haryana 122018
E-mail: cirp.tradingengineers@gmail.com
Last date for
submission of claims: January 9, 2020
[*] INDIA: A Record $83 Billion Bond Bill is Looming Over Firms
---------------------------------------------------------------
Bloomberg News reports that it's the last thing India's stricken
credit markets need: a record debt bill.
Bloomberg relates that companies must repay an unprecedented INR5.9
trillion (US$83 billion) of local notes this year, just as
corporate defaults spike. Many firms are already struggling after
economic growth slumped to its weakest since 2009.
That's putting India behind China, Indonesia and a few others in
the region, Bloomberg notes. Credit market scares have impeded
Prime Minister Narendra Modi's efforts to revive growth.
According to Bloomberg, chief among the problems is a lingering
crisis at shadow banks that started in 2018, with a shocking
default by then high-rated lender IL&FS. The woes mounted last year
when major mortgage lender Dewan Housing Finance Corp. missed
repayments, Bloomberg says.
So it's concerning that shadow banks and other financial companies
account for the biggest group of bond maturities this year, at
INR4.2 trillion, Bloomberg notes. Such lenders extend credit to
everyone from small shopkeepers to property tycoons.
While there are tentative signs of recovery in certain areas of the
shadow bank sector, a funding squeeze has kept borrowing costs
high. The financiers pass that on by charging their own customers
more for money, according to Bloomberg.
Bloomberg says the picture isn't all gloomy, though. Policy makers
have taken steps to keep liquidity abundant. And more than half of
the bonds due this year carry top-notch ratings, while another 17%
are notes that are graded between AA+ and AA-.
That suggests the risk of rampant failures should be lower,
Bloomberg notes. But as the stunning fall of formerly top-rated
IL&FS illustrated, even that's no guarantee that there won't be
bumps ahead, adds Bloomberg.
=================
I N D O N E S I A
=================
LIPPO KARAWACI: S&P Alters Outlook to Negative & Affirms B- ICR
---------------------------------------------------------------
S&P Global Ratings, on Jan. 8, 2020, revised its outlook on the
Indonesian real estate developer to negative from stable, while
affirming its 'B-' issuer credit rating on the company and the 'B-'
issue rating on the outstanding notes.
The outlook revision reflects the steady erosion in the company's
liquidity since the July rights issue, the limited visibility on
the company's liquidity, and the sustainability of its balance
sheet beyond the first half of 2021.
Lippo's liquidity has steadily eroded since the July 2019 rights
issue.
S&P estimates the company's cash balance declined to slightly below
Indonesian rupiah (IDR) 3 trillion at the holding company level as
of Dec. 31, 2019. That compares with our estimate of about IDR4.6
trillion as of Sept. 30, 2019. Lippo spent most of nearly IDR11.2
trillion of rights issue proceeds from July 2019 in working capital
for its ongoing development projects, financial charges, rental
support, and operating expenses in the second half of 2019. The
company's balance sheet remains highly leveraged despite the rights
issue, given Lippo applied about 24% of the rights issue proceeds
to debt repayment over the period.
Beyond the proposed disposal of Puri Mall in 2020, there is
significant uncertainty about whether the company can monetize
other nonstrategic assets on a timely basis.
S&P believes Lippo's capacity to service fixed financial and
operating charges in 2020 and 2021 will depend more than ever on
further asset monetization, given still-slow marketing sales for
real estate developers in Indonesia, reducing liquidity buffer from
the rights issue, and our projection of negative discretionary cash
flows in both years. At the same time, the quantum of both
nonstrategic and monetizable assets--such as stakes in subsidiaries
such as PT Siloam International Hospitals Tbk. or stakes in real
estate investment trusts listed in Singapore--has also fallen
without denting materially Lippo's debt.
The sale of Puri Mall will only bring Lippo a temporary liquidity
boost when it happens. Assuming the sale closes in the second
quarter of 2020 (S&P's current base case), S&P estimates that the
net proceeds of IDR 2.0 trillion-IDR2.5 trillion will only bring
sufficient funds to cover interest and rental expenses at Lippo's
holding company level for about 12 months, until second-quarter
2021. It will also leave the company with reduced financial
flexibility beyond the first half of 2021, by which time cash
balances will be barely sufficient to cover operating expenses.
S&P said, "After the sale, we estimate that Lippo would need to
sell up to IDR2.5 trillion of assets in 2021 to maintain a
sufficient liquidity buffer. We derive this number by adding annual
interest servicing and hedging costs of about IDR1.1 trillion per
year, and overheads and rental expenses of about IDR1.3 trillion,
and excluding any sizable investment in working capital." That
fixed charge number is elevated, given Lippo's shrinking base of
quickly monetizable assets post the Puri mall disposal. It is
uncertain whether the company can monetize its other assets,
including the high-quality land bank in Lippo Village and South
Jakarta and its majority stakes in hospital operators Siloam and
real estate developer PT Lippo Cikarang Tbk., considering their
strategic importance to the company.
A relatively long-dated debt maturity profile underpins the 'B-'
rating.
The affirmation on the company and its notes outstanding
predominantly reflects a fairly long-dated debt maturity
profile--with bonds maturing in 2022 and 2026. S&P also estimates
that the Puri sale--which we capture in our base-case forecasts as
happening in the first half of 2020--will provide sufficient
funding for the next 15-18 months, with no imminent risk of missed
payments or default.
The negative outlook reflects the limited visibility S&P has on
Lippo's liquidity sources and its reduced financial flexibility
into 2021 and beyond the potential Puri sale, amid large and
recurring interest and operating charges.
S&P said, "We could lower the rating if there are signs that the
company faces unexpected delays in completing the sale by the end
of June 2020. We could also lower the rating over the next 6-12
months--regardless of the sale's completion--if Lippo cannot
maintain an ongoing liquidity cushion that allows it to service
more than a year of fixed interest and operating charges." Evidence
of rating pressure would be a sum of ongoing cash balance and cash
flows below IDR2 trillion or a rapid depletion in the company's
asset base that could indicate an unsustainable capital structure.
S&P could revise the outlook to stable if Lippo bolsters its
liquidity through asset sales, positive discretionary cash flows,
or other means, as well as sustains ample liquidity. A cash balance
exceeding IDR3 trillion over 18 months and positive discretionary
cash flows could be indicative of a stabilized liquidity position.
An outlook revision to stable would also be contingent upon no
major debt maturities over a two-year period.
Lippo is the property arm of the Lippo conglomerate. The company's
key business divisions include property development, operation of
hospitals, commercial (hospitality and retail malls), as well
managing Singapore-listed LMIRT. Lippo mainly targets the
Indonesian middle-to-upper-class segment in its property
development and health care businesses. Two key listed subsidiaries
generate the bulk of Lippo's revenues: PT Lippo Cikarang Tbk., a
property developer; and PT Siloam International Hospitals Tbk., the
largest hospital operator in Indonesia.
MEDCO ENERGI: Moody's Raises CFR to B1 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating of
Medco Energi Internasional Tbk (P.T.) to B1 from B2.
Moody's has also upgraded the ratings on the backed senior
unsecured bonds issued by Medco Strait Services Pte. Ltd., Medco
Platinum Road Pte. Ltd. and Medco Oak Tree Pte. Ltd. to B1 from B2.
These bonds are unconditionally and irrevocably guaranteed by
Medco.
The outlook on all ratings has been changed to stable from
positive.
RATINGS RATIONALE
"The rating upgrade reflects a sustained improvement in Medco's
scale and the geographic diversification of its reserves and
production, following the acquisition of Ophir," says Vikas Halan,
a Moody's Senior Vice President.
Pro forma for Ophir acquisition, Medco expects to produce 110
thousand barrels of oil equivalent (boe) per day in 2019, up from
87 thousand boe per day in 2017. Also, Medco's proved reserves has
increased to 249.3 million boe at Seprtember 30, 2019 from 233.5
million boe at December 31, 2017.
Further, there has been an improvement in Medco's cash flow
visibility with revenue from fixed price gas contracts accounting
for 29% of total revenue for 2019 compared with 24% in 2017.
"Medco's credit metrics and liquidity are also supportive of its B1
rating. We expect the company's debt/EBITDA to improve to below
4.0x in 2019 from 4.4x in 2018. This is despite the increase in its
debt to fund the acquisition of Ophir Energy in 2019," says Halan,
who is also Moody's Lead Analyst for Medco.
Moody's expects Medco's adjusted net debt/EBITDA (net of cash in
escrow earmarked for debt repayment) will improve to around
3.2x-3.5x over the next two years, from around 3.9x for LTM
September 2019 and 4.4x in 2018. Over the same period, its
EBITDA/interest cover will be around 3.5x-3.7x and RCF/adjusted net
debt will be about 11%-12%.
At the same time, the B1 rating remains constrained by Medco's
exposure to the cyclicality of commodity prices, its acquisitive
growth appetite, and the execution risk associated with its annual
investment plan of around $300 million.
In addition, Medco's rating benefits from its proactive liquidity
management with the company refinancing its upcoming debt
maturities well in advance, increasing the average weighted debt
maturity profile of its debt.
In terms of environmental, social and governance (ESG) factors, the
ratings also consider the following:
For environmental factors, Medco's rating incorporates the
environment risk that the company is exposed to through its oil &
gas, power and mining businesses. However, the risk is somewhat
mitigated by its high proportion of natural gas business that
accounts for about 50% of its revenue, and by its long-term fixed
price gas contracts that generate sufficient EBITDA to cover its
interest expenses.
Further, the environmental risk for its power business is largely
mitigated by the company's fuel mix which is heavily weighted
towards renewable sources like geothermal and hydro. Medco has only
a minority interest in its copper mining business, which is an open
pit mine and is well positioned to benefit from higher EV
penetration.
With regards to social factors, Medco's business mix includes
sectors that are exposed to moderate to high social risks,
especially responsible production and health & safety issues.
However, the risk is mitigated by the company's long track record
of operating its businesses without any major incidents.
As for governance factors, the rating incorporates Medco's strong
appetite for growth as shown by its history of debt-funded
acquisitions, and its concentrated ownership structure which could
lead to increased potential for conflicts of interest. Nonetheless,
these risks are partially mitigated by (1) Medco's public
commitment to deleveraging and target net debt/EBITDA of 3.0x; and
(2) its listing on the Indonesian stock exchange, which requires
the company to comply with listing rules.
Medco's liquidity profile is strong with cash and cash equivalents
of $262 million, short term investments of $26 million and cash
earmarked for debt repayment in an escrow account of about $170
million as of Seprtember 30, 2019. Against this, $329 million of
debt is maturing over next 12 months. However, despite Medco's
strong EBITDA growth, its free cash flow generation remains
constrained by its high taxes, interest expense and capital
spending.
The stable outlook on Medco's rating incorporates Moody's
expectation that Medco's credit metrics will continue to remain
supportive of its rating, supported by stable cash flow generation
from its existing portfolio and planned sale of non-core assets.
An upgrade of Medco's CFR will require an increase in the company's
scale and a further improvement in its credit metrics. Credit
metrics supportive of a higher rating include adjusted net
debt/EBITDA falling below 3.0x, RCF/adjusted net debt rising above
20% and EBITDA/interest expense increasing above 4.5x.
In addition, an upgrade would also require the company to maintain
strong liquidity with cash and cash equivalents covering at least
the amount of debt maturing over the next 12 months.
Downward pressure on the rating could build if Medco (1) fails to
renew a significant portion of its fixed price gas sales contracts
that expire over the next two years, or (2) makes large debt funded
acquisition, or (3) provides funding support to its mining or power
businesses, or (4) fails to maintain sufficient liquidity to cover
its debt maturing over the next 12 months.
Specific credit metrics indicative of downward pressure include
adjusted net debt/EBITDA rising above 4.0x, RCF/adjusted net debt
falling below 10% and EBITDA/Interest expense falling below 3.5x.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
Established in 1980 and headquartered in Jakarta, Medco Energi
Internasional Tbk (P.T.) is a Southeast Asian integrated energy and
natural resources company listed in Indonesia with three key
business segments, oil and gas, power and mining.
MEDCO ENERGI: S&P Raises ICR to 'B+', Outlook Stable
----------------------------------------------------
S&P Global Ratings On Jan. 9, 2020, S&P Global Ratings raised its
long-term issuer credit rating on PT Medco Energi Internasional to
'B+' from 'B'. At the same time, S&P raised its long-term issue
rating on the company's guaranteed senior unsecured notes to 'B+'
from 'B'.
S&P raised the rating because it believes Medco's improved scale
following the acquisition of Ophir will keep its capital
expenditure to maintain production above 100 kboe/d at manageable
levels. Medco's record of debt reduction will also contribute to
the company's ratio of funds from operations (FFO) to debt
sustaining above 12%.
Ophir adds scale and geographic diversity to Medco's operations.
The acquisition in May 2019 has increased Medco's production by
29%, with Ophir's production guidance for 2019 of 26 kboe/d.
Medco's pro forma production in 2019 was about 110 kboe/d, with a
balanced mix across liquids (43% of total) and gas (57%). Following
the acquisition, Medco now has operations in Thailand and Vietnam,
with overseas volumes accounting for close to a fourth of total
production. In addition, there are synergies that the company
estimates at about US$50 million on a full-year basis.
Capital expenditure to maintain production should be manageable.
S&P forecasts Medco will invest about US$300 million per year in
its oil and gas business over the next five years to maintain
production above 100 kboe/d. This compares with the company's
average annual EBITDA of US$850 million during the period. Medco's
leverage should therefore be at least stable, if not decline,
beyond 2020. The company has decent record in reserve
replenishment, with a five-year average 2P (proved plus probable)
reserves replacement ratio (RRR) of 1.1x in 2018. Based on the pro
forma guidance of 110 kboe/d production in 2019, Medco has a 2P
reserves life index of 8.1 years. The company's 1P (proved)
reserves offer production visibility for 6.2 years based on
reserves at end September 2019.
S&P said, "The company has a good record of debt reduction to
preserve its creditworthiness. Given Medco's thin financial
headroom, we do not anticipate external growth in our base case. We
expect the company to take necessary steps to curtail the leverage
impact of any acquisition. Medco has a record of monetizing assets
when necessary to control debt. Asset disposals in 2019 include the
headquarters in Jakarta (raising US$163 million), a 8.81% stake in
PT Amman Mineral Nusa Tenggara (AMNT; US$251 million), and stakes
in some oil and gas fields (together about US$500 million). We see
this ability and willingness to manage leverage as a key support
for the 'B+' rating.
"The stable outlook reflects our view that Medco will maintain its
current production volumes and remain disciplined in its growth
aspirations over the next 12-24 months, such that its leverage
remains stable."
Downside scenario
S&P said, "We could lower the rating if Medco fails to replenish
its reserves consistently, such that its volumes fall permanently
well below 100 kboe/d. Further pressure on the rating would arise
if the company's intrinsic creditworthiness erodes due to negative
regulatory developments in Indonesia, falling hydrocarbon prices or
large debt-funded investments with no marked contribution to
earnings, such that the FFO/Debt ratio falls and remains below
12%."
Upside scenario
S&P said, "We see a higher rating as remote. It would require Medco
to maintain its scale of operations comfortably above 100 kboe/d,
with sustainable proven reserves well exceeding five years and a
meaningful portion of fixed-price gas contracts that shield the
company's from fluctuation in hydrocarbon prices. In parallel, we
would expect Medco to reduce leverage, establishing a record of
adequate funding and a FFO/Debt ratio above 25%."
Medco is an Indonesia-based and listed oil and gas company. Medco
also owns PT Medco Power Indonesia and a 32% effective interest in
AMNT, which controls the Batu Hijau copper and gold mine in eastern
Indonesia. Medco has fourteen producing oil and gas fields in
Indonesia, Thailand, and Vietnam, and a service contract field in
Oman, with a total production of 110 kboe/d. Oil sales contracts
are indexed to the Indonesian crude price index while the majority
of the gas sales are contracted at a fixed price with annual
escalation. The Panigoro family indirectly controls Medco through
intermediate holding companies.
SAKA ENERGI: S&P Lowers Issuer Credit Rating to BB, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings, on Jan. 9, 2020, lowered the issuer credit
rating on PT Saka Energi Indonesia and issue rating to 'BB' from
'BB+'.
S&P said, "We lowered the rating because we believe that Saka's
uncertain strategic direction is constraining investments and
production, which, in turn, could undermine the company's cash flow
adequacy. At the same time, we still see Saka as an important
subsidiary of PT Perusahaan Gas Negara Persero Tbk (PGN).
"Since PT Pertamina (Persero) acquired PGN in April 2018, we
believe the group's strategic priorities for Saka have become less
clear. PGN's acquisition of some of Pertamina's gas assets in
early 2019 suggests there could be a reorganization of industrial
assets between PGN and its parent Pertamina. In March 2019, the
State-Owned Enterprises Ministry's undersecretary for mining,
strategic industries, and media affairs said that the Indonesian
government, through PGN, was evaluating Saka's future direction.
The options were to either sell Saka to Pertamina, or list it on
the Indonesian stock exchange. We believe the uncertainty
surrounding Saka's long-term ownership has undermined the company's
ambitions. This is indicated by Saka's shrinking capital
expenditure, and consequently, production levels, which should
remain at 40 thousand barrels of oil equivalent per day (kboe/d) at
best, compared with about 50 kboe/d each in 2017 and 2018. The
scale of Saka's operations is smaller than that of peers.
"PGN's support for Saka remains largely intact for the time being.
While upstream oil and gas may not be a strategic priority for PGN
anymore, we believe the company remains committed to supporting
Saka if necessary. We do not expect a swift change in
organizational structure, owing to Saka's position as a material
subsidiary to PGN, as well as the possibility of triggering a
change-of-control clause in Saka's existing bonds. To that extent,
the past repayments of the shareholder's loan have not
fundamentally altered our view of group ties so far. We believe PGN
could extend the instrument's maturity well beyond the due date of
2021, because we consider that Saka does not have sufficient
financial resources to repay the instrument without raising debt.
To that extent, we assume that PGN will take necessary actions so
as not to burden its subsidiary's liquidity. A further reduction in
the amount of shareholder's loan outstanding could be indicative of
a dilution in ties between PGN and Saka.
"Saka's limited financial resources restrict options. In the
absence of new debt raising, we believe Saka's acquisition
firepower does not exceed US$200 million. In our view, Saka could
buy producing assets that could add up to 10 kboe/d, i.e. 25% of
today's production." S&P bases its estimate on recent transactions
in the region:
-- PTT Exploration and Production Public Co. Ltd.'s acquisition
of Murphy Oil Corp.'s Southeast Asian assets for about
US$2.1 billion, adding 48 kboe/d;
-- PT Medco Energi Internasional Tbk acquiring 25 kboe/d with
Ophir Energy plc for US$0.6 billion.
Such a transaction would not meaningfully raise Saka's production
profile in S&P's view, and could use up most of its existing cash.
S&P said, "The stable outlook reflects our view that until the
reorganization of Pertamina shows meaningful new developments, Saka
will focus on its operations and achieve a production volume of
about 40 kboe/d.
"We could lower the rating on Saka if we downgrade PGN to 'BB' or
there is a dilution of the relationship between Saka and PGN,
including reduced operational integration, change in ownership or
looser strategic oversight. Negative rating pressure would also
escalate if Saka's ratio of funds from operations (FFO) to debt
falls well below 12%, due to substantial organic cash burn, or to
large debt-funded investments with no commensurate contribution to
earnings. A continued decline in production could also erode Saka's
intrinsic creditworthiness.
"A higher rating would require Saka to increase significantly its
scale of operations, with sustainable reserves providing clarity on
production. At the same time, we would expect the company to
maintain its sound profitability and a consistent capital
structure, with FFO to debt comfortably above 12%. Alternatively,
at current production levels, an FFO to debt well above 20% could
pave the way for a higher rating. In addition, we would be looking
at obtaining more clarity on Saka's long-term ownership."
PT Saka Energi Indonesia conducts hydrocarbon exploration and
production in Indonesia. On June 30, 2019, Saka had proved and
probable reserves of 99.1 million barrels of oil equivalent. The
company holds working interests in 11 oil and gas blocks, six of
which are producing. In the first half of 2019, Saka reported net
production of 37.2 kboe/d. Saka is wholly owned by natural gas
distribution and transmission company PGN. In turn, PGN is 56.9%
owned by national oil company, Pertamina.
SOECHI LINES: Fitch Affirms B LongTerm IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings affirmed Indonesia-based tanker operator PT Soechi
Lines Tbk's Long-Term Issuer Default Rating at 'B'. The Outlook is
Stable.
Fitch has also affirmed the rating on the USD200 million 8.375%
senior unsecured notes due 2023 issued by wholly owned subsidiary
Soechi Capital Pte. Ltd., and guaranteed by Soechi and all its
operating subsidiaries, at 'B' with a Recovery Rating of 'RR4'.
Soechi's EBITDA and leverage improved in 9M19, driven by higher
earnings from its shipping business and a significant cut in capex.
Annualised 9M19 EBITDA was up 12% compared with 2018 and Fitch
estimates 2019 FFO-adjusted net leverage fell to 4.4x (2018: 5.2x,)
helped by a 65% reduction in capex, including upfront docking
charges. However, Soechi's shipyard business continues to remain a
drag with minimal earnings contribution despite significant capex.
Soechi also has significant bank debt maturities in 3Q21, which
will have to be addressed through refinancing.
The company has started engaging with banks to refinance its debt
and more details are likely to be available later this year. There
is risk that the post-refinancing bank debt amortisation, which
could start as early as 2022, will not be met by the company's free
cash flows despite minimal capex, as shipyard earnings could remain
insignificant. Fitch also sees some risk of capex being higher than
its assumption, if the company chooses to replace old ships at a
faster pace to secure longer term time-charter contracts from key
customer PT Pertamina (Persero) (BBB/Stable). Pertamina usually
grants contracts of less than a year for ships aged around 20 years
or more, compared with multi-year contracts for younger ships.
These risks, if they materialise, could affect Soechi's credit
profile.
KEY RATING DRIVERS
Higher Shipping EBITDA, Lower Capex: Soechi's 9M19 EBITDA rose 20%
yoy to USD56 million, helped by higher shipping revenue as a
contract started in late 2018 for a floating storage and offloading
(FSO) unit. Soechi's capex, excluding upfront docking charges, fell
by 76% yoy to USD15 million. The company acquired one tanker in
2019, compared with two in 2018. Capex in 2018 also included
charges for conversion of the FSO unit. Fitch expects Soechi's
EBITDA to remain at around current levels, assuming steady fleet
capacity, sustained demand for its tanker fleet, and stable
day-rates supported by the protected nature of the domestic
shipping industry.
Strong Shipping Business Fundamentals: Soechi's fleet under
time-charter contracts remained at a high 97% at end-September 2019
(year-earlier: 97%). The average duration of time-charter contracts
for Soechi, weighted by capacity, was around 2 years, but contracts
are often renewed. Soechi is the one of the largest independent
tanker operators in a domestic shipping industry filled with many
small players. Operators are protected from foreign competition by
cabotage laws for domestic transport, which require the use of
Indonesia-flagged vessels and limit foreign ownership to 49% in
joint ventures.
Shipyard Remains a Drag: Soechi invested around USD200 million in
its shipyard, which began operations in 2012. However, annualised
9M19 EBITDA from the shipyard remained quite weak at USD2 million.
Soechi secured contracts in 2019 for building five ships, the first
orders secured since 2015. However, the contract value was quite
small at around USD7 million.
Two tankers ordered by Pertamina were completed in 4Q19, after
delays in construction and inspections. As a result, revenue
visibility for Soechi's shipbuilding business is poor. However,
Fitch has assumed further shipbuilding orders from 2020, likely to
be granted by the government, and a gradual increase in ship-repair
revenue. Nevertheless Fitch doesn't expect shipyard EBITDA to
meaningfully contribute to Soechi's cash flows in the medium-term.
Old Fleet, Small Size: The average age of Soechi's fleet (weighted
by capacity) is around 20 years, against a typical useful ship-life
of 30 years. This is in line with its strategy of operating older
ships, which is the norm in Indonesia's market. The average age of
Indonesian-flagged vessels is more than 20 years. However, older
vessels usually earn shorter time-charter contracts than newer
vessels, are more costly to maintain, have lower utilisation rates
and are more prone to operational issues. Soechi's fleet of 39
ships as of September 2019 is also small relative to global peers.
Customer Concentration, but Low Risk: Pertamina is the company's
largest customer and contributed 77% of Soechi's revenue in 9M19.
This exposes Soechi to the risk of Pertamina not renewing
contracts, not granting new contracts or defaulting on its
payments. However, Fitch believes these risks are significantly
alleviated by the long relationship (Soechi's predecessor companies
have been contracted by Pertamina since 1981), Pertamina's robust
credit profile, as well as Soechi's strong market position and
capex policy, which is tied to the likelihood of new contracts.
Some Deleveraging, Limited FCF: Fitch estimates Soechi's FFO
adjusted net leverage will fall further to 4.1x by 2021. Soechi
should be able to reduce debt via limited free cash flow, as Fitch
assumes controlled spending on ship acquisitions. Management has
indicated a more conservative approach to fleet growth, compared
with its earlier strategy of expanding rapidly to match rising
tanker demand. However, Fitch sees risks to its capex assumptions
from spending to replace ageing vessels, in addition to a more
aggressive approach to growth.
Parent-Subsidiary Linkage Assessment: Fitch assesses overall
linkages between Soechi and its parent PT Soechi Group (PT SG),
which holds a 79.9% stake, to be weak and therefore assesses Soechi
based on its standalone credit profile (including subsidiaries, but
excluding the parent). Fitch assesses the parent, which has a much
smaller shipping fleet and EBITDA than Soechi, to be weaker.
There are no guarantees from Soechi to PT SG or cross-default
clauses covering debt at the parent. There are no loans to the
parent, and dividends and related-party transactions are small.
There are also some checks on related-party transactions under the
local listing regulations and the US dollar bond indenture.
Soechi's rating will likely be constrained to two notches above the
consolidated credit profile including PT SG, as per Fitch's
criteria. Therefore, Soechi's rating may be affected if PT SG's
standalone credit profile deteriorates materially.
DERIVATION SUMMARY
Soechi's rating can be compared with that on PT Buana Lintas Lautan
Tbk (BULL, B+/Stable), which is a very close peer focusing on oil
transportation in Indonesia. BULL had a fleet of 19 ships as of
March 2019, with an average age (weighted by capacity) of around 18
years. BULL's fleet capacity under longer-term time-charter
contracts was relatively high at over 90% as of end-March 2019 and
Pertamina is the largest customer. While Soechi's fleet size is
roughly double that of BULL, its FFO adjusted net leverage was
considerably higher than BULL's 2.9x in 2018.
Soechi can also be compared with PAO Sovcomflot (BB+/Stable), whose
standalone credit profile of 'bb' benefits from one-notch uplift
due to strong support from the Russian government (BBB/Stable). The
company engages in shipping of oil, oil products and gas and
provision of offshore services. The company's fleet (owned and
chartered) specialises in transportation in challenging icy
conditions and includes 147 vessels with an average age of 9 years.
Its customer base is diversified and consists of large
international and Russian oil and gas companies. Sovcomflot's
significantly stronger business profile justifies a higher rating,
despite FFO adjusted net leverage being similar to Soechi's in
2018.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Soechi's deadweight tonnage and tanker day rates to stay
broadly flat over 2019-2022.
- Average annual capex, including upfront docking charges, of
USD27 million over 2019-2022.
- Vessel operational expenses (excluding fuel) to rise by 3% per
year and salaries by 5% per year from 2020, after adjusting for an
increase in fleet size.
- General and administrative expenses to increase by 3% per year
from 2020.
- Revenue from shipyard of USD12 million in 2020, increasing to
USD19 million by 2022, driven by new shipbuilding orders and a
gradual increase in ship-repair revenue.
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Weakening of liquidity position or a substantial deterioration
of the operating environment
- FFO adjusted net leverage above 5x on a sustained basis
- FFO fixed-charge cover below 2x on a sustained basis
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- FFO adjusted net leverage below 4x on a sustained basis
- FFO fixed-charge cover remaining above 3x
- No material deterioration of the operating environment.
LIQUIDITY AND DEBT STRUCTURE
Manageable Liquidity, Some Risk: Soechi had total debt of USD335
million as of end-September 2019, compared with cash (included cash
reported as restricted) of USD24 million. Of the total debt, USD30
million is due in 2020 and USD85 million in 2021. Fitch expects
Soechi to be able to meet its debt maturities in 2020, helped by
some positive free cash flow generation and refinancing of its
USD10 million medium-term notes in December 2019.
The company is engaging with banks to address the large debt
maturities in 2021 through refinancing and Fitch thinks that lower
leverage, revenue visibility due to its market position and the
fleet's adequate appraisal value should support its efforts.
However, there is some risk that the refinancing does not result in
a maturity profile for bank debt that can be addressed by the
company's free cash flows, which could weaken Soechi's liquidity
position due to reliance on further refinancing.
SUMMARY OF FINANCIAL ADJUSTMENTS
Material Non-Standard Financial Statement Adjustments include:
- Cash kept as collateral for loan facilities and for US dollar
bonds' interest reserve account, but reported as "restricted", has
been classified as readily available as it is usable for debt
servicing (2018: USD15.8 million).
- Docking expenses, which are amortised after incurrence, have
been added back to EBITDA (2018: USD9.2 million). Cash expense for
docking has been deducted from capex and added to operating cash
flow (2018: USD7.2 million).
- "Unbilled revenues" and "estimated earnings in excess of
billings on contracts" have been included in working capital -
given their conceptual similarity to trade receivables. Advances
and prepaid expenses have also been included in working capital.
However, interest-related accrued expenses have been excluded from
working capital.
- Unamortised loan transaction costs have been added back to debt
(2018: USD6.7 million).
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.
Soechi has an ESG Relevance Score of 4 for Management Strategy. The
company made a large investment in its shipyard business but
earnings generation has been significantly weaker than its and
management's expectations. This indicates some weakness in
management strategy development and implementation and further
aggressive growth spending remains a risk to Soechi's credit
profile in conjunction with other factors.
===============
M A L A Y S I A
===============
APFT BHD: Plans to Exit PN17 Status with QEOS Energy Stake Buy
--------------------------------------------------------------
The Sun Daily reports that APFT Bhd plans to acquire the entire
equity stake in QEOS Energy Sdn Bhd, as part of its proposed
regularisation plan to exit from the Practice Note 17 (PN 17)
status.
According to the report, APFT told Bursa Malaysia that it had
entered into a memorandum of understanding (MoU) with QEOS LED Sdn
Bhd with the aim of entering into a definitive sale and purchase
agreement along with other key proposals to be implemented under
its proposed regularisation plan.
"The proposed regularisation plan would involve, inter-alia, the
proposed acquisition and other key proposals including a fund
raising exercise."
Sun Daily relates that APFT said under the MoU, the two parties
have agreed to co-operate exclusively with each other for a minimum
period of six months and sets out the understanding and intention
in respect of the proposed regularisation plan.
APFT has until Jan. 18 to submit its regularisation plan, the
report notes.
About APFT Berhad
APFT Berhad owns and operates flight education and training
academy, the Asia Pacific Flight Training Academy (APFTA), located
at Sultan Ismail Petra Airport, Pengkalan Chepa, Kota Bharu
Kelantan. APFTA is a flight education and training service provider
in Malaysia. The Company operates through two segments: flight
education and training, and mechanical works and services.
It has a fleet strength of over 30 aircrafts, and over 40 flight
and ground instructors operating out of three commercial airports
in Malaysia.
APFT was admitted into Practice Note 17 (PN17) category in January
2018 as its shareholders' equity fell below the 50% threshold.
=================
S I N G A P O R E
=================
TEE LAND: Net Loss Widens to SGD6.97MM in Q2 Ended Nov. 30
----------------------------------------------------------
Janice Heng at The Business Times reports that despite a rise in
gross profit, mainboard-listed developer TEE Land saw its net loss
attributable to owners widen to SGD6.97 million for the second
quarter ended Nov. 30, from a restated loss of SGD2.04 million for
the year-ago period, according to results released on Jan. 9.
According to BT, contributing to the loss was a surge in other
operating expenses to SGD5.4 million from SGD0.4 million in the
year-ago period. This was due mainly to the additional buyer's
stamp duty payable for a development project, as the project did
not meet the required timeline for completion, as well as the
fair-value loss of TEE Building.
BT relates that revenue shrank 24.8 per cent to SGD16.3 million in
the second quarter from SGD21.7 million in the year-ago period, due
mainly to lower revenue from development projects 24One Residences
and 183 Longhaus, and lower sales of unsold units in Third Avenue,
offset to some extent by the progressive recognition of revenue
from Rezi 35 and 35 Gilstead.
Loss per share for the second quarter was 1.56 Singapore cents,
compared with 0.46 cent in the year-ago period, BT discloses.
With the latest quarter's results, TEE Land's net loss attributable
to owners for the first half of the year was SGD8.66 million,
widening from SGD5.11 million in the year-ago period, the report
relates. Revenue for the half year was down 33.8 per cent at SGD37
million, compared with a restated SGD55.9 million in the year-ago
period.
Amid continued global uncertainty, "the operating environment in
Singapore for the property market is expected to remain challenging
and could affect the performance of the group", said TEE Land.
Any delays in achieving 100% sales, or in completion of the group's
existing properties which are subject to regulatory timelines,
could also hit the group's performance, it added, BT relays. The
performance of its overseas markets is also expected to be affected
by local economic developments and foreign exchange fluctuations.
"Moving forward, the group will take a cautious approach when
seeking opportunities to acquire new land sites and in making any
investments," TEE Land, as cited by BT, said. It added that it will
focus on improving operations and sales, realising value in
investments, and reducing its gearing.
About TEE Land
Based in Singapore, TEE Land Limited, an investment holding
company, operates as a real estate developer and investor in
Singapore, Malaysia, Thailand, Australia, and New Zealand. The
company operates through three segments: Property Development,
Hotel Operations, and Investment Properties. It undertakes
residential, commercial, and industrial property development
projects; invests in properties, such as hotels in Australia; and
provides short-term accommodation in New Zealand. TEE Land Limited
is a subsidiary of TEE International Limited.
Tee Land posted a net loss of SGD23.8 million for the 12 months to
May 31, 2019, compared with a net loss of SGD8.69 million the year
before.
*********
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.
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