/raid1/www/Hosts/bankrupt/TCRAP_Public/200115.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
Wednesday, January 15, 2020, Vol. 23, No. 11
Headlines
A U S T R A L I A
BAY BON: First Creditors' Meeting Set for Jan. 23
CO-OP BOOKSHOP: Curious Planet Retail Network to Shut 63 Stores
FREESTYLE TECHNOLOGY: Second Creditors' Meeting Set for Jan. 22
GLOBAL TRAVEL: First Creditors' Meeting Set for Jan. 22
GT WINE: Second Creditors' Meeting Set for Jan. 22
GUVERA GROUP: ASIC Bans Former Director for Two Years
C H I N A
DANDONG PORT: Bankruptcy Ruling Stirs Up a Storm
MIE HOLDINGS: Fitch Affirms CC LT Issuer Default Rating
REDSUN PROPERTIES: Moody's Rates Proposed USD Sr. Unsec. Notes B3
RISESUN REAL: Fitch Publishes LT IDR at 'BB-', Outlook Stable
H O N G K O N G
HONGKONG INTERNATIONAL (QINGDAO): S&P Withdraws 'BB+' LT ICR
I N D I A
A SHAMA: ICRA Lowers Rating on INR69.50cr LT Loan to B+
AVADH COTTON: ICRA Maintains 'B' Rating in Not Cooperating
CLC INDUSTRIES: Insolvency Resolution Process Case Summary
COASTAL ENERGY: Insolvency Resolution Process Case Summary
DEWAN HOUSING: Creditors to Meet on January 16
DUGAR POLYMERS: ICRA Lowers Rating on INR33cr Cash Loan to B+
GAYATRI INFRA: Insolvency Resolution Process Case Summary
GLENMARK PHARMACEUTICALS: Fitch Rates New US$ Sr. Unsec. Notes 'BB'
GLENMARK PHARMACEUTICALS: S&P Rates US$200MM Sr. Unsec. Notes 'BB-'
IREO PRIVATE: ICRA Maintains 'D' Rating in Not Cooperating
KISHORE INFRASTRUCTURES: Ind-Ra Moves BB+ Rating to NonCooperating
KOCHAS POWER: ICRA Withdraws 'D' Rating on Bank Facilities
KTC FOODS: ICRA Maintains 'D' Rating in Not Cooperating
KUMAR SPINTEX: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
LAXMIKANT COTTON: ICRA Withdraws B Rating on INR5cr Cash Loan
MAHATHI SOFTWARE: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
MAHESHWARI TECHNOCAST: ICRA Cuts Rating on INR6.9cr Loan to B
MATHIYAN CONSTRUCTION: ICRA Keeps C+ Rating in Not Cooperating
MIZORAM ISPAT: ICRA Lowers Rating on INR20cr Loan to B+
NAIKNAVARE PROFILE: ICRA Reaffirms C Rating on INR65cr Loan
NAVBHARAT BUILDCON: ICRA Moves 'B' Rating to Not Cooperating
PACIFIC MULTI-COMMODITY: Insolvency Resolution Case Summary
POPULAR SHOE: ICRA Lowers Rating on INR12cr Cash Loan to B+
REDDY PHARMACEUTICALS: ICRA Cuts Rating on INR10cr Loan to C+
RENEW POWER: S&P Assigns 'BB-' Rating to US$400MM Sr. Secured Notes
SANDHHYA SHIPPING: Insolvency Resolution Process Case Summary
SAP ENERGY: ICRA Lowers Rating on INR9cr Term Loan to 'B+'
SHAIFALI STEELS: Insolvency Resolution Process Case Summary
SHRENIK MARBLE: ICRA Migrates B+ Rating to Not Cooperating
SREE LAKSHMI: ICRA Lowers Rating on INR160cr Term Loan to B+
SRI SUDHA: ICRA Maintains B Rating in Not Cooperating Category
SRI VENKATESHWARA: ICRA Keeps 'B' Rating in Not Cooperating
SRI YADADRI: Insolvency Resolution Process Case Summary
SUMA FOODS: ICRA Maintains 'D' Rating in Not Cooperating
SUMAN PROTEINS: ICRA Lowers Rating on INR7cr Cash Loan to B+
SYNTEL INFOSYSTEM: Insolvency Resolution Process Case Summary
THREE C UNIVERSAL: Insolvency Resolution Process Case Summary
UNITED TELECOMS: ICRA Keeps 'D' Ratings in Not Cooperating
URVI PLASTIC: ICRA Migrates B Rating to Not Cooperating Category
VALUE INFRATECH: Insolvency Resolution Process Case Summary
I N D O N E S I A
LIPPO KARAWACI: Fitch Assigns B- Rating to New US$ Sr. Unsec. Notes
LIPPO KARAWACI: S&P Assigns 'B-' Rating on Sr. Unsecured Notes
J A P A N
[*] JAPAN: Regional Banks Face Shake-Up Under FSA Plans
N E W Z E A L A N D
PACIFIC PINE: Putaruru Sawmill Goes Into Receivership
P A K I S T A N
PAKISTAN: Fitch Affirms B- LT FC IDR, Outlook Stable
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A U S T R A L I A
=================
BAY BON: First Creditors' Meeting Set for Jan. 23
-------------------------------------------------
A first meeting of the creditors in the proceedings of Bay Bon
Investments Pty Ltd will be held on Jan. 23, 2020, at 11:30 a.m. at
the offices of Worrells Brisbane, Level 8, at 102 Adelaide Street,
in Brisbane, Queensland.
Lee Crosthwaite of Worrells North Lakes was appointed as
administrator of Bay Bon on Jan. 13, 2019.
CO-OP BOOKSHOP: Curious Planet Retail Network to Shut 63 Stores
---------------------------------------------------------------
Matthew Elmas at SmartCompany reports that the Co-op bookshop's
Curious Planet retail network will be wound up by the end of March
unless an eleventh hour buyer emerges for the business.
According to SmartCompany, the network of 63 stores, which were
formerly known as Australian Geographic stores, are today in the
midst of a stock fire sale as administrators for collapsed parent
Co-op Bookshop Limited prepare to shut down the business
permanently.
PricewaterhouseCoopers administrator Andrew Scott has been trying
to sell the business as a going concern since it collapsed in
December last year, but he said on Jan. 13 no suitable suitors have
emerged.
The administrators did not say how many workers would be affected
by the closures, but SmartCompany has sought clarification on the
number of people affected.
"A number of discussions have been held and are still ongoing with
interested parties, however, no acceptable offer to purchase some
or all the Curious Planet store network has been forthcoming,"
SmartCompany quotes Mr. Scott as saying in a statement on Jan. 13.
"While we remain open to offers from potential purchasers, we have
no option at this time but to commence the orderly closure of the
stores."
Separately, Mr. Scott said the sale process for the Co-op bookshop
business is at an "advanced stage", suggesting a buyer may be
announced for the business in the coming weeks, SmartCompany
reports.
No update was provided by the administrators regarding the
investigation of allegations that the Co-Op's chief executive
oversaw hundreds of thousands of dollars in advance payments to a
supplier he controls, the report adds.
FREESTYLE TECHNOLOGY: Second Creditors' Meeting Set for Jan. 22
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Freestyle
Technology Limited has been set for Jan. 22, 2020, at 11:30 a.m. at
Novotel Melbourne Glen Waverley, at 285 Springvale Road, in Glen
Waverley, 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. 21, 2020, at 5:00 p.m.
Todd Gammel & Barry Taylor of HLB Mann Judd were appointed as
administrators of Freestyle Technology on Dec. 9, 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; and
-- Travel Serv Co Pty Ltd
will be held on Jan. 22, 2020, at 11:00 a.m. at the offices Wesley
Conference Centre, at 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.
GT WINE: Second Creditors' Meeting Set for Jan. 22
--------------------------------------------------
A second meeting of creditors in the proceedings of GT Wine
Magazine Pty Limited has been set for Jan. 22, 2020, at 3:00 p.m.
at the offices of McGrath Executive Suites, Level 5, at 115 Pitt
Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 21, 2020, at 5:00 p.m.
Cameron Hamish Gray and Anthony Wayne Eklerton of DW Advisory of
were appointed as administrators of GT Wine on Dec. 11, 2019.
GUVERA GROUP: ASIC Bans Former Director for Two Years
-----------------------------------------------------
The Australian Securities and Investments Commission (ASIC) has
disqualified Darren Russel Herft, of Sanctuary Cove, Queensland,
from managing corporations for a period of two years.
The disqualification follows the failure of four companies within
the Guvera Group, which operated and developed a worldwide music
streaming platform. An additional three failed companies were also
considered by the ASIC.
The seven failed companies of which Mr. Herft was a director were:
* Guvera Australia Pty Ltd (In Liquidation) (Guvera Australia)
* Guvera Operations Pty Ltd (In Liquidation)
* Guv Services Pty Ltd (In Liquidation) (Guv Services)
* Professional IPO Management Pty Ltd (Deregistered)
* KwikTV Australia Services Pty Ltd (In Liquidation) (KwikTV)
* The Product People (International) Pty Limited (In
Liquidation)
* WWP Accounting Group Pty Ltd (Deregistered)
An ASIC delegate found Mr. Herft:
* failed to ensure that Guvera Australia met its statutory
obligations relating to debts owed to the Australian Taxation
Office and the Office of State Revenue;
* failed to ensure that Guv Services met its statutory
obligations;
* caused Guvera Australia to enter into a management agreement
with Guvera Limited (Guvera Group's parent company) to
provide research and development services, resulting in all
expenses relating to generating a refund from research and
development activities being incurred by Guvera Australia,
yet any tax refund flowing to Guvera Limited, leading to the
ongoing viability of Guvera Australia being significantly
affected;
* did not act in good faith and for a proper purpose in the
management of Guv Services, given that Guv Services' primary
source of revenue was from Guvera Australia and that Guvera
Australia's financial viability was affected by the agreement
that Mr Herft had caused it to enter into with Guvera
Limited; and
* improperly used the Guvera Group structure for his gain and
the gain of others in circumstances where there were
significant conflicts of interest in the operation of the
companies within the group.
Mr. Herft's disqualification took effect from Dec. 19, 2019 and
will continue until December 18, 2021.
In making the decision to disqualify Mr. Herft, the ASIC delegate
relied on reports lodged by the liquidators of the failed
companies.
Guvera Limited (the holding company in the Guvera Group), undertook
an initial public offering in order to list on the Australian
Securities Exchange. An initial prospectus was lodged with ASIC on
May 31, 2016 and a replacement prospectus was issued on June 16,
2016. The replacement prospectus was rejected by the Australian
Securities Exchange on June 16, 2016.
On June 27, 2016, two Guvera Group companies -- namely, Guvera
Australia and Guv Services - were placed into administration and
subsequently entered into liquidation.
Section 206F of the Corporations Act empowers ASIC to disqualify a
person from managing corporations for up to five years if, within a
seven-year period, the person was an officer of two or more
companies, and those companies were wound up and a liquidator
provides a report to ASIC about the company's inability to pay its
debts.
In making its decision to disqualify Mr. Herft, ASIC relied on
supplementary reports lodged by the liquidators of Guvera
Australia, Guv Services, and KwikTV. Funding from the Assetless
Administration Fund was also provided to the liquidator of KwikTV
to assist in preparing a supplementary report.
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C H I N A
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DANDONG PORT: Bankruptcy Ruling Stirs Up a Storm
------------------------------------------------
Bloomberg News reports that a port operator in northeastern China
once at the center of U.N. sanctions on North Korea is finding
itself in another storm.
According to Bloomberg, Dandong Port Group Co. has regained
attention after a controversial court ruling in favor of a
state-led debt overhaul that forces steep losses on creditors and
drew shareholders' complaints about an opaque bankruptcy process.
The court verdict also runs counter to an unprecedented roadmap
that Beijing has just laid out to restore investor confidence via
fair handling of bond defaults, the report says.
Bloomberg relates that the Dandong authorities' iron-fist approach
is a reminder that despite Beijing's repeated pledge to treat all
investors equally, a powerful state sector and deeply rooted local
protectionism are just among the many hurdles it faces in an uphill
battle.
Dandong Port, located on the border with North Korea, began
defaulting on local bonds in 2017 as a result of years of
debt-fueled expansion and a regional economy battered by
international sanctions on Pyongyang, the report notes.
The firm has failed to repay investors on nearly CNY8 billion ($1.2
billion) of local notes and ranks as China's eighth largest bond
defaulter, according to data compiled by Bloomberg.
Bloomberg says the port operator went into bankruptcy proceedings
in April after the Dandong Intermediate People's Court appointed a
group of local government officials as administrators. The case
also involves three companies related to Dandong Port.
Under the restructuring plan, local authorities will reorganize the
four companies into two new entities, including one with the most
lucrative port assets to be controlled by a major state-run port
operator from the province, Bloomberg discloses citing a court
ruling on the National Enterprise Bankruptcy Information Disclosure
Platform's website. The other entity gets the less profitable
businesses and will be collectively owned by creditors.
Institutional bondholders will each receive a maximum of CNY300,000
in cash compensation and can swap their remaining debt claims for
shares in the weaker of the two new firms, according to the plan
cited by Bloomberg.
Despite fierce opposition from creditors and shareholders who had
voted against the plan twice, the local court handed down its
irrevocable ruling Dec. 31, calling the compensation "relatively
fair," according to Bloomberg.
Bloomberg says many bondholders of Dandong Port said the
restructuring plan is significantly worse than those in other cases
in China, where investors enjoyed much higher debt recovery.
"The court's forceful ruling, which disregards ordinary creditors'
interests and may benefit certain parties in the short term, will
seriously damage the business reputation of the Dandong area,"
Bloomberg quotes Deng Hao, chief executive of Beijing GEC Asset
Management, as saying.
Forceful rulings are a special right awarded to the court and need
to be used "very prudently," Deng said.
MIE HOLDINGS: Fitch Affirms CC LT Issuer Default Rating
-------------------------------------------------------
Fitch Ratings affirmed China-based MIE Holdings Corporation's
Long-Term Issuer Default Rating at 'CC'. Fitch has also affirmed
the rating of MIE's USD248.4 million 13.75% senior notes due April
2022 at 'C' with a Recovery Rating of 'RR6'.
The 'CC' rating reflects MIE's significant liquidity challenges and
its limited financial flexibility, as cash generation is unlikely
to cover short-term debt maturities and interest obligations. The
Recovery Rating of 'RR6' on the 2022 notes reflects their low
recovery prospects in light of MIE's significant levels of secured
and other prior-ranking debt.
KEY RATING DRIVERS
High Probability of Default: MIE's debt-servicing ability remains
weak, even though the disposal of Maple Marathon to its major
shareholder has reduced its outstanding debt obligations by about
CNY1.69 billion. Fitch estimates FFO adjusted net leverage fell to
around 10x by end-2019 from 15.3x at end-December 2018. MIE's
capital structure is untenable and restructuring is inevitable as
cash flow from operations is not sufficient to repay its debt and
interest obligations. MIE is keen to also divest its 40% stake in
Emir Oil and 34% stake in its South China Sea oil and gas business.
Interest from investors in these two assets has so far been weak
because of the absence of controlling stakes.
Low Principal Repayment Visibility: Fitch estimates MIE has
outstanding debt of CNY3.7 billion, with most of it, approximately
CNY2 billion, due in 2020. MIE had a minimal unrestricted cash
balance of CNY10.35 million at end-June 2019 and Fitch estimates
the cash balance stayed at a similar level at end-December 2019.
Fitch expects MIE to seek an extension for its maturing loans and
at the same time seek ways to restructure its borrowings to avert a
default. MIE is working towards exercising its option to extend the
maturity for its outstanding USD30 million loan due February 1,
2020 with its lender. Failure to do so would likely result in a
non-payment event. Fitch notes MIE has so far been able to extend
its debt maturities with its lenders.
Interest Coverage Remains Below 1x: Fitch believes MIE will
continue to have difficulty repaying the large amount of its
interest-bearing obligations due to its cash deficit. Fitch
estimates it had EBITDA of slightly less than CNY400 million in
2019 versus an interest obligation of around CNY600 million. MIE
was relying on short-term bridge loans, payment extensions as well
as a new share placement to support its near-term obligations
during 2019. Fitch continues to forecast EBITDA interest coverage
of around 0.7x even after the disposal of Maple Marathon, with an
annual interest obligation of about CNY520 million, assuming stable
production for its Daan oilfield.
Substantial Pledged Shareholder Loan: China Orient Asset Management
Co., Ltd. (A/Stable) had a 45.03% indirect security interest in MIE
as of end-December 2019 after MIE's controlling shareholder, Far
East Energy Limited (Hong Kong) (FEEL) pledged its shares for a
loan, although details are not available. FEEL holds a 43.27% stake
in MIE. A decline in MIE's share price may trigger margin calls,
which would require FEEL to increase collateral; a failure to meet
margin calls could result in the lender liquidating the shares to
recover loan losses, though this is relatively uncommon in Asia.
Nevertheless, an involuntary sell-off of the shares pledged could
potentially trigger a change-of-control clause in MIE's loan and
bond documentation, including its outstanding US dollar bond,
raising the risk of accelerated debt redemption.
Concentration Risks in Daan: MIE's key cash flow generating asset
is mainly its 100%-owned Daan oilfield in China's Jilin province.
Cash contribution from its 10% stake in the Moliqing field in
northeast China and its 40% stake in its Kazakhstan operations is
negligible. Daan's oilfield production remained largely stable in
2019 at around 5mboepd but Fitch estimates it has a short proved
and probable, or 2P, reserve life of around six years compared with
that of its peers. Management plans to increase capex in 2020 to
support production growth. However, Fitch believes this would be
challenging due to MIE's limited cash resources and hefty
debt-repayment obligations.
DERIVATION SUMMARY
The ratings on MIE and its bonds are driven by the company's
distressed situation with high redemption risk for its near-term
debt maturities. MIE's production volume of around 5mboepd is
weaker than that of its 'B' rated peers such as Seplat Petroleum
Development Company Plc (B-/Positive) and PT Medco Energi
Internasional Tbk (B+/Stable). It is also exposed to concentration
risks with the majority of income from its Daan oilfield. MIE's
financial profile is constrained by its imminent liquidity
challenge arising from the prolonged cash burn, limited financing
access and very weak capital structure compared with its peers in
China such as Anton Oilfield Services Group (B/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Limited access to new funding
- Stable oilfield production in China with 0%-2% growth between
2019 and 2022
- Fitch oil-price assumptions for Brent: USD62.5/barrel (bbl) in
2020, USD60/bbl in 2021 and USD57.5/bbl thereafter
Key Assumptions for Fitch's Bespoke Recovery Analysis
- MIE's domestic operations would be liquidated rather than
reorganised in a bankruptcy.
- Fitch has applied 60% advance rate to MIE's Daan oilfield, 75%
advance rate to accounts receivable, and 60% to inventory
- Fitch then applied a 50% discount to MIE's residual equity
value in Emir Oil, which is valued based on its last sale price in
2016.
- The recovery estimate for senior unsecured debt, predominantly
consisting of the 2022 US dollar senior notes, is 0%, which
corresponds to a Recovery Rating of 'RR6'
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- No positive rating action envisaged until MIE's liquidity
position and capital structure improve significantly.
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- The IDR will be downgraded to 'C' if a default or default-like
process begins.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Crunch: Most of MIE's debt is on a secured basis and
maturing in the short term. Fitch estimates MIE had CNY13.70
million in unrestricted cash at end-December 2019, against CNY2.0
billion in debt maturing in 2020. Its next upcoming maturity of
USD30 million is due February 1, 2020 and the company is seeking to
exercise its option to extend the maturity date with its lender.
MIE's financing access remains very weak with minimal unencumbered
access and concentrated lenders.
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.
REDSUN PROPERTIES: Moody's Rates Proposed USD Sr. Unsec. Notes B3
-----------------------------------------------------------------
Moody's Investors Service has assigned a B3 rating to Redsun
Properties Group Limited's (B2 positive) proposed senior unsecured
USD notes.
Redsun plans to use the proceeds from the proposed notes to
refinance its existing indebtedness and for general corporate
purposes.
RATINGS RATIONALE
"The proposed bond issuance will have limited impact on Redsun's
credit metrics, because the proceeds will mainly be used to
refinance its existing debt," says Cedric Lai, a Moody's Vice
President and Senior Analyst. "The issuance will also improve the
company's liquidity position and lengthen its debt maturity
profile."
Redsun reported total contracted sales of RMB65.1 billion for the
12 months to December 31, 2019. The result represented a 37.6%
year-on-year growth from the RMB47.3 billion recorded in the
corresponding period a year ago.
Supported by strong contracted sales in the past two years, Moody's
expects that Redsun's revenue recognition will improve over the
next 12-18 months. As a result, the company's debt leverage — as
measured by revenue/adjusted debt and including adjustments for its
shares in joint ventures and associates — will trend towards
60%-65% over the next 12-18 months from around 44% for the 12
months ended June 30, 2019. Its interest coverage — as measured
by adjusted EBIT/interest and including adjustments for shares in
joint ventures and associates — should strengthen to around
2.2x-2.5x from 2.2x over the same period.
Redsun's B2 corporate family rating reflects the company's long
track record of developing properties in Jiangsu Province, quality
land bank, and strong sales execution. The rating also considers
the recurring income streams generated from its investment
properties, which improve the stability of its debt servicing.
However, the CFR is constrained by its developing funding channels,
moderate credit metrics, and high exposure to joint venture
businesses, which in turn lower the transparency of its credit
metrics.
Redsun's liquidity position is adequate. Specifically, the
company's RMB16.9 billion in cash as of June 30, 2019 covered 125%
of its short-term debt of RMB13.5 billion. Moody's expects that the
company's cash holdings, together with its operating cash flow,
will be sufficient to cover its short-term debt and committed land
payments over the next 12-18 months.
The B3 senior unsecured rating is one notch lower than Redsun's CFR
to reflect the risk of structural subordination. This subordination
risk considers the fact that the majority of its 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, the likely recovery rate for claims at the holding
company will be lower.
In terms of environmental, social and governance factors, Moody's
has taken into account the concentrated ownership by Redsun's key
shareholder, Mr. Zeng Huansha, who held a 72% direct and indirect
stake in Redsun as of June 30, 2019.
Moody's has also considered (1) the presence of three independent
non-executive directors on Redsun's eight-member board of
directors, (2) the fact that the three directors also chair both
the audit and remuneration committees; and (3) the presence of
other internal governance structures and standards, as required
under the Corporate Governance Code for companies listed on the
Hong Kong Stock Exchange.
The positive ratings outlook reflects Moody's expectation that
Redsun will (1) continue its strong contracted sales growth; (2)
strengthen its credit metrics over the next 12-18 months; and (3)
improve access to both offshore and onshore funding channels.
Moody's could upgrade Redsun's ratings if the company improves its
debt leverage and funding channels, while maintaining strong
contracted sales growth. Credit metrics indicative of a potential
upgrade include (1) revenue/adjusted debt rising above 60%-65%; (2)
adjusted EBIT/interest rising above 2.25x; and (3) cash/short-term
debt rising above 1.25x; all three factors on a sustained basis.
A downgrade is unlikely in the near term, given the positive
outlook on Redsun's ratings.
However, Moody's could revise the ratings outlook to stable from
positive, if the company fails to improve its credit metrics over
the next 12-18 months or maintain adequate liquidity over the same
period.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Founded in 1996, Redsun Properties Group Limited listed on the Hong
Kong Stock Exchange in July 2018. Its headquarters are in Shanghai
and Nanjing.
Redsun engages in real estate development, commercial properties
and hotel operations in China. At June 30, 2019, the company's
total saleable resources comprised a gross floor area of around
15.7 million square meters, across 39 cities in China.
RISESUN REAL: Fitch Publishes LT IDR at 'BB-', Outlook Stable
-------------------------------------------------------------
Fitch Ratings published China-based homebuilder Risesun Real Estate
Development Co.,Ltd.'s first-time Long-Term Foreign-Currency Issuer
Default Rating of 'BB-' with a Stable Outlook. Fitch has also
published Risesun's senior unsecured rating of 'BB-'.
Risesun's IDR is supported by its deleveraging trend, which can be
sustained by its large size in terms of contracted sales, land bank
and EBITDA. The company has a diversified land bank covering 79
cities in the Bohai Rim, Yangtze River Delta, Pearl River Delta,
and central, northern and south-western China. In addition,
Risesun's EBITDA margin, after adding back capitalised interest,
has been sustained above 25% because of its price premium and low
land costs due to its sophisticated land-bank acquisition strategy
and satisfactory government relationships.
Fitch expects Risesun's total contracted sales to exceed CNY120
billion in 2020, compared with CNY115 billion in 2019 and CNY102
billion in 2018. Fitch forecasts Risesun's leverage to improve due
to a decent sales collection rate of 78%-80% and a sustainable
land-bank life of three to four years.
KEY RATING DRIVERS
Deleveraging Trend: Fitch expects Risesun's leverage to reduce
gradually to 42%-43% in 2020-2021, in line with that of 'BB-'
peers. Risesun's leverage - measured by net debt/adjusted inventory
- improved to 44% in 1H19 and 3Q19, from 45% in 2018 and 54% in
2017, due to slower land acquisition and high sales collection.
Fitch forecasts Risesun to replenish land at a rate of 1.1x of
contracted sales gross floor area (GFA), with the land acquisition
premium likely to be equivalent to about 40% of cash collection
from contracted sales. The cash collection rate remained at 78%-80%
in the 9M19, due to Risesun's strict check on homebuyers' loan
qualifications and better incentives for the sales team, whose
income is based on cash collected instead of contracted sales.
Sufficient, Diversified Land Bank: Risesun's large land bank
reserve exceeded 40 million sq m at end-1H19, up from 36 million sq
m at end-2018. More than 50% of the land reserves are located in
Beijing and Bohai Rim where the company, headquartered in Langfang,
Hebei province, has advantages in its home market. The company also
has a broad geographical diversification, selectively entering
cities that have a net population inflow in the Yangtze River
Delta, Greater Bay Area and central and western China. It has a
presence in 79 cities.
In addition, the company has improved its land reserve quality and
has increased the portion of land located in Tier 1-2 cities in
2019. Fitch expects Risesun's land-bank life to stay around three
to four years in 2019-2022, in light of the company's strong
financial discipline.
Healthy Margin: Fitch forecasts Risesun's EBITDA margin, after
adding back capitalised interest, to be sustained above 25% due to
low average land costs. The company can maintain its price premium,
compared with other developers in Bohai Rim, by providing a
higher-quality living experience through modern housing
technologies, a higher green space ratio (around 40%) and
high-standard property management services. Risesun's average
selling price (ASP) and land costs should rise as the company
raises its land bank portion in Tier 2 cities.
Large Business Scale: Risesun's total contracted sales are forecast
by Fitch to exceed CNY120 billion in 2020. Total contracted sales
reached CNY115 billion in 2019, an increase from CNY101 billion in
2018 and CNY68 billion in 2017. More than 80% of total contracted
sales are attributable to Risesun.
DERIVATION SUMMARY
Risesun's credit profile improved in 2019, but is weaker than that
of 'BB' rated homebuilders because of the company's higher
leverage, as measured by net debt/adjusted inventory. Risesun's
scale by contracted sales and land bank is larger than that of CIFI
Holdings (Group) Co. Ltd. (BB/Stable). Both companies are focused
on Tier 2 and 3 cities, although Risesun has more exposure in lower
tier cities, which is reflected by its lower ASP of around
CNY11,000 per sq m than CIFI's CNY15,000 per sq m. Risesun and CIFI
have similar churn rates and both maintain an EBITDA margin
(excluding capitalised interest) of over 25%. Risesun's leverage of
44%-45% in 2018 and 2019 is comparable to CIFI's 35%-45%.
Risesun's financial profile is comparable with Ronshine China
Holdings Limited (BB-/Stable) considering their similar leverage
level. However, Ronshine focuses on Tier 1-2 cities, implying a
better land reserve quality. Risesun's business scale is stronger
than some 'B+' peers, including Helenbergh China Holdings
Limited(B+/Stable) and Zhongliang Holdings Group Company Limited
(B+/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Contracted sales to rise by 8%-10% in 2020-2021, with ASP to
increase by 4%-6% for the same period. The faster-than-sector ASP
growth is due to an increase in land acquisition in higher tier
cities in 2019-2020
- Land replenishment at 1.1x of contracted sales GFA in 2019-20,
with land bank life at three-four years.
- Sales collection ratio to remain above 78%
- EBITDA margin, excluding capitalised interest, to remain at
above 28% in 2019-2021
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory, sustained
below 35% (1H19: 44%)
- EBITDA margin, after adding back capitalised interest in COGS,
sustained at 30% or above (1H19: 28.7%)
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Leverage, measured by net debt/adjusted inventory, above 45%
for a sustained period
- EBITDA margin, after adding back capitalised interest in COGS,
below 25% for a sustained period
LIQUIDITY AND DEBT STRUCTURE
Liquidity Manageable: Risesun had total cash of CNY26.1 billion at
end-1H19 (CNY30.3 billion in 2018) against CNY34.7 billion of
short-term debt (CNY26.6 billion in 2018). The company has unused
uncommitted credit facilities of CNY55.7 billion, enough to cover
its short-term debt.
SUMMARY OF FINANCIAL ADJUSTMENTS
The interest-bearing portion of amounts due to related parties were
classified as long-term debt
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 Risesun, either due
to their nature or the way in which they are being managed by the
company.
=================
H O N G K O N G
=================
HONGKONG INTERNATIONAL (QINGDAO): S&P Withdraws 'BB+' LT ICR
------------------------------------------------------------
S&P Global Ratings said that it has withdrawn its 'BBB-' long-term
issuer credit rating on Qingdao City Construction Investment
(Group) Ltd. (QCCI), a local government financing vehicle in China,
at the issuer's request. The outlook was stable at the time of
withdrawal.
At the same time, S&P withdrew its 'BB+' long-term issuer credit
rating on Hongkong International (Qingdao) Co. Ltd., a subsidiary
of QCCI. The outlook was stable at the time of withdrawal. S&P also
withdrew the 'BB+' long-term issue rating on the company's rated
debt.
