/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/200706.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Monday, July 6, 2020, Vol. 23, No. 134 Headlines A U S T R A L I A ABOUT LIFE: First Creditors' Meeting Set for July 13 ARMA SECURITY: Second Creditors' Meeting Set for July 13 GASCOYNE RESOURCES: Recapitalisation Retains Lender Support LITM71 PTY: First Creditors' Meeting Set for July 10 LJH RES: Second Creditors' Meeting Set for July 13 MAYFAIR 101: Provisional Liquidators Appointed to IPO Wealth Firms SEAFOLLY: Administrators Set to Close Sunburn Stores STELLER 141: First Creditors' Meeting Set for July 10 C H I N A CHENGDU RURAL: Government Overhaul Nears Completion GUANGZHOU R&F: Fitch Downgrades LT IDR to B+, Outlook Stable HILONG HOLDING: Fitch Withdraws C(EXP) Rating on Proposed USD Notes ICONIX BRAND: Iconix China to Sell Starter China for $16 Million IDEANOMICS INC: Regains Compliance with Nasdaq Min. Bid Price Rule REMARK HOLDINGS: Delays Filing of Quarterly Report I N D I A ANANTHAKRISHNA SHETTY.K: CARE Cuts Rating on INR5cr Loan to C DEVANS MODERN: CRISIL Keeps D Debt Ratings in Not Cooperating DHARAMRAJ CONTRACTS: CRISIL Withdraws D Rating on INR50cr Loans DRUSHTI REALTORS: CARE Keeps D INR15cr Debt Rating in Not Coop. ELEGENT INFRASTRUCTURE: CRISIL Moves D Ratings to Not Cooperating EPYGEN BIOTECH: CRISIL Migrates D Rating to Not Cooperating HINDUSTAN PRODUCE: CARE Keeps D Debt Ratings in Not Cooperating KEEN AND CORE: CRISIL Migrates C INR6cr Debt Rating to Not Coop. MANNE LABORATORIES: CARE Cuts Rating on INR13.74cr Loan to B- PRITHVI DEVELOPERS: CARE Keeps D INR3.91cr Debt Rating in Not Coop. RAM COMTRADE: CARE Maintains D Debt Ratings in Not Cooperating RAM INDUSTRIES: CRISIL Keeps D Debt Ratings in Not Cooperating RAMDEV STAINLESS: CARE Keeps B- INR11.39cr Debt Rating in Not Coop. RATHI FEEDS: CRISIL Keeps C Debt Ratings in Not Cooperating RATHI HATCHERIES: CRISIL Keeps D Debt Ratings in Not Cooperating RICE TECH: CARE Keeps D INR6cr Debt Rating in Not Cooperating SATYA MEGHA: CRISIL Keeps D Debt Ratings in Not Cooperating SHIRDI SAI: CRISIL Migrates D Debt Ratings from Not Cooperating SIDDHI PAPER: CARE Assigns B+ Rating to INR7.0cr LT Loan SOKHI STEELS: CRISIL Keeps D Debt Ratings in Not Cooperating SUPREME MANOR: CRISIL Migrates D Rating to Not Cooperating SVR CORPORATION: CARE Keeps D INR9.50cr Debt Rating in Not Coop. TROPICAL COATINGS: CRISIL Keeps D Debt Ratings in Not Cooperating I N D O N E S I A MODERNLAND REALTY: S&P Lowers ICR to CCC-, On Watch Negative S I N G A P O R E HATTEN LAND: Units Owe MYR605MM mostly to Group Entities IBC CAPITAL: Moody's Reviews B2 CFR for Downgrade S R I L A N K A ABANS FINANCE: Fitch Affirms BB+(lka) Nat'l LT Rating, Outlook Neg - - - - - ================= A U S T R A L I A ================= ABOUT LIFE: First Creditors' Meeting Set for July 13 ---------------------------------------------------- A first meeting of the creditors in the proceedings of About Life Foodservice Pty Ltd will be held on July 13, 2020, at 11:00 a.m. at the offices of Cor Cordis, One Wharf Lane, Level 20, at 171 Sussex Street, in Sydney, NSW. Andre Lakomy of Cor Cordis was appointed as administrator of About Life on July 1, 2020. ARMA SECURITY: Second Creditors' Meeting Set for July 13 -------------------------------------------------------- A second meeting of creditors in the proceedings of Arma Security Service Pty Ltd has been set for July 13, 2020, at 11:00 a.m. at the offices of Hamilton Murphy Advisory Pty Ltd, Level 1, at 255 Mary Street, in Richmond, Victoria. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by July 10, 2020, at 4:00 p.m. Richard Rohrt of Hamilton Murphy Advisory was appointed as administrator of Arma Security on June 5, 2020. GASCOYNE RESOURCES: Recapitalisation Retains Lender Support ----------------------------------------------------------- Elise Kelly at The Market Herald reports that Gascoyne Resources' (GCY) senior lenders will continue supporting the company's recapitalisation by entering into exclusivity arrangements. At a second meeting on June 25, 2020, creditors of Gascoyne approved a broader recapitalisation and relisting plan for the company. The Market Herald says these lender arrangements will support this plan, and provide the market with greater certainty about senior debt during the recapitalisation phase. According to the report, the exclusivity arrangements with the company's senior lenders will last until Sept. 12, 2020. Gascoyne's Deed Administrators have until this date to complete the proposed recapitalisation and relisting of the company. They will also have until then to fully repay the senior lenders all amounts which are currently owed to them, the report notes. The Market Herald relates that the lenders have agreed that they will not accept or enter, or offer and agree to accept or enter into any transaction which may jeopardise the completion of the Gascoyne deed of company arrangement (DOCA). This agreement will also last until Sept. 12, 2020, at which time the lenders may accept or enter into such a transaction. In order to reimburse the senior lenders what is owed, Gascoyne has organised a repayment scheme. Starting from July 1, the company will begin making monthly repayments of AUD1 million per month to the Senior Lenders facility. This will continue up until the closing date of Sept. 30, 2020, The Market Herald discloses. In the coming weeks, the company will issue the necessary documents to advance the broader recapitalisation and relisting plan. This will include a shareholder notice of meeting and prospectus. Gascoyne Resources shares remain suspended from quotation, last trading for 3.9 cents in 2019, the report notes. About Gascoyne Resources Gascoyne Resources Limited is a mineral exploration and development company. The Company is engaged in the exploration for gold and evaluation of the development options for its Australian gold projects. The Company holds mining leases and exploration licenses and applications totaling approximately 4,000 square kilometers in the Gascoyne and Murchison regions of Western Australia. Its Dalgaranga gold project is located approximately 70 kilometers Northwest of Mt Magnet in the Murchison gold mining region of Western Australia. Its Glenburgh gold project is located in the Southern Gascoyne Province of Western Australia approximately 250 kilometers east of Carnarvon. The Glenburgh gold project consists of a gold mineralized system hosted in interpreted remnants of Archaean terrain in a Proterozoic mobile belt. Its Egerton project consists of approximately two granted mining leases and over three granted exploration licenses. The company employs 87 staff at Dalgaranga and 15 at its head office in Perth. As reported in the Troubled Company Reporter-Asia Pacific on June 4, 2019, Australian Mining said Gascoyne Resources has moved into administration due to an expected material cash shortfall over the coming months. The announcement was made via FTI Consulting, which revealed that Michael Ryan, Kathryn Warwick and Ian Francis will assume the role as voluntary administrators. The company's creditors in late June approved a deed of company arrangement (DOCA) as part of a broader recapitalisation and relisting plan for the gold miner. LITM71 PTY: First Creditors' Meeting Set for July 10 ---------------------------------------------------- A first meeting of the creditors in the proceedings of LITM71 Pty Ltd will be held on July 10, 2020, at 5:00 p.m. at 52/41-49 Norcal Road, in Nunawading. Peter Goodin at Magnetic Insolvency was appointed as administrator of LITM71 Pty on July 1, 2020. LJH RES: Second Creditors' Meeting Set for July 13 -------------------------------------------------- A second meeting of creditors in the proceedings of LJH RES Ltd and LJHRES Holdings Pty Ltd has been set for July 13, 2020, at 11:00 a.m. via teleconference. 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 10, 2020, at 4:00 p.m. Ryan Eagle, Philip Quinlan and Amanda Coneyworth of KPMG were appointed as administrators of LJH RES on June 11, 2020. MAYFAIR 101: Provisional Liquidators Appointed to IPO Wealth Firms ------------------------------------------------------------------ Jonathan Shapiro and Liam Walsh at Australian Financial Review report that provisional liquidators have been appointed to companies tied to the AUD80 million IPO Wealth Fund, the maiden offering of the embattled Mayfair 101 investment outfit. Its founder, James Mawhinney, is likely to face questions in coming months about the IPO Wealth companies in a public examination, the Victorian Supreme Court heard on July 2, AFR says. AFR relates that the appointment was made after the court ruled the move was in the best interests of the 181 investors of the now frozen IPO Wealth Fund. "The scheme has failed," the report quotes Justice Ross Robson as saying on July 2. Mr. Mawhinney, in a statement, said the court outcome was disappointing and he would cooperate with the provisional liquidators. "We are confident that once all the facts are known, any concerns about how we have operated will be put to bed. We always operate in the best interests of investors and within the guidelines," AFR quotes Mr. Mawhinney as saying. That decision quashes attempts by Mr. Mawhinney, 36, to avoid the appointment of provisional liquidators that will now be given additional powers to investigate IPO Wealth activities, according to AFR. Mr. Mawhinney had late last month appointed a voluntary administrator to IPO Wealth companies and proposed a deed of company arrangement with the aim of recovering the funds for investors, AFR recalls. As part of the proposal, Mr. Mawhinney pledged security he valued at AUD20 million on a Mayfair 101 property investment in Venetian island Isola San Spirito. He also offered AUD3.2 million in accrued IPO Wealth performance fees held on trust, the report says. But the fund trustee Vasco, the largest creditor, had said it would not support the deal, which it said offered nothing for investors, AFR relates. IPO Wealth was set up in March 2017 and was marketed as having "investor protection mechanisms" and being an alternative to term deposits. According to AFR, investors' funds were loaned to IPO Wealth companies to invest in ventures from an Indian business software company to a small business lender. It was part of the broader Mayfair 101 outfit, which skyrocketed to attention last year in a AUD30 million purchase of Dunk Island in Queensland promoted by Instagram influencers and discussed in seminars with retiree investors. AFR says the outfit also raised AUD130 million through its Mayfair Platinum notes. But missed payments in February and concerns about the status of investments prompted the fund's trustee Vasco to have receivers appointed to IPO Wealth companies in May, the report states. Lawyers for Vasco, the receivers and the Australian Securities and Investment Commission argued that the judge should appoint a provisional liquidator, says AFR. In reviewing evidence on July 3, Justice Robson said the court had heard allegations the books and records were a "shambles". He said questions were also raised about Mr. Mawhinney's explanations about shares in the Indian software investment being transferred outside of the IPO Wealth group to a British Virgin Islands company that the entrepreneur said was part of the larger Mayfair 101 Group, AFR relates. According to AFR, Mr. Mawhinney has maintained the transfer benefited investors and rejected allegations the trustee was mislead about the value of the fund. AFR relates that Mr. Mawhinney's lawyers argued under a receivership the assets were secured and that the appointment of a liquidator would damage the broader Mayfair 101 outfit. Justice Robson said he acknowledged the argument but said the damage would already have had occurred with the appointment of receivers, adds AFR. About Mayfair 101 Mayfair 101 Group is an Australian-based investment company. Mayfair 101 Group on June 22 placed IPO Wealth Holdings Pty Ltd into voluntary administration to protect IPO Wealth Fund investors from the liquidation of the assets held by IPO Wealth Holdings Pty Ltd and its subsidiaries. The Group has appointed Barry Wight, Daryl Kirk and Rachel Burdett of Cor Cordis as voluntary administrators. The appointment comes as a result of the decision of the IPO Wealth Fund's trustee, Vasco Trustees Limited, to appoint receivers to the IPO Wealth Holdings group of companies on May 22, 2020. SEAFOLLY: Administrators Set to Close Sunburn Stores ---------------------------------------------------- The Sydney Morning Herald reports that the administrators of collapsed swimwear brand Seafolly will shut all of the company's Sunburn-branded stores in an effort to slim the business down for a potential sale. According to the report, KordaMentha administrators Scott Langdon and Rahul Goyal said as many as 50 local and international buyers had expressed interest in the brand following its collapse earlier this week, with initial bids due by Sunday, July 12. As a result, all 15 stores under the Sunburn banner will be shut over the next two weeks, a move intended to make the troubled business "more attractive" to buyers, SMH says. "The slimming down of the cost structure and closure of unprofitable stores will make the Seafolly business much more attractive to buyers," the report quotes administrator Scott Langdon as saying. "Seafolly has a clearly defined and strong brand globally and is a market leader in its niche, while Sunburn struggled to reach the same heights." The Sunburn stores set to be closed are in Erina, Werribee, Cronulla, Springfield, Big Swim (Bondi), Marina Mirage, Shell Harbour, Mosman, Pacific Fair, Chermside, Joondalup, Macquarie, Manly and Top Ryde, SMH discloses. Seafolly fell into administration on June 29, with the owners citing "the crippling financial impact of the COVID-19 pandemic" as a reason for its collapse. The company employs 121 staff and operates 56 stores both locally and internationally. SMH says the remaining 25 Australian Seafolly stores are continuing to trade as normal throughout the sale process, with "deep discounts" on offer. Sales will also be on at Sunburn in an effort to clear stock prior to their closure. Information memorandums will be issued to prospective buyers, and the administrators are hoping to have a sale proposal ready by the second meeting of company creditors in early August, the report states. Seafolly is owned by private equity firm L Catteron, an offshoot of consumer goods giant Louis Vuitton Moet Hennessy (LVMH), which also owns popular boot brand RM Williams. L Catterton purchased 70 per cent of Seafolly for about AUD70 million in 2014 from the founding Halas family. Scott Langdon and Rahul Goyal of KordaMentha Restructuring were appointed Voluntary Administrators of the Australian swimwear and women's beachwear fashion brand, Seafolly on June 29, 2020. The appointment includes the entities relating to the Sunburn business. STELLER 141: First Creditors' Meeting Set for July 10 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Steller 141 Pty Ltd (As Trustee For "Steller 141") will be held on July 10, 2020, at 10:00 a.m. via telephone conference facilities. Timothy James Brace, Michael Carrafa and Peter Gountzos of Address were appointed as administrators of Steller 141 on Sept. 20, 2020. ========= C H I N A ========= CHENGDU RURAL: Government Overhaul Nears Completion --------------------------------------------------- Caixin Global reports that the rehabilitation of troubled Chengdu Rural Commercial Bank Co. Ltd. (CRCB), one of the financial vehicles of fallen tycoon Wu Xiaohui, has taken another step forward with the appointment of two key personnel to the lender which is now under the control of the local government. Liang Qizhou, previously the head of the Chengdu Municipal Financial Regulatory Bureau, has been named as the bank's party secretary and Huang Jianjun, a former vice president of another local bank, Bank of Chengdu Co. Ltd., has been nominated as president, sources close to the matter told Caixin. Huang, 44, recently resigned as a vice president of Bank of Chengdu owing to a "work adjustment," the lender said in a June 13 filing to the Shanghai Stock Exchange. Caixin relates that the appointments fill out remaining gaps in the bank's senior management which has been slowly reshuffled since the government of Chengdu, the capital of southwestern Sichuan province, finally took control of the lender in April through several investment vehicles including Chengdu Xingcheng Investment Group Co. Ltd. The local authority bought the bank from Anbang Insurance Group Co. Ltd., a once-highflying financial conglomerate which was taken over by regulators in February 2018 amid concerns that its reckless debt-fueled expansion posed intolerable risks to the country's financial system, the report notes. GUANGZHOU R&F: Fitch Downgrades LT IDR to B+, Outlook Stable ------------------------------------------------------------ Fitch Ratings has downgraded China-based Guangzhou R&F Properties Co. Ltd.'s Long-Term Foreign- and Local-Currency Issuer Default Rating (IDR) to 'B+' from 'BB-'. The Outlook is Stable. Fitch has also downgraded Guangzhou R&F's senior unsecured rating to 'B+', from 'BB-', with a Recovery Rating of 'RR4'. The downgrade reflects slower deleveraging than Fitch had expected and weaker liquidity, with the cash/short-term debt ratio below 0.5x at end-1Q20. Guangzhou R&F's leverage - measured by net debt/adjusted inventory - fell to 55% by end-2019, from 58% at end-2018, but remained high compared with 'BB-' rated peers. Fitch believes its leverage will hover around 55% over its forecast horizon of 2020-2023. KEY RATING DRIVERS Slow Deleveraging: Guangzhou R&F's 55% leverage at end-2019 was at threshold at which Fitch would consider negative rating action. Fitch previously expected that the company would reduce leverage through slower land acquisitions, stake sales and a potential share issuance, but there has been limited progress on stake sales and share issuance. Management has cut back its land acquisition budget in 2020 to no more than CNY11 billion, which is only less than 10% of its contracted sales target. However, there is lower visibility on the timing of asset sales and share issuance due to market conditions. Contracted Sales Underperform: Guangzhou R&F's 5M20 sales fell by 17% yoy, which is weaker than the industry average of 3% drop. Its average selling price (ASP) edged up by 1% to CNY11,790 per sq m. The company achieved 24% of its full-year growth target by end-May 2020. Management is confident it will deliver 10% attributable contracted sales growth in 2020 and says it will consider cutting ASP to boost sales volume, if needed. Fitch believes that achieving the growth target in 2020 may be challenging with the continual weak sale sentiment in lower-tier cities. 37% of Guangzhou R&F's attributable land bank is in lower-tier Chinese cities, where home sales are volatile. Low Cash Level: Guangzhou R&F's total cash/short-term debt ratio has been below 1.0x since 2018. It worsened to below 0.5x in 1Q20 as the coronavirus outbreak led to weaker sales and lower cash proceeds collection. This weakened its flexibility to repay the CNY87 billion short-term debt as of 1Q20. The weak liquidity buffer is no longer commensurate with a 'BB-' rating, even though its cash on hand is adequate to cover the CNY32 billion capital-market debt puttable or maturing in the coming 18 months. Sound Business Profile: The company's contracted sales scale of over CNY130 billion is bigger than 'BB-' rated peers' sales of CNY50 billion-90 billion. Guangzhou R&F's land bank covers more than 100 cities and is more geographically diversified than the 30-40 cities of 'BB-' peers. Fitch forecasts Guangzhou R&F's EBITDA margin will stay above 28% in 2020-2021, supported by the company's unrecognised property sales of CNY96 billion, which carried a gross profit margin of 35% on average. Fitch also forecasts its non-development property recurring EBITDA coverage will remain at 0.15x in 2020, despite the pandemic-related impact on its hotel operation, as rental income from investment properties is quite resilient. Adequate Land Bank: Guangzhou R&F's moderately long land-bank life adds to flexibility for land acquisitions. Its unsold development property (DP) attributable land bank of 54.7 million sq m as of 2019 was adequate for contracted sales for 5.1 years. Moreover, management says that some of the company's over 70 urban redevelopment projects are expected to be transferred to its land bank in phases and contribute to contracted sales in the coming year; the key projects are in Guangzhou and the Greater Bay Area. Guangzhou R&F is able to pick projects with high margins, as it is not in a rush to replenish its land bank. High Attributable Interest: Guangzhou R&F's non-controlling interest (NCI) - as a percentage of total equity and as a percentage of adjusted inventory - is significantly lower than that of its peers. It shows Guangzhou R&F has less reliance on capital contributions from non-controlling shareholders as a source of financing to expand scale. This increases Guangzhou R&F's need for debt funding. Management prefers sales via contracted sales to maximise profit, rather than disposal of DP project stakes. The company's low NCI position means Guangzhou R&F has fewer potential cash leakage and much more room to deleverage by reducing its DP project stakes compared with its peers. DERIVATION SUMMARY Guangzhou R&F's CNY138 billion attributable contracted sales scale is significantly larger than the CNY40 billion-100 billion of 'BB-' rated peers (except Greenland Holding Group Company Limited (BB-/Stable)) and 'B+' peers (except China Evergrande Group (B+/Stable)). Its contracted sales scale is similar to that of Yango Group Co., Ltd. (B+/Stable), but Guangzhou R&F's 2019 EBITDA size was much bigger. Yango's ASP is 17% higher than that of Guangzhou R&F and has a higher churn rate. However, Guangzhou R&F's land bank size is double that of Yango, which means Guangzhou R&F has more flexibility on land acquisition spending to control leverage. Fitch expects Guangzhou R&F's leverage to be around 5pp lower than that of Yango throughout the forecast period of 2020-2023. Guangzhou R&F has a long land-bank life compared with its peers. Guangzhou R&F's geographical diversification is comparable with that of 'BB+' and 'BB' rated peers. It has a more geographically diversified operation spread across 100 Chinese cities than CIFI Holdings (Group) Co. Ltd.'s (BB/Stable) more than 50 cities. Still, the geographical spread of both companies' operations should mitigate risk from local policy intervention and economies. Guangzhou R&F's attributable contracted scale is more than double of that of Zhenro Properties Group Limited (B+/Stable). Zhenro's ASP is 50% higher than that of Guangzhou R&F with a faster churn rate as well. However, Zhenro has a much shorter land-bank life (around 2.5 years), which will limit its flexibility to control land acquisition costs. Zhenro's 2019 leverage is 8pp lower than that of Guangzhou R&F. However, Zhenro has a much bigger NCI position and this limits its deleveraging ability. Guangzhou R&F has a better-quality land bank than China Fortune Land Development Co., Ltd. (CFLD, BB-/Stable) as its ASP is 26% higher. In addition, Guangzhou R&F's attributable contracted sales scale is 55% bigger. Both developers have low churn rates, but CFLD has a higher EBITDA margin. Guangzhou R&F's leverage is 9pp lower than that of CFLD. Still, CFLD has a much higher non-DP EBITDA interest coverage because of its leading position in developing industrial parks. KEY ASSUMPTIONS - Attributable contracted sales of CNY119 billion-132 billion in 2020-2023 - EBITDA margin, excluding capitalised interest from cost of sales, at 27%-29% in 2020-2023 - 15%-25% of contracted sales proceeds to be spent on land acquisitions in 2020-2023 to maintain a land bank sufficient for about three to four years of development - 45% of contracted sales proceeds to be spent on construction cost in 2020-2023 - 1%-2% average selling price hike each year in 2020-2023 RECOVERY RATING ASSUMPTIONS - Guangzhou R&F to be liquidated in a bankruptcy, as it is an asset-trading company - 10% administration claims - 70% advance rate to accounts receivable - 75% advance rate to adjusted net inventory of Guangzhou R&F to reflect the around 25% EBITDA margin - 55% advance rate to investment properties, property, plant and equipment - 60% standard haircut to net property, plant and equipment - 100% advance rate to restricted cash The Recovery Rating is capped at 'RR4' because under Fitch's Country-Specific Treatment of Recovery Ratings Criteria, China falls into Group D of creditor friendliness, and instrument ratings of issuers with assets in the group are subject to a soft cap at the issuer's IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Leverage, measured by net debt/adjusted inventory, at below 55% for a sustained period - Total cash/short-term debt ratio above 0.8x Factors that could, individually or collectively, lead to negative rating action/downgrade: - Leverage, measured by net debt/adjusted inventory, at over 65% for a sustained period LIQUIDITY AND DEBT STRUCTURE Their CNY39 billion cash on hand as of 1Q20 is enough to cover the CNY32 billion in capital market debts maturing or puttable in the coming 18 months, with minimal operating cash left. Total cash/short-term debt ratio dropped to below 0.5x by end-1Q20 from 0.6x in 2019. This is weaker than other 'BB-' rated peers. They obtained CNY23 billion of various capital market instrument issuance quotas in the past four months which may help improving their liquidity ratio if those can be successfully issued. ESG CONSIDERATIONS 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). HILONG HOLDING: Fitch Withdraws C(EXP) Rating on Proposed USD Notes ------------------------------------------------------------------- Fitch Ratings has withdrawn the 'C(EXP)' expected rating on China-based Hilong Holding Limited's (Hilong, RD) proposed US dollar notes. Hilong previously proposed an exchange offer to refinance its USD165.11 million 7.25% senior unsecured notes due June 2020. The ratings were withdrawn with the following reason: the expected rating is no longer expected to convert to a final rating. KEY RATING DRIVERS Exchange Offer Unsuccessful: Hilong announced on June 30, 2020 the company's exchange offer was not successful as it failed to reach the 80% minimum acceptance level. Restricted Default: Hilong's IDR was downgraded to 'RD' on June 23, 2020 as the company failed to make payment on the June 2020 notes. Fitch defines a restricted default as an uncured payment default in which the issuer has not initiated bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedures as yet and continues to operate its business. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch would reassess the company's credit profile if there is a successful resolution to the current default. Factors that could, individually or collectively, lead to negative rating action/downgrade: - The IDR will be further downgraded to 'D' if Hilong enters into bankruptcy proceedings, administration, receivership, liquidation or other formal winding-up procedures or if it ceases operations. ICONIX BRAND: Iconix China to Sell Starter China for $16 Million ---------------------------------------------------------------- Iconix China Limited, an indirect wholly-owned subsidiary of Iconix Brand Group, Inc., entered into a share purchase agreement to sell all of the equity interests of Starter China Limited, a wholly-owned subsidiary of Iconix China, for consideration of $16.0 million. The Starter China Sale includes the sale of the Starter brand in the mainland of China, Hong Kong, Taiwan and Macau. The Starter China Sale is anticipated to close on or prior to Sept. 15, 2020, subject to the satisfaction or waiver of customary closing conditions. The sale agreement contains representations, warranties, and covenants of the parties that are customary for transactions of this type. The Company anticipates using the net proceeds from the Starter China Sale to repay amounts due under its existing financing arrangements, and otherwise for general corporate purposes. About Iconix Brand Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including: CANDIE'S, BONGO, JOE BOXER, RAMPAGE, MUDD, MOSSIMO, LONDON FOG, OCEAN PACIFIC, DANSKIN, ROCAWEAR, CANNON, ROYAL VELVET, FIELDCREST, CHARISMA, STARTER, WAVERLY, ZOO YORK, UMBRO, LEE COOPER, ECKO UNLTD., MARC ECKO, ARTFUL DODGER, and HYDRAULIC. In addition, Iconix owns interests in the MATERIAL GIRL, ED HARDY, TRUTH OR DARE, MODERN AMUSEMENT BUFFALO and PONY brands. The Company licenses its brands to a network of retailers and manufacturers. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and brand loyalty. Iconix Brand reported a net loss attributable to the company of $111.51 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the company of $100.52 million for the year ended Dec. 31, 2018. As of March 31, 2020, Iconix Brand had $465.25 million in total assets, $712.25 million in total liabilities, $31.34 million in redeemable non-controlling interest, and a total stockholders' deficit of $278.35 million. BDO USA, LLP, in New York, NY, the Company's auditor since 1998, issued a "going concern" qualification in its report dated March 30, 2020 citing that the Company has suffered recurring losses and has certain debt agreements which require compliance with financial covenants. The COVID 19 pandemic is expected to have a material adverse effect on the Company's results of operation, cash flows and liquidity, including compliance with future debt covenants. These conditions raise substantial doubt about the Company's ability to continue as a going concern. IDEANOMICS INC: Regains Compliance with Nasdaq Min. Bid Price Rule ------------------------------------------------------------------ Ideanomics has received a letter from the NASDAQ Listing Qualifications Staff notifying the Company that it has regained compliance with NASDAQ's minimum bid price requirements for continued listing on the Nasdaq Capital Market. The letter noted that as a result of the closing bid price of the Company's common stock having been at $1.00 per share or greater for at least ten consecutive business days, from June 9, 2020 to June 23, 2020, the Company has regained compliance with Listing Rule 5550(a)(2) and the matter is now closed. About Ideanomics Ideanomics--http://www.ideanomics.com--isa global company focused on facilitating the adoption of commercial electric vehicles and developing next generation financial services and Fintech products. Its electric vehicle division, Mobile Energy Global (MEG) provides financial services and incentives for commercial fleet operators, including group purchasing discounts and battery buy-back programs, in order to acquire large-scale customers with energy needs which are monetized through pre-paid electricity and EV charging offerings. Ideanomics Capital includes DBOT ATS and Intelligenta which provide innovative financial services solutions powered by AI and blockchain. MEG and Ideanomics Capital provide their global customers and partners with better efficiencies and technologies and greater access to global markets. The company is headquartered in New York, NY, and has offices in Beijing, China. Ideanomics reported a net loss attributable to common stockholders of $97.66 million for the year ended Dec. 31, 2019, compared to a net loss attributable to common stockholders of $28.42 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $114.94 million in total assets, $61.06 million in total liabilities, $1.26 million in series A Convertible redeemable preferred stock, $7.15 million in redeemable non-controlling interest, and $45.47 million in total equity. B F Borgers CPA PC, in Lakewood, Colorado, the Company's auditor since 2018, issued a "going concern" qualification in its report dated March 16, 2020 citing that the Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. REMARK HOLDINGS: Delays Filing of Quarterly Report -------------------------------------------------- Remark Holdings, Inc., was unable to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 without unreasonable effort or expense due to delays in obtaining and compiling information for inclusion in the Report. The Company expects to be able to file the Report on or before the fifth calendar day following its original prescribed due date. In May 2019, the Company completed the sale of Vegas.com, LLC, which comprised its previously-reported Travel and Entertainment segment. The Company anticipates that the sale of Vegas.com, LLC will cause a significant change in its results of operations; however, the Company is not able to quantify the change at this time as the review of its consolidated financial statements for the quarter ended March 31, 2020 is not complete. About Remark Holdings Remark Holdings, Inc. (NASDAQ: MARK) -- http://www.remarkholdings.com-- delivers an integrated suite of AI solutions that enable businesses and organizations to solve problems, reduce risk and deliver positive outcomes. The company's easy-to-install AI products are being rolled out in a wide range of applications within the retail, financial, public safety and workplace arenas. The company also owns and operates digital media properties that deliver relevant, dynamic content and ecommerce solutions. The company is headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China. As of Dec. 31, 2019, the Company had $14.83 million in total assets, $42.56 million in total liabilities, and a total stockholders' deficit of $27.73 million. Cherry Bekaert LLP, in Atlanta, Georgia, