/raid1/www/Hosts/bankrupt/TCRAP_Public/200625.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
Thursday, June 25, 2020, Vol. 23, No. 127
Headlines
A U S T R A L I A
GUMBOOTS AUSTRALIA: First Creditors' Meeting Set for July 3
HARCOL PTY: First Creditors' Meeting Set for July 2
INTELLIGENT INFRASTRUCTURE: 2nd Creditors' Meeting Set for July 6
IPO WEALTH: First Creditors' Meeting Set for July 2
MJ PROTECTIVE: First Creditors' Meeting Set for July 2
MYOB INVEST: Moody's Downgrades CFR to B3, Outlook Stable
STELLER 208: Second Creditors' Meeting Set for July 1
C H I N A
CHINA EVERGRANDE: Moody's Affirms B1 CFR; Alters Outlook to Neg
HILONG HOLDING: Moody's Downgrades CFR to Caa3, Outlook Negative
LUCKIN COFFEE: Court Orders Wind Down of Chair's Offshore Assets
QINGHAI PROVINCIAL: Court Approves Bankruptcy Reorganization
YUZHOU PROPERTIES: Moody's Confirms Ba3 CFR, Outlook Now Stable
[*] CHINA: Growing Dollar Bond Defaults Reveal Depth of Stress
H O N G K O N G
NEXT DIGITAL: Full-Year Loss Widens to US$53 Million
I N D I A
AUTOTECH NON-WOVENS: CRISIL Reaffirms B+ Rating on INR19.5cr Loan
BALAJI GINNING: CRISIL Lowers Rating on INR6cr Cash Loan to B+
BHAGWATI COTTON: CRISIL Lowers Rating on INR20cr Loan to B+
BILASA MEDICALS: CRISIL Keeps B Debt Ratings in Not Cooperating
BKG ENTERPRISES: CRISIL Keeps B INR25cr Debt Rating in Not Coop.
BRAHMAPUTRA TELE: CRISIL Keeps D Debt Ratings in Not Cooperating
CARE TECH: Ind-Ra Affirms B+ LT Issuer Rating
COROMANDEL ENTERPRISES: CRISIL Keeps B+ Debt Rating in Not Coop
D. MANOHARAN: Ind-Ra Affirms B+ LT Issuer Rating, Outlook Stable
D. S. KULKARNI: CARE Keeps D Debt Ratings in Not Cooperating
DEVIKA FIBRES: CRISIL Lowers Rating on INR27cr Cash Loan to B+
DHANVRIDHI COMMERCIAL: CARE Keeps D Debt Ratings in Not Coop
DIVYA BUILDERS: CRISIL Keeps B+ INR15cr Debt Rating in Not Coop
EAST INDIA COMMERCIAL: CRISIL Lowers Rating on INR39.5cr Loan to B+
ELSON PACKAGING: CRISIL Lowers Rating on INR10cr Loan to B+
EPARI SADASHIV: CRISIL Lowers Rating on INR29cr Loan to B+
FINE LINES: CRISIL Lowers Rating on INR7cr Long Term Loan to B+
FUTECH PROJECTS: CRISIL Reaffirms B- Rating on INR7.25cr LT Loan
HARISUN CERAMIC: CRISIL Assigns B+ Rating to INR4cr Term Loan
HITECH PRINT: Ind-Ra Hikes LT Issuer Rating to B+, Outlook Stable
KANKAI PIPES: CARE Lowers Rating on INR4.15cr LT Loan to B
MAHAJYOTI FIBERS: CARE Keeps D INR7.45cr Debt Rating in Not Coop.
MB POWER: Ind-Ra Withdraws Prov. BB Rating on INR51.96BB Loan
NILE OVERSEAS: CRISIL Assigns B+ Rating to INR4.5cr Term Loan
ORTEL COMMUNICATIONS: CARE Keeps D Debt Ratings in Not Cooperating
OVERSEAS CARPETS: CRISIL Keeps B- Debt Ratings in Not Cooperating
PREMIERWORLD TECHNOLOGY: CARE Cuts Rating on INR13.21cr Loan to D
PROLIFIC PAPERS: CRISIL Withdraws B+ Rating on INR24cr Cash Loan
RAJASTHAN ARTS: CRISIL Lowers Rating on INR26.25cr Loan to B+
RAJSHREE SUGARS: CRISIL Reaffirms D Rating on INR411.45cr Loan
SHREE SHYAMSUNDER: CRISIL Reaffirms B+ Rating on INR2.2cr Debt
SIDDHARTH AGRO: CARE Lowers Rating on INR5.45cr Loan to C
SOFFIA CERAMIC: CRISIL Reaffirms B+ Rating on INR4.6cr LT Loan
TIRUPATI INTERNATIONAL: CRISIL Cuts Rating on INR12cr Loan to B+
VINDHYA CEREALS: Insolvency Resolution Process Case Summary
VIRAJ STEEL: CRISIL Keeps B- INR12cr Debt Rating in Not Cooperating
WELLBUILD MERCHANTS: CARE Cuts Rating on INR70cr LT Loan to C
I N D O N E S I A
MODERNLAND REALTY: Fitch Downgrades LT IDR to CCC-
WIJAYA KARYA: Moody's Downgrades CFR to Ba3; Alters Outlook to Neg
J A P A N
MITSUBISHI MOTORS: S&P Downgrades ICR to BB, Outlook Negative
TOKYO DOME: Egan-Jones Lowers Senior Unsecured Ratings to B+
N E W Z E A L A N D
AJ HACKETT: To Receive Millions from New Zealand Government
S I N G A P O R E
HIN LEONG: Overstated Assets by SGD3 Billion, PwC Says
T A I W A N
FAR EAST HORIZON: Fitch Withdraws BB+ IDR for Commercial Reasons
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A U S T R A L I A
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GUMBOOTS AUSTRALIA: First Creditors' Meeting Set for July 3
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Gumboots
Australia Pty Ltd, trading as Pavement Brands, and Meurs Gumboots
Pty Ltd, as Trustee for the Meurs Gumboots Trust, will be held on
July 3, 2020, at 10:30 a.m. via teleconference.
Andrew Reginald Yeo and Gess Michael Rambaldi of Pitcher Partners
were appointed as administrators of Gumboots Australia on June 23,
2020.
HARCOL PTY: First Creditors' Meeting Set for July 2
---------------------------------------------------
A first meeting of the creditors in the proceedings of Harcol Pty
Ltd will be held on July 2, 2020, at 10:30 a.m. via
teleconference.
Glenn Anthony Crisp and Malcolm Kimbal Howell of Jirsch Sutherland
were appointed as administrators of Harcol Pty on June 22, 2020.
INTELLIGENT INFRASTRUCTURE: 2nd Creditors' Meeting Set for July 6
-----------------------------------------------------------------
A second meeting of creditors in the proceedings of Intelligent
Infrastructure Solutions Pty Ltd has been set for July 6, 2020, at
3:00 p.m. at the offices of Cor Cordis, Waterfront Place, Level 19,
1 Eagle Street, in Brisbane, Queensland.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by July 3, 2020, at 5:00 p.m.
Matthew Leslie Joiner and Bruno Secatore of Cor Cordis were
appointed as administrators of Intelligent Infrastructure on July
3, 2020.
IPO WEALTH: First Creditors' Meeting Set for July 2
---------------------------------------------------
A first meeting of the creditors in the proceedings of IPO Wealth
Holdings Pty Ltd will be held on July 2, 2020, at 11:00 a.m. at the
offices of Cor Cordis, Level 29/360 Collins Street, in Melbourne,
Victoria.
Darryl Kirk, Barry Wight and Rachel Burdett of Cor Cordis were
appointed as administrators of IPO Wealth on June 22, 2020.
MJ PROTECTIVE: First Creditors' Meeting Set for July 2
------------------------------------------------------
A first meeting of the creditors in the proceedings of MJ
Protective Services Group Pty Ltd, trading as "ASAP Armoured" and
"ASAP Australian Security and Protection", and MJ Protective
Services Asia Pacific Pty Ltd, will be held on July 2, 2020, at
10:30 a.m. at the offices of Jones Partners, Level 13, 189 Kent
Street, in Sydney, NSW.
Daniel Robert Soire of Jones Partners was appointed as
administrator of MJ Protective on June 22, 2020.
MYOB INVEST: Moody's Downgrades CFR to B3, Outlook Stable
---------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating of MYOB Invest Co Pty Ltd to B3 from B2. At the same time,
Moody's has downgraded the senior secured rating on MYOB's
AUD918-million-equivalent first lien senior secured term loan B
facility and its AUD75 million delayed-draw first lien senior
secured term loan B facility to B3 from B2. The outlook on all
ratings remains stable.
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented, and Moody's views
them as a social risk factor under its environmental, social and
governance (ESG) framework.
The downgrade of MYOB's ratings reflects the rating agency's
expectation that Moody's adjusted gross leverage will increase and
free cash flow generation will be negative over the next 12-18
months. The rating action also reflects the negative impact that
the coronavirus is expected to have on the company's financial
performance.
MYOB has accelerated its research and development pipeline
resulting in higher-than-expected capitalized research and
development (R&D) costs over FY2020 and FY2021. For analytical
purposes, Moody's considers adjusted leverage on both an EBITDAC
(where capitalized R&D costs are expensed) and EBITDA basis (where
capitalized R&D costs are not expensed) for software companies.
The company has brought forward these R&D costs to enhance its
cloud-based offerings for small- and medium-sized businesses (SMEs)
and Practice (accounting practice) customers. Moody's expects that
in in the medium term this strategy will place the company in a
better competitive position in the growing cloud-based software
market.
However, in the meantime, Moody's expects the company's earnings
will also be impacted by the deteriorating economic outlook as a
result of the coronavirus outbreak. MYOB has already undertaken
cost-saving initiatives to offset the potential impact. However,
Moody's remains cautious on the SME market (SME customers comprise
around 63% of the company's revenues) which has been supported by
various government stimulus packages in Australia and New Zealand
that are due to be phased out from September 2020 onwards.
As a result, Moody's expects adjusted leverage on an EBITDA basis
will increase to over 7.5x over the next 12-18 months. On an
EBITDAC basis, adjusted leverage is expected to increase above
15.0x as a result of the company's higher capitalized R&D costs
forecasts. Moody's excludes the shareholder loan in its debt
calculation. MYOB's free cash flows will also remain negative over
the same period, with FCF to debt at around -2 to -3%.
The rating agency expects that MYOB will gradually de-lever from
FY2022 -- compared to FY2021 as previously anticipated - as the
Australian and New Zealand economies recover, capitalized R&D costs
decrease, and revenues from the product development pipeline are
realized.
However, Moody's considers there are potential execution risks with
the new strategy, as well as uncertainty around the timing and pace
of economic recovery, and in turn, around recovery prospects for
SMEs and therefore demand for MYOB's products.
MYOB's credit profile reflects (1) its leading position in the
provision of accounting and business software to SMEs in Australia
and New Zealand, (2) the essential and mission critical nature of
its products (3) its continued successful migration to cloud
accounting software, which enhances recurring revenues as well as
customer retention, and (4) good operating cash-flow generation.
Moody's also notes that the company has good liquidity, with a
flexible cost base and some flexibility on the timing of R&D
spending to preserve cash flow, if required.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
The ratings also take into consideration several ESG factors.
Like other software companies, MYOB is exposed to data
protection/privacy risks and cybersecurity risks. These companies
are also exposed to changing regulatory and political environments.
However, MYOB has policies and procedures in place to mitigate
these risks.
Additionally, MYOB's ownership structure presents some governance
risk, to the extent that private equity firms tend to prioritise
more aggressive growth plans and strategies, including a tolerance
for higher leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade MYOB's ratings if earnings are above Moody's
current expectations, such that adjusted leverage on an EBITDA
basis is sustained below 6.0x and free cash flow (FCF) to debt is
above 3.0% on a sustained basis.
On the other hand, Moody's could downgrade MYOB's ratings if (1)
MYOB fails to de-lever below 7.5x on an EBITDA basis over the next
12-24 months; and/or (2) the company's financial sponsor pursues
aggressive debt-funded acquisitions and/or capital distributions.
The principal methodology used in these ratings was Software
Industry published in August 2018.
COMPANY PROFILE
MYOB Invest Co Pty Ltd is an Australian accounting software company
that operates in three main segments, namely SMEs, accounting
practices, and enterprise and payments.
STELLER 208: Second Creditors' Meeting Set for July 1
-----------------------------------------------------
A second meeting of creditors in the proceedings of Steller 208 Pty
Ltd has been set for July 1, 2020, at 10:00 a.m. via telephone
conference facilities.
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 June 30, 2020, at 5:00 p.m.
Timothy James Brace, Michael Carrafa and Peter Gountzos of SV
Partners were appointed as administrators of Steller 208 in May
2020.
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C H I N A
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CHINA EVERGRANDE: Moody's Affirms B1 CFR; Alters Outlook to Neg
---------------------------------------------------------------
Moody's Investors Service has changed the outlooks on the ratings
of China Evergrande Group (Evergrande), Hengda Real Estate Group
Company Limited (Hengda), Tianji Holding Limited (Tianji) and
Scenery Journey Limited (Scenery Journey) to negative from stable.
At the same time, Moody's has affirmed the following ratings:
-- Evergrande's B1 corporate family rating (CFR) and B2 senior
unsecured debt rating;
-- Hengda's B1 CFR;
-- Tianji's B2 CFR; and
-- The B2 backed senior unsecured rating on the notes issued by
Scenery Journey and guaranteed by Tianji. The notes are also
supported by a keepwell deed and a deed of equity interest purchase
undertaking between Hengda, Tianji, Scenery Journey, and the bond
trustee.
Hengda is a 63.5%-owned onshore subsidiary of Evergrande. It also
owns 100% of Tianji, which in turn owns 100% of Scenery Journey.
RATINGS RATIONALE
"The negative outlook reflects our concerns over Evergrande's
ability to materially reduce its high level of short-term debt,
high debt leverage and still high proportion of trust loans in its
total debt over the next 12-18 months," says Cedric Lai, a Moody's
Vice President and Senior Analyst. "In addition, the negative
outlook also reflects our concern over its ability to improve its
weakened profit margins amid deteriorating economic conditions and
our negative outlook for the China property sector."
Evergrande's liquidity is weak. The company had sizable short-term
debt of RMB372 billion at the end of 2019, mainly comprising trust
and bank loans. Its cash holdings of RMB229 billion at the end of
2019 and its cash/short-term debt stood at 0.6x at the end of 2019.
Moody's expects its current cash holdings, together with its cash
flow from operations, will not be sufficient to cover its debt
maturities and other obligations through the next 12-18 months,
meaning the company will need to raise new debt to manage its
refinancing needs.
The negative outlook also considers the costs and risks associated
with its non-property businesses, including new energy vehicle
(NEV) investments. Such businesses have consumed sizable capital
and are unlikely to turn sufficiently profitable to replenish its
capital over the next 12-18 months, given their nascent stage. This
has contributed in part to a degree of divergence in the financial
profiles of Evergrande and Hengda, given Hengda's exclusive focus
on property development in China.
Meanwhile, the company recorded solid 18% year-on-year contracted
sales growth to RMB272.8 billion in the first five months of 2020,
outperforming nationwide property sales growth over the same
period. Moody's expects the company's contracted sales will grow
modestly in 2020 from the RMB601 billion recorded in 2019,
supported by its strong sales execution. Nevertheless, such
development will unlikely result in a meaningful reduction in
short-term debt. Refinancing risk however is mitigated by
Evergrande's track record of accessing diversified funding
channels, including the bank and capital markets for debt
refinancing.
Moody's expects that Evergrande will reduce spending on land and
control debt growth over the next 12-18 months given its high debt
leverage. Accordingly, Moody's expects that Evergrande's debt
leverage — as measured by revenue/adjusted debt — will improve
to 53%-59% over the next 12-18 months from 47% in 2019. Similarly,
Moody's expects Hengda's revenue/adjusted debt will increase to
67%-77% over the next 12-18 months from 59% in 2019.
Moody's has included the RMB130 billion in investments from
Hengda's strategic investors in the calculation of the companies'
adjusted debt, but notes that the funds were treated as equity by
the companies, in accordance with China GAAP and Hong Kong GAAP.
Adjusted EBIT/interest for both Evergrande and Hengda will also
improve because of the leverage trend. Specifically, Moody's
expects that Evergrande's EBIT/interest will improve to 2.1x-2.3x
over the next 12-18 months from 1.7x in 2019, and Hengda's
EBIT/interest to 2.5x-2.8x from 2.1x over the same period.
Hengda's B1 CFR reflects the company's strong market position as
one of the top property developers in China (A1 stable) in terms of
contracted sales and the size of its land bank. The rating also
reflects Hengda's nationwide geographic coverage, strong sales
execution, low-cost land bank and focus on mass-market residential
properties. However, the company's CFR is constrained by its weak
liquidity and high debt leverage.
Evergrande's B1 CFR mainly reflects the credit profile of Hengda,
with the latter accounting for most of Evergrande operations and
financial profile. At the end of 2019, Hengda accounted for 89% of
Evergrande's revenue, 78% of cash, 70% of reported debt, 84% of
total assets, and around 80% of the company's land bank.
Evergrande's B1 CFR further considers its high-risk appetite in
expanding its non-property businesses, a factor that constrains its
liquidity.
Evergrande's B2 senior unsecured rating is one notch below its CFR,
reflecting legal and structural subordination. This risk reflects
the fact that most of the claims are at the 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 expected recovery rate for claims at the holding
company will be lower.
Tianji's B2 CFR reflects the company's standalone credit profile
and a one-notch rating uplift, based on Moody's expectation that
Hengda will provide financial support to Tianji in a situation of
financial stress.
The one-notch uplift reflects (1) Hengda's full ownership of
Tianji; (2) Tianji's status as the primary platform for Hengda to
invest in offshore property projects and raise offshore funds; and
(3) Hengda's track record of providing financial support to
Tianji.
Tianji's standalone credit profile factors in its moderately large
scale, weak liquidity, and weak credit metrics.
The B2 senior unsecured rating of the notes guaranteed by Tianji
takes into account Moody's expectation that support from Hengda
mitigates the risk of structural subordination.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered the concentrated ownership by Evergrande's
key shareholders, Mr. Hui Ka-yin and his wife, who held a total 77%
stake in the company at end of 2019. Evergrande benefits from
established internal governance structures and standards, as
required for companies listed on the Hong Kong Stock Exchange. The
board has three independent non-executive directors out of a total
nine-member board of directors.
Moody's regards the impact of the deteriorating global economic
outlook amid the rapid and widening spread of the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade Evergrande's CFR if (1) it embarks on
aggressive acquisitions and a high-growth strategy; (2) fails to
deleverage; (3) its liquidity weakens; or (4) there is a material
reduction in the ownership of its subsidies, including Hengda.
Metrics indicative of a downgrade include (1) cash/short term debt
below 1.0x; (2) revenue/adjusted debt below 50%; and (3) EBIT/
interest below 2.0x.
An upgrade of Evergrande's CFR is unlikely in the near term given
the negative rating outlook. However, the outlook could return to
stable if (1) the company demonstrates discipline in its business
growth and acquisitions; (2) its liquidity position improves so
that it can meet its refinancing needs; and (3) its credit metrics
improve.
Moody's could downgrade Hengda's CFR if (1) it embarks on
aggressive acquisitions and a high-growth strategy; (2) fails to
deleverage; or (3) its liquidity weakens.
An upgrade of Hengda's CFR is unlikely in the near term given the
negative rating outlook. However, the outlook could return to
stable if (1) the company demonstrates discipline in its debt
growth as it grows its business; (2) its liquidity position
improves so that it can meet its refinancing needs; and (3) its
credit metrics improve.
Moody's could downgrade Tianji's CFR if (1) its liquidity position
further weakens; (2) Hengda's rating is downgraded; or (3) Tianji's
significance within the Hengda group declines, leading to reduced
financial or operational support.
An upgrade of Tianji's CFR is unlikely in the near term given the
negative rating outlook. However, the outlook could return to
stable if (1) the outlook on Hengda's rating returns to stable; and
(2) Tianji maintains a stable standalone profile.
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
China Evergrande Group is among the top five developers in China by
sales volume, with a standardized operating model. Founded in 1996
in Guangzhou, the company has rapidly expanded its business across
China over the past few years. At December 31, 2019, its land bank
totaled 293 million square meters in gross floor area.
Hengda Real Estate Group Company Limited is the property arm and
flagship subsidiary of China Evergrande Group. It is among the top
property developers in China by sales volume, with a standardized
operating model. Founded in 1996 in Guangzhou, Hengda has rapidly
expanded its business across the country over the past few years.
China Evergrande Group is Hengda's largest shareholder. At December
31, 2019, the former owned 63.5% of Hengda's shares.
Incorporated in Hong Kong in 2009, Tianji Holding Limited is an
offshore holding company that houses some of Hengda's property
projects in China and overseas, including Hengda's Hong Kong
headquarters.
HILONG HOLDING: Moody's Downgrades CFR to Caa3, Outlook Negative
----------------------------------------------------------------
Moody's Investors Service has downgraded Hilong Holding Limited's
corporate family and senior unsecured ratings to Caa3 from B3, and
the rating on Hilong's proposed senior secured notes to Caa3 from
B3.
The outlook has been changed to negative from ratings under
review.
This rating action concludes the review for downgrade initiated on
June 9, 2020, following Moody's increased concerns over Hilong's
heightened refinancing risk.
RATINGS RATIONALE
The downgrade follows the announcement on June 22, 2020 that Hilong
will not repay its outstanding USD165 million senior notes maturing
June 22, 2020 (2020 notes), given its inability to complete its
tender offer.
The action also reflects Hilong's poor financial management as a
governance consideration, given its potential debt restructuring
and inability to complete its refinancing.
Hilong also announced it will extend the expiration deadline for
its exchange offer to June 29, given its inability to fulfil the
acceptance conditions to date. Moody's considers Hilong's extended
debt exchange offer as a way to avoid default. The offer can
therefore be viewed as a distressed exchange, which is a default
under Moody's definition.
Hilong's Caa3 ratings reflect Moody's view of a low recovery on
Hilong's debt, given the probable lower asset valuation amid low
oil prices. The ratings also reflect Moody's expectations of
potential debt restructuring and cross default triggered for its
USD200 million senior notes due September 2022.
The negative outlook reflects the potential for losses
post-restructuring to exceed Moody's current expectation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if recovery prospects for lenders
deteriorate further.
The ratings could be upgraded once a clear restructuring plan is
announced that improves the company's recovery and liquidity
position.
The principal methodology used in these ratings was Global Oilfield
Services Industry Rating Methodology published in May 2017.
Hilong Holding Limited is an integrated oilfield equipment and
services provider. The company's four main businesses are (1)
oilfield equipment manufacturing and services, (2) line pipe
technology and services, (3) oilfield services, and (4) offshore
engineering services.
The company listed on the Hong Kong Stock Exchange in 2011. Jun
Zhang, the chairman and founder of the company, is the controlling
shareholder, with a 58.7% equity interest as of the end of 2019.
LUCKIN COFFEE: Court Orders Wind Down of Chair's Offshore Assets
----------------------------------------------------------------
Bloomberg News reports that lenders led by Credit Suisse have won a
court order seeking to wind down entities controlled by the family
of Luckin Coffee Chairman Lu Zhengyao as they try to recover
US$324.1 million of outstanding debt, according to a Cayman Island
court filing.
Judge Raj Parker will grant orders to liquidate two
holdings--Primus Investments Fund and Mayer Investments Fund--which
hold shares in Luckin and are ultimately controlled by the Lu
family, Bloomberg relates citing the judgment delivered on June 16
in the Court of the Cayman Islands.
Bloomberg says the court rejected a request by Primus and Mayer to
dismiss the petition to allow them to repay the debts by
refinancing or selling assets, saying there is no credible evidence
that the debt will be paid within a reasonable time.
"There is no evidence to suggest that the debtors are in a position
to meet their contractual commitments if the lenders were willing
to forebear exercising their contractual rights," the judge said in
the filing, Bloomberg relays.
Luckin Coffee, often viewed as China's answer to Starbucks, last
month fired its chief executive Jenny Qian Zhiya and chief
operating officer Liu Jian after an internal investigation into
fabricated transactions that roiled investors and undermined the
trust in Chinese financial reporting, recalls Bloomberg.
Bloomberg relates that the lenders in September provided a US$533
million loan facility secured by Luckin Coffee shares. They were
also seeking a court order in the British Virgin Islands to appoint
liquidators for Haode Investment, which is controlled by Lu's
family trust.
Banks including Credit Suisse and Morgan Stanley raised about
US$210 million over the past two months selling Luckin shares that
Lu had pledged as collateral, people familiar with the matter said,
Bloomberg relays. They still face a US$300 million shortfall on
margin loans to the founder.
About Luckin Coffee
Based in China, Luckin Coffee Inc. (NASDAQ: LK) --
https://www.luckincoffee.com/ --- has pioneered a technology-driven
retail network to provide coffee and other products of high
quality, high affordability, and high convenience to customers.
Empowered by big data analytics, AI, and proprietary technologies,
the Company pursues its mission to be part of everyone's everyday
life, starting with coffee.
As reported in the Troubled Company Reporter-Asia Pacific on April
7, 2020, China Daily said that Luckin Coffee Inc, the so-called
rival to Starbucks in China, has exposed itself to the risks of
delisting and even bankruptcy due to severe fabrication of sales
data, experts said.
China Daily related that the Nasdaq-listed Chinese coffee chain saw
its share price crash more than 75 percent to $6.40 on April 2
after the company disclosed that its earnings results were
substantially inflated. It dropped nearly 15 percent more in the
first two hours of trading on April 3.
Liu Jian, chief operating officer and a director of the company,
and several employees reporting to him, had engaged in misconduct,
including fabricating transactions, a company statement said on
April 2.
The aggregate sales associated with fabricated transactions amount
to around CNY2.2 billion (US$310 million) during the April to
December period last year, according to Luckin's preliminary
internal investigation, the statement said.
QINGHAI PROVINCIAL: Court Approves Bankruptcy Reorganization
------------------------------------------------------------
Peng Qinqin and Timmy Shen at Caixin Global report that a court in
Northwest China has accepted a bankruptcy reorganization
application made by the creditors of a troubled state-owned
aluminum producer which has repeatedly failed to pay its debts over
the past year amid a worsening liquidity crisis.
Qinghai Provincial Investment Group Co. Ltd. (QPIG) received
documents on June 19 from a court in Xining, Qinghai province,
which said the court had accepted creditors' reorganization
application for QPIG and 16 of its subsidiaries, the company said
in a filing on June 22 to ChinaBond, an official platform for bond
registration, depository and settlement services, Caixin relates.
According to Caixin, the court said QPIG and its subsidiaries had
failed to repay overdue debt and it is possible they had lost the
ability to do so, according to the filing. QPIG said in the filing
that it would actively undertake the reorganization and fulfill its
responsibilities as a debtor and that the reorganization work, if
successfully implemented and completed, would help improve the
company's debt structure and profitability.
However, if the reorganization failed, the company might be
declared bankrupt and liquidated, it said in the filing.
This move is creditors' last resort as QPIG is finally approaching
bankruptcy, a source close to the Qinghai provincial government
told Caixin.
QPIG's first meeting with its creditors about the bankruptcy
reorganization is set to take place online on Aug. 28, according to
the filing cited by Caixin.
A QPIG source told Caixin the Qinghai provincial government, which
controls QPIG, is seeking strategic investors for the company.
Founded in 2001, Qinghai Provincial Investment Group Co. Ltd.
(QPIG) is one of Qinghai's major state-owned enterprises (SOEs). In
2008, Chinese local governments started a borrowing binge through
SOEs, including financing vehicles, in the wake of Beijing's
massive stimulus in response to the global financial crisis.
That has now resulted in mountains of hidden debt which are
becoming a major burden as the world's second-largest economy
gradually loses steam, Caixin notes.
In recent years, QPIG has faced operational difficulties and has
seen its liquidity dry up amid criticism from both its onshore and
offshore investors. It rattled the bond market in February 2019 by
defaulting on a domestically issued bond and an overseas bond.
The company has repeatedly defaulted on its bond payments over the
past year and missed an interest payment due on Jan. 10 on its $300
million bond issue maturing on July 10, 2021. In January, S&P
Global Ratings Inc. cut the ratings of QPIG even further into
junk-bond territory to "D" from "CCC-."
In the first half of 2019, QPIG had a net loss attributable to
shareholders of CNY497.4 million ($70.3 million), a massive decline
from its CNY16 million net profit for the whole of 2018, according
to the company's 2019 interim report. Its liability-to-asset ratio
stood at 82.9% at the end of June 2019, a slight expansion from
82.7% half a year earlier, Caixin discloses.
About Qinghai Provincial
Qinghai Provincial Investment Group Co., Ltd, produces and sells
primary and fabricated aluminum products in China. The company
operates through four segments: Aluminium Production, Electricity
Generation, the Mining and Sale of Coal, and Other Ancillary
Businesses. It generates thermal power and hydropower; mines and
sells coal; and develops and manages real estate properties, as
well as provides guarantee and leasing services. The company offers
equipment financing and leasing, fundraising, and other financing
services, as well as loan guarantees, and custodian and investment
consultation services; purchases raw materials; sells carbon and
aluminum products.
As reported in the Troubled Company Reporter-Asia Pacific on Feb.
28, 2020, S&P Global Ratings discontinued its 'D' long-term issuer
credit rating on Qinghai Provincial Investment Group Co. Ltd.
(QPIG) and 'D' issue rating on the company's senior unsecured
notes. On Jan. 14, 2020, S&P lowered the rating on QPIG to 'D'
after the China-based aluminum producer defaulted on its offshore
U.S.-dollar-denominated senior unsecured notes.
YUZHOU PROPERTIES: Moody's Confirms Ba3 CFR, Outlook Now Stable
---------------------------------------------------------------
Moody's Investors Service has confirmed Yuzhou Properties Company
Limited's Ba3 corporate family rating and the B1 senior unsecured
rating on its bonds.
The outlook has been changed to stable from ratings under review.
This concludes the review on the ratings of Yuzhou initiated on
April 9, 2020.
RATINGS RATIONALE
"The ratings confirmation reflects our expectation that Yuzhou's
credit metrics will improve meaningfully over the coming 12-18
months from weak levels in 2019, supported by the company's
deleveraging plans and track record of strong sales execution,"
says Celine Yang, a Moody's Assistant Vice President and Analyst.
Moody's has assessed Yuzhou's willingness and ability to deleverage
during its review and expects that Yuzhou will not incur a
significant increase in its total debt over the next 12-18 months,
as it will likely reduce its land acquisition budget and lower its
sales targets.
In particular, the company's well-located land bank in the Yangtze
river Delta area, West strait area, Bohai Rim area and the Greater
Bay area, as well as its abundant saleable resources of RMB180
billion in 2020 will support its property sales in the coming 12-18
months without undue need for land replenishment. The company's
strong sales execution is illustrated by its robust 44% sales
growth in the first five months of 2020 despite coronavirus-related
disruptions.
Moody's expects Yuzhou's gross contracted sales to increase by
around 25%-30% to reach over RMB95 billion in 2020 from RMB 75.1
billion in 2019. The strong cash collection from property sales
will help Yuzhou fund its cash expenditure.
Moody's has also considered the fact that Yuzhou's sustained good
liquidity buffer will mitigate the risk of high debt leverage in
the near term.
Yuzhou's liquidity is good. The company's cash-on-hand of RMB35.5
billion as of December 31, 2019 covers around 233% of its
short-term debt of RMB15.3 billion. Moody's expects its cash
holding and operating cash flow will be sufficient to cover its
maturing debt, committed land premiums and dividend payments in the
next 12-18 months.
Moody's also expects that Yuzhou's revenue, financial metrics and
visibility will improve as it increasingly consolidates joint
ventures or associated projects in the coming 12- 18 months.
Specifically, the company's leverage, as measured by
revenue/adjusted debt, will improve to 50%-60% over the next 12-18
months from the weak level of 33.8% recorded in 2019. At the same
time, its interest coverage, as measured by adjusted EBIT/
interest, will gradually improve to 2.5x from 2.0x during the same
period.
Yuzhou's Ba3 corporate family rating (CFR) continues to reflect its
(1) track record of developing and selling residential properties
in the Yangtze River Delta, Bohai Rim and West Strait area, (2)
growing operating scale and improved geographic diversification,
and (3) good liquidity.
However, its Ba3 rating is constrained by weak credit metrics and
high reliance on sales from JVs and associates.
The stable outlook reflects Moody's expectation that Yuzhou will
execute its business plan and maintain good liquidity while
improving its credit metrics over the next 12-18 months.
In terms of environmental, social and governance (ESG) factors,
Yuzhou's Ba3 CFR has considered the company's concentrated
ownership in its controlling shareholder, Mr. Lam Lung On, who held
a 57.38% stake in the company at December 31, 2019 and Yuzhou's
relatively high dividend payout ratio of 46.8% in 2019, compared to
35%-36.5% in the previous four years.
Yuzhou's CFR also takes into consideration the presence of internal
governance structures and disclosure standards, as required under
the Corporate Governance Code for companies listed on the Hong Kong
Stock Exchange. The company has three special committees; the Audit
Committee, the Remuneration Committee and the Nomination Committee,
which are all chaired by an independent non-executive director.
Moody's regards the impact of the deteriorating global economic
outlook amid the rapid and widening spread of the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety.
Yuzhou's B1 senior unsecured bond rating is one notch below its CFR
because of the risk of structural subordination. This subordination
risk reflects the fact that most of Yuzhou's claims are at the
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 expected recovery rate for claims at the holding
company will be lower.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Yuzhou's ratings could be upgraded if it (1) maintains good
liquidity, (2) executes its contracted sales growth target while
maintaining stable margins, and (3) improves its credit metrics,
with revenue/adjusted debt trending to 70%-75% and EBIT/interest
coverage exceeding 3.0x-3.5x on a sustained basis.
A material reduction in contingent liabilities associated with
joint ventures or lower risk of providing funding support to joint
ventures could also be positive for the ratings. This could be a
result of reduced usage of joint ventures or a material improvement
in the financial strengths of its JV projects.
Downward rating pressure could emerge if Yuzhou records a weakening
in its contracted sales growth, liquidity, profit margins or credit
metrics. Credit metrics indicative of a downgrade include (1)
cash/short-term debt below 1.5x, (2) EBIT interest coverage below
2.0-2.5x, and (3) revenue/adjusted debt failing to trend back to
50%-60% on a sustained basis.
Moody's could also downgrade the ratings if the company's
contingent liabilities associated with joint ventures or the risk
of providing funding support to joint ventures increases
materially. This could be a result of a material deterioration in
the financial strengths and liquidity of its joint venture projects
or a substantial increase in investment in new joint venture
projects.
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Yuzhou Properties Company Limited is a property developer that
focuses on residential housing in the Yangtze River Delta and the
West Strait Economic Zone. Established in Xiamen in the mid-1990s,
Yuzhou is one of the city's largest developers. The company moved
its headquarters to Shanghai in 2016.
Yuzhou listed its shares on the Hong Kong Stock Exchange in 2009.
At December 31, 2019, Yuzhou's land bank totaled 20.12 million
square meters in saleable gross floor area.
[*] CHINA: Growing Dollar Bond Defaults Reveal Depth of Stress
--------------------------------------------------------------
Bloomberg News reports that surging dollar bond defaults by Chinese
companies highlight the increasing pressure the nation's firms are
facing as the economy slows.
Bloomberg relates that while the picture looks almost rosy onshore,
with the total value of defaults falling 31% to CNY38 billion ($5.4
billion) this year from a year earlier, the situation is far from
comforting offshore. Debt failures in the dollar market have jumped
nearly 150% to $4 billion -- already above the total for the whole
of 2019.
According to Bloomberg, the divergence between the yuan and dollar
bond pace of defaults shows how hard it is for Chinese firms to
borrow cheaply or get away with debt compromises in a global
market. At home, a credit boom has enabled cash-strapped firms to
refinance old debt, and borrowers are openly encouraged to seek
temporary debt reprieves from largely obedient local investors.
Ample domestic liquidity and strong support by the government has
allowed even weaker borrowers to refinance onshore, said Ivan
Chung, an analyst from Moody's Investors Service, Bloomberg relays.
Regulators are also inclined to use measures such as debt
extensions and swaps so as to help markets avoid a bigger blow, he
added.
A good example of how Chinese firms face tougher scrutiny overseas
is Hilong Holding Ltd., an oil equipment and services company, says
Bloomberg. The firm declared a default on a dollar bond on June 22
after failing to garner investor support for a debt swap despite
extending the deadline for the offer three times, Bloomberg
relates.
Compare that with onshore, where at least 15 companies, from a
private luxury clothing giant to an obscure local government
financing arm, have succeeded or sought to relieve imminent
pressure by delaying bond repayments, swapping old notes for new
ones or canceling early redemptions, according to data compiled by
Bloomberg. Chinese regulators have sent a clear signal that
borrowers should be given leeway as they seek to restructure debt
in the midst of an historic economic contraction.
While most attempts to secure such compromises from investors have
gone with little protest, HNA Group Co. had to issue an apology in
April after the troubled conglomerate narrowly escaped a default by
securing a bond repayment delay via a hastily arranged and widely
criticized investor meeting, recalls Bloomberg.
"Despite onshore RMB bond defaults dropping in 2020, the reality is
far more nuanced," Bloomberg quotes Owen Gallimore, head of credit
strategy at Australia & New Zealand Banking Group Ltd, as saying.
Different criteria used to classify defaults and the growing
popularity of temporary debt reprieves are concealing the financial
difficulties facing China's private sector, he said.
Defaults in the offshore bond market are "providing more clarity on
the levels of stress among Chinese firms," Mr. Gallimore added.
Bloomberg says more rigorous definitions used by global ratings
firms to pinpoint bond failures also boosted the tally of offshore
defaults: A maturity extension proposed by a private
telecommunications services provider and an exchange offer from a
business park developer earlier this year have both been labeled de
facto defaults.
The faster pace of defaults offshore shows Chinese firms are
unlikely to prioritize offshore debt repayment, according to Chung
from Moody's.
"The defaults this year showed that if they are mired in a debt
crisis, they won't do so anymore likely because they want to win
support from domestic financial institutions for restructuring,"
Bloomberg quotes Mr. Chung as saying. "Offshore investors will more
likely end up in a disadvantageous position."
=================
H O N G K O N G
=================
NEXT DIGITAL: Full-Year Loss Widens to US$53 Million
----------------------------------------------------
Pearl Liu at South China Morning Post reports that Next Digital,
which publishes the Apple Daily tabloid in Hong Kong and Taiwan,
reported a wider loss for the 2019-2020 financial year on June 22,
adding that it expected "choppy waters ahead".
SCMP relates that Hong Kong-based and listed Next Digital, which
was founded by media tycoon Jimmy Lai Chee-ying, said in a filing
to the city's stock exchange that it had recorded a net loss of
HK$415.3 million (US$53.6 million) attributable to its
shareholders. The annual loss was the company's fifth in a row and
about 23 per cent more than last year's loss of HK$338.5 million,
SCMP notes.
It also said in a Facebook post earlier in the day that it would
lay off 140 staff members in Taiwan, or about 13 per cent of its
total employees on the island, starting June 22, SCMP reports. It
also reported that it had 216 fewer employees as of March 31, 2020
as compared with the year before.
The loss, a result of a steep decline in both print and digital
advertising revenue, was caused by the "perfect storm" of the
US-China trade tensions, Hong Kong's anti-government protests and
the Covid-19 pandemic, all of which led advertisers to delay
promotional projects and cancel campaigns, the company, as cited by
SCMP, said.
"There are choppy waters ahead for the media sector and the economy
as a whole . . . Future consumer confidence will determine whether
the two economies bounce back with strong growth momentum, or
whether recovery will be slow and painstaking. Both the Taiwanese
and Hong Kong SAR governments are committing substantial resources
to fiscal stimulus and support. Even in a post-virus scenario,
however, the uncertain fate of US-China trade negotiations and the
social unrest in Hong Kong will also be critical factors," SCMP
quotes Chow Tat Kuen, the company's executive director, as saying
in the filing.
Revenue from internet advertising income, content provision and
development of mobile games and apps was HK$269 million, 53 per
cent lower from the previous year, while newspaper advertising
stood at HK$163 million, 32 per cent lower, SCMP adds.
Next Digital is a managed IT service provider that also offers
cloud services, backup services and security as a service.
=========
I N D I A
=========
AUTOTECH NON-WOVENS: CRISIL Reaffirms B+ Rating on INR19.5cr Loan
-----------------------------------------------------------------
CRISIL has reaffirmed the ratings on certain bank facilities of
Autotech Non-Wovens Private Limited (ANPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL A4 (Reaffirmed)
Cash Credit 12.5 CRISIL B+/Stable (Reaffirmed)
Letter of Credit 2.5 CRISIL A4 (Reaffirmed)
Long Term Loan 19.5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 18.89 CRISIL A4 (Withdrawn)
CRISIL's ratings on bank facilities of ANPL continue to reflect
working capital-intensive operations and average financial risk
profile. This weakness is partially offset by the extensive
experience of the promoters in the textile industry. CRISIL has
also partially withdrawn its rating on proposed fund-based bank
limits facility of INR18.89 crore at the company's request and on
receipt of latest sanction letter from the bank. The withdrawal is
in line with CRISIL's policy on withdrawal of bank loan ratings.
CRISIL had earlier downgraded its ratings on the bank facilities of
ANPL to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL
A4+' vide rating rationale dated on June 1, 2020.
CRISIL has taken cognizance of measures undertaken by the central
and state governments towards containment of the outbreak of Novel
Coronavirus (Covid-19), which includes temporary closure of
non-critical establishments leading to decline in demand from key
end user industry like automobile. However, the company has started
manufacturing PPE kit, medical grade PPE fabrics; and has also
increased manufacturing of air and liquid filter media. Currently,
Company is operating at optimal scale of around 70% of total
capacity.
The decline in the domestic automotive business is also expected to
be partially offset by its exports to automotive customers in Asia
and Latin America. Within filtration segment, the Company is having
a resilient demand as well as continuous exports. The Company is
also actively exploring export opportunities in the medical markets
as soon as the Government lifts its export ban on PPE-related
materials.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans of
INR32 crore as on December 31, 2019, extended by the promoters, as
neither debt nor equity as it is expected to remain in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Working capital-intensive operations: Operations are working
capital intensive with gross current assets (GCA) of 250-300 days,
driven by inventory days of 140-200 days and debtors of 60-100 days
over the last 3 years ending March 31, 2020.
* Average financial risk profile: Financial risk profile is
average with expected moderate net worth of INR14 crore and high
total outside liabilities to adjusted net worth of 2.83 times as on
March 31, 2020. Debt protection metrics are expected to be
moderate with net cash accrual to adjusted debt of 0.18 time and
interest coverage of 2.05 times for fiscal 2020.
Strength
* Extensive industry experience of the promoters and their funding
support: The promoters, Mr. Ankit Desai and Mr. Nitin Shah, have a
combined experience of more than four decades in the industry.
Supported by extensive experience of promoters; sales from auto
segment increased by 26% despite overall slowdown of 18% in the
auto sector in fiscal 2020 which shows overall increase in market
share of company in this sector. The Company's quality focused
approach has resulted in a strong relationship with customers and
suppliers with the Company recently obtaining the industry gold
standard of IATF 16949:2016 certification by TUV Nord.
Moreover, the promoters have extended funding support and are
expected to continue to do so over the medium term, wherever
required.
Liquidity Poor
Liquidity is poor marked by expected cash accruals of around INR3
crore in fiscal 2021 and INR7 crore in fiscal 2022 against
repayment obligation of around INR4 crore in fiscal 2021 and
INR6.89 crore in fiscal 2022. Company has access to bank lines of
INR12.5 crore utilized to the tune of 96% for the last 12 months
ending March 2020. Company also has availed additional loan of
INR50 lakhs. Unutilized bank lines of around INR3 crore and
unsecured loan support of around INR32 crore as on May 2020 is
expected to support liquidity.
Outlook: Stable
CRISIL believes ANPL will continue to benefit over the medium term
from the extensive experience of its proprietor
Rating Sensitivity Factor
Upward Factor
* Improvement in cash accrual to over INR7 crore on sustained
basis
* Improvement in capital structure and working capital cycle
Downward Factor
* Stretch in GCA days beyond 350 days
* Larger-than-expected debt-funded capex or acquisition, or
more-than-expected capital withdrawals, weakening the financial
risk profile, particularly liquidity.
* Lack of timely fund support from promoters.
ANPL, incorporated in May 1991, is promoted by Mr. Ankit Desai and
the Shahlon group. The company manufactures nonwoven technical
textiles at its unit in Surat, Gujarat.
BALAJI GINNING: CRISIL Lowers Rating on INR6cr Cash Loan to B+
--------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Balaji
Ginning and Pressing Factory (BGPF; part of the Balaji group), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Corporate Loan 1.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Term Loan 3 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with BGPF for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BGPF, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BGPF is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of BGPF Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB-/Stable Issuer Not Cooperating'.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of Kashi Pandhari Cottex (KPC) and BGPF.
This is because the two entities, together referred to as the
Balaji group, are in the same line of business, and have a common
management in addition to operational linkages.
About the Group
The Balaji group is based in Jalgaon (Maharashtra) and is engaged
in ginning and pressing of raw cotton and extraction of cotton
seeds. KPC, a partnership firm set up in 2012, gins and presses raw
cotton. BGPF, a partnership firm set up in 2005, is also in the
same business. It also has an in-house oil mill for extracting oil
from cotton seeds.
BHAGWATI COTTON: CRISIL Lowers Rating on INR20cr Loan to B+
-----------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Bhagwati Cotton Company (BCC), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with BCC for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BCC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BCC is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of BCC Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB-/Stable Issuer Not Cooperating'.
Set up in 1991 in Bhatinda as a proprietorship firm by Mr Sohan
Lal, BCC trades in cotton bales and yarn.
BILASA MEDICALS: CRISIL Keeps B Debt Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Bilasa
Medicals Private Limited (BMPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Term Loan 15 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with BMPL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of BMPL continues to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Incorporated in 2009, BMPL runs a multi-specialty hospital, aaRBee
Institute of Medical Sciences, in Bilaspur, Chhattisgarh, with
total capacity of 450 beds. The hospital started operations from
December 2016. The company also runs a nursing college on the same
premises with total intake of 50 students. Fiscal 2018 was the
college's first year.
BKG ENTERPRISES: CRISIL Keeps B INR25cr Debt Rating in Not Coop.
----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of BKG
Enterprises LLP (BKGE) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 25 CRISIL B/Stable (ISSUER
Bank Loan Facility NOT COOPERATING)
CRISIL has been consistently following up with BKGE for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BKGE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BKGE is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of BKGE continues to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Established in 2016, BKGE is engaged in commercial real-estate
development. The firm is part of BKG group based out of Karnataka.
Its day to day operations are managed by Mr. Bhavihalli Rudra
gouda.
BRAHMAPUTRA TELE: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of
Brahmaputra Tele Productions Private Limited (BTPPL) continues to
remain in the 'Issuer Not Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL D (ISSUER NOT COOPERATING)
Proposed Long 10.23 CRISIL D (ISSUER NOT COOPERATING)
Term Bank
Loan Facility
Term Loan 6.77 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with BTPPL for obtaining
information through letters and emails dated
November 30, 2019 and May 11, 2020 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of BTPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on BTPPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of BTPPL continues to be 'CRISIL D Issuer Not
Cooperating'.
BTPPL was incorporated in 2001 by Mr Jaiswal and family as Jaintia
Ispat Pvt Ltd in Assam. It was renamed as Tsang-Po Smelter Pvt Ltd
in 2003 and got its present name in 2006. BTPPL operates a 24-hour
free-to-air (FTA) satellite news channel, DY365, in Assamese. The
company launched an FTA general entertainment channel, Jonak, in
October 2014.
CARE TECH: Ind-Ra Affirms B+ LT Issuer Rating
---------------------------------------------
India Ratings and Research (Ind-Ra) has taken the following rating
actions on CARE TECH (CT):
-- Long-Term Issuer Rating affirmed with IND B+/ Stable rating;
-- INR20 mil. Fund-based working capital limit affirmed with
IND B+/ Stable/IND A4 rating;
-- INR5 mil. Non-fund-based working capital limit affirmed with
IND A4 rating;
-- INR21.6 mil. (reduced from INR26.8 mil.) Long-term loans due
on September 2024 affirmed with IND B+/Stable rating;
-- INR28.6 mil. (reduced from INR35 mil.) Long-term loan* due on
July 2024 assigned with IND B+/Stable rating; and
-- INR30 mil. Fund-based working capital limits* assigned with
IND B+/ Stable/IND A4 rating.
* The assignment of the final ratings follows the receipt of
sanction letters conforming to the information already received by
Ind-Ra.
KEY RATING DRIVERS
The affirmation reflects CT's continued small scale of operations
even though its revenue increased to INR213.7 million in FY19 from
INR88.4 million in FY18, mainly due to the higher sale of
manufacturing components to Wipro Enterprises Limited. The total
revenue derived from the sale of manufactured precision machinery
components grew to INR196.4 million in FY19 from INR72.1 million in
FY18. According to the provisional financials for FY20, revenue was
INR207.6 million. Ind-Ra expects the revenue and EBITDA margins of
1QFY21 to have been affected by the impact of the nationwide
COVID-19-led lockdown.
The ratings factor in CT's weak credit metrics due to low EBITDA of
INR22.0 million in FY19 (FY18: INR14.4 million) and high debt of
INR77.8 million (INR58.0 million). The metrics improved in FY19 due
to higher absolute EBITDA with interest coverage (EBITDA/interest
expense) of 2.8x in FY19 (FY18: 2.2x) and net leverage (adjusted
net debt/operating EBITDA) of 3.3x (3.9x). In FY20, interest
coverage was steady at 2.8x and net leverage deteriorated to 3.7x.
Liquidity Indicator - Stretched: CT's average use of its fund-based
limits was 61.7% for the 12 months ended March 2020. The working
capital cycle elongated to 89 days in FY20 (FY19: negative 3 days)
due to an increase in inventory days to 59 (20) owing to the lack
of demand from Wipro Enterprise. The debtor days also increased to
53 in FY20 (FY19: 20 days). The firm's cash flow from operations
turned negative to INR15.6 million in FY20 due to higher working
capital requirement, which resulted from huge inventory in FY20. At
FYE20, the firm had a cash balance of INR0.1 million (FYE19: INR3.7
million). CT has availed the Reserve Bank of India-prescribed
moratorium on its fund- and non-fund-based facility for the three
months starting April 2020.
Moreover, the firm is exposed to customer concentration risk, as a
majority of the revenue is derived from Wipro Enterprises. The
ratings are constrained by the partnership nature of the firm.
The ratings are supported by the company's healthy EBITDA margin
even though they declined to 10.3% in FY19 from 16.3% in FY18 due
to a decline in job work from Wipro Enterprises. In FY20, the
margin was 18.2% due to an increase in the absolute EBITDA (INR37.8
million). The firm's return on capital employed was 21% in FY20
(FY19: 20%, FY18: 18%).
The ratings are also supported by the partners' experience of more
than two decades in the manufacturing of precision machinery
components, which has enabled the company to establish strong
relationships with customers and suppliers.
RATING SENSITIVITIES
Negative: Worsening of liquidity or a fall in the revenue as well
as operating profitability, leading to deterioration in the credit
metrics, will be negative for the ratings.
Positive: An improvement in the liquidity, revenue and operating
profitability, leading to an improvement in the credit metrics,
will be positive for the ratings.
COMPANY PROFILE
Established in 2010, CT manufactures precision machinery components
for hydraulic machineries.
COROMANDEL ENTERPRISES: CRISIL Keeps B+ Debt Rating in Not Coop
---------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of
Coromandel Enterprises (CE) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with CE for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of CE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on CE is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of CE continues to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
CE, set up in 2009, is promoted by Mr Desu Venkata Seshagiri. The
firm trades in steel products such as thermo-mechanically treated
bars and coils. It is based in Ongole, Andhra Pradesh.
D. MANOHARAN: Ind-Ra Affirms B+ LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed D. Manoharan's
Long-Term Issuer Rating at 'IND B+'. The Outlook is Stable. The
instrument-wise rating actions are as follows:
-- INR85.0 mil. Fund-based limits affirmed with IND B+/Stable/IND
A4 rating;
-- INR15.0 mil. Non-fund-based limits affirmed with IND A4
rating;
-- INR55.0 mil. Proposed fund-based working capital limit* is
withdrawn; and
-- INR5.0 mil. Proposed non-fund-based working capital limits* is
Withdrawn.
*The rating has been withdrawn as it has been outstanding for more
than 90 days. The rated instrument is no longer expected to proceed
as previously envisaged
KEY RATING DRIVERS
The affirmation reflects DM's continued small scale of operations,
as indicated by revenue of INR316.0 million in FY20 (FY19: INR129.0
million). The revenue increased due to the execution of a higher
number of orders. As on 31 March 2020, the firm had an outstanding
order book of about INR354 million and L1 orders of
INR674.4million, indicating moderate revenue visibility. DM's
revenue in 1QFY21 is likely to be affected by the COVID-19-led
lockdown, which would lead to moderation in the overall revenue for
the year. The numbers for FY20 are provisional in nature.
Liquidity Indicator - Stretched: DM's average use of its fund-based
and non-fund-based limits was 79% and 92%, respectively, during the
12 months ended April 2020. The cash flow from operations turned
positive at INR43.0 million in FY20 (FY19: negative INR3.0 million)
due to an increase in the operating EBITDA. The company's working
capital cycle turned negative at four days for FY20 (FY19: 18 days)
due to increase in creditor days to 19 days in FY20 (FY19: 0 days).
The firm availed adhoc limit of INR8.5 million during August 2019-
January 2020. The cash and cash equivalents stood at INR1.0 million
at FYE20 (FYE19: INR2.0 million). DM has availed the Reserve Bank
of India-prescribed moratorium till August 2020.
The ratings continue to be constrained by DM's exposure to
geographical concentration risk, as the firm's projects are largely
based in Tamil Nadu. The ratings also reflect the sole
proprietorship nature of the organization.
The ratings factor in the firm's comfortable credit metrics due to
the healthy EBITDA margins. The credit metrics improved in FY20 due
to an increase in the absolute EBITDA to INR22.0 million in FY20
(FY19: INR7.0 million) and a decrease in the debt to INR33.0
million (INR63.0 million). The net financial leverage (adjusted net
debt/operating EBITDA) was 1.4x in FY20 (FY19: 8.8x) and the
interest coverage (operating EBITDAR/gross interest expense +
rents) was 2.8x (1.6x). However, Ind-Ra expects the credit metrics
to deteriorate in FY21 due to the likely decline in the operating
revenue and EBITDA margin.
The ratings are supported by the healthy EBITDA margins due to the
high-margin nature of the business. The margin rose to 7.0% in FY20
(FY19: 5.3%) due to the execution of high-margin projects. The
return on capital employed was 23% in FY20 (FY19: 6%). The agency
the EBITDA margins to fall in FY21, as a decline in the revenue
would lead to poor absorption of fixed expenses.
The ratings are also supported by the promoters' experience of more
than a decade in executing engineering, procurement and
construction contracts.
RATING SENSITIVITIES
Positive: A substantial growth in the revenue and operating EBITDA
margins while maintaining the overall credit metrics, along with an
improvement in the liquidity position, will lead to a positive
rating action.
Negative: Any decline in the revenue and EBITDA margins, leading to
deterioration in the credit metrics, on a sustained basis, and/or
deterioration in the liquidity position, could be negative for the
ratings.
COMPANY PROFILE
D Manoharan is a sole proprietorship firm which commenced its
business during 2003. It is engaged in civil construction that
caters to Tamilnadu.
D. S. KULKARNI: CARE Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of D. S.
Kulkarni Developers Limited (DSKDL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Bank 715.79 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Non-Convertible 111.59 CARE D; Issuer not cooperating;
Debentures Based on best available
Information
Fixed Deposits 33.86 CARE D; Issuer not cooperating;
Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 26, 2018, placed
the rating(s) of DSKDL under the 'issuer non-cooperating' category
as DSKDL had failed to provide information for monitoring of the
rating as agreed to in its Rating Agreement. DSKDL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
June 2, 2020. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on May 23, 2019 the following were the
rating weaknesses.
Key Rating Weaknesses
The rating assigned to the Bank Facilities, Non-Convertible
Debentures and Fixed Deposits of D. S. Kulkarni Developers Limited
(DSKDL) factors in continued delays in servicing its obligations on
account of stretched liquidity position.
D. S. Kulkarni Developers Limited (DSKDL) was incorporated in 1991
by Mr. D S Kulkarni. The equity shares of the company are listed on
stock exchanges. DSKDL is the flagship company of the diversified
DSK Group, formed for the purpose of real estate development,
initially commencing from Pune. Between 1991–2015, the company
developed 212 lakh square feet (lsf) (largest in Pune) of real
estate projects (predominantly residential properties). Currently,
there are ongoing litigations in the name of company and
promoters.
DEVIKA FIBRES: CRISIL Lowers Rating on INR27cr Cash Loan to B+
--------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Devika
Fibres Private Limited (DFPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.5 CRISIL A4 (ISSUER NOT
COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Cash Credit 27.0 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Long Term Loan 11.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with DFPL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DFPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DFPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of DFPL revised to 'CRISIL B+/Stable/CRISIL A4 Issuer
Not Cooperating' from 'CRISIL BB+/Stable/CRISIL A4+ Issuer Not
Cooperating'.
DFPL, formed in 1992, is engaged in texturizing of Polyester
Filament Yarn (PFY), catering mainly to the local weaving units in
domestic market with presence in export market. The manufacturing
facility is located in at Kudsad village in Gujarat while the
marketing activities are carried out from Surat. Company is
promoted and managed by Mr. Gopal Sultania and Mr. Ashok Sultania.
DHANVRIDHI COMMERCIAL: CARE Keeps D Debt Ratings in Not Coop
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Dhanvridhi
Commercial Private Limited (DCPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term/ 1.63 CARE D/CARE D; Issuer not
Short Term cooperating; Based on best
Bank Facilities available information
Long term Bank 8.00 CARE D/CARE D; Issuer not
Facilities cooperating; Based on best
available information
Short term Bank 4.87 CARE D/CARE D; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 26, 2019, placed the
ratings of DCPL under the 'issuer non-cooperating' category as DCPL
had failed to provide information for monitoring of the rating and
had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. DCPL continues to be
noncooperative despite requests for submission of information
through phone call and letter/email dated May 5, 2020. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on March 26, 2019 the following were the
rating strengths and weaknesses (updated for the information
available from Auditor Interaction):
Key Rating Weaknesses
* Ongoing delay in debt servicing: There are ongoing delays in the
servicing of DCPL's debt obligations.
* Small scale of operations: The operations of the company is small
with total operating income of INR2.73 crore in FY18 (refers to the
period from April 1 to March 31) and total capital employed of
INR8.37 crore as on March 31, 2018. The small size restricts the
financial flexibility of the company in times of stress and it
suffers on account of absence of economies of
scale.
* Dependence on single customer for orders: DCPL's entire sales
were against orders from a single customer to manufacture wagons
for the Indian Railway on job work basis, thereby resulting in
customer concentration. The company however, has modified its
business model to accept orders from different customers for its
trading and manufacturing activities.
* Deterioration of financial performance in FY18: DCPL reported
decline in total operating income from INR7.51 crore in FY17 to
INR2.73 crore in FY18. The company reported loss of INR3.28 crore
in FY18.
* Weak liquidity with working capital intensive nature of
operations: The operations of the company are working capital
intensive as a large part of its working capital remained blocked
in
aw material inventory and work-in-progress (WIP). The
liquidity profile of the company remained weak.
* Leveraged capital structure with moderate debt protection
metrics: DCPL reported high overall gearing of 16.69x as on March
31, 2018.
Key Rating Strengths
* Experienced promoters: DCPL is promoted by Kolkata-based Tantia
family having long experience of more than four decades in railway
equipment manufacturing. Currently, the day to day operations of
the company are looked after by Mr. Alok Kumar Modi (Director)
having experience of more than three decades.
DCPL was incorporated in November, 2005 by the Tantia family of
Kolkata, West Bengal. Initially, DCPL was engaged in trading of
materials required for railway wagons. Subsequently, from
FY2010-11, the company started manufacturing of railway wagons and
fabrication jobs on contract basis. The manufacturing facility of
the company is located at Baruipur, West Bengal with an installed
capacity of 1500 wagons.
DIVYA BUILDERS: CRISIL Keeps B+ INR15cr Debt Rating in Not Coop
---------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Divya
Builders (DB) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 15 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with DB for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DB, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on DB is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of DB continues to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
DB is an Ahmedabad-based real estate developer and is executing a
residential real estate project called Nishan Pride at Ranip in
Ahmedabad.
EAST INDIA COMMERCIAL: CRISIL Lowers Rating on INR39.5cr Loan to B+
-------------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of East
India Commercial Co Limited (EICCL; part of the East India
Commercial group), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL A4 (ISSUER NOT
COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Cash Credit 39.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Inland/Import 7 CRISIL A4 (ISSUER NOT
Letter of Credit COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
Long Term Loan 5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 4.78 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with EICCL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of EICCL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on EICCL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of EICCL revised to 'CRISIL B+/Stable/CRISIL A4 Issuer
Not Cooperating' from 'CRISIL BB/Stable/CRISIL A4+ Issuer Not
Cooperating'.
For arriving at its ratings, CRISIL has combined the business and
financial risk profile of EICCL and Sri Bajrang Jute Mills Limited
(SBJML). This is because these two companies, together referred to
as the East India Commercial group, have common promoters and are
in a similar line of business.
Established in 1941, the East India Commercial group is currently
managed by Mr Brijgopal Lunani. It has two manufacturing plants
under EICCL: Krishna Jute Mills and Krishna Hessians, both in
Elluru, Andhra Pradesh; and two plants under SBJML, one in Guntur,
Andhra Pradesh, and the other in Raipur, Chhattisgarh. The
companies primarily manufacture jute bags and a limited quantity of
jute twine and yarn. Krishna Hessians manufactures valueadded jute
products.
ELSON PACKAGING: CRISIL Lowers Rating on INR10cr Loan to B+
-----------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Elson
Packaging Industries Private Limited (EPIPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with EPIPL for obtaining
information through letters and emails dated December 31, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of EPIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on EPIPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of EPIPL Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB/Stable Issuer Not Cooperating'.
Incorporated in 1988, EPIPL is engaged in manufacturing of made of
High Density Poly Ethylene (HDPE), Poly Propylene (PP) and paper
packaging bags which are used for packaging in various industries
like Cement, Chemical, Fertilizer, Food Packaging, Textiles, FMCG
and others. Company is promoted by Mr. Ashok Mody and has
registered office at Mumbai and manufacturing setup at Vapi
(Gujarat).
EPARI SADASHIV: CRISIL Lowers Rating on INR29cr Loan to B+
----------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Epari
Sadashiv Private Limited (ESPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 29 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 2 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with ESPL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ESPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on ESPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of ESPL Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB/Stable Issuer Not Cooperating'.
Established in 2005 by Mr. Epari Sridhar, ESPL sells gold and
diamond jewellery in Odisha. The promoter's family has been in the
jewellery business for nearly eight decades. The company has two
showrooms, one in Bhubaneshwar and the other in Behrampur (Odisha).
It is also the exclusive distributor for Nakshatra, D'damas, Orra,
and Ishtaa diamond-studded jewellery for Cuttack, Khurda (both in
Odisha), and Behrampur regions.
FINE LINES: CRISIL Lowers Rating on INR7cr Long Term Loan to B+
---------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Fine
Lines (FL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 7 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Packing Credit 16 CRISIL A4 (ISSUER NOT
COOPERATING; Revised from
'CRISIL A4+ ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with FL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of FL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on FL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of FL revised to 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating' from 'CRISIL BB+/Stable/CRISIL A4+ Issuer Not
Cooperating'.
Established in 1994, FL is a partnership firm engaged in
manufacturing of garments for men, women and children. It has five
manufacturing units in Noida, Uttar Pradesh. Mr. Rohit Aggarwal and
his wife Ms. Shinjani Aggarwal are the two partners in the firm.
FUTECH PROJECTS: CRISIL Reaffirms B- Rating on INR7.25cr LT Loan
----------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B-/Stable/CRISIL A4' ratings on
the bank facilities of Futech Projects India Private Limited
(FPIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Clean Bill
Discounting 1 CRISIL A4 (Reaffirmed)
Letter of credit
& Bank Guarantee 9.5 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 7.25 CRISIL B-/Stable (Reaffirmed)
Secured Overdraft
Facility 2.25 CRISIL B-/Stable (Reaffirmed)
The ratings continue to reflect the modest scale of FPPL's
operations with limited revenue visibility, large working capital
requirement, and an average financial risk profile. These
weaknesses are partially offset by the extensive experience of the
promoters.
Analytical Approach
Unsecured loans extended by promoters to the tune of INR0.68 crore
as on March 31, 2019 (estimated to be INR0.28 crore as on March 31,
2020) are treated as debt as these are need based funds and are not
subordinated to the bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations with limited revenue visibility:
Intense competition and the tender-based nature of business may
continue to constrain scalability, pricing power, and
profitability. Revenue was modest at INR19.07 crore in fiscal 2020
(estimated) as against INR15.60 crore in fiscal 2019. Further,
there is limited revenue visibility with unexecuted order-book of
mere INR9.76 crore as on April 1, 2020, translating into 0.52 times
of revenue booked in latest fiscal. Growth in topline is expected
to remain modest because of slower construction activities and
labour challenges amid the Covid-19 pandemic.
* Large working capital requirement: Operations, are likely to
remain working capital intensive over the medium term. Gross
current assets were high at 274 days as on March 31, 2020
(estimated), (against 318 days a year ago) driven by large
receivables of 224 days. Since business is tender based, majority
of the revenue is derived in the last quarter of the fiscal. The
company also has to deposit earnest and margin money against bank
guarantees, leading to further pressure on receivables.
* Average financial risk profile: Networth for the company have
remained modest estimated at INR2.47 crore as on March 31, 2020 as
against INR0.76 crore as on March 31, 2019 wherein the company had
incurred losses. However, promoters have infused capital by way of
fresh equity to the tune of INR0.30 crore in fiscal 2020. Gearing,
however, improved to 1.20 times as on March 31, 2020 (estimated) as
against 5.38 times a year ago, driven by reduced working capital
borrowings as at year end. The debt protection metrics remain
moderate with interest coverage ratio and net cash accruals to
adjusted debt estimated at 3.82 times and 0.51 times as on March
31, 2020.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' experience of over two decades, their strong
understanding of local market dynamics, and healthy relations with
customers and suppliers should help take advantage of the
increasing demand for fire-fighting equipment across sectors.
Liquidity Poor
Liquidity profile of FPIPL remains poor with limit utilisation at
over 80% over the past twelve months ending Feb 2020, during which
the company also availed adhoc limits. Cash accrual was low at
INR0.50 crore for fiscal 2021, however, supported by nil term debt
obligation. Partial comfort is also derived from continual support
of promoters by way of infusion of equity as well as unsecured
loans. Current ratio are moderate at estimated 1.13 times on March
31, 2020.
Outlook: Stable
CRISIL believes FPPL will continue to benefit from the experience
of the promoters.
Rating Sensitivity Factor
Upward factor
* Sustained improvement in scale of operation by 20% and sustenance
of operating margin, leading to higher cash accruals
* Improvement in working capital cycle
Downward factor
* Decline in operating profitability by over 400 basis points on a
sustainable basis
* Large debt-funded capital expenditure weakens capital structure
* witnesses a substantial increase in its working capital
requirements thus weakening its liquidity & financial profile.
FPPL, incorporated in 1995, undertakes engineering, procurement,
and construction of fire protection systems for turnkey projects
from concept to commissioning. The New-Delhi-based company executes
piping and fuel oil storage systems in few projects. Mr. Narshiman
and Mr. S Ahmed are the promoters.
HARISUN CERAMIC: CRISIL Assigns B+ Rating to INR4cr Term Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Harisun Ceramic Private Limited (HCPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.25 CRISIL A4 (Assigned)
Cash Credit 3 CRISIL B+/Stable (Assigned)
Proposed Long Term 1.75 CRISIL B+/Stable (Assigned)
Bank Loan Facility
Term Loan 4 CRISIL B+/Stable (Assigned)
The rating reflects HCPL's moderate scale of operation, working
capital intensive nature of business and exposure to cyclicality in
end user industry. These weakness are partially offset by its
extensive industry experience of the promoters, strategic location
ensuring availability of raw materials and labor.
Analytical Approach
For arriving at the ratings of HCPL, unsecured loans which is
estimated at INR4.92 crore as on March 31, 2020 are being treated
as neither debt nor equity as these are from promoters,
subordinated to bank debt and expected to remain in the business
over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Moderate scale of operation: HCPL's business profile is
constrained by its moderate scale of operations in the intensely
competitive ceramic industry. The company is estimated to report a
revenue of INR21 cr in FY 20 as against INR15.4 cr in FY 19. Going
forward, revenue is estimated to improve gradually over the medium
term supported by improvement in demand of real estate industry
which is correlated to ceramic industry. HCPLs moderate scale of
operations will continue limit its operating flexibility.
* Working capital intensive nature of operation: Working capital
intensity of operations is estimated to be high with GCA of 153
days for fiscal 2020. The working capital requirement arises from
higher credit period extended to customer of about 90-100 days,
with few debtors due for more than 6 months and moderate level of
inventory. Though working capital requirement is partially offset
by credit period availed from suppliers, it continues to remain on
a higher side.
* Exposure to cyclicality in end user industry: The entity caters
to the real estate and construction industries. The end-user
industries are cyclical, and are strongly correlated to economic
cycles.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of over a decade in ceramic industry. This has
given them an understanding of the dynamics of the market, and
enabled them to establish relationships with suppliers and
customers.
* Strategic location ensuring availability of raw materials and
labour: Manufacturing facilities situated in Morbi benefit from
easy access to clay (main raw material), infrastructure such as gas
and power and availability of contractors and skilled laborers.
Transportation costs are also low since it is located near major
ports, Kandla and Mundra.
Liquidity Stretched
HCPL has stretched liquidity marked by cash and cash equivalents of
INR0.49 crore estimated as on March 31, 2020 and cash accruals
expected to be around INR1-2 crore against the term debt
obligations of INR0.90 crore in FY 21 and nearly INR1.7 cr in FY22.
The firm has access to fund based limits of INR3.00 crore, which
are utilized at an average level of 81.6% over the 12 months ended
May 31, 2020. The liquidity risk is partially mitigated by funding
support from promoters in the form of unsecured loans which stood
at INR4.92 crore as on March 31, 2020.
Outlook: Stable
CRISIL believes, HCPL will continue to benefit from the extensive
experience of the promoters
Rating Sensitivity Factors
Upward Factor
* Ratio of net cash accruals to repayment obligation improves to
1.8 time
* Significant improvement in its scale of operation.
Downward Factor
* Interest coverage being lower than 1.5 time
* Further stretch in working capital management.
HCPL was incorporated in 2014. HCPL is promoted by Mr. Dilip Kaila
family members and relatives. HCPL is engaged in manufacturing
digitally printed ceramic wall tiles and facility is located in
Morbi, Gujarat.
HITECH PRINT: Ind-Ra Hikes LT Issuer Rating to B+, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Hitech Print
Systems Limited's (HPSL) Long-Term Issuer Rating to 'IND B+' from
'IND D'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR82.56 mil. (reduced from INR111.80 mil.) Term loans due on
November 2024 upgraded with IND B+/Stable rating;
-- INR140 mil. Fund-based limits upgraded with IND B+/Stable
rating; and
-- INR55 mil. Non-fund-based limits upgraded with IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects HPSL's timely debt servicing for at least
three consecutive months ended May 2020 and an increase in its
revenue and profitability in FY19. HPSL's revenue grew 13.48% yoy
to INR920.38 million in FY19 on the higher execution of work
orders; the revenue is likely to have been stable in FY20. As of 29
February 2020, the revenue achieved was INR764 million.
Furthermore, the company reported a healthy EBITDA of INR128.31
million in FY19 (FY18: INR118.96 million).
The ratings are supported by HPSL's healthy EBITDA margin even
though they declined marginally to 13.94% in FY19 (FY18: 14.67%)
due to an increase in raw material cost; the margins are likely to
have been stable in FY20. The company's return on capital employed
was 19.20% in FY19 (FY18: 21.50%).
The upgrade also reflects HPSL's comfortable credit metrics as
indicated by net financial leverage (net debt/operating EBITDA) of
1.65x in FY19 (FY18: 1.69x) and EBITDA interest coverage (operating
EBITDA/gross interest coverage) of 5.02x (4.78x). The improvement
in the credit metrics was on account of an increase in the absolute
EBITDA level. In FY20, the credit profile is likely to have been
comfortable.
Liquidity Indicator - Stretched: HPSL's utilization of fund-based
limit was 99% during the 12 months ended May 2020. However, its
cash flow from operations increased to INR35.71 million in FY19
(FY18: INR12.10 million) on account of a rise in the absolute
EBITDA along with positive changes in the working capital
requirement. The net working capital cycle remained unchanged
year-on-year at 106 days in FY19 due stable receivable and
inventory days. The cash and cash equivalents stood at INR8.02
million at FYE19 (FYE18: INR21.62 million).
The ratings continue to be supported by the promoters' experience
of more than three decades in the printing press business.
RATING SENSITIVITIES
Positive: An improvement in the liquidity position, indicated by
the presence of adequate unencumbered cash or sustained cushion in
bank limit utilization of around 10%, along with an improvement in
the EBITDA margins, on a sustained basis, would lead to a positive
rating action.
Negative: A decline in the revenue leading to deterioration in the
interest coverage and/or further deterioration in the liquidity
profile, all on a sustained basis, will be negative for the
ratings.
COMPANY PROFILE
HPSL, a wholly-owned subsidiary of Anjani Vishnu Holding Limited
(formerly Anjani Projects & Construction Limited), is primarily
engaged in printing business. It has five marketing offices in
Bengaluru, Chennai, Bhopal, Mumbai and New Delhi.
KANKAI PIPES: CARE Lowers Rating on INR4.15cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Kankai Pipes and Fittings Private Limited (KPFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 4.15 CARE B; Stable; Issuer not
Facilities cooperating; Revised from
CARE B+; Stable; On the basis
of best available information
Long Term/Short 5.00 CARE B; Stable/CARE A4; Issuer
Term Bank not cooperating; Revised from
Facilities CARE B+;Stable/CARE A4; On the
basis of best available
information
Short-term Bank 2.00 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated April 9, 2019 placed the
ratings of KPFPL under the 'issuer non-cooperating' category as
KPFPL had failed to provide information for monitoring of the
ratings as agreed to in its Rating Agreement. KPFPL continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated May 13, 2020,
May 14, 2020 and May 19, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings assigned to the bank facilities of KPFPL have been
revised on account of non-availability of requisite information.
The ratings take into account modest scale of operations, decrease
in profit margins, leveraged capital structure and moderate debt
coverage indicators during FY19 (FY; refers to the period April 1
to March 31). The ratings, further continue to remain constrained
on account of its presence in a highly competitive and fragmented
nature of pipes and fittings industry along with vulnerability of
profitability to fluctuations in raw material prices.
The ratings, however, derive strength from the experienced
promoters of KPFPL and well established track record of
operations.
Detailed description of the key rating drivers
At the time of last rating done on April 9, 2019 the following were
the rating strengths and weaknesses (updated for publically
available information).
Key Rating Weaknesses
* Modest scale of operations and decrease in profit margins:
During FY19, the scale of operations of KPFPL marked by Total
Operating Income (TOI) increased however continued to remain modest
at INR21.13 crore as against INR16.96 crore during FY18. Despite
increase in TOI, the PBILDT margin decreased and remained moderate
at 9.47% during FY19 as compared to 12.64% during FY18 mainly on
account of increase in cost of materials consumed. The PAT margin
continued to remain thin at 0.47% during FY19 as against 0.27%
during FY18.
* Leveraged capital structure and moderate debt coverage
indicators: The capital structure marked by overall gearing
continued to remain leveraged at 2.66 times as on March 31, 2019
[March 31, 2018: 2.65 times]. Debt coverage indicators remained
moderate marked by Total Debt to Gross Cash Accruals (TDGCA) of
9.68 years as on March 31, 2019 [March 31, 2018: 8.27 years] and
interest coverage of 2.33 times in FY19 [FY18: 2.42 times].
* Presence in a highly competitive and fragmented nature of
industry: KPFPL operates in a highly fragmented pipes and fittings
industry marked by the presence of a large number of players in the
organized as well as unorganized sector. The industry is
characterized by low entry barriers due to low technological inputs
and easy availability of standardized machinery for the production.
This further leads to high competition among the various players
and low bargaining power with suppliers.
* Vulnerability of profitability to fluctuations in raw material
prices: The prices of raw materials such as PVC granules (which are
a derivative of crude oil) and others, required for the
manufacturing of PVC pipes and fittings are volatile in nature.
With the cost of raw materials accounting for significant
portion of the total production cost, an upward movement in the raw
material prices adversely affects the profitability of the
industry players.
Key Rating Strengths
* Experienced promoters and well established track record of
operations: KPFPL was promoted by Mr. Kalpesh Meghani. Mr. Mahendra
Talpada and Mr. Dhaval Ghadiya in October 2012. All the directors
have one decade of experience in the same line of business. Mr.
Kalpesh Meghani handles overall operations of the company.
Liquidity position: Stretched
Overall liquidity position of KPFPL remained stretched marked by an
operating cycle of 149 days during FY19 as against 163 days during
FY18. Unencumbered cash and bank balance remained low at INR0.21
crore and net cash flow from operations remained at INR0.45 crore
as on March 31, 2019.
Rajkot (Gujarat) based Kankai Pipes & Fittings Private Limited
(KPFPL) was incorporated in October 2012 by Mr. Kalpesh Meghani,
Mr. Mahendra Talpada and Mr. Dhaval Ghadiya. KPFPL is engaged in
the manufacturing of plastic pipes & fittings (mainly cPVC pipes &
fittings). The products manufactured by KPFPL are used in
residential, commercial as well as industrial units.
MAHAJYOTI FIBERS: CARE Keeps D INR7.45cr Debt Rating in Not Coop.
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Mahajyoti
Fibers Private Limited (MFPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Bank 7.45 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 15, 2019, placed the
rating of MFPL under the 'issuer non-cooperating' category as MFPL
had failed to provide information for monitoring of the rating as
agreed to in its rating agreement. MFPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and letters dated May 22,
2020, June 1, 2020 and June 8, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings assigned to the bank facility of MFPL continued to
remain constraint on account of delay in debt servicing.
Detailed description of the key rating drivers
At the time of last rating on March 15, 2019, the following was the
rating weakness.
Key Rating Weaknesses
* Irregularity in debt servicing due to poor liquidity: There are
ongoing irregularities in debt servicing due to poor liquidity of
the company.
Sendhwa (Madhya Pradesh) based, Mahajyoti Fibers Private Limited
(MFPL, CIN: U17111MH2008PTC187544) was promoted by Agrawal family
in 2008. MFPL is currently managed by Mr. Sanjay Agrawal, Mr.
Mukeshkumar Agrawal, Mr. Sachin Joshi and Mr. Dwarkaprasad Agrawal.
The company is engaged in trading of ginned cotton and cotton seeds
and also produces cotton bales by ginning and pressing of raw
cotton. The ginning facility is located at Prakasha (Maharashtra)
with an installed capacity of 31,500 Metric tonnes per annum (MTPA)
as on March 31, 2016.
MB POWER: Ind-Ra Withdraws Prov. BB Rating on INR51.96BB Loan
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn MB Power (Madhya
Pradesh) Limited's (MBPL) proposed debt facilities as follows:
-- The 'Provisional IND BB (ISSUER NOT COOPERATING)' rating on
the INR51.960 bil. Proposed rupee term loan due on April 2034
is withdrawn; and
-- The 'Provisional IND A4+ (ISSUER NOT COOPERATING)' INR2.50
bil. Proposed short-term loan under working capital facility
is withdrawn.
KEY RATING DRIVERS
Ind-Ra has withdrawn the provisional ratings on MBPL's facilities
as the company did not proceed with the instruments as envisaged.
COMPANY PROFILE
MBPL is a 100% subsidiary of Hindustan Thermal Projects Limited,
which is a 100% subsidiary of Hindustan Power Projects Private
Limited. Hindustan Power Projects is the energy holding company of
the group and has 100% step-down subsidiaries for thermal, hydro
and solar verticals. MBPL has set up a 2x600MW coal-based
sub-critical thermal power plant in the Anuppur district of Madhya
Pradesh.
NILE OVERSEAS: CRISIL Assigns B+ Rating to INR4.5cr Term Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Nile Overseas (NIO).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 4.5 CRISIL B+/Stable (Assigned)
Cash Credit 3.0 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility 1.0 CRISIL B+/Stable (Assigned)
The rating reflects NIO's exposure to volatility in raw material
prices, exposure to intense competition, and large working capital
requirement. These weaknesses are partially offset by the extensive
experience of the partners.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to volatility in raw material prices and susceptibility
to intense competition: Since cost of procuring the major raw
material, polyster yarn accounts for 70% of total production cost,
even a slight variation in rates may adversely impact its operating
profitability.
The home furnishings industry comprises numerous players from the
decentralised power loom and hosiery sector and the consequent
intense competition may continue to constrain scalability, pricing
power and profitability.
* Large working capital requirement: The working capital cycle may
remain stretched over the medium term and hence will be closely
monitored. GCAs are sizeable estimated to be around 204 days as on
March 31, 2020. CAs are estimated at 200 days as on March 31, 2020,
driven by inventory and debtors of 60 days and 140 days,
respectively.
Strength
* Extensive experience of the partners: The partners' experience
of over a decade, their strong understanding of local market
dynamics, and healthy relationships with suppliers and customers
should continue to support the business.
Liquidity Stretched
Cash accrual is expected to be modest at around INR1 crore in
fiscal 2021, against yearly repayment obligation of INR50 lakh.
Bank limit utilisation averaged 60-70% during the 9 months ended
April, 2020. Current ratio is estimated at 1.8 times as on
March 31, 2020. The partners are likely to continue extending
timely, need-based funds to support financial flexibility. The firm
has availed moratorium for 3 months ending 31st May, 2020 and plans
to avail extended moratorium till 31st August, 2020.
Outlook: Stable
NIO should continue to benefit from the extensive experience of the
partners.
Rating Sensitivity factors
Upward factors
* Substantial and sustainable increase in revenue and
profitability, leading to cash accrual of more than INR1.8 crore
* Significant improvement in the working capital cycle
Downward factors
* Steep decline in revenue or operating margin, resulting in cash
accrual of less than INR70 lakh
* Any large, debt-funded capital expenditure or a further stretch
in the working capital cycle
NIO was set up in 2014 as a partnership firm by Mr. Abhishek Arya
and Mr. Manish Kumar. This Israna (Panipat; Haryana)-based firm
manufactures mink blankets.
ORTEL COMMUNICATIONS: CARE Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Ortel
Communications Limited (OCL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Bank 39.98 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Short Term Bank 20.00 CARE D; Issuer not cooperating;
Facilities Based on best available
Information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 25, 2019, placed
the ratings of OCL under the 'issuer non-cooperating' category as
OCL had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. OCL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and letters dated May 28,
2020 and June 1, 2020. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on February 25, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from stock exchange filings):
Key Rating Weaknesses
* Delays in debt servicing: There are delays in debt servicing by
OCL. The company is under Corporate Insolvency Resolution Process
(CIRP) and its affairs are being managed by the Resolution
Professional appointed by the National Company Law tribunal (NCLT).
It incurred loss of INR51.23 crore in FY19 (refers to the period
April 1 to March 31) and loss of INR26.34 crore in
9MFY20.
OCL was incorporated on June 2, 1995, promoted by the
Bhubaneswar-based Mr. Baijayant Panda and family. OCL is a
regional cable and broadband service provider. The company provides
services in the state of Odisha, Chhattisgarh, Andhra Pradesh,
Telengana, Madhya Pradesh and West Bengal.
OVERSEAS CARPETS: CRISIL Keeps B- Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Overseas
Carpets Limited. (OCL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 18 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Cash Credit 7 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Export Packing 10 CRISIL B-/Stable (ISSUER NOT
Credit COOPERATING)
CRISIL has been consistently following up with OCL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of OCL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on OCL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of OCL continues to be 'CRISIL B-/Stable Issuer Not
Cooperating'.
Incorporated in 1981, OCL exports carpets. It is promoted by Mr. O
P Garg. OCL is the flagship company of the Garg group, which has
interest in carpets and handicrafts exports, travel services, and
manufacturing of compact discs.
PREMIERWORLD TECHNOLOGY: CARE Cuts Rating on INR13.21cr Loan to D
-----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Premierworld Technology Limited (PTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.51 CARE D; Issuer not cooperating;
Facilities Revised from CARE B; Stable; on
the basis of best available
information
Short Term Bank 13.21 CARE D; Issuer not cooperating;
Facilities Revised from CARE A4, Issuer
not cooperating on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 18, 2019, placed the
ratings of PTL under the 'issuer non-cooperating' category as PTL
had failed to provide information for monitoring of the rating and
had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. PTL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and letters dated May 28,
2020 and June 1, 2020. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings have been revised on account of ongoing delays in debt
servicing by the company.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Ongoing delays in debt servicing: There are ongoing delays in
debt servicing by the company due to stretched liquidity position.
The company continued to incur cash loss in FY19 (refers to the
period April 1 to March 31) and operating cycle remained high at
347 days.
PTL: (erstwhile Premier Irrigation Equipment Ltd) was promoted by
Late Mr. Kedar Nath Goenka. In 1989, the company started commercial
production of fountains and installation of fountains for
beautification purpose (mainly for government contracts). In 1999,
it started manufacturing hydraulic and pneumatic ride simulators.
PROLIFIC PAPERS: CRISIL Withdraws B+ Rating on INR24cr Cash Loan
----------------------------------------------------------------
Due to inadequate information, CRISIL, in line with the Securities
and Exchange Board of India guidelines, had migrated its rating on
the long term bank facilities of Prolific Papers Private Limited
(PPPL) to 'CRISIL B+/Stable Issuer Not Cooperating'. However, the
company's management has subsequently started sharing requisite
information, for a comprehensive review of the ratings.
Consequently, CRISIL is migrating its rating to 'CRISIL B+/Stable'
and subsequently withdrawn the rating at the company's request and
on receipt of a no-objection certificate from the bankers. The
withdrawal is in line with CRISIL's policy on withdrawal of bank
loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 24 CRISIL B+/Stable (Migrated from
'CRISIL B+/Stable ISSUER NOT
COOPERATING'; Rating Withdrawn)
PPPL is a private limited company incorporated in 2007. It is
managed by business associates Mr. Hemant Kumar Jodhani, Mr.
Abhishek Agarwal, Mr. Shyam Lal Tayal, and Mr. Sourabh Jodhani. It
manufactures writing and printing paper (WPP) and duplex boards.
The company has two manufacturing units in Kashipur (Uttarakhand).
RAJASTHAN ARTS: CRISIL Lowers Rating on INR26.25cr Loan to B+
-------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Rajasthan Arts and Crafts House (RACH), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing 26.25 CRISIL B+/Stable (ISSUER NOT
Credit COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
Term Loan 8.75 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with RACH for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RACH, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RACH is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of RACH Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB+/Stable Issuer Not Cooperating'.
RACH was set up in 1974 as a proprietorship by Mr. Ramesh Chand
Gupta; after his demise, the firm was converted into a partnership
in 2005. The firm manufactures and exports furniture,
handicraft/decorative/home furnishing items made of wood and iron
metal. The manufacturing facility is based in Jodhpur, Rajasthan.
The day to day operations are managed by Mr. Sunil Jain.
RAJSHREE SUGARS: CRISIL Reaffirms D Rating on INR411.45cr Loan
--------------------------------------------------------------
CRISIL has reaffirmed its rating on the long-term bank facilities
of Rajshree Sugars and Chemicals Limited (RSCL) at 'CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term
Bank Loan Facility 169.89 CRISIL D (Reaffirmed)
Rupee Term Loan 411.45 CRISIL D (Reaffirmed)
Working Capital
Term Loan 62.66 CRISIL D (Reaffirmed)
CRISIL's ratings continue to reflect instances of delay by RSCL in
servicing its term debt obligations.
The ratings also factors RSCL's weak financial risk profile, marked
by high gearing and below average debt protection metrics, and the
company's susceptibility to regulatory risks in the sugar industry.
However, these rating weaknesses are partially offset by the
promoters' extensive industry experience and availability of
diverse revenue streams.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: The Company's financial risk profile
continue to be weak marked by high gearing and subdued debt
protection metrics. Substantial losses incurred in the past and
sizeable debt has resulted in leveraged capital structure. Debt
protection metrics remains subdued marked by a negative interest
coverage for 9 month ended December 2019.
Strength
* Established regional presence and diverse revenue streams:
RSCL has established presence in sugar industry as reflected from
The company has integrated operations with bagasse-based
cogeneration plant of 57-MW and distillery capacity of 125 kilo
litres per day.
Liquidity Poor
The company's liquidity is weak on account of modest utilization of
installed capacities resulting in inability to recover fixed costs
and operating losses. As a result, the company continues to delay
on its interest and principal payments towards its term loans.
Rating Sensitivity Factors
Upward Factors
* Timely servicing of debt
* Improvement in turnover by more than 30 percent.
Based in Coimbatore (Tamil Nadu), RSCL was incorporated in 1986 and
is a fully integrated sugar manufacturer with distillery and
cogeneration capabilities. The company's operations are managed by
chairman-cum-managing director, Ms. Rajshree Pathy.
SHREE SHYAMSUNDER: CRISIL Reaffirms B+ Rating on INR2.2cr Debt
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Shree Shyamsunder Alloys Private Limited
(SSAPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.5 CRISIL A4 (Reaffirmed)
Cash Credit 2.2 CRISIL B+/Stable (Reaffirmed)
Term Loan 1.3 CRISIL B+/Stable (Reaffirmed)
The ratings reflect the company's low operating margin and
leveraged TOL/ANW. These weaknesses are partially offset by the
extensive industry experience of promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Low operating margin: Due to limited value addition in the final
product, operating margin has remained low at 1.4-1.8% over the
years. In fiscal 2019, margin stood at 1.4% and is expected to
remain at a similar level in FY20.
* Leveraged TOL/ANW: Capital structure is highly leveraged: total
outside liabilities to tangible networth is estimated at 3.2 times
and networth at over INR3.5 crore as on March 31, 2020. In absence
of large debt funded capex plan and lower reliance of external
borrowings, total outside liabilities to tangible networth is
expected to improve over the medium term.
Strengths
* Extensive industry experience of the promoters: The promoters,
Mr. Manoharlal Sharma and his son, Mr. Lalitmohan Sharma, have
experience of four decades and one decade, respectively, in the
steel billets/ingot industry; this should continue to benefit the
business.
* Average debt protection metrics: The debt protection metrics as
reflected in estimated interest coverage over 6.5 times in FY20. In
absence of large debt funded capex plan, debt protection metrics
are expected to improve over the medium term.
Liquidity Stretched
Liquidity is stretched with modest cash accrual is projected at
over INR1.10 crore per annum over the medium term, against the
yearly maturing debt of INR0.30-0.40 crore. Fund-based limit of
INR2.2 crore was utilised at around 80% during the six months
through April 2020.
Outlook: Stable
CRISIL believes SSAPL will continue to benefit from the expertise
of the partners.
Rating Sensitivity Factors
Upward Factor
* Improvement in NCA to above INR2.00 crore
* Improvement in TOL/ANW
Downward Factor
* Decline in operating margin by 50 bps
* Stretch in working capital cycle.
Incorporated in 2012, Gandhinagar-based SSAPL manufactures steel
ingots and flats. Day-to-day operations are managed by Mr. Himanshu
Shah, who is one of the directors along with the promoters.
SIDDHARTH AGRO: CARE Lowers Rating on INR5.45cr Loan to C
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Siddharth Agro Industries (SAI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 5.45 CARE C; ISSUER NOT COOPERATING;
Facilities Revised from CARE B-; Stable;
ISSUER NOT COOPERATING; On the
basis of best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated May 24, 2019, placed the
ratings of SAI under the 'issuer non-cooperating' category as SAI
had failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. SAI continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
May 22, 2020, May 23, 2020, May 26, 2020, June 4, 2020. In line
with the extant SEBI guidelines, CARE has reviewed the ratings on
the basis of the best available information which however, in
CARE's opinion is not sufficient to arrive at a fair ratings.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The ratings have been revised on account of non-availability of
requisite information for review.
Detailed description of the key rating drivers
At the time of last rating in May 24, 2019 the following were the
rating strengths and weaknesses.
Key Rating Weaknesses
* Partnership nature of constitution: The constitution as a
partnership firm restricts SAI's overall financial flexibility in
terms of limited access to external funds for any future expansion
plans. Furthermore, there is inherent risk of possibility of
withdrawal of capital and dissolution of the firm in case of
death/insolvency of any of the partners.
* Fragmented nature of industry coupled with competitive nature of
business: SAI operates in the cold storage services industry which
is highly fragmented with presence of numerous independent
smallscale enterprises owing to low entry barriers leading to high
level of competition in the segment.
Key Rating Strengths
* Experienced partners: Mr. Shantilal Choradia has an experience
of over four decades and Mr. Sunil Choradia and Mr. Anil Choradia
have experience of more than a decade in diversified areas such as
manufacturing of herbal plant and medicine and processing of fruits
and vegetable and other agricultural products with minimal
experience in the field of providing cold storage facility. Overall
diversified experience of the partners would be beneficial.
* Location advantage: The cold storage is located in proximity to
agricultural producing area of Valsad while it is situated on
National Highway no. 8 providing easy connectivity through both
road and rail to cities like Ahmedabad, Mumbai and Surat.
* Fiscal benefits: Cold storage facility of SAI is eligible for
credit linked back-ended subsidy from National Horticulture Mission
(NHM) ad interest subsidy from Government of Gujarat (GoG) which is
expected to increase cash flows in the short-medium term.
Valsad-based (Gujarat) SAI was established in October, 2009 as a
partnership firm by six partners to provide cold storage facilities
on a rental basis as well as for trading purposes for products like
Fruits, dry fruits, spices, vegetables, milk products etc. However,
the construction of the plant began from 2014 and was completed in
July, 2016 after a delay of three months from envisaged completion
date. The cold storage has storage capacity of 6,000 MT.
SOFFIA CERAMIC: CRISIL Reaffirms B+ Rating on INR4.6cr LT Loan
--------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of Soffia Ceramic (SC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 4.6 CRISIL B+/Stable (Reaffirmed)
The rating reflects the firm's modest scale of operations, large
working capital requirement, and susceptibility to volatility in
raw material and fuel prices, and to intense competition. These
weaknesses are partially offset by the extensive experience and
funding support of promoters, and strategic location of
manufacturing plant.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Revenue is estimated to decline to
INR10-12 crore in fiscal 2020 against INR15 crore in the previous
fiscal due to slowdown in ceramic industry on account of ban on
coal based gasifier.
Strengths
* Extensive experience and funding support of promoters: Benefits
from promoters' experience of around a decade through group
entities should support business risk profile. Promoters also
extend equity and unsecured loans.
* Strategic location of plant: Manufacturing facility is in Morbi,
Gujarat, which is the hub of ceramic production in India. Hence,
raw materials and labour are easily available.
Liquidity Stretched
Liquidity is stretched, driven by expected annual cash accrual of
INR0.90 crore against yearly debt obligation of INR0.50-0.60 crore
over the medium term. Unsecured loans (Rs 1.88 crore as on March
31, 2019) from partners also support liquidity. Fund-based limit of
INR3.50 crore was moderately utilised at about 60% for the six
months ended March 2020.
Outlook: Stable
CRISIL believes SC will continue to benefit from the expertise of
the partners.
Rating Sensitivity Factors
Upward Factor
* Significant growth in revenue along with sustained operating
margin in range of 11-13%
* Improvement in working capital cycle
Downward Factor
* Steep decline in NCA by 20%
* Stretch in working capital cycle.
Set up in May 2017 as a partnership firm by Mr. Anuj Narbheram
Ughreja, Mr. Dhananjay Dilip Ughreja, Ms Madhu Dilip Ughreja, and
Ms Pragna Balvant Zalariya, SC manufactures biscuit ceramic wall
tiles.
TIRUPATI INTERNATIONAL: CRISIL Cuts Rating on INR12cr Loan to B+
----------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Tirupati International (TI), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with TI for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on TI is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of TI Revised to 'CRISIL B+/Stable Issuer Not
Cooperating' from 'CRISIL BB+/Stable Issuer Not Cooperating'.
TI, based in Surat, Gujarat was established in 2007 by Mr.
Bhagwanjibhai Savsani, Mr. Nikunj Savsani and Mr. Vinubhai Savsani.
The firm trades in advertising materials such as polyvinyl chloride
(PVC) flex paper, banner, foam, and backlit boards.
VINDHYA CEREALS: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Vindhya Cereals Private Limited
E-5/68, Arera Colony
Bhopal 462016
Insolvency Commencement Date: March 13, 2020
Court: National Company Law Tribunal, Indore Bench
Estimated date of closure of
insolvency resolution process: December 14, 2020
Insolvency professional: Amresh Shukla
Interim Resolution
Professional: Amresh Shukla
F-05, Jaideep Complex
112, Zone-II
M.P. Nagar
Bhopal-M.P. 462011
E-mail: insolvencyprofessionalsindia@
gmail.com
cirp.vindhya@gmail.com
Last date for
submission of claims: July 1, 2020
VIRAJ STEEL: CRISIL Keeps B- INR12cr Debt Rating in Not Cooperating
-------------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Viraj
Steel and Energy Private Limited (VSEL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with VSEL for obtaining
information through letters and emails dated November 30, 2019 and
May 11, 2020 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of VSEL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on VSEL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of VSEL continues to be 'CRISIL B-/Stable Issuer Not
Cooperating'.
VSEL, incorporated in 2004, started commercial production in 2006.
The company is owned and operated by Mr. Kamaljeet Singh Ahluwalia
and Mr. Prashant Kumar Ahluwalia. VSEL manufactures sponge iron
(capacity of 220,000 tonne per annum'tpa) and mild steel billets
(280,000 tpa) at its facility in Sambalpur, Orrisa. The company
also has a waste head recovery based power plant of 16 MW capacity
and an atmospheric fluidised bed combustion (AFBC) based power
plant with 14 MW capacity.
WELLBUILD MERCHANTS: CARE Cuts Rating on INR70cr LT Loan to C
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Wellbuild Merchants Private Limited (WMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 70.00 CARE C; Stable; Issuer not
Facilities cooperating; Revised from
CARE BB-; Stable; ISSUER NOT
COOPERATING; on the basis of
Best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 7, 2019, placed the
rating of WMPL under the 'Issuer Non-Cooperating' category as the
company had failed to provide information for monitoring of the
rating as agreed to in its Rating Agreement. WMPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls dated emails May 25, 2020,
and June 9, 2020. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings have been revised on account of non-availability of
adequate information to assess the company's operational &
financial performance, the uncertainty around the outbreak of
covid-19 & its impact on the firm's operations and the exposure of
the firm to the cyclicality associated with the real estate sector.
This apart, the rating revision also takes into account the delay
in servicing of bank loan (not rated by CARE Ratings) as reported
by the auditor in the company's audit report for FY19.
Detailed description of the key rating drivers
At the time of last rating on March 7, 2019 the following were the
rating strengths and weaknesses (updated for the information
available in FY19 Audited report)
Key Rating Weaknesses
* Project funding and execution risk with financial closure yet to
be achieved particularly for phase II: WMPL has taken up a
residential project 'Rajgruhi Residency' in Kondhwa, Budruk, Pune
for which the company has proposed project debt of INR75 crore for
phase I (wing A & B) and phase II (wing C-yet to be launched). As
on September 30, 2017, the company has incurred around 54% of the
project cost (including cost of land, construction cost, interest
and finance charges and other administrative expenses) which was
funded through mix of promoter's equity (35.13%), debt (19.97%) and
customer advances (44.90%). The balance project cost is yet to be
incurred which is proposed to be funded through mix of customer
advances (37%) and proposed debt (63%). With majority of cost to be
incurred out of proposed debt funding, timely receipt of financial
closure for the ongoing project is critical.
* Requisite approvals to commence construction for phase II (yet to
be launched): WMPL is yet to receive the essential approvals for
the construction of Phase II of the ongoing project. At present,
under phase II-Wing C, the company has sanction plan for 5P+6
floors while plan for additional 14 floors has been proposed.
Further, the company is yet to receive the Real Estate Regulatory
Agency (RERA) certification for wing C.
* Slow realization of advances from sold inventory: The company
depends to a large extent on advances from customers to finance its
ongoing projects which constitute about 41% of total cost of
Rajgruhi Residency project. Out of total estimated project cost of
INR187.10 crore, the company has already incurred about 54% of
total project cost as on September 30, 2017. The company has
received customer advances of 33% of total sold inventory and
balance receivable of about 67% is yet to be recovered on
September 30, 2017.
* Lower proportion of flats registered out of total sold units: As
on September 30, 2017, the company has sold 58% of the saleable
area (4.46 lsf) backed by sales of 61% of the total units (274
flats across wing A, B and C) of the ongoing project out of which
only 45% of the units are registered. Hence, going forward, the
ability of the company to achieve envisaged sales volume coupled
with timely collection of advances from customer would remain
critical from ratings prospective.
* Cyclical nature of the real estate industry: The industry has
witnessed muted housing demand in recent past resulting in high
inventory levels exhibiting pressure on prevailing prices. Prices
in the residential segment have fallen on an inflation adjusted
basis. However, prices are still high and unaffordable for majority
of buyers. Decline in sales and lower receipt of customer advances
have strained the liquidity required for construction and debt
servicing for the developers. Further, the impact of Real Estate
Regulation Act, 2016 remains to be seen on the developers. It is
expected the developers will have to bring about the operational
transformation in their business models to comply with RERA
requirements.
Key Rating Strengths
* Experienced promoters with long track record coupled with 100%
infusion of project equity: WMPL belongs to Yuvraj Dhamale group
promoted by Mr. Yuvraj Dhamale, who has two decades of experience
in real estate sector with core competency in land procurement and
technical management. Yuvraj Dhamale group has long track record of
operations however concentrated in and around city of Pune,
Maharashtra. Further, the promoter has infused 100% project equity
as on September 30, 2017 for the ongoing project.
* Requisite approvals in place for Phase I: All approvals required
for the projects are in place including layout plan, building plan,
high rise clearances, fire safety, pollution control, NOC for water
and drainage, dry waste disposal etc. Satisfactory booking status
Out of total 274 flats spread across wing A, B and C, the company
has sold 167 flats that accounts for around 61% of the total flats
of phase I-wing A and B while phase II is yet to be launched.
Wellbuild Merchants Private Limited (WMPL) belongs to Pune based
Yuvraj Dhamale group. Incorporated in March 2005, WMPL was promoted
by Mr. Bharat Rajkumar Agarwal and was engaged in business of
garments trading. Later in 2013, Mr. Yuvraj Dhamale was on the
boards of Wellbuild Merchants Private Limited and thereafter, the
management of WMPL was taken over by Mr. Yuvraj Dhamale in 2017
with 62.53% shareholding and Mrs. Vaishnavi Y. Dhamale with 37.47%
shareholding. The group has three entities under the Yuvraj Dhamale
brand, namely, WMPL, Raj Developers (Proprietary concern of Mr.
Yuvraj Dhamale, involved in trading of land) and Dhamale Buildcon
(Partnership concern with 90% stake of Mr. Yuvraj Dhamale, involved
in construction business). Mr. Yuvraj Dhamale has long track record
in real estate industry with experience of over two decades however
has executed projects only in and around city of Pune, Maharashtra.
WMPL has taken up a residential project for building up luxurious
apartments in Kondhwa Budruk, Pune, Maharashtra under two phases
(Phase I and Phase II) consisting of four wings (building A-RERA
registration no.: P52100006776) & BRERA registration no.:
P52100006651) in phase I & building C & D (yet to be launched) in
phase II. However at present, WMPL is executing project under three
wings (building A, B in phase I & building C in phase II) with
total 274 flats (mix of 2 & 3 BHK) totaling to 4.46 Lakh sq.ft
spread across Phase – I (2.70 LSF) and Phase – II (1.76 LSF).
The total cost of the project is INR187.10 crore of which a cost of
INR100.17 crore has being incurred as on September 30, 2017. Out of
total 274 flats in project, WMPL has sold 167 flats together of
wing A and wing B (~96% of the total flats in wing A and B) and has
received customer advance of INR44.98 crore as on September 30,
2017. The company is planning to deliver apartment-A by June 30,
2019, apartment-B by December 31, 2019 with all the amenities.
However, wing C is at nasant stage and booking for the captioned
wing is yet to start.
=================
I N D O N E S I A
=================
MODERNLAND REALTY: Fitch Downgrades LT IDR to CCC-
--------------------------------------------------
Fitch Ratings has downgraded Indonesia-based developer PT
Modernland Realty Tbk's (MDLN) Long- Term Issuer Default Rating
(IDR) to 'CCC-' from 'B'. At the same time the USD150 million notes
due in 2021 and USD240 million notes due in 2024 issued by its
wholly owned subsidiaries, and guaranteed by MDLN, have also been
downgraded to 'CCC-' from 'B'. The Recovery Rating on the notes
remains at 'RR4'. All ratings were removed from Rating Watch
Negative (RWN), on which they were placed on April 23, 2020.
The downgrade reflects MDLN's weak liquidity position, which raises
doubts about its ability to repay IDR150 billion of domestic bonds
maturing on July 7, 2020, especially as the company has not been
able to secure bank financing to repay the bond. MDLN says that it
faces problems in collecting payments from residential presales
while potential customers in the industrial segment are delaying
their purchases.
Fitch has revised its rating case assumptions to factor in
additional stress from collection and lower presales in 2020 than
previously expected, and believes that MDLN's internal cash flows
may not be sufficient to meet operating expenses and debt servicing
in the next six months.
KEY RATING DRIVERS
Insufficient Cash: Fitch has revised its estimates for cash
collection from presales in 2020 to IDR1.4 trillion from IDR2.2
trillion, and presales to IDR 1.2 trillion from IDR 1.6 trillion.
In particular, its revised expectation for 2Q cash collection is
70% less than MDLN's average collection for the same period in the
past two years. Under the revised forecasts, Fitch estimates that
MDLN's end-June cash balance would be around IDR260 billion,
compared with its previous expectation of around IDR490 billion.
In the absence of additional financing, MDLN's cash would be
insufficient to meet the IDR150 billion of domestic bonds due on
July 7, 2020 and operating expenses. Missing the payment on July 7,
2020 could lead to extensive debt restructuring because of cross
default clauses in documentation for the company's USD150 million
notes due 2021 and USD240 million notes due 2024 notes.
Lower Presales, Weaker Collections: MDLN reported IDR3.7 trillion
in presales in 2019, including IDR480 billion of net proceeds from
land sold to a joint venture with PT Lotte Land Indonesia. In 1Q20,
MDLN reported IDR435 billion in presales, down 60% yoy, of which
IDR290 billion was from industrial land sales. However, the company
said that the coronavirus pandemic has led to difficulties in
collection from existing customers, and payment deferrals or
cancellations from presales booked in 1Q20.
High Refinancing Risk: Fitch believes that MDLN's refinancing risk
is high, in light of its weak liquidity and the risk-adverse debt
market. While MDLN has said that it is working with banks to
refinance maturing debt, there are risks that MDLN may not be able
to secure adequate funds in time to address the domestic bonds due
on July 7, 2020. This is due to MDLN's relatively short
relationship with its existing lenders.
Matured Projects as Collateral: Fitch believes MDLN's matured
projects in Jakarta Garden City, with around five development years
remaining, and its established Cikande Industrial Estate will
provide some support for the company's refinancing efforts. As of
December 31, 2019, MDLN reported land bank for development at
historical value of IDR5.2 trillion against IDR380 billion of
secured debt.
ESG - Governance: Fitch has revised MDLN's ESG Relevance Scores for
Management Strategy and Financial Transparency to 5 from 3. This
follows its assessment that financial management with respect to
refinancing and disclosure of pertinent information has
deteriorated. This is evident from the fact that, to date, the
company has not been able to secure funding for the IDR150 billion
domestic bonds due in the next two weeks. In addition, the company
is unable to provide and has not provided timely information on its
liquidity position, cash balance and concrete refinancing plan.
DERIVATION SUMMARY
MDLN 'CCC-' IDR reflects Fitch's assessment that the company is
exposed to high liquidity risk on its IDR150 billion bond due July
7, 2020. Its liquidity is weak due to low cash collection. The
company is in negotiations for new funding lines to assist it to
redeem the domestic bond, but it may face challenges in doing so as
credit markets are tight amid risk aversion during the coronavirus
pandemic.
MDLN is rated two-notches lower than PT Agung Podomoro Land Tbk
(APLN, CCC+) to reflect MDLN's more immediate liquidity pressure
than APLN. Fitch estimates that MDLN does not have sufficient cash
to address debt maturing in July 2020, while Fitch expects APLN has
enough liquidity to tide through debt servicing in the next six
months from internal cash flows as well as committed bank lines at
the project level.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- No presales in both industrial and residential segments in
2Q20, with presales to gradually resume in 3Q and 4Q
- Zero collections from industrial property in 2Q20 and 3Q20
- Around 25% of MDLN's residential presales are paid in cash or
by the company's in-house instalment schemes. Fitch has assumed
zero collections on these in 2Q20 and 3Q20
- Collections from new residential presales to resume in 3Q20
- No significant reduction in operating expenditure except for
marketing expenses, in line with lower presales.
- Cash of IDR258 billion as at June 30, 2020
Key Recovery Rating Assumptions
The recovery analysis assumes MDLN would be liquidated in a
bankruptcy rather than be considered a going concern. Fitch has
also assumed a 10% administrative claim in the recovery analysis.
Fitch assigned a liquidation value under a distressed scenario of
around IDR9 trillion as of December 31, 2019. The estimate reflects
Fitch's assessment of the value of trade receivables under a
liquidation scenario at 75% advance rate, inventory at 50% advance
rate, fixed assets at 50% advance rate, investments in associates
at 100% advance rate and land bank for long-term development at
100% advance rate. Fitch believes the company's reported land-bank
value, which is based on historical land costs, is at a significant
discount to market value and, thus, its assumption is already
conservative.
The estimates result in a recovery rate corresponding to an 'RR1'
recovery rating for MDLN's senior unsecured notes. Nevertheless,
Fitch has rated the senior notes at 'CCC-' with a Recovery Rating
of 'RR4' because under Fitch's Country-Specific Treatment of
Recovery Ratings criteria, Indonesia falls into 'Group D' of
creditor friendliness. Instrument ratings of issuers with assets in
this group are subject to a soft cap at the issuer's IDR and
Recovery Rating at 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Any positive rating action is contingent upon Fitch's assessment of
a sustained improvement in MDLN's liquidity profile, which could be
driven by a combination of improving collections and securing
sufficient funds to address maturities in the next 6-12 months.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Fitch may downgrade the ratings by multiple notches if the company
fails to adequately address the IDR150 billion bond maturing on
July 7, 2020.
LIQUIDITY AND DEBT STRUCTURE
Stressed Liquidity, Refinancing Risks: Fitch expects MDLN's cash
will be insufficient to service debt and other operating expenses
in the absence of refinancing or other funding sources. There is
risk that adequate funding may not be available in a timely manner,
given unfavourable market conditions.
ESG CONSIDERATIONS
MDLN has an ESG Relevance Score of 5 for Management Strategy, which
reflects its inability to secure refinancing for the domestic bond
due in the next two weeks. MDLN has an ESG Relevance Score of 5 for
Financial Transparency as it is unable to provide and has not
provided timely information about its liquidity position, cash
balance, and refinancing plan.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
WIJAYA KARYA: Moody's Downgrades CFR to Ba3; Alters Outlook to Neg
------------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating and senior unsecured bond rating of Wijaya Karya (Persero)
Tbk. (P.T.) (WIKA) to Ba3 from Ba2. At the same time, Moody's has
changed the outlook on the ratings to negative from stable.
RATINGS RATIONALE
WIKA's Ba3 rating reflects the application of Moody's rating
methodology for government-related issuers — published in
February 2020 — that combines: (1) its b2 baseline credit
assessment (BCA), and (2) a two-notch uplift based on Moody's
expectation of a strong level of extraordinary support from the
Government of Indonesia (Baa2 stable) in times of need.
"WIKA's business has been severely impacted by the coronavirus
pandemic, and we expect the supply chain disruptions and
restrictions on construction work resulting from the lockdowns in
Indonesia will delay the completion of all of WIKA's projects.
Consequently, we expect its leverage to peak to 9.0x-10.0x in 2020
and remain elevated at about 5.8x-6.0x through 2022," says Nidhi
Dhruv, a Moody's Vice President and Senior Analyst.
Furthermore, the strong growth in new contracts in recent years has
corresponded with a weakening in WIKA's credit metrics given the
large up-front investments associated with some of these projects.
Moody's expects the company to generate negative cash from
operations over 2020 and 2021 given its sizeable working capital
requirements.
"The negative outlook reflects WIKA's elevated leverage and weak
liquidity amid an uncertain operating environment due to the
protracted coronavirus outbreak. The company will also need to
refinance debt maturities of IDR5.6 trillion ($386 million) over
the next six months, which include the Komodo bond maturing in
January 2021," adds Dhruv, who is also Moody's Lead Analyst for
WIKA.
Nonetheless as a government-owned and controlled company, Moody's
expects WIKA will continue to have access to domestic state-owned
banks.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices and asset
price declines are creating a severe and extensive credit shock
across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The construction
sector has been affected by the shock given its direct exposure to
government containment and regulatory measures, and its sensitivity
to consumer demand and sentiment.
Moody's regards the coronavirus outbreak as a social risk under its
environmental, social and governance (ESG) framework, given the
substantial implications for public health and safety. Moody's
rating action reflects the potential impact on WIKA of the breadth
and severity of the shock, and the broad deterioration in credit
quality it has triggered.
That said, WIKA's standalone credit profile continues to reflect
its leading market position as one of the largest integrated
construction companies in Indonesia with an established track
record of completing large projects, and a strong order book which
provides revenue and cash flow visibility over the next few years.
WIKA's order book declined to IDR80.2 trillion as of March 2020
(compared to IDR117 trillion in December 2019), and comprised
mainly of backlog orders. Based on revenues for the 12 months to
March 2020, this represents an order book to revenue ratio of
around 3.2x, down from 3.6x in 2015. Moody's expects WIKA's order
book to revenue ratio to remain around 3.5x-4.0x through 2021 and
2022 on the back of a pick-up in infrastructure investment as
Indonesia emerges from coronavirus-led lockdowns.
WIKA has a diversified business profile with multiple
revenue-generating segments focused on engineering, procurement and
construction (EPC) for the civil & building infrastructure, energy
& industrial, and property & realty sectors. WIKA also operates a
segment producing construction materials such as pre-cast concrete.
The operational diversity between the various business segments
moderates its earnings volatility and supports the company's credit
profile.
In addition, its earnings growth over the next two years will be
driven by its three largest projects -- the Jakarta to Bandung High
Speed Rail, Jakarta Light Rail Transit, and Balikpapan - Samarinda
Toll Road -- which constituted around 27% of WIKA's order book as
of March 2020. As such, project delays or cost overruns could
adversely impact WIKA's credit profile.
Moody's expectation of support from the Indonesian government for
WIKA stems from WIKA's role in achieving Indonesia's infrastructure
development objectives as one of the four main state-owned
construction companies. Such expectation of support remains
appropriately reflected in the two notches of uplift.
The Indonesian government also holds a Series A Dwiwarna Share
which provides it special rights, including the right to approve
WIKA's board level personnel, corporate strategy and financial
policy decisions.
ESG CONSIDERATIONS
In terms of environmental, social and governance (ESG) factors,
WIKA's ratings reflect elevated social risks relating to its
construction activities, including health and safety risk, and
interactions with local communities.
Moody's has also considered governance risk stemming from
concentrated ownership, because the Government of Indonesia --
through the Ministry of State-Owned Enterprises -- owns 65.05% of
the company, and also appoints the board of commissioners and
directors.
Nonetheless, governance risk is partially mitigated by WIKA's
listing on the Indonesian stock exchange since October 2007. The
company refers to the country's prevailing laws and regulations
which largely govern risk management, compliance and reporting,
board structure, policies and procedures.
RATING OUTLOOK
The negative outlook reflects WIKA's elevated leverage and weak
liquidity amid an uncertain operating environment due to the
protracted coronavirus outbreak. The company will need to refinance
significant debt maturities over the next six months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely, given the negative outlook. Nevertheless,
the outlook could return to stable if WIKA successfully executes
its business plan while maintaining a disciplined approach to
investments, with a sustained improvement in its financial profile
and a strong order book. An upgrade of the sovereign rating will
not automatically result in an upgrade of WIKA's ratings.
Specific indicators that Moody's would consider for a stable
outlook are (1) adjusted debt/EBITDA below 6.0x; and (2) adjusted
EBITA/interest expense above 1.5x on a sustained basis. Refinancing
of debt maturing over the next six months also needs to be
addressed.
WIKA's ratings could be downgraded if (1) the company bids
aggressively to win new contracts, resulting in a considerable
deterioration in its financial profile; (2) it experiences a
substantial decline in new contracts wins; or (3) it incurs large
cost overruns and project delays; or (4) the company does not
refinance its upcoming debt maturities in a timely manner.
Credit metrics indicative of a possible downgrade include (1)
adjusted debt/EBITDA above 6.0x; and (2) adjusted EBITA/interest
expense below 1.5x on a sustained basis.
In addition, a reduction in the Indonesian government's
shareholding level or perceived support could lead to a negative
rating action on WIKA.
The methodologies used in these ratings were Construction Industry
published in March 2017.
Established in 1960, Wijaya Karya (Persero) Tbk. (P.T.) (WIKA) is
one of the largest engineering, procurement and construction (EPC)
companies in Indonesia with a revenue of IDR24.9 trillion for the
12 months ended March 2020 and an order book of IDR80.2 trillion as
of March 2020.
WIKA was listed on the Indonesian Stock Exchange in 2007 and is 65%
owned by the Government of Indonesia, with the remaining 35% of
shares held by the public. However, the Indonesian government holds
a Series A (Dwiwarna) share in WIKA. This Series A share grants it
special rights, including setting corporate strategy and financial
policy, and having a veto on board selection.
=========
J A P A N
=========
MITSUBISHI MOTORS: S&P Downgrades ICR to BB, Outlook Negative
-------------------------------------------------------------
S&P Global Ratings said that it has lowered by one notch to 'BB'
from 'BB+' the long-term issuer credit rating on Mitsubishi Motors
Corp. The outlook is negative. The rating was removed from
CreditWatch, on which it was placed with negative implications on
March 25, 2020.
S&P said, "The downgrade is based on our view that there is only a
limited possibility that the company's profitability in terms of
its EBITDA margin recovers to a level commensurate with the
previous rating quickly. In our view, the margin will likely plunge
in fiscal 2020 (ending March 31, 2021). We expect the sharp
decrease in global auto sales triggered by the COVID-19 pandemic to
lead to a significant deterioration in the company's profitability.
We also see a strong likelihood that the company will incur one-off
expenses from structural reforms that aim to slash substantial
fixed costs."
The company's profitability is very likely to remain weak in the
next one to two years. Costs for planned structural reforms may
lower profitability further in the short-term. In Thailand,
Indonesia, and other members of the Association of Southeast Asian
Nations bloc--key markets for the company--economic slowdowns are
likely. S&P said, "Consequently, we believe material declines in
demand for automobiles are likely in 2020. In the North American
and European markets, in addition to material declines in
automobile demand, we expect development costs related to product
lineups are likely to increase, and competition will be intensified
in the area of SUVs, the company's strong point. These factors will
lead to a material decline in the company's profitability, in our
view."
Mitsubishi Motors' major structural reforms may cause one-off
expenses or cash outflows. The company has shifted its focus from
increasing auto sales to reducing fixed costs by more than 20%.
Currently, it plans to redesign its production and sales systems
and reducing its product lineup.
The company maintains financial heath with a net cash position,
excluding its captive finance operations. This will support its
creditworthiness under difficult circumstances, in our view. The
company has a net cash position of over JPY370 billion in its
automobile business (as of March 31, 2020). S&P said, "We believe
its negative free cash flow in fiscal 2020 is likely to be higher
than in the previous fiscal year, when the figure was negative
JPY82.8 billion. However, we expect the company to maintain a net
cash position, because it is working to reduce expenses, including
sales and general administration expenses, and to reduce capital
expenditures that exceeded JPY100 billion in fiscal 2019. We also
believe the company's conservative policy for shareholder returns
and strong relationships with major financial institutions will
support the stability of its financial standing."
S&P has the following assumptions under the base-case scenario.
-- Auto sales units decline by about 20%–30% in fiscal 2020, and
increase by 10%-15% in fiscal 2021.
-- The EBITDA margin falls to near zero in fiscal 2020, and
recovers to about 4% in fiscal 2021.
-- Free cash flow remains negative, JPY100 billion to -JPY200
billion in fiscal 2020 and marginally negative in fiscal 2021.
-- The company maintains a virtually net cash position (excluding
captive finance).
Environmental, social, and governance (ESG) factors for this credit
rating change:
-- Health and safety
S&P said, "The negative outlook reflects that we see over a
one-in-three chance of further downward pressure on the company's
creditworthiness, because the impact of the pandemic on its sales
and manufacturing activities persists or because structural reform
benefits are delayed.
"We will consider a downgrade if we believe the company's EBITDA
margin is unlikely to recover to about 4% in fiscal 2021 and
continue to recover steadily thereafter. This scenario could occur
if the auto sales units remain extremely weak over a prolonged
period in its key ASEAN markets, or if its fixed expenses are not
reduced as planned, leading to a delay in the recovery of earnings.
We may also lower the rating on the company if excessively large
investments and a financial burden stemming from structural reforms
lead to a persistent negative free cash flow large enough to erode
the company's financial soundness.
"We will revise the outlook to stable if we see a clear trend of
recovery in the company's earnings, such that the EBITDA margin
surpasses and remains over 4% quickly and its free cash flow looks
likely to turn positive."
S&P Global Ratings acknowledges a high degree of uncertainty about
the evolution of the coronavirus pandemic. The consensus among
health experts is that the pandemic may now be at, or near, its
peak in some regions but will remain a threat until a vaccine or
effective treatment is widely available, which may not occur until
the second half of 2021. S&P said, "We are using this assumption in
assessing the economic and credit implications associated with the
pandemic. As the situation evolves, we will update our assumptions
and estimates accordingly."
TOKYO DOME: Egan-Jones Lowers Senior Unsecured Ratings to B+
------------------------------------------------------------
Egan-Jones Ratings Company, on June 19, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Tokyo Dome Corporation to B+ from BB-.
Headquartered in Japan, Tokyo Dome Corporation operates an air
dome-type baseball stadium and an urban amusement center.
=====================
N E W Z E A L A N D
=====================
AJ HACKETT: To Receive Millions from New Zealand Government
-----------------------------------------------------------
Zoe George at Stuff.co.nz reports that AJ Hackett Bungy New Zealand
may get up to NZD10.2 million in government funding to ensure its
survival post-Covid-19.
According to Stuff, the announcement was made on June 17 by Tourism
Minister Kelvin Davis as part of the NZD400 million Tourism Sector
Recovery Package.
It will receive a NZD5.1 million grant in the first year, with a
possible loan of up to NZD5.1 million available in the second year
if borders remain closed to international tourists, the report
says.
According to Stuff, AJ Hackett Bungy New Zealand co-founder and
managing director Henry van Asch said the government funding was
well-timed for the internationally recognised company.
"We've been contributing to the communities we're operating in, and
delivering our life changing experiences to people from around the
globe for more than thirty years, and are doing everything we can
to ensure we can continue to do so," Stuff quotes Mr. van Asch as
saying. "Even after considerably resizing our business across New
Zealand we are still facing significant losses through to whenever
the tourism market rebounds."
AJ Hackett Bungy announced staff cuts in May, with a spokeswoman
saying at the time 150 jobs out of 224 could go, Stuff recalls.
AJ Hackett Bungy New Zealand was established in 1988, with the
first site situated at Kawarau Bridge near Queenstown. The company
has expanded its experiences to six sites across Queenstown,
Auckland and Taupo, offering jumps, swings, sky walks, catapults
and zip rides.
AJ Hackett Bungy New Zealand is owned by Bungy New Zealand which
has three shareholders, including Fun Innovators NZ, owned by Henry
Van Asch and John Ward; Trojan Holdings, owned by John Davies; and
Gulley Holdings, owned by Andrew and Claire Brinsley and Farry & Co
Trustees.
Bungy New Zealand received a NZD219,288 Government wage subsidy for
32 staff. Queenstown Bungy--which is part of Bungy New
Zealand--received NZD1.363 million for 196 staff, Stuff discloses.
=================
S I N G A P O R E
=================
HIN LEONG: Overstated Assets by SGD3 Billion, PwC Says
------------------------------------------------------
Jessica Jaganathan and Anshuman Daga at Reuters report that Hin
Leong Trading (Pte) Ltd has no future as an independent company
after it "grossly overstated" the value of its assets by at least
SGD3 billion, according to a preliminary report prepared by a
court-appointed supervisor.
In the report filed this week in Singapore's High Court and
reviewed by Reuters, the interim judicial managers from
PricewaterhouseCoopers Advisory Services Pte. Ltd (PwC) said they
had found a significant number of irregularities in the Singapore
oil trader's finances.
Reuters relates that two sources close to the matter confirmed the
findings, which were based on documents and interviews with Hin
Leong employees in a two-month investigation into its finances and
trading activities.
Hin Leong, one of Asia's largest oil traders, was placed under
so-called judicial management in April after banks demanded
repayment of loans as oil prices crashed and the coronavirus swept
across the globe.
It needs to restructure debts of about SGD3.5 billion and as part
of the judicial management process, PwC is running its affairs.
According to Reuters, the accountancy firm said that as of Oct. 31,
2019, Hin Leong had overstated its assets, including at least
SGD2.23 billion in accounts receivables, unlikely to be recovered,
and SGD800 million in inventory shortfalls.
"The overstatement existed to conceal significant losses that the
Company (Hin Leong) had accumulated over the years," PwC said in
the report.
Hin Leong currently has liabilities of SGD3.5 billion and assets of
SGD257 million and PwC said that on its own, the company "has no
reasonable prospect of being restructured or rehabilitated,"
Reuters relays.
"However, there may be some prospect of restructuring if the
Company is put together with other companies in the Hin Leong Group
with the support and cooperation of the Lim Family," the report, as
cited by Reuters, said.
Hin Leong is owned by its founder Lim Oon Kuin, a Singaporean in
his 70s widely known as O.K. Lim, and his son Lim Chee Meng, who is
also known as Evan Lim, and daughter Lim Huey Ching.
According to Reuters, PwC is proposing that Hin Leong be merged
with other companies either fully or partly owned by the Lim family
including Ocean Tankers (Pte) Ltd (OTPL), which is also under
judicial management, Xihe Group which owns a fleet of tankers,
Universal Group Holdings (UGH) and oil terminal Universal Terminal
to create an integrated petroleum trading platform.
"The proposed restructuring will require the commitment and
co-operation of the Lim Family to inject their personal assets
(including but not limited to their shares held in OTPL, Xihe
Group, UGH and Universal Terminal)," according to the report cited
by Reuters.
It added that it was holding informal discussions with potential
investors to assess their interest in Hin Leong and its
subsidiaries Ocean Bunkering Services Pte Ltd and Hin Leong Marine
International Pte Ltd.
The investors include state-owned enterprises and other companies
from China and regional or global traders in oil and gas, PwC
said.
In its report, PwC said it had found evidence to suggest that Hin
Leong had hidden about SGD808 million in losses from derivatives
trading over the past ten years by overstating derivatives gains by
as much as SGD2.1 billion, Reuters relays.
Reuters says Hin Leong also "fabricated documents on a massive
scale" to give the impression that customers were paying the
company, helping to inflate its accounts receivables and secure
financing.
Hin Leong's founder O.K. Lim admitted in a court document filed
earlier this year to directing the firm not to disclose hundreds of
millions of dollars in losses over several years, Reuters notes.
Dividends totalling SGD90 million were paid to shareholders of Hin
Leong in the financial years that ended October 2018 and October
2017, PwC said.
PwC added that it will continue its investigations after submitting
this report, Reuters relays.
About Hin Leong
Hin Leong Trading (Pte.) Ltd. provides petroleum products and
transportation services. The Company offers oil, lubricants,
grease, and diesel products, as well grants storage, terminalling,
trucking, and marine logistics services. Hin Leong Trading serves
customers globally.
Hin Leong Trading and shipping unit Ocean Tankers (Pte.) Ltd. filed
for court protection from creditors on April 17, 2020, as the
former struggles to repay debts of almost US$4 billion.
Hin Leong posted a positive equity of US$4.56 billion and net
profit of US$78 million in the period ended October 31, according
to the people, who asked not to be identified as the matter is
sensitive, according to Bloomberg News.
But Hin Leong told its creditors this month that total liabilities
reached US$4.05 billion as of early April, while assets were just
US$714 million, leaving a hole of at least US$3.34 billion,
according to screenshots of the presentation to a group of bankers
seen by Bloomberg News.
The balance sheet of the company showed no equity at all as of
April 9, 2020, and warned that "figures obtained from the company
are subject to verification," Bloomberg News added.
On April 27, the Company was granted interim judicial management by
the the Singapore High Court. Goh Thien Phong and Chan Kheng Tek
of PricewaterhouseCoopers Advisory Services (PwC) have been
appointed as interim judicial managers.
===========
T A I W A N
===========
FAR EAST HORIZON: Fitch Withdraws BB+ IDR for Commercial Reasons
----------------------------------------------------------------
Fitch Ratings has affirmed and subsequently withdrawn the following
ratings on Far East Horizon Limited:
- the Long-Term Issuer Default Rating at 'BB+' with a Negative
Outlook;
- the Short-Term IDR at 'B';
- the ratings on the medium-term note programme and notes issued
under the programme at 'BB+'; and
- the rating on subordinated debt issued by King Talent
Management Limited at 'BB-'.
Fitch's last rating action for the referenced entity and debt
issuance was on April 7, 2020, when the ratings were downgraded on
its expectation of deteriorating asset quality and profitability,
which will lead to higher leverage as the operating environment has
weakened significantly.
Fitch has chosen to withdraw the ratings of Far East Horizon for
commercial reasons.
KEY RATING DRIVERS
There has been no material change in Far East Horizon's credit
profile since the previous rating action on April 7, 2020. The
Negative Outlook on Far East Horizon reflects the challenging
operating environment and the potential for further pressure in a
prolonged coronavirus pandemic. This could further weigh on the
company's asset quality and profitability, which in turn will
weaken Fitch's assessment of leverage.
RATING SENSITIVITIES
Rating sensitivities are no longer relevant as the ratings have
been withdrawn.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch adjusts Far East Horizon's leverage ratio - measured by
debt/tangible equity - to include 50% of the junior subordinated
debt issued by King Talent Management Limited as debt and 50% as
equity, based on Fitch's Non-Financial Corporates Hybrids Treatment
and Notching Criteria. King Talent is an SPV that is wholly owned
by Far East Horizon and the subordinated debt is irrevocably and
unconditionally guaranteed by Far East Horizon.
ESG CONSIDERATIONS
Far East Horizon has an ESG Relevance Score of 4 for Group
Structure due to its complex organisational structure, with many
onshore and offshore entities in various business lines. This has a
negative effect on the credit profile and is relevant to the
ratings in conjunction with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means 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.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed
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