=========
I N D I A
=========
A SHAMA: ICRA Lowers Rating on INR69.50cr LT Loan to B+
-------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of A Shama
Rao Foundation, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term– 69.50 [ICRA]B+ (Stable) ISSUER NOT
Fund based COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable)and
continues to remain under
'Issuer Not Cooperating'
Category
Long Term- 0.25 [ICRA]B+ (Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
Facilities from [ICRA]BB+ (Stable)and
continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The ratings are downgrade because of lack of adequate information
regarding A Shama Rao Foundation performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with A Shama Rao Foundation, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Established in April 1988, A Shama Rao Foundation (ASRF) is a part
of the Srinivas Group of Colleges and Vijayalakshmi Group of
Colleges, which run many educational institutes offering various
courses ranging from pre-university to post graduation. The group
operates with 18 institutions at present, offering courses in hotel
management, medical, nursing, pharmacy, physiotherapy, management,
engineering and hospitality among others. The colleges of the Group
are located on three campuses in and around Mangalore namely
Pandeshwar, Valachil and Mukka. The Trust has five trustees, with
Mr. A Raghavendra Rao as its current President. ASRF has
established Srinivasa University in 2013, which commenced
operations in the academic year 2015-16. The university offers
courses in the fields of management, engineering, commerce, allied
health sciences, hotel management, social science and humanities.
AVADH COTTON: ICRA Maintains 'B' Rating in Not Cooperating
----------------------------------------------------------
ICRA said the ratings for the INR5.93-crore bank facilities of
Avadh Cotton Industries continue to remain under 'Issuer Not
Cooperating' category. The ratings are denoted as "[ICRA]B(Stable);
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 4.50 [ICRA]B(Stable) ISSUER NOT
Cash Credit- COOPERATING; Rating continues
cum-ODBD to remain under 'Issuer Not
Cooperating' category
Fund based– 1.43 [ICRA]B(Stable) ISSUER NOT
Term Loan COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity to monitor
its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately
reflect the credit risk profile of the entity.
Avadh Cotton Industries was established in January 2014, as a
partnership firm, by Mr. Rohitbhai Sitapara and five other
partners. The firm is engaged in the ginning and pressing of raw
cotton. In December 2014, the firm commenced the ginning
operations. The operations are managed by Mr. Shaileshbhai Chikani,
Mr. Rashikbhai Vaishnav and Mr. Rohitbhai Sitapara. The
manufacturing plant is in Moti Banugar in the Jamnagar district of
Gujarat. It is equipped with 24 ginning machines and a pressing
machine, with an installed production capacity of 225 cotton bales
per day (24-hour operations).
CLC INDUSTRIES: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: CLC Industries Limited
Registered office as per ROC Company master data:
A-60, Okhla Industrial Area
Phase-II, New Delhi 110020
Insolvency Commencement Date: January 3, 2020
Court: National Company Law Tribunal, New Delhi Principal Bench
Estimated date of closure of
insolvency resolution process: July 1, 2020
(180 days from commencement)
Insolvency professional: Subhash Kumar Kundra
Interim Resolution
Professional: Subhash Kumar Kundra
Primus Insolvency Resolution and
Valuation Pvt. Ltd.
C4E/135, Janak Puri
New Delhi 110058
E-mail: kundra.sk27@gmail.com
clc@primusresolutions.in
Last date for
submission of claims: January 20, 2020
COASTAL ENERGY: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Coastal Energy Private Limited
Door No. 11, Mahalingapuram Main Road
Nungambakkam, Chennai TN 600034
IN
Insolvency Commencement Date: January 6, 2020
Court: National Company Law Tribunal, Chennai Bench
Estimated date of closure of
insolvency resolution process: July 6, 2020
Insolvency professional: S Rajagopal
Interim Resolution
Professional: S Rajagopal
C/o S Rajagopal and Associates
11/108, 4th Street
Karpagam Avenue
R.A. Puram, Chennai 600028
E-mail: centaur_sr@yahoo.com
- and -
C/o S Rajagopal and Associates
Room No. 10, #20, Jehangir Street
Second Line Beach
E-mail: sribcip@gmail.com
sra.irp@gmail.com
Last date for
submission of claims: January 22, 2020
DEWAN HOUSING: Creditors to Meet on January 16
----------------------------------------------
Livemint.com reports that creditors to Dewan Housing Finance Corp.
Ltd (DHFL) will meet on January 16 to discuss the eligibility
criteria for prospective resolution applicants, said a person aware
of the development, requesting anonymity.
Other things on the agenda, the person said, are updates on the
insolvency process since the first meeting on December 30; a
resolution strategy for the lender; and an update on operations.
Moreover, the Reserve Bank-appointed administrator may discuss the
status of claims submitted by creditors, Livemint.com relates.
In the December 30 meeting, the committee of creditors (CoC) had
approved a plan under which the mortgage lender could resume
disbursing home loans, beginning with INR500 crore a month, to
arrest the decline in its loan book, Livemint.com says. The firm
has not disbursed loans for more than six months due to a liquidity
crunch that also led to a series of defaults. DHFL's assets under
management are at INR1.19 trillion, of which INR63,690 crore is in
retail loans and the remaining in wholesale.
RBI-appointed administrator R. Subramaniakumar is concerned that
the rapid decline in DHFL's loan book will make it less valuable to
potential investors, Livemint.com states.
Meanwhile, it is to be seen if Subramaniakumar gives an update on
pending dues of lenders from securitized assets, Livemint.com
notes. Since the insolvency process began, lenders have stopped
receiving repayments for assets bought under securitization deals
from DHFL. The administrator has made representations to RBI, and
suggested banks to approach the regulator independently as well,
the report says.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
5, 2019, Deccan Herald said the Mumbai bench of the National
Company Law Tribunal (NCLT) on Dec. 2, 2019, admitted an RBI
petition seeking bankruptcy proceedings to resolve the mortgage
player Dewan Housing Finance (DHFL). The move came in after the
Reserve Bank on Nov. 29, 2019, made an application for bankruptcy
proceedings to resolve the credit and liquidity crisis at the
company, which became the first financial sector player being sent
for bankruptcy.
Dewan Housing Finance Corporation Limited (DHFL) operates as a
housing finance company in India. The company's deposit products
include fixed deposit products for individuals, and trusts and
institutions; and corporate, recurring, and Wealth2Health deposits
products. It also offers home loans, which include home improvement
loans, home construction loans, home extension loans, plot
loans/land loans, plot and construction loans, and balance transfer
of home loans, as well as home loans for the self-employed; small
and medium enterprise loans, including property term, plant and
machinery, medical equipment, and business loans; mortgage loans,
such as loans against property, loan for purchase of commercial
premises, and loan through lease rental discounting; and NRI home
loans.
DUGAR POLYMERS: ICRA Lowers Rating on INR33cr Cash Loan to B+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Dugar
Polymers Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 33.00 [ICRA]B+(Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating continues to remain
under 'Issuer Not Cooperating'
category
Term Loan 2.59 [ICRA]B+(Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating continues to remain
under 'Issuer Not Cooperating'
category
Unallocated 0.91 [ICRA]B+(Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating continues to remain
under 'Issuer Not Cooperating'
category
Non-Fund Based 5.50 [ICRA] A4; ISSUER NOT
COOPERATING; Ratings continues
to remain under 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding Dugar Polymers Limited performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Dugar Polymers Limited, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Dugar Polymers Limited (DPL) was incorporated in the year 2003 and
is into manufacturing of plastic rods and sheets. The company is
involved in the manufacturing of PVC, PP, EVA rods & sheets and it
commenced operations from the year 2004. The company is the
recipient of awards like Plastvision 2007 and Rasthriya Nirman
Ratan Award 2008-09. The Company caters to customers throughout the
country and operates through four units, three being manufacturing
units and the last one being a consignment and DCA agency.
GAYATRI INFRA: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Gayatri Infra Planner Private Limited
1/7089, 2nd Floor, Gali No. 5
Shivaji Park, Shahdara
Delhi East, Delhi 110032
Insolvency Commencement Date: January 2, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: June 30, 2020
Insolvency professional: Manish Sukhani
Interim Resolution
Professional: Manish Sukhani
B213, Orchard Road Mall
Royal Palms, Aarey Colony
Goregaon (East), Mumbai
Maharashtra, India 400065
E-mail: ca.m.sukhani@gmail.com
cirp.gippl@gmail.com
Classes of creditors: Allottees under Real Estate Project
Insolvency
Professionals
Representative of
Creditors in a class: Anil Tayal
Vijay K. Saxena
Brij Nandan Kalra
Last date for
submission of claims: January 22, 2020
GLENMARK PHARMACEUTICALS: Fitch Rates New US$ Sr. Unsec. Notes 'BB'
-------------------------------------------------------------------
Fitch Ratings assigned a rating of 'BB' to India-based Glenmark
Pharmaceuticals Ltd's (BB/Stable) proposed US dollar-denominated
senior unsecured notes.
The proposed notes are rated at the same level as Glenmark's Issuer
Default Rating because they will represent its direct,
unconditional, unsecured and unsubordinated obligations. Glenmark's
credit profile remains broadly unaffected by the proposed issuance,
as the company intends to use the proceeds to repay debt.
KEY RATING DRIVERS
Leverage to Remain Stable: Fitch expects financial leverage -
measured by adjusted net debt/operating EBITDAR - of 2.5x in the
financial year ended March 2019 (FY19) to stay broadly stable over
the next few years. Glenmark is likely to continue to incur
moderate capex on fixed assets and to acquire territorial sale
rights for other companies' drugs, consistent with its view of the
company's growth strategy. This should lead to moderate negative
free cash generation over the next few years. Its rating case does
not include debt reduction from a potential sale of Glenmark's
active pharmaceutical ingredient business or other non-core
pharmaceutical assets.
Sustained pricing pressure in the US, especially on dermatology
products, is likely to weigh on Glenmark's EBITDA margin, which
fell to below 15% in 1HFY20. Nonetheless, an adequate new product
pipeline in the US and stronger growth in non-US markets, along
with a focus on limiting R&D spending to around 12% of sales,
should support a margin of 15%-16% over the next few years.
Risks in Novel Drugs: Glenmark faces above-average risk in its
novel drug development programme due to its small scale and limited
record. In addition, a more aggressive approach could hurt
financial flexibility, potentially outweighing the benefits of
lower dependence on the highly competitive generic drug business
over the long term. Glenmark's FY19 profitability was affected by
R&D expenditure on novel drugs remaining above its forecasts. Fitch
expects Glenmark to take a more measured and collaborative approach
to R&D spending, in line with its strategy, as evident from the
signing of multiple partnerships for its R&D assets. However,
significant deviation could pressure credit metrics and financial
flexibility. Glenmark aims to launch or monetise its R&D drugs in
the advanced stages of development in the medium term, which could
provide significant earnings. Its rating case does not include any
launches due to the uncertainty and potential delays in the
approval process, as highlighted by the US Food and Drug
Administration's (FDA) response letter on Ryaltris, Glenmark's
maiden new drug application.
Small but Diversified: Glenmark's revenue and operating EBITDAR are
small compared with those of global major generic drug makers, but
the risks are counterbalanced by its geographic diversification
across pure and branded generic markets globally - including the US
(32% of revenue in FY19), India (28%), Europe (11%), Latin America
(4%) and others (25%). Scale and diversification are important for
generic drug companies to maintain stable margins. The company also
has an adequate competitive position in its core dermatology and
respiratory therapy segments.
Adequate Product Pipeline: Glenmark received nine abbreviated new
drug application approvals, including one tentative nod, from the
US FDA in 1HFY20 and has 45 approvals in various stages of the
approval process as of November 11, 2019. Fitch believes Glenmark's
product pipeline will enable a steady flow of new product launches,
particularly in the US, which will support modest sales growth and
margins amid pricing pressure.
Robust Growth Prospects in India: Glenmark's adequate market
position enables the company to benefit from healthy long-term
growth prospects in the Indian pharmaceutical market, where it
continued to expand by low-double-digits in 1HFY20. Fitch expects
sustained growth over the next few years due to the government's
focus on increasing mass access to healthcare. Glenmark ranked 14th
in India by revenue market share of 2.2%, according to IQVIA MAT
September 2019 data, but the highly fragmented and physician-driven
market as well as Glenmark's stronger share in its focus therapy
areas of respiratory (5.0%), cardiovascular (4.6%) and dermatology
(9.0%) underpin its position.
Limited Impact of USFDA Action: US FDA's recent warning letter for
Glenmark's production facility at Baddi in India underscores the
above-average level of regulatory risk arising from Glenmark's low
production-facility diversification compared with larger global
pharmaceutical companies. Nonetheless, Fitch does not expect the
regulatory action to hurt Glenmark's operation, as the plant's
contribution to Glenmark's US sales is only 7% and there are no
major pending new-product approvals from the plant over the next 12
months.
DERIVATION SUMMARY
Glenmark has smaller scale and diversification compared with large
generic pharmaceutical companies, such as Mylan N.V. (BBB-/Rating
Watch Positive) and Teva Pharmaceutical Industries Limited
(BB-/Negative). Large companies like Teva and Mylan also benefit
from deeper launch pipelines that are also focused on more complex
products, which mitigates price erosion risk, notably in the US.
Glenmark is rated two notches below Mylan due to its weaker
business profile and negative free cash generation, which are
partly counterbalanced by Mylan's higher leverage from its
acquisitive posture. Glenmark is rated a notch above Teva, as
Teva's stronger business profile is counterbalanced by acquisitions
that have led to high leverage and limited financial flexibility in
view of pricing pressure for its top product.
Glenmark compares favourably with other peers, such as Ache
Laboratorios Farmaceuticos S.A. (BB/Stable) and Jubilant Pharma
Limited (JPL, BB-/Rating Watch Positive), with its bigger scale and
more diversified geographic presence. Nonetheless, JPL's greater
presence in specialty pharmaceuticals limits its exposure to
ongoing pricing pressure in the US generic pharmaceutical market
and the Rating Watch Positive reflects a probable improvement in
its business profile post the demerger of its parent's largely
commoditised chemicals business. Ache has a strong competitive
position in Brazil and robust credit ratios, but its
foreign-currency Issuer Default Rating is capped by Brazil's
Country Ceiling of 'BB'.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Consolidated revenue to increase by mid- to high-single digits
annually over FY20-FY22
- EBITDA margin to remain between 15%-16% as new product launches
and disciplined approach to R&D costs help counterbalance ongoing
pricing pressure in the US
- Annual capex to average 9.0%-9.5% of sales during FY20-FY22
- Annual dividend payout of up to 10% of net income
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Maintaining an EBITDAR margin above 21%
- Sustained free cash flow generation
- Financial leverage, as measured by adjusted net debt/EBITDAR,
sustained at less than 1.5x (FY19: 2.5x)
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Weakening of competitive position or any adverse US FDA action
- Deterioration in financial leverage, as measured by adjusted
net debt/EBITDAR), to more than 3.0x
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Glenmark had a readily available cash balance
of INR9.4 billion and adequate unutilised committed credit
facilities as of FYE19 to meet INR8.8 billion of near-term debt
maturities and a moderate free cash flow deficit expected by Fitch
in FY20. Near-term maturities included INR3.0 billion of short-term
debt, which Fitch expects lenders to roll over in the normal course
of business due to Glenmark's reasonable leverage levels. Glenmark
has already refinanced a portion of long-term debt due in FY20.
Annual debt maturities should also remain manageable at less than
INR7 billion in FY21 before rising to more than INR10 billion a
year in FY22 and FY23. Glenmark's free cash generation is likely to
stay negative in these years, but the proposed US-dollar notes will
address refinancing needs in FY22 and Fitch believes Glenmark's
stable leverage will support its refinancing ability in FY23. Any
disposal proceeds, if utilised to cut debt, will help to further
alleviate refinancing risk.
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.
GLENMARK PHARMACEUTICALS: S&P Rates US$200MM Sr. Unsec. Notes 'BB-'
-------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue rating to India-based
generic drugmaker Glenmark Pharmaceuticals Ltd.'s (BB-/Negative/--)
proposed US$200 million senior unsecured notes. S&P expects the
company to use the proceeds to refinance its US$200 million senior
unsecured notes due on Aug. 6, 2021, thus not impacting the ratings
immediately.
S&P said, "Our rating outlook on Glenmark remains negative. We view
the company's proactive refinancing proposal as credit positive and
essential to maintain the 'BB-' rating. We believe the refinancing,
if successful, will alleviate some of the liquidity pressure
building for Glenmark over the next 12 months. However, our issuer
rating on Glenmark also hinges on deleveraging, such that the
company's ratio of funds from operations (FFO) to debt moves
materially above 20%. The deleveraging is dependent upon the
revival of Glenmark's generic pharmaceutical business or potential
strategic measures such as the monetization of its active
pharmaceutical ingredient (API) business or the new molecular
entities portfolio or rationalization of its non-core businesses.
"The company's first half fiscal 2020 (year ending March 31, 2020)
results were broadly in line with our expectations. The company's
revenue grew 8.2%, while the reported EBITDA margins were 15.4%,
compared to our full year fiscal 2020 estimates of 8%-10% and
16%-17%, respectively. The company's reported gross debt as of
Sept. 30, 2019 increased slightly to Indian rupee (INR) 45.8
billion from INR44.5 billion on March 31, 2019. We expect the
company to end fiscal 2020 with positive free operating cash flows,
which is dependent on the company keeping its capital spending for
the year under INR9.0 billion. The company's first half fiscal 2020
capital spending was INR5.5 billion, but management has issued
guidance that it will restrict the spend to INR8.0 billion for the
full year."
ISSUE RATING
Capital structure:
-- Glenmark's reported borrowings of INR45.8 billion, as of Sept.
30, 2019, consists of INR120 million in secured debt and INR32.9
billion (including US$200 million of 2021 notes) in unsecured debt
issued by Glenmark and INR12.8 billion in unsecured debt issued by
its subsidiaries.
-- The proposed notes will refinance its 2021 notes.
Analytical conclusions:
-- Glenmark is domiciled in India, and its substantial assets and
operations are in India. S&P said, "Therefore, we consider India to
be the relevant jurisdiction for our issuance analysis. In our
view, the priority of claims in a theoretical Indian bankruptcy
scenario remain highly uncertain for issuances out of India. We
therefore equalize our issue rating on the senior unsecured notes
with our 'BB-' issuer credit rating on Glenmark."
IREO PRIVATE: ICRA Maintains 'D' Rating in Not Cooperating
----------------------------------------------------------
ICRA said the rating for the INR970.00 crore bank facilities of
IREO Private Limited continues to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term 420.69 [ICRA]D ISSUER NOT COOPERATING;
Fund based Continues to remain under the
'Issuer Not Cooperating'
Category
Long term non- 150.00 [ICRA]D ISSUER NOT COOPERATING;
Fund based Continues to remain under the
'Issuer Not Cooperating'
Category
Long term 399.31 [ICRA]D ISSUER NOT COOPERATING;
Unallocated Continues to remain under the
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
IPL was set up as a special purpose vehicle (SPV) to develop a
mixed-use township in Gurgaon. The company (erstwhile Orange Realty
Private Limited) is promoted by IREO Investment Holding III Ltd.,
which is registered in Mauritius. As on March 31, 2016, IREO –
directly and through its intermediate holding companies – had
funded the SPV to the tune of INR1,719 crore through a mix of
equity, fully convertible debentures and redeemable preference
shares. IREO is a foreign private equity fund established to
directly invest in the Indian real estate sector. The IREO Group
had raised over USD 1.7 billion. It is involved in real-estate
development.
KISHORE INFRASTRUCTURES: Ind-Ra Moves BB+ Rating to NonCooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kishore
Infrastructures Private Limited's (KIPL) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will now
appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR160 mil. Fund-based facilities migrated to non-cooperating
category with IND BB+ ISSUER NOT COOPERATING) / IND A4+
(ISSUER NOT COOPERATING) rating;
-- INR800 mil. Non-fund-based facilities migrated to non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating; and
-- INR40 mil. Proposed fund-based facilities* migrated to non-
cooperating category with Provisional IND BB+ (ISSUER NOT
COOPERATING) / Provisional IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
January 30, 2019. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in May 2010, KIPL is mainly engaged in the execution
of electrical distribution, transmission, and civil construction
projects.
KOCHAS POWER: ICRA Withdraws 'D' Rating on Bank Facilities
----------------------------------------------------------
CARE has withdrawn the outstanding ratings of 'CARE D; ISSUER NOT
COOPERATING; assigned to the bank facilities of the Kochas Power
Private Limited with immediate effect. The action has been taken at
the request of Kochas Power Private Limited and 'No Objection Mail'
received from the bank that has extended the facilities rated by
CARE.
Bhojpur, (Bihar) based Kochas Power Private Limited (KPPL) was
incorporated in 2013 as private limited company by Mr Ram Kishan
Kaul, Mr. Kunal Ahuja, Mr. Seema Ahuja and commenced its commercial
operations from Sept 2016. KPPL is engaged in milling and
processing of basmati and non-basmati rice with an installed
capacity of 16 tonne per hour (TPH) at its manufacturing facility
located at Bhojpur, Bihar. The company procures its raw material
i.e. paddy from local grain markets (mandis) located in vicinity
and nearby region. The company has commenced its commercial
operations from Sept 2016. The company sells its products to
wholesalers in North India states as Delhi, Haryana, U.P. The
company also exports its products to Nepal and Bangladesh.
KTC FOODS: ICRA Maintains 'D' Rating in Not Cooperating
-------------------------------------------------------
ICRA said the ratings for the Rs.125.00-crore bank facility of KTC
Foods Private Limited continues to remain under 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA] D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 110.00 [ICRA]D ISSUER NOT COOPERATING;
Limits Continues to remain under the
'Issuer Not Cooperating'
Category
Term Loan 9.01 [ICRA]D ISSUER NOT COOPERATING;
Continues to remain under the
'Issuer Not Cooperating'
Category
Non-fund 5.00 [ICRA]D ISSUER NOT COOPERATING;
Based Limits Continues to remain under the
'Issuer Not Cooperating'
Category
Unallocated 0.99 [ICRA]D ISSUER NOT COOPERATING;
Continues to remain under the
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Established in 2010, KTC is primarily involved in the rice -milling
business. The company has an installed production capacity of 24
tons per hour. It sells rice in Punjab, Haryana, Uttar Pradesh,
Rajasthan, Delhi and many southern and eastern states. KTC sells
broken rice under the brand name, 'Barfi', in the southern states.
KUMAR SPINTEX: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kumar Spintex
Private Limited's (KSPL) Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using the rating. The rating will now
appear as 'IND BB- (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR188 mil. Long-term loans due on March 2024 migrated to non-
cooperating category with IND BB- (ISSUER NOT COOPERATING)
rating;
-- INR140 mil. Fund-based facilities migrated to non-cooperating
category with IND BB- (ISSUER NOT COOPERATING) / IND A4+
(ISSUER NOT COOPERATING) rating; and
-- INR28 mil. Non-fund-based facilities migrated to non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 19, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
KSPL was incorporated in June 2002 and promoted by Balvantrai
Agarwal and family. The company manufactures cotton yarn at its
facility in Ahmedabad, Gujarat. KSPL is a part of Kumar Group,
which comprises Venus Denim ('IND BBB-'/Stable), Vishal Spintex
('IND BB (ISSUER NOT COOPERATING)) and Kumar Cotton Mills Private
Limited.
LAXMIKANT COTTON: ICRA Withdraws B Rating on INR5cr Cash Loan
-------------------------------------------------------------
ICRA has withdrawn the long-term ratings assigned to Laxmikant
Cotton (LC) at the request of the company, based on the
no-objection certificate provided by its banker. ICRA is
withdrawing the rating and that it does not have information to
suggest that the credit risk has changed since the time the rating
was last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 5.00 [ICRA]B(Stable) ISSUER NOT
Cash Credit COOPERATING; Withdrawn
Unallocated 1.20 [ICRA]B(Stable) ISSUER NOT
COOPERATING; Withdrawn
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
Established in May 2013, Laxmikant Cotton (LC) is involved in the
business of ginning and pressing of raw cotton to produce cotton
bales and cotton seeds. Its manufacturing facility is located at
Rajkot (Gujarat). The firm is equipped with 24 ginning machines and
one pressing machine, with an installed capacity of processing 100
MT of raw cotton per annum. The promoters have an extensive
experience in the cotton industry.
MAHATHI SOFTWARE: Ind-Ra Assigns BB Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Mahathi Software
Private Limited (MSPL) a Long-Term Issuer Rating of 'IND BB'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR270 mil. Proposed term loan assigned with Provisional IND
BB/ Stable rating; and
-- INR30 mil. Proposed working capital assigned with Provisional
IND BB/Stable/Provisional IND A4+ rating.
The final rating will be assigned following the issuance and the
receipt of final executed transaction documentation, conforming to
the information already received by Ind-Ra.
KEY RATING DRIVERS
The ratings reflect MSPL's small scale of operations, as indicated
by revenue of INR303 million in FY19 (FY18: INR200 million). The
revenue increased due to higher project orders from the software
business. MSPL's revenue grew at 11% CAGR from FY16 to FY19, mainly
driven by the software business (contributes 90% to the revenue).
During 1HFY20, MSPL achieved a top-line of INR196 million. Ind-Ra
expects MSPL to achieve a top-line of about INR400 million in
FY20.
Liquidity Indicator - Stretched: MSPL's utilization of property
overdraft facility and other working capital facilities was more
than 95% during the 12 months ended November. The company's free
cash and cash equivalent stood at INR0.06 million as on March 31,
2019. MSPL continued to witness positive cash flow from operations
of INR138.72 million in FY19 (FY18: INR85.06 million). The company
also reported positive free cash flow from the operation of
INR44.18 million in FY19 (FY18: INR58.13 million) on account of an
improvement in EBITDA and favorable changes in the working capital
cycle. Ind-Ra expects free cash flow from operations to remain
positive in the medium term, mainly on account of limited capital
expenditure. As per the current account statement for
January-November 2019, MSPL maintained an average balance of about
INR10 million.
The ratings are constrained by MSPL's high geographical risk, with
the company's entire revenue from the software segment being
generated from the United States of America.
The ratings also reflect the company's high customer concentration
risk. Till the beginning of FY18, MSPL had been providing software
services through its group company, Health Grid Corporation, to
various hospitals. Health Grid Corporation was acquired by May
2018 by Allscripts Healthcare Solutions Inc, a NASDAQ-listed
entity. Allscrips has entered into a statement of work agreement
with MSPL for the period between May 2018 and May 2021 for
providing mobile application development and IT development
services. Over the medium term, 80% of MSPL's total revenue will be
derived from the software business, which would entirely be driven
by Allscripts Healthcare Solutions, Inc, indicating considerable
customer concentration risk. Moreover, the company's
customer-retention ability in the lease rental business is yet to
be seen as the company ventured into the segment only in 2018.
The rating factor in MSPL's average EBITDA margins. The company's
EBITDA margin increased to 50% in FY19 (FY18:47.08%) because of an
increase in the share of high-margin rental income business. MSPL's
ROCE stood at 13% in FY19 (FY18: 9%). MSPL's absolute EBITDA
improved to INR152 million in FY19 (FY18: INR94.18 million).
Considering the limited overheads associated with the software and
rental businesses, growth in the scale of the business is likely to
lead to a further improvement in the EBITDA margins.
The ratings also derive comfort from MSPL's strong credit metrics
on account of the robust absolute EBITDA. The company's interest
coverage improved to 3.45x in FY19 (FY18: 1.73x). MSPL's net
leverage improved to 2.06x in FY19 (FY18: 3.88x), mainly on account
of improvement in the EBITDA and pre-payment of high-cost debts.
Ind-Ra expects the credit metrics to improve further over the
medium term on account of continued improvement in the EBITDA and
the absence of any debt-led CAPEX plans. Ind-Ra expects net
leverage to fall below 1.75x and interest coverage to improve above
4x in FY20.
RATING SENSITIVITIES
Negative: Decline in revenue or EBITDA, leading to a fall in
interest coverage below 2.5x, on a sustained basis, would be
negative for the ratings.
Positive: Increase in the scale of operations and absolute EBITDA,
along with an improvement in the liquidity position, all on a
sustained basis, would be positive for the ratings.
COMPANY PROFILE
Incorporated in 2001, MSPL provides software services to healthcare
organizations and is also engaged in the business of leasing out
office premises. In FY17, the company completed the CAPEX for the
construction of a three-story building, with a built-up area of
1,350,000 square feet, in Rushikonda, Vishakapatnam. The building
has been leased out to various software companies.
MAHESHWARI TECHNOCAST: ICRA Cuts Rating on INR6.9cr Loan to B
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Maheshwari Technocast Limited (MTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 6.90 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable on the
basis of best available
information
Short-term Bank 2.50 CARE A4; ISSUER NOT
Facilities COOPERATING; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MTL to monitor the ratings
vide e-mail communications/letters dated July 5, July 16, 2019,
September 30, 2019 and November 26, 2019 and numerous phone calls.
However, despite our repeated requests, the company has not
provided the requisite information for monitoring the ratings. In
line with the extant SEBI guidelines, CARE has reviewed the rating
on the basis of the publicly available information which however,
in CARE's opinion is not sufficient to arrive at a fair rating. The
rating on MTL's bank facilities will now be denoted as CARE B;
Stable; ISSUER NOT COOPERATING/CARE A4; ISSUER NOT COOPERATING*.
Further, banker could not be contacted.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating in September 3, 2018 the following were
the rating weaknesses and strengths:
Key Rating Weaknesses
Small scale of operations with low profit margins: The scale of
operations of the company remained small marked by total operating
income of INR32.67 crore (Rs.30.17 crore in FY18, provisional) with
a PAT of INR0.13 crore for last two years. Furthermore, the total
capital employed has also remained low at INR10.91 crore as on
March 31, 2018. The company has booked revenue of INR11.91 crore in
Q1FY19 as maintained by the management. Furthermore, the profit
margins of the company remained low marked by PBILDT margin of
4.16% and PAT margin of 0.40% in FY18, provisional. However, the
PBILDT margin marginally deteriorated due to increase in cost of
operations in FY18, provisional. Further, the PAT margin also
deteriorated in FY18 on account of increase in capital charges.
Volatility in raw material prices: The company does not have
backward integration for its basic raw-materials (coke, foundry
chemicals, coal, welding electrodes, gases etc.) and it procures
the same from open market at spot prices. Since the raw-material is
the major cost driver and the prices of which are volatile in
nature, the profitability of the company is susceptible to
fluctuation in raw-material prices.
Working capital intensive nature of business: The operations of the
company remained working capital intensive marked by high inventory
holding period. MTL maintains a large quantity of raw material
inventory to mitigate the raw material price fluctuations risk and
smooth running of its production process. Accordingly the average
inventory period of the company remained on the higher side during
last three years. Further, the company allows credit of about four
weeks to its clients which also resulted into working capital
intensive nature of its operations. However, it receives credit of
about two month from suppliers due to its long presence in the
industry, mitigated the working capital intensity to a certain
extent. Accordingly, the average fund based bank limit utilization
remained on the higher side at about 80% during last twelve months
ending on July 31, 2018.
Leveraged capital structure with moderate debt coverage indicators:
The capital structure of the company remained leverage marked by
debt equity and overall gearing ratios of 0.74x and 2.89x
respectively as on March 31, 2018. Further, the overall gearing
ratio has improved as on March 31, 2018 due to accumulation of
surplus into reserve. The debt coverage indicators of the company
also remained moderate marked by interest coverage of 1.42x and
total debt to CGA of 20.43x in FY18, provisional.
Intensely competitive and cyclical industry: The operating spectrum
of the company is highly fragmented and competitive marked by the
presence of numerous players in the region. Hence the players in
the industry do not have pricing power and are exposed to
competition induced pressures on profitability. This apart, MTL's
product being intermediary iron & steel products, are used
primarily by steel industry. Accordingly, it is subjected to the
risks associated with the industry like cyclicality and price
volatility.
Key Rating Strengths
Experienced promoters with long track record of operations: MTL is
into manufacturing of rolling mill spare parts since 1974 and thus
has long track record of operations. Being in the same line of
business since long period, the promoters have built up established
relationship with its clients and the company is deriving benefits
out of this. Mr. Suresh Kumar Mantri (aged, 64 years) has more than
four decades of experience in the same line of business, looks
after the overall management of the company supported by other
directors Mr. Prashant Kumar Mantri who also has around 15 years of
experience in same line of business.
Reputed and diversified clientele: MTL has been associated with a
number of reputed customers since its inception and has marked a
remarkable presence as a supplier of bearings and spare parts. The
client portfolio of MTL includes reputed names like Bhilai Steel
Plant (a unit of Steel Authority of India Ltd), Beekay Steel
Industries Limited, National Aluminium Company Limited (NALCO),
Hindustan Copper Limited and so on. Considering the client profile,
the risk of default is minimal.
Maheshwari Technocast Limited (MTL), promoted by Mr Suresh Kumar
Mantri, was originally set up as a partnership firm in 1974 and the
same was converted into limited company with effect from August 14,
1996.MTL is the ancillary unit of Bhilai Steel Plant, a unit of
Steel Authority of India Limited. Since its inception, MTL has been
engaged in manufacturing of rolling mill spare parts. The
manufacturing facility of the company is located at Bhilai,
Chhattisgarh with an aggregate installed capacity of 3000 MTPA of
foundry and 1500 MTPA of fabrications.
MATHIYAN CONSTRUCTION: ICRA Keeps C+ Rating in Not Cooperating
--------------------------------------------------------------
ICRA said the rating for the INR45.00 crore bank facilities of
Mathiyan Construction Pvt. Ltd. (MCPL) continues to remain in the
'Issuer Not Cooperating' category. The rating is denoted as "[ICRA]
C+/A4, ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 10.00 [ICRA]C+ ISSUER NOT COOPERATING;
Fund based Continues to remain in the
Cash credit 'ISSUER NOT COOPERATING'
Category
Short Term– 35.00 [ICRA]A4, ISSUER NOT
Non Fund Based COOPERATING; Continues to remain
in the 'ISSUER NOT COOPERATING'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Based at Muzaffarnagar in Uttar Pradesh, Mathiyan Constructions
Private Limited (MCPL) was incorporated in 2007 by Mr. Rajeev Kumar
and his brother, Mr. Subhash Chand. The promoters have a
decade-long experience in the construction sector. The company
undertakes work related to road construction and maintenance mainly
for the Public Works Department (PWD) and Pradhan Mantri Gram Sadak
Yojana (PMGSY).
MIZORAM ISPAT: ICRA Lowers Rating on INR20cr Loan to B+
-------------------------------------------------------
ICRA has downgraded the ratings for the INR25.00 crore bank
facilities of Mizoram Ispat Industries and continues to remain
under 'Issuer Not Cooperating' category. The rating is now denoted
as "[ICRA]B+ (stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 4.25 [ICRA]B+(Stable) ISSUER NOT
Cash Credit COOPERATING/Rating downgraded
from [ICRA]BB (Stable) and
Continues to remain under
'Issuer Not Cooperating'
Category
Fund based– 20.00 [ICRA]B+(Stable) ISSUER NOT
Term Loans COOPERATING/Rating downgraded
from [ICRA]BB (Stable) and
Continues to remain under
'Issuer Not Cooperating'
Category
Unallocated 0.75 [ICRA]B+(Stable)/[ICRA]A4
Limit ISSUER NOT COOPERATING/
Long term Rating downgraded
from [ICRA]BB (Stable)/[ICRA]A4
and Continues to remain under
'Issuer Not Cooperating'
Category
The rating downgrade is because of lack of adequate information
regarding Mizoram Ispat Industries.performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade. As part of its process and in accordance with its rating
agreement with Mizoram Ispat Industries.ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
MII was established as a partnership firm in 2010 and had set up an
ingot and TMT bar manufacturing plant in Mizoram. The plant was
commissioned in July, 2012. In FY2016, the firm added a wire rod
manufacturing facility. The promoters also have interests in the
cement and infrastructure industries.
NAIKNAVARE PROFILE: ICRA Reaffirms C Rating on INR65cr Loan
-----------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of
Naiknavare Profile Constructions Private Limited (NPCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non–Convertible
Debentures 65.00 CARE C; Stable Reaffirmed
Non–Convertible
Debentures 10.00 CARE C; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The reaffirmation of the long-term instrument of NPCPL continues to
take into accounts high project execution risk associated with
nascent stage of the project construction, slow execution of
project, weak sales momentum, high salability risk of the project,
competition from other projects in the nearby areas and cyclical
nature of the real estate industry.
However the rating weaknesses are partially offset by strong
promoter's background with 3 decades of experience and track record
in construction sector. The rating also factors in the receipt of
all the approvals and clearances required for the construction of
project and financial assistance received from ASK Real estate fund
("ASK") in the form of NCD.
Positive Factor
Sustained improvement in projects execution and financial risk
profile
Negative Factor
Delay/default in redemption of NCDs
Detailed description of the key rating drivers
Key Rating Weaknesses
High project execution risk associated with nascent stage of the
project construction
The construction of Phase -1 and Phase -2 of Avon Vista commenced
in August 2016 and April 2018 respectively and is in nascent stage
of execution. Construction of Phase-3 is yet to begin. The company
has incurred ~35% of the total project cost as on Dec 20, 2019. The
remaining project cost is to be funded from customer advances.
Further, considering repayment of debt (NCD repayment along with
Interest) company's ability to sell the remaining unsold inventory
and generating surplus is critical.
High Salability Risk
The company has already launched Phase-1 and Phase-2 of the project
for sale, construction of phase 3 is yet to begin and the
management is planning to launch the same by April 2020. The
company has 42.81% unsold units in aggregate of Phase 1 & phase 2.
Going forward, the ability of the firm to receive customer advances
stage wise from the sold units and ability of the firm to sell
unsold units and collect the customer advances out of the same
shall remain key rating sensitivity.
Competition from other projects in the nearby areas
The project is situated at Balewadi, Pune, next to Mumbai Pune
Highway, and has all the required social infrastructure including
shopping, entertainment, health care, education, IT Park within a
short distance and easy reach. Thus making the area very favorable
to those in IT companies or offices in these areas as well, thereby
leading to the increased competition among various builders within
the same vicinity.
Key Rating Strengths
Experienced Promoters
Naiknavare Profile Construction Private Limited (NPCPL) was
incorporated in December, 2017 and is spearheaded by Mr. Hemant
Naiknavare. Mr Hemant holds the degree in B.E. (Civil) L.L.B., and
has the business experience of more than three decades. He looks
after the control of overall operations and policies of the group,
his main areas of expertise lies in land acquisition and legal
permissions. Mr Hemant is ably supported by Mr. Ranjit Naiknavare,
graduated with distinction from the Bombay University in 1984 and
has obtained MS in Civil Engineering (Structures) from the USA. He
currently undertakes the responsibilities of Marketing,
Construction and Finance for the group. Mr. Anand Naiknavare looks
after the day to day operations of NPCPL.
Financial Assistance from ASK Real Estate Fund
The Company has raised INR80.00 Crore (O/s INR75.00 crore as on
December 20, 2019) through Non-convertible Debentures (NCD) issued
to ASK Real estate fund (ASK). The purpose of raising additional
NCDs is expansion of same project "Avon Vista" at Balewadi. The
NCDs have stipulated guaranteed IRR of 16% and maximum IRR of 22%,
maturing on December 19, 2021. However, the IRR shall be payable
based on availability of surplus cash flows in the project. The
amount was used for refinancing NPCPL's existing term loan from
Piramal Finance Private Limited and towards funding working capital
requirements.
Receipt of the approvals and clearance
NPCPL has received all the necessary sanction required for the
project, including approval on commencement certificate, Fire NOC,
Environment clearance, Irrigation and Highway approval, plinth
checking approval for the whole project.
Liquidity -Stretched: Current ratio as on March 31, 2019 stood at
1.02x as against 2.24x as on March 31, 2018. Further, cash and bank
balance as on September 30, 2019 stood at INR9.01 crore. The
projects of the company are slow moving and there exists high risk
of salability of the remaining units under the ongoing projects.
Hence the ability of the company to timely execute the construction
of the project and collect the customer advances as per schedule
thereby avoiding any cash flow mismatches is critical and
monitorable.
Industry Outlook
Cyclical nature associated with the real estate sector which has
direct linkage with the general macroeconomic scenario, interest
rates and level of disposable income available with individuals. In
case of real estate companies, the profitability is highly
dependent on property markets.
Naiknavare Developers Private Limited (NDPL) belonging to Naiknavre
Group is developing a residential project through Naiknavare
Profile Constructions Private Limited (NPCPL, erstwhile Naiknavare
Profile Developers LLP) by the name of Avon Vista at Balewadi, Pune
(Project) with total saleable area of 7.62 lakh square ft (lsf).
Naiknavare group is engaged in real estate construction business
since the past 28 years in Pune.
NAVBHARAT BUILDCON: ICRA Moves 'B' Rating to Not Cooperating
------------------------------------------------------------
ICRA has moved the rating for the INR14.55 crore bank facilities of
Navbharat Buildcon Pvt Ltd (NBPL) to 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]B (Stable); ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 10.80 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
Non-fund Based 3.75 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
NBPL was established as a partnership firm in 1974. Later it was
reconstituted into a private limited company and registered in
1996. The company is involved in irrigation construction work for
dams and barrages, canals and tanks. Apart from the irrigation, the
company has also installed a wind turbine generator of
1.25-megawatt capacity in Jaisalmer and a solar plant of
1.00-megawatt capacity in Churu, Rajasthan. The company is promoted
by Mr. Mool Chand Lohadia and Mr. Ashok Kumar Lohadia, who have an
experience of nearly four decades in the civil construction sector.
PACIFIC MULTI-COMMODITY: Insolvency Resolution Case Summary
-----------------------------------------------------------
Debtor: Pacific Multi-Commodity Limited
419B, 4th Floor, Plot No. 21
Panchratna, Mama Parmanand Marg
Opera House, Girgaon
Mumbai 400004
Insolvency Commencement Date: January 2, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: June 30, 2020
Insolvency professional: Manoj Kumar Jain
Interim Resolution
Professional: Manoj Kumar Jain
11, Friends Union Premises CSL
2nd Floor, 227, P.D' Mello Road
Opp. St. George Hospital
Mumbai 400001
Maharashtra
E-mail: manojj2102@gmail.com
Last date for
submission of claims: January 21, 2020
POPULAR SHOE: ICRA Lowers Rating on INR12cr Cash Loan to B+
-----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Popular
Shoe Mart, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash credit 12.00 [ICRA]B+(Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB(Stable) and
Rating continues to remain
under 'Issuer Not Cooperating'
category
Rationale
The rating downgrade is because of lack of adequate information
regarding Popular Shoe Mart (1) performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Popular Shoe Mart (1), ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Popular Shoe Mart – 1 (PSM) was established in the year 1962 as a
partnership firm by Mr. Chukkapalli Pitchaiah. It is engaged in
retailing of footwear through 119 stores with total retail space of
1.1 lakh sq. ft. spread across the states of Andhra Pradesh,
Telangana and Karnataka. The firm is currently being managed by two
of the founder's sons – Mr. Ch. Arun Kumar and Mr. Ch. Vijaya
Kumar.
REDDY PHARMACEUTICALS: ICRA Cuts Rating on INR10cr Loan to C+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Reddy
Pharmaceuticals Limited (RPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term: 2.70 Revised to [ICRA]C+ from
Cash Credit [ICRA]B+(stable); placed
on Watch with negative
implications
Long term: 7.30 Revised to [ICRA]C+ from
Unallocated [ICRA]B+(stable); placed
limits on Watch with negative
implications
Material event
ICRA has noted that National Company Law Tribunal (NCLT) has
ordered the commencement of a corporate insolvency resolution
process of Reddy Pharmaceuticals Limited (RPL) on December 20,
2019.
Impact of material event
The insolvency resolution proceedings are likely to impact the
liquidity position of the company and its operations. ICRA awaits
more details from the management on the proceedings and will
closely monitor the developments and would keep the investors
updated on the implication of the same on the credit profile of
Reddy Pharmaceuticals Limited. ICRA has revised the ratings and
placed under watch with negative implications.
Rationale
The rating revision factors in the insolvency proceedings initiated
against the company by its creditor, which is expected to impact
its operations and liquidity position. The rating is also
constrained by RPL's small scale of operations in the API industry;
high product concentration with entire manufacturing revenues
contributed by its sole product, Itraconazole; and high customer
concentration with top five customers accounting for ~80% of
revenues in FY2019. The rating is also constrained by the company's
moderate financial risk profile with a gearing of 2.15 times as on
March 31, 2019 and modest debt protection metrics as reflected by
Total debt/OBITDA of 5.72 times and NCA/TD of 11% in FY2019.
Further, the liquidity position is poor as indicated by high
average utilisation of working capital limits in the past owing to
high debtor and inventory days; and high TOL/TNW of 4.51 times as
on March 31, 2019 on account of high creditors. Timely enhancement
in working capital limits would be critical on the back of expected
increase in revenues.
The rating, however, takes into account extensive promoters'
experience in the pharmaceutical industry; and steady revenue
growth over the last three years on the back of ramp up in its own
manufacturing facility, also resulting in improved operating
profitability. ICRA also notes the established customer
relationships leading to repeat orders from customers.
Key rating drivers and their description
Credit strengths
Track record of the company and established relationships with
customers: The company more than 20 years of experience in the
pharmaceutical industry. Earlier, the company was into trading of
pharma products resulting in established relationships with various
players in the industry. The established relationships have
resulted in repeat orders from customers.
Credit challenges
High product and customer concentration: The company has a high
product concentration with majority of revenues (~75% in FY2019)
contributed by Itraconazole, with the remaining from its trading
division. Also, the customer concentration is high with the top 5
customers contributing ~80% of revenues in FY2019 which majorly
comprise formulation players in Telangana and Maharashtra.
Modest financial risk profile: The company's financial profile is
moderate with gearing of 2.15 times as on March 31, 2019. Total
debt of INR13.75 crore as on March 31, 2019 comprises interest-free
unsecured loans from promoters of INR9.39 crore, working capital
borrowings of INR3.68 crore and long-term debt of INR0.68 crore.
However, the gearing adjusted for unsecured loans stands lower at
1.20 times. Debt protection metrics are modest as reflected by
Total debt/OPBITDA of 5.72 times and NCA/TD of 11% in FY2019 owing
to high debt levels and thin profitability.
Poor liquidity position: The company's liquidity position continues
to remain weak as reflected by high utilization of working capital
limits in the past owing to high debtor and inventory levels and is
majorly funded by creditors resulting in high TOL/TNW of 4.51 times
as on March 31, 2019. The insolvency proceedings are expected to
further impact its liquidity position. The company's ability to
secure enhancement in working capital limits would remain a key
rating monitorable.
Liquidity position: Poor
The company's liquidity position is poor reflected in the delays in
payments to its creditors and its liquidity is expected to be
impacted by the insolvency proceedings initiated against it.
Rating sensitivities
Positive Triggers: The ratings could be upgraded if the insolvency
proceedings initiation is resolved amicably. Subsequently, the
ratings could also be upgraded if the healthy growth in the
company's scale of operations and accruals leads to improvement in
the financial risk profile.
Negative Triggers: Any adverse effect on the company's liquidity
position due to insolvency proceedings initiation would lead to the
rating downgrade.
Reddy Pharmaceuticals Limited (RPL) was incorporated in 1996 and
has been engaged in trading of pharmaceutical products. The company
forayed into manufacturing of Active Pharmaceutical Ingredients
(APIs) and Intermediates during FY2017 after taking over an
existing facility from Jupiter Biotech Limited in Rudraram,
Patancheru Mandal, Telangana. The company is currently
manufacturing anti-fungal APIs such as Itraconazole.
RENEW POWER: S&P Assigns 'BB-' Rating to US$400MM Sr. Secured Notes
-------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' long-term issue rating to
ReNew Power Pte. Ltd.'s (RPL; BB-/Stable/--) proposed US$400
million senior secured notes. The issue rating is subject to its
review of the final issuance documentation.
S&P said, "The proposed issuance will not affect the issuer credit
rating on RPL. We estimate that RPL will continue to maintain its
funds from operations (FFO) to debt of about 5% and FFO cash
interest coverage of about 1.5x over the next 12-24 months. The
India-based company intends to use the proceeds from the note
issuance for repayment of existing debt. We also expect RPL to
appropriately hedge its proposed notes against the U.S. dollar
within 30 days of issuance.
"We view RPL's receivables profile as relatively weak compared with
its peers, particularly given its 14% capacity exposure to Andhra
Pradesh. We believe the lengthening payment delays from
distribution companies in Andhra Pradesh to power generators across
the industry are unlikely to improve significantly in the next 12
months. With Indian rupee (INR) 5 billion worth of overdue
receivables expected to be collected from Andhra Pradesh, we now
expect working capital investment of INR10 billion-INR15 billion
per year in fiscal 2020 (year ending March 31, 2020) and fiscal
2021. This compares with our previous estimate of INR15
billion-INR20 billion. Furthermore, RPL's fairly short operating
track record and high leverage due to ongoing debt-funded capital
expenditure constrain the issue rating."
These risks are moderated by RPL's steadying operating performance
on a large and increasingly diversified fully stabilized portfolio
(assets with more than one year of operational performance),
improving counterparty exposure to better credit-quality off-takers
(such as Solar Energy Corp. of India), and long-term fixed-tariff
power purchase agreements.
S&P said, "The stable outlook for the next 12-18 months reflects
our expectation that RPL's asset efficiencies will continue to
perform in line with P90 estimates (generation levels that we
expect the company's projects will be able to achieve at least 90%
of the time). We also anticipate that the company will maintain
minimal delays in project execution for future projects and a
manageable receivables position (or sufficient equity funding to
offset delays). The outlook also reflects our expectation that any
change to the company's sponsors will not lead to an increase in
leverage."
SANDHHYA SHIPPING: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: M/s Sandhhya Shipping Services Private Limited
185 & 186, Avittam Apts
Thilakar Avenue, Vth Cross Street
Madipakkam, Chennai 600091
Insolvency Commencement Date: January 1, 2020
Court: National Company Law Tribunal, Coimbatore Bench
Estimated date of closure of
insolvency resolution process: June 29, 2020
(180 days from commencement)
Insolvency professional: CA. Rajagurusami Maheswaran
Interim Resolution
Professional: CA. Rajagurusami Maheswaran
Chartered Accountants
II A/GF, DeeCee Victoria Apartments
78-1(69), East Lokamanya Street
R.S. Puram, Coimbatore 641002
E-mail: rgmaheswaran@gmail.com
Last date for
submission of claims: January 15, 2020
SAP ENERGY: ICRA Lowers Rating on INR9cr Term Loan to 'B+'
----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of SAP
Energy, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 9.00 [ICRA]B+(Stable) ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
moved to 'Issuer Not
Cooperating' category
Unallocated 0.25 [ICRA]B+(Stable) ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
moved to 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding SAP Energy's performance and hence the uncertainty around
its credit risk. ICRA assesses whether the information available
about the entity is commensurate with its rating and reviews the
same as per its "Policy in respect of non-cooperation by the rated
entity". The lenders, investors and other market participants are
thus advised to exercise appropriate caution while using this
rating as the rating may not adequately reflect the credit risk
profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with SAP Energy, ICRA has been trying to seek information from the
entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Incorporated in 2015, SAP Energy operates a 2.10-MW wind-based
power plant in Ratlam District of Madhya Pradesh. The project was
commissioned in March 2016 and wind turbine generators (WTGs) were
supplied by Suzlon Energy Limited.
SHAIFALI STEELS: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Shaifali Steels Limited
Block No. 1563/Pvill Santej
Kalol Gandhinagar
Gandhinagar Gujarat
IN
Insolvency Commencement Date: December 17, 2019
Court: National Company Law Tribunal, Ahmedabad Bench
Estimated date of closure of
insolvency resolution process: June 16, 2020
(180 days from commencement)
Insolvency professional: Parag Sheth
Interim Resolution
Professional: Parag Sheth
404, Sachet II
Opp. GLS University
Maradia Plaza Lane
C.G. Road
Ahmedabad 380006
E-mail: pksheth@hotmail.com
cirp.shaifalisteel@gmail.com
Last date for
submission of claims: Janaury 20, 2020
SHRENIK MARBLE: ICRA Migrates B+ Rating to Not Cooperating
----------------------------------------------------------
ICRA has moved the rating for INR9.60-crore bank facility of
Shrenik Marble Private Limited (SMPL) to the 'Issuer Not
Cooperating' category. The rating is now denoted as [ICRA]B+
(Stable)/A4 ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 4.60 [ICRA]B+(Stable) ISSUER NOT
Fund-based COOPERATING; Rating moved to
'Issuer Not Cooperating'
Category
Short-term 5.00 [ICRA]A4 ISSUER NOT
Non-fund COOPERATING; Rating moved to
based 'Issuer Not Cooperating'
Category
ICRA has been seeking information from the entity so as to monitor
its performance. Despite repeated requests by ICRA, the entity's
management has remained non-cooperative. The current rating action
has been taken by ICRA on the basis of the best
available/dated/limited information on the issuers' performance.
Accordingly, lenders, investors and other market participants are
advised to exercise appropriate caution while using this rating as
it may not adequately reflect the credit risk profile of the
entity.
Incorporated in 1990, SMPL is primarily involved in the mining and
processing of marble with a processing capacity of 2.5–3.0
million sq. ft. for imported marble blocks and around 10-12 million
sq. ft. for indigenous varieties. The company processes about 1.5
million sq. ft. of imported marble blocks. The marble
slab-processing unit is situated at Kishangarh, Rajasthan and has
three gang saws.
SREE LAKSHMI: ICRA Lowers Rating on INR160cr Term Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sree
Lakshmi Gayatri Hospitals (SLGHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Term 160.00 [ICRA]B+(Stable); ISSUER NOT
Loan Limits COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating continues to remain
under 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding SLGHPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sree Lakshmi Gayatri Hospitals, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 2011, Sree Lakshmi Gayatri Hospitals Private
Limited (SLGHPL) is setting up a 775-bed multi specialty namely
"SLG Hospital" in Bachupally, Hyderabad. In the same premises, the
company is also setting up a 120-room hotel to facilitate the
longer stay requirements at the hospital and promote medical
tourism. The total estimated cost of the project is INR235.00 crore
which is to be funded by debt of INR160.00 crore, promoters' equity
of INR67.00 crore and unsecured loans of INR8.00 crore. As on May
31,2018, SLGHPL has incurred cost of INR100.42 crore funded by
INR39.36 3 crore of equity, INR19.89 crore unsecured loans from
promoters, INR40.95 crore term loans and remaining from project
creditors. The commercial operations date(COD) of the hospital is
March 31, 2019. Mr. Dandu Sivarama Raju and family are the main
promoters of the hospital and they currently operate a hotel named
"Katriya hotels & towers(KHT)" in Somajiguda, Hyderabad through
group company Sri Lakshmi Gayatri Hotels Pvt. Ltd.
SRI SUDHA: ICRA Maintains B Rating in Not Cooperating Category
--------------------------------------------------------------
ICRA said the rating for the INR10.00 crore bank facilities of Sri
Sudha Sesamum Sms9 Agro Oils LLP to remain under 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]B(Stable);
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loan 7.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Cash Credit 3.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Established on February 10, 2016 as a partnership firm, SMS 9 Agro
Oils LLP (SMS9) is setting up a rice bran oil solvent extraction
unit with a plant capacity of 250 TPD. The proposed manufacturing
unit would be in Yadgarpally village in Miryalaguda mandal of
Nalgonda district in Telangana on a total area of 6.10 acres. The
firm is promoted by Mr. S. Satyanarayana and his family members.
The promoters have more than 20 years of experience in edible oil
and rice milling businesses.
SRI VENKATESHWARA: ICRA Keeps 'B' Rating in Not Cooperating
-----------------------------------------------------------
ICRA said the rating for the INR12.25 crore bank facilities of Sri
Venkateshwara Polymers to remain under 'Issuer Not Cooperating'
category. The rating is denoted as "[ICRA]B(Stable); ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 12.25 [ICRA]B(Stable); ISSUER NOT
Limits COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Sri Venkateshwara Polymers (SVP) is a partnership firm involved in
the manufacture of Poly Propylene (PP) sacks of various grades used
in different industries. The firm was established in December 2013
by Mr. Kasi Reddy, Mr. Masthan Reddy and Mr. Raghurami Reddy. The
plant is situated in Nandyal in Kurnool district in Andhra Pradesh
and has an installed capacity of 3600 metric tonnes per annum. The
PP sacks are used for packaging commodities like cement,
fertilizers, mineral, chemicals, food grains, Fast Moving Consumer
Goods (FMCG), etc.
SRI YADADRI: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: Sri Yadadri Life Sciences Private Limited
5-530, 3rd Floor, Penthouse
Deepthisrinagar Colony Madinaguda
Sherilingampally
Hyderabad Telangana 500050
India
Insolvency Commencement Date: January 6, 2020
Court: National Company Law Tribunal, Hyderabad Bench
Estimated date of closure of
insolvency resolution process: July 3, 2020
(180 days from commencement)
Insolvency professional: Mr. Madhusudhan Rao Gonugunta
Interim Resolution
Professional: Mr. Madhusudhan Rao Gonugunta
7-1-285, Flat No. 103
Sri Sai Swapnasampada Apartments
Balkampet, Sanjeev Reddy Nagar
Hyderabad, Telangana 500038
E-mail: madhucs1@gmail.com
yadadriip@gmail.com
Last date for
submission of claims: January 21, 2020
SUMA FOODS: ICRA Maintains 'D' Rating in Not Cooperating
--------------------------------------------------------
ICRA said the ratings for the INR24.00-crore bank facility of Suma
Foods Private Limited continues to remain under 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA] D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 8.00 [ICRA]D ISSUER NOT COOPERATING;
Limits Continues to remain under the
'Issuer Not Cooperating'
Category
Term Loan 7.79 [ICRA]D ISSUER NOT COOPERATING;
Continues to remain under the
'Issuer Not Cooperating'
Category
Unallocated 8.21 [ICRA]D ISSUER NOT COOPERATING;
Continues to remain under the
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
SFPL was established in July 2015. The company is primarily
involved in the milling of paddy rice with an installed capacity of
16 ton per hour. It has a sortex machine with the capacity of 16
tonne per hour. The milling unit is based out of Nissing (Karnal).
The company sells rice to states like Punjab, Haryana, UP, Delhi.
SUMAN PROTEINS: ICRA Lowers Rating on INR7cr Cash Loan to B+
------------------------------------------------------------
ICRA has downgraded the ratings for the INR7.00 crore bank
facilities of Suman Proteins Private Limited and continues to
remain under 'Issuer Not Cooperating' category.The rating is now
denoted as "[ICRA]B+ (stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 7.00 [ICRA]B+(Stable) ISSUER NOT
Cash Credit COOPERATING/Rating downgraded
From [ICRA]BB-(Stable) and
Continues to remain under
'Issuer Not Cooperating'
Category
The rating downgrade is because of lack of adequate information
regarding Suman Proteins Private Limited performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Suman Proteins Private Limited. ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 1997, SPPL is a carrying and forwarding agent for
'Engine' brand mustard oil in West Bengal. Besides, the company
produces mustard oil itself. The company also has a separate
packaging unit where various types of refined edible oils are
packed and sold. The manufactured and packaged edible oils are sold
under the brand name 'Suman'. The production facility for mustard
oil is equipped with four expellers and twenty kolhus with an
installed capacity of 979 TPA (tonne per annum); whereas, the
packaging unit has the capacity of 20 TPD (tonne per day). The
manufacturing facilities of the company are located in Uluberia,
West Bengal.
SYNTEL INFOSYSTEM: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Syntel Infosystem (Nagpur) Private Limited
Registered office:
Shri Krishna Bhavan
Near Ramchand Tolbas Shop
Itwara, Nagpur 440002
Insolvency Commencement Date: November 19, 2019
Court: National Company Law Tribunal, Thane Bench
Estimated date of closure of
insolvency resolution process: July 1, 2020
(180 days from commencement)
Insolvency professional: Paresh Chandulal Mehta
Interim Resolution
Professional: Paresh Chandulal Mehta
13/B, Nirmal Society
Pandurang Wadi, Dombivali East
PIN 421201
E-mail: pareshmehta5959@gmail.com
- and -
402, Rajhans Apartments
Opp. Gaodevi Bus Depo
Above Rajmal Lakhichand Jewellers
Thane West, PIN 400602
E-mail: ip.syntelinfosystem@gmail.com
Last date for
submission of claims: January 17, 2020
THREE C UNIVERSAL: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Three C Universal Developers Private Limited
C-23, Greather Kailash Enclave
Part I, New Delhi 110048
Insolvency Commencement Date: December 17, 2019
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: June 14, 2020
Insolvency professional: Rakesh Kumar Gupta
Interim Resolution
Professional: Rakesh Kumar Gupta
C/o PARM & SMRN
701, Vikrant Tower
Rajendra Place
New Delhi 110008
E-mail: rkg.delhi.ca@gmail.com
cirp.3cuniversal@gmail.com
Classes of creditors: Real Estate Investors
Insolvency
Professionals
Representative of
Creditors in a class: Ms. Maya Gupta
3685/7, Narang Colony
Tri Nagar, New Delhi 110035
E-mail: fcsmayagupta@gmail.com
Mr. Pawan Kumar Goyal
P K Goyal & Associates
304, D.R. Chambers
12/56, D.B. Gupta Road
Karol Bagh, New Delhi 110005
E-mail: ca.pawangoyal@gmail.com
Mr. Sanyam Goel
Unit No. 110, First Floor, JMD
Pacific Square, Sector 15
Part II, Gurugram 122001
E-mail: goelsanyam@gmail.com
Last date for
submission of claims: December 31, 2019
UNITED TELECOMS: ICRA Keeps 'D' Ratings in Not Cooperating
----------------------------------------------------------
ICRA said the ratings for the INR365.00 crore bank facilities of
United Telecoms Limited continue to remain under Issuer Not
Cooperating category. The long-term rating is denoted as [ICRA]D
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 59.00 [ICRA]D; ISSUER NOT COOPERATING;
Limits Rating Continues to remain
under the 'Issuer Not
Cooperating' category
Non-fund 306.00 [ICRA]D; ISSUER NOT COOPERATING;
Based limits Rating Continues to remain
under the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Incorporated in 1984, United Telecoms Limited (UTL) is a Bangalore
based information and communication solutions company with wide
experience in telecom equipments, telecom networks, e-governance
networks and real estate development.
URVI PLASTIC: ICRA Migrates B Rating to Not Cooperating Category
----------------------------------------------------------------
ICRA has moved the long-term and short-term ratings for the bank
facilities of Urvi Plastic Industries (UPI) to the 'Issuer Not
Cooperating' category. The ratings are now denoted as
"[ICRA]B(Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund- (0.90) [ICRA]B(Stable) ISSUER NOT
based Cash Credit COOPERATING; Rating moved to
(Interchangeable- the 'Issuer Not Cooperating'
Sublimit of LC) category
Short-term Non- 5.40 [ICRA]A4 ISSUER NOT
fund-based Letter COOPERATING; Rating moved to
of Credit the 'Issuer Not Cooperating'
category
Long-term/Short- 4.60 [ICRA]B(Stable)/A4 ISSUER
Term Unallocated NOT COOPERATING; Rating
moved to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Established in 1984, UPI is engaged in trading of engineering
plastic products. UPI is proprietorship firm of Mr. Sameer Mehta,
who has an extensive experience of close to 35 years in the trading
business. The firm trades engineering plastic products like Poly
Methyl Methacrylate (PMMA), Polyacetal (POM), Polycarbonate (PC),
Styrene Acrylonitrile Resin (SAN), Acrylonitrile Butadiene Styrene
(ABS), Ethylene Vinyl Acetate (EVA), Polyamide resin (PA6/PA66),
and transparent ABS (Toray), etc. These products find applications
in automobiles, costume jewellery, LED bulbs, electrical modular
switches, and plastic goggle frames, etc.
VALUE INFRATECH: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Value Infratech India Private Limited
715, Navrang House
7th Floor, 21, K.G. Marg
Connaught Place, New Delhi
DL 110001
IN
Insolvency Commencement Date: January 3, 2020
Court: National Company Law Tribunal, Principal Bench, New Delhi
Estimated date of closure of
insolvency resolution process: July 1, 2020
Insolvency professional: Sanjay Kumar Singh
Interim Resolution
Professional: Sanjay Kumar Singh
003, Windsor Grand Forte
Plot No. 76, Sigma-IV
Greater Noida
Uttar Pradesh 201310
E-mail: singhsk.adv@gmail.com
Classes of creditors: Finacial Creditors in Class
i.e. Homebuyers
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Vineet Aggarwal
Plot No. 2, Sampurnanand Nagar
Sigra, Varanasi
Uttar Pradesh 221010
E-mail: vntg631@gmail.com
Mr. Anish Agarwal
605A, R.S. Tower
Circular Raod, Lalpur
Ranchi, Jharkhand 834001
E-mail: anishagarwal@aaainsolvency.com
ip.cispl@gmail.com
Mr. Kapilendra Swain
303-Lata Enclave
Jail Road, Laxmisagar
Bhubaneswar, Khordha
Orissa 751006
E-mail: cakswain@gmail.com
Last date for
submission of claims: January 22, 2020
=================
I N D O N E S I A
=================
LIPPO KARAWACI: Fitch Assigns B- Rating to New US$ Sr. Unsec. Notes
-------------------------------------------------------------------
Fitch Ratings assigned a rating of 'B-' with a Recovery Rating of
'RR4' to Indonesia-based property developer PT Lippo Karawaci TBK's
(B-/Stable) proposed US dollar senior unsecured notes. The proposed
notes will be issued by Lippo's wholly owned subsidiary, Theta
Capital Pte Ltd, and guaranteed by Lippo and several subsidiaries.
The proposed notes are rated at the same level as Lippo's Issuer
Default Rating as they represent unconditional, unsecured and
unsubordinated obligations of the company, and the 'RR4' Recovery
Rating implies a zero-notch uplift from the IDR for a 'B-'
instrument rating.
The net proceeds from the proposed issue will be used to redeem
Lippo's USD409.3 million senior unsecured 7% notes due 2022 and for
associated refinancing costs.
KEY RATING DRIVERS
Liquidity Remains Broadly in Line: Lippo says it had a cash balance
of around IDR3.5 trillion at end-2019 at the standalone company
level, which excludes listed subsidiaries PT Lippo Cikarang Tbk
(LPCK) and PT Siloam International Hospitals Tbk, compared with its
previous estimate of around IDR5 trillion, following higher cash
outflows than Fitch expected in 2019. Assuming Lippo is able to
collect at least IDR1 trillion from sales of existing and new
property projects, the lower cash balance should continue to be
sufficient to meet operating expenses and interest costs till
end-2020 by its estimates. In addition, if Lippo's plan to sell the
Lippo Mall Puri in 1H20 takes place, Fitch estimates liquidity
would be boosted by another six to 12 months into 2021, which would
give the company further headroom to execute a pre-sales
turnaround. Having repaid most of its near-term debt maturities
using its rights issue proceeds, its earliest major debt maturity
is the USD409.3 million notes due 2022.
Operational Execution Key to Turnaround: Lippo's higher cash drain
in 2019 was mainly driven by the need to take up the full rights
issuance of IDR2.9 trillion at LPCK, which raised Lippo's stake in
the company to 81% from 53%. The cash collections from sales of
existing property projects were also weaker than Fitch expected
because Lippo made refunds for incomplete inventory. A sustainable
turnaround in Lippo's operating cash flows hinges on the success of
its plan to launch its new low-income high-density property
projects in 2H20, mainly at its established Lippo Village township.
The company says it has sufficient land bank to execute its plans
at the standalone company level, and Fitch expects demand for its
products to be underpinned by underlying structural demand for
low-income housing in Indonesia. Fitch may take negative rating
action if Lippo's plans to launch its new projects in 2H20 are
delayed, leading to its negative free cash flow-to-gross debt ratio
remaining weaker than -20% on a prospective basis (2019F: -27%;
2020F: -15%).
Risks to Pre-Sales Revival: Fitch expects Lippo's cash flow from
operations (CFFO) to remain negative at least until end-2020, as
the company could face challenges in sustainably improving
pre-sales in the next two years, limiting upward rating action. Key
challenges include regaining buyer confidence and securing
significant advance payments from customers to fund construction
costs due to a number of failed projects and delayed deliveries
over several years. Lippo expensed penalty payments of IDR490.2
billion and inventory impairment of IDR325.6 billion pertaining to
its existing projects as of end-September 2019. The company
confirmed that there are no further penalty payments to be expensed
for 4Q19 or 2020 on its existing projects as it expects projects to
be delivered on time.
Fitch does not expect the Meikarta project, which Lippo owns via an
associate company, to return significant cash flow to Lippo in the
medium term because it will require large ongoing investment. The
sales performance of the project has weakened gradually over the
last 12 months. Meikarta's pre-sales fell to IDR262 billion in
9M19, from more than IDR5 trillion in 2018 and IDR7.5 trillion in
2017. LPCK has lent its IDR2.9 trillion rights issue proceeds to
Meikarta to fund the first phase of development. The project, if
successful, should improve Lippo's reputation and help it conquer
the affordable-housing market even at the standalone company
level.
Puri Mall Sale Pending: Lippo expects to complete the sale of Lippo
Mall Puri to Singapore-listed Lippo Malls Indonesia Retail Trust
(LMIRT, BB/Stable) in 1H20 at a consideration of USD200 million net
of Lippo's investment in LMIRT's upcoming rights issuance. The sale
was deferred again from the company's most recent 4Q19 completion
target due to delays in obtaining the strata title certificates of
the mall. Fitch has not included the sale in its rating case for
2020 in light of the continued execution uncertainty. The net
proceeds of the sale would nonetheless boost Lippo's liquidity
further and help it meet operational expenses and debt-service
obligations through to end-2021.
DERIVATION SUMMARY
Lippo's 'B-' Long-Term IDR is lower than that of peers, such as PT
Alam Sutera Realty Tbk (ASRI, B/Stable), PT Modernland Realty Tbk
(B/Stable) and PT Kawasan Industri Jababeka Tbk (KIJA,
B/A-(idn)/Stable). ASRI and Modernland are rated higher than Lippo
to reflect their larger property-development businesses, with more
than IDR2 trillion-3 trillion of annual pre-sales. Furthermore,
both peers have sustained neutral CFFO, which Fitch attributes to a
higher mix of landed property in their pre-sales. Landed properties
typically have faster cash-collection cycles and lower committed
construction costs than high-rise properties. Both developers have
also relied on bulk land-bank sales to institutional buyers and
joint ventures with other developers to varying degrees, which
Fitch believes has boosted cash collections further.
Lippo's property pre-sale scale is similar to that of KIJA, as
Fitch expects both companies to have around IDR1 trillion in annual
pre-sales. KIJA's pre-sales stem mainly from the company's
industrial land bank, which can be more volatile than
residential-property sales during downturns. However, the company
has gradually reduced its industrial sales mix in the last few
years in favour of more residential properties and commercial
plots. In contrast, Lippo's pre-sales have dried up in the last few
years due to weak operational execution, despite the company's
focus on residential property, and a sustained turnaround has yet
to be seen. KIJA is rated higher than Lippo to reflect the
availability of recurring cash flow from a long-term power-purchase
agreement with state-owned utility PT Perusahaan Listrik Negara
(Persero) (BBB/Stable), which covers KIJA's interest payments.
Lippo's 'BB+(idn)' National Long-Term Rating is higher than that of
PT Greenwood Sejahtera Tbk (BB-(idn)/Negative), reflecting Lippo's
abundant liquidity following the completion of its rights issue and
strong turnaround prospects. In contrast, Greenwood's rating is
constrained by the risk that it may use debt to fast track the
development of its Capital Square project through to 2020, even if
pre-sales remain slow, thereby weakening its healthy recurring
cash-flow interest coverage and leading to rising liquidity risk.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Pre-sales of IDR700 billion in 2019 and IDR2 trillion in 2020
(2018: IDR597 billion)
- Annual construction costs of IDR2 trillion in 2019-2020 (2018:
IDR1 trillion)
- Annual rent payments to REITs of IDR1 trillion in 2019-2020
(2018: IDR1 trillion)
- Annual interest payments of around IDR1 trillion in 2019-2020
(2018: IDR1.25 trillion)
- CFFO at the standalone company to remain at negative IDR3.5
trillion in 2019, and negative IDR2 trillion in 2020 (2018:
negative IDR2.7 trillion)
- Fitch has not factored in the sale of Lippo Mall Puri in its
rating case.
Key Recovery Rating Assumptions:
- Fitch assumes Lippo will be liquidated in a bankruptcy rather
than continue as a going concern, because it is an asset-trading
company
- To estimate Lippo's liquidation value, Fitch has assumed a 75%
advance rate against accounts receivable at the standalone level
and a 50% advance rate against the carrying value of adjusted
inventory and fixed assets
- Proceeds from the disposal of Lippo's 51% share of Siloam's
market value will be available during a liquidation
- Based on the above calculation of the adjusted liquidation
value after administrative claims, Fitch estimates the Recovery
Rating of the senior unsecured bonds at 100%, which corresponds to
a Recovery Rating of 'RR1'. However, Fitch has rated the senior
unsecured bonds 'B-'/'RR4' because Indonesia falls into Group D of
creditor-friendliness under its Country-Specific Treatment of
Recovery Ratings Criteria and the instrument ratings of issuers
with assets in this group are subject to a soft cap at the
company's IDR.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Fitch does not expect to upgrade Lippo's ratings until the
company can demonstrate a successful turnaround in its property
business, such that it can sustain positive free cash flow
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Fitch may downgrade the ratings if the company is not able to
execute its turnaround strategy, such that its negative free cash
flow remains higher than 20% of its gross debt
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity, Limited Refinancing: Lippo's cash on hand of
around IDR3.5 trillion at end-2019 needs to be supplemented with
collections of at least IDR1 trillion from property sales during
the year to have adequate funds to meet its operating expenses and
debt servicing in 2020. Fitch believes the shortfall is manageable
as its forecasts assume around IDR2 trillion of collections. Lippo
repaid its USD50 million term loan in April 2019, and in August
2019 prepaid a USD75 million unsecured 9.625% bond due 2020, with
the balance used to reduce loans from domestic banks. Lippo's next
significant debt maturity will be the USD409.3 million unsecured
notes that are due in 2022. Lippo's ability to sustain its
comfortable liquidity position beyond 2020 will depend on its
success in sustainably improving its property-development business
and the disposal of non-core assets.
ESG CONSIDERATIONS
Lippo has an ESG Relevance Score of '4' for management strategy.
The ESG score of '4' indicates that the degree of success of
management's strategy may have a materially positive or negative
impact on Lippo's rating, in conjunction with other factors.
LIPPO KARAWACI: S&P Assigns 'B-' Rating on Sr. Unsecured Notes
--------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating to a
proposed issuance of senior unsecured notes by PT Lippo Karawaci
Tbk. (B-/Negative/--) under its special purpose vehicle, Theta
Capital Pte Ltd. Lippo will unconditionally and irrevocably
guarantee the proposed notes.
S&P equates the issue rating on Lippo's proposed notes with its
'B-' issuer credit rating on the company. This is because all of
the company's assets are located in Indonesia, a jurisdiction where
it believes the priority of claims in a theoretical bankruptcy is
highly uncertain due to the weak jurisdictional context.
The proposed transaction will extend Lippo's debt maturity profile.
The company will use most of the note proceeds to partially
refinance US$409.3 million notes due in 2022.
The rating on Lippo reflects the company's high leverage and
sizable negative discretionary cash flows. This has resulted in
steady erosion of liquidity since the July 2019 rights issue. Based
on current cash sources, S&P projects Lippo will have sufficient
liquidity at least until June 2021, contingent upon successful
completion of the Puri mall sale in 2020.
S&P said, "The negative outlook reflects the limited visibility we
have 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.
"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 Indonesian rupiah (IDR) 2 trillion or a rapid depletion
in the company's asset base that could indicate an unsustainable
capital structure.
"We 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."
=========
J A P A N
=========
[*] JAPAN: Regional Banks Face Shake-Up Under FSA Plans
-------------------------------------------------------
The Financial Times reports that Japan's struggling regional banks
face their biggest shake-up since the 1990s under plans outlined by
the country's top financial regulator, as weak profitability and
years of zero interest rates loom over the long-term stability of
the industry.
Toshihide Endo, commissioner of the Financial Services Agency, told
the Financial Times that the sweeping reforms could also boost the
nation's ailing regional economies, which have been stricken by
falling demand as Japan's population declines.
According to the FT, the plans include letting regional lenders
participate in areas outside their core business for the first time
since the second world war, meaning that banks could turn
themselves into management consultants and trading companies as
they seek new ways to generate profit.
The FT relates that the strategy, laid out in recent months, marks
a shift in Tokyo's approach to the 100-plus regional banks that
dominate small business lending. Instead of regulating purely to
control loan risk, the FSA's historic role, Mr. Endo wants the
banks to remake their business models.
"To get some kind of revival in regional economies, we need to
change the behaviour of the financial institutions. Instead of
sitting and waiting for companies to ask for money, why not go to
companies yourselves offering advice and consultancy on how to find
customers and grow your business?" the report quotes Mr. Endo as
saying.
The fate of Japan's regional banks also has global implications,
the report says. In their hunt for higher yielding investments,
they have become important buyers in international markets, even in
exotic assets such as leveraged loans. With $3 trillion in assets,
they are bigger than the entire Italian banking system, the FT
notes.
Traditionally, regional banks primarily lent cash to local
borrowers with strong balance sheets, but Mr. Endo wants them to
engage with customers and help them grow. Banks could even get
directly involved in marketing clients' products by setting up
regional trading companies, he suggested, the FT relays.
That would require the repeal of a law limiting lenders to a
maximum 5 per cent ownership stake in non-banking companies. "I
think it's too strict," said Mr. Endo of the current law, noting
that FSA approval would still be required for such investments.
Another FSA plan would make it easier for regional banks to merge.
"The solution isn't the merger itself, but the closure of a certain
number of branches, combining your IT systems, and cutting from the
back office to create some financial space" that can then be used
to provide new services to regional companies, Mr. Endo, as cited
by FT, said.
Dealmaking between regional banks has been hampered by competition
law, but the upper house of parliament is expected to pass a bill
this year creating an exemption for such mergers, the FT states.
The FSA also will abolish its inspection manual that required banks
to provide for bad loans based on past experience, the report says.
A period of low bankruptcies since 2013 has encouraged them to run
down their loan loss reserves. It will now be up to the banks to
make adequate provisions based on the riskiness of their own loan
books, subject to FSA oversight, Mr. Endo said, the FT relays.
Easing prescriptive rules and urging banks into new areas of
business could be risky, as it could incentivise struggling
financial institutions to gamble in the pursuit of returns. But Mr.
Endo said mechanically applying the current regulations is no
longer an option.
"If you look at the reality of regional economies, the local
businesses themselves are stumped over how to expand. They need
support," Mr. Endo said.
=====================
N E W Z E A L A N D
=====================
PACIFIC PINE: Putaruru Sawmill Goes Into Receivership
-----------------------------------------------------
Andrea Fox at NZ Herald reports that hopes are high that 60 staff
who've just lost their jobs with the receivership of Putaruru's
Pacific Pine Industries will find new jobs, with local employers
and other industries offering support, receiver Kenneth Brown of
BDO said.
According NZ Herald, the South Waikato sawmill and
timber-processing operation was closed for the Christmas period and
staff were on holiday when they were phoned with the news last week
it would not be reopening.
NZ Herald relates that Mr. Brown said the 30-year-old company,
which exported finished timber to Australia and Europe, had been
losing money, with one shareholder having injected a large amount
of money to try to head off failure.
The biggest shareholder is interests associated with the La Grouw
family of Rotorua and Auckland. The family owns the Lockwood
home-building company.
Mr. Brown said directors had decided against putting more money
into the Putaruru operation and continuing with the prospect of
another year of losses. It had been considered better to keep the
operation closed rather than restart it and close within weeks, he
said, NZ Herald relays.
Ministry of Social Development staff had attended a meeting on Jan.
13 with staff and the receiver to help staff explore other job
opportunities, the report notes. Local employers had also sent
representatives with application forms for affected staff and it
was known that other South Waikato industries needed staff, he
said.
Two parties interested in restarting the operation had approached
the receiver, the report says.
"We've advised them they will have to move quickly because staff
will find new jobs," the report Mr. Brown as saying.
Creditors are owed around NZD2 million to NZD3 million, Mr. Brown
said. Wages were up to date with staff paid last week, however
holiday pay and some redundancy payments were owing. Creditors had
all been paid up until the last month, however in the timber
business a month's supply of logs could add up to hundreds of
thousands of dollars, he said, NZ Herald relays.
"We have told staff we are confident they will be able to be paid,
but we have to sell stock (and assets) so we just can't tell them a
date yet."
The company owns the land and buildings. The land is in two titles,
totalling more than 6ha, Mr. Brown said. On the site is an office
block, mill and timber drying sheds. All logs had been processed
before the Christmas shutdown, the report discloses.
The directors had considered trying to sell the business but didn't
believe they would find a market, he said.
"Some of the equipment is quite old. They had to draw a line in the
sand somewhere."
NZ Herald relates that Mr. Brown said the receivers had also
considered reopening the plant and trying to sell it as a going
concern with the receivers running it.
"But that creates problems for us. There are health and safety
issues to consider and I'm not a sawmiller. There was no guarantee
that we wouldn't have run losses which we would have been liable
for."
About six of the total 60 staff whose jobs had been terminated had
been kept on to help close down the business, Mr. Brown said. They
included the chief executive. Some staff had been with the company
for up to 30 years, he said, adds NZ Herald.
===============
P A K I S T A N
===============
PAKISTAN: Fitch Affirms B- LT FC IDR, Outlook Stable
----------------------------------------------------
Fitch Ratings affirmed Pakistan's Long-Term Foreign-Currency Issuer
Default Rating at 'B-' with a Stable Outlook.
KEY RATING DRIVERS
The 'B-' rating reflects a challenging external position
characterised by a high external financing requirement and low
reserves, weak public finances including large fiscal deficits and
a high government debt-to-GDP ratio, and weak governance
indicators. Progress is being made towards strengthening external
finances and positive steps have been made on the fiscal front, but
considerable risks remain.
External vulnerabilities have been reduced over the past year as a
result of policy actions by the authorities and financing unlocked
through an IMF programme, which have narrowed the current account
deficit and supported a modest rebuilding of reserves. Still,
external finances remain fragile with relatively low
foreign-exchange reserves in the context of an elevated external
debt repayment schedule and subdued export performance. Pakistan's
liquidity ratio is 111.4%, much weaker than the historic 'B' median
of 161.2%.
Fitch forecasts a further narrowing of the current account deficit
to 2.1% of GDP in the year ending June 2020 (FY20) and 1.9% in
FY21, from 4.9% in the last fiscal year. Import compression remains
the predominant driver of the narrowing deficit, facilitated by a
depreciation of the rupee against the US dollar of around 30% since
December 2017 and tighter monetary conditions. Exports are forecast
to grow modestly from a low base.
The State Bank of Pakistan's (SBP) adoption of a more flexible
exchange rate last May and capital inflows are also supporting a
rebuilding of foreign-exchange reserves. Fitch expects gross liquid
foreign-exchange reserves rise to around USD11.5 billion by FYE20,
from USD7.2 billion at FYE19. The SBP has also reduced its net
forward position by over USD3 billion since June, contributing to a
considerable improvement in its net foreign-exchange reserves,
although these remain negative. Fitch expects continued adherence
to the new exchange rate regime to help rebuild foreign-exchange
reserves and improve external resilience.
Access to external financing has improved after the approval of a
USD6 billion, 39-month Extended Fund Facility (EFF) by the IMF
board in July 2019. According to the IMF, this has potentially
unlocked about USD38 billion in financing from multilateral
(including from the IMF) and bilateral sources over the programme
period. It may also facilitate financing from offshore capital
markets. The EFF is on track, with the first review completed in
December. However, implementation risks remain high in Fitch's
view, particularly given the politically challenging nature of the
authorities' reform agenda.
Gross external financing needs are likely to remain high, in the
mid-USD20 billion range, over the medium term due to considerable
debt repayments and despite the smaller current account deficit.
Sustaining inflows to meet these financing needs could prove
challenging over a longer horizon without stronger export growth
and net FDI inflows.
Public finances are a key credit weakness and deteriorated further
in FY19 prior to the approval of the IMF programme. The general
government deficit slipped to 8.9% of GDP in FY19, from 6.5% in
FY18, as revenues contracted, due in part to one-off factors, such
as lower SBP dividends and delayed telecom licence renewals.
General government debt rose to 84.8% of GDP, well above the
current 'B' median of 54%, due to the currency depreciation, higher
fiscal deficit, and build-up of liquidity buffers. Debt/revenue
also jumped sharply to 667%, compared with the historic 'B' median
of 252%.
The government is consolidating public finances, but Fitch believes
progress will be challenging due to the relatively high reliance on
revenues to achieve the planned adjustment. Fitch believes the
revenue target in the FY20 budget is ambitious. Nevertheless, the
government's efforts to broaden the tax base through its tax-filer
documentation drive and removal of GST exemptions will contribute
to stronger revenue growth in the current fiscal year. The passage
of the Public Financial Management Act should improve fiscal
discipline by limiting the use of supplementary budgets. The
government has also taken steps to improve federal-provincial level
fiscal coordination through its Fiscal Coordination Council, as the
provinces play a key role in the fiscal structure.
Fitch forecasts the fiscal deficit to decline to 7.9% of GDP in
FY20, based on a reversal of the previous year's one-off factors
and revenue-enhancing measures. This is slightly higher than the
government's expectations of 7.5% due to its more conservative
revenue projections. Fitch expects expenditure to rise,
particularly as interest-servicing costs increase sharply on the
back of higher interest rates. Fitch projects interest
payments/general government revenues of 45% in FY20, well above the
historic peer median of 8.6%.
Fitch forecasts general government debt to GDP will fall to about
80% by end-FY21 due to faster nominal GDP growth and fiscal
consolidation. The government has taken steps to manage domestic
debt rollover risks following the cessation of borrowing from the
SBP under the EFF. In particular, the government has reprofiled its
SBP debt stock into longer-tenor instruments and has sought to
lengthen maturities by issuing longer-term domestic bonds. The
government still has roughly 17% of GDP in upcoming domestic
maturities in FY20 compared with the 'B' median of 6%, but has
built up its cash buffer to partly mitigate rollover risk.
Tighter macroeconomic policies are further slowing GDP growth,
which Fitch forecasts at 2.8% in FY20 from 3.3% in FY19. Fitch
expects growth to recover gradually to 3.4% by FY21. Inflation has
also continued to rise sharply from the cost pass-through of the
currency depreciation and increases in energy tariffs. Fitch
forecasts inflation to average 11.3% in FY20 compared with 6.8% in
FY19. The SBP is likely to keep the policy rate at the current peak
of 13.25% in the coming months, before modest cuts towards the end
of FY20 as inflationary pressures begin to fade.
Improvements to the business and security environment could further
support the growth outlook. Domestic security has improved over the
past couple of years, measured by a decline in terrorist incidents.
Nevertheless, ongoing international perceptions of security risks
and geopolitical tensions with neighbouring countries weigh on
investor sentiment. The government has also made progress on
business reforms, reflected in the country's move from 136th to
108th in the World Bank's latest Ease of Doing Business survey.
Pakistan's rating is constrained by structural weaknesses,
reflected in weak development and governance indicators. Per capita
GDP of USD1,382 is below the USD3,470 median of its 'B' rated
peers. Governance quality is also low in Pakistan with a World Bank
governance indicator score in the 22nd percentile while the 'B'
median is in the 38th percentile.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Pakistan a score equivalent to a
rating of 'B' on the Long-Term Foreign-Currency IDR scale.
Fitch's sovereign rating committee adjusted the output from the SRM
to arrive at the final LT FC IDR by applying its QO, relative to
rated peers, as follows:
- Structural: -1 notch, to reflect domestic security issues,
geopolitical risks arising from tensions with neighbouring
countries, and political risks around IMF programme
implementation.
Fitch's rating committee removed a -1 notch on external finances to
reflect an improvement in external financing flexibility as a
result of policy changes supporting the rebuilding of reserves and
the external financing unlocked as part of the IMF programme
approved in July 2019.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
RATING SENSITIVITIES
The main factors that could, individually or collectively, lead to
a positive rating action are:
- Continued implementation of policies sufficient to facilitate a
rebuilding of foreign-exchange reserves and ease external financing
constraints.
- Sustained fiscal consolidation, for instance through a
structural improvement in revenue, sufficient to put the
debt-to-GDP ratio on a downward trajectory.
- Sustained improvements in the business environment and the
security situation, which contribute to improved growth and export
prospects.
The main factors that could, individually or collectively, lead to
a negative rating action are:
- Reduced access to external finance that causes financing
strains.
KEY ASSUMPTIONS
Fitch assumes the global economy will perform in line with its
Global Economic Outlook.
ESG CONSIDERATIONS
Pakistan has an ESG Relevance Score of '5' for Political Stability
and Rights as World Bank Governance Indicators have the highest
weight in the SRM and are therefore highly relevant to the rating
and a key rating driver with a high weight. Domestic security risks
and geopolitical tensions with neighbours also pose a risk to
political stability.
Pakistan has an ESG Relevance Score of '5' for Rule of Law,
Institutional and Regulatory Quality, and Control of Corruption as
World Bank Governance Indicators have the highest weight in the SRM
and are therefore highly relevant to the rating and a key rating
driver with a high weight. Pakistan also scores low on the World
Bank's Doing Business Index, despite recent improvements.
Pakistan has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as World Bank Governance Indicators have the
highest weight in the SRM and are relevant to the rating and a
rating driver.
Pakistan has an ESG Relevance Score of '4' for Creditors Rights as
willingness and ability to service debt are relevant to the rating
and a rating driver, as for all sovereigns.
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S U B S C R I P T I O N I N F O R M A T I O N
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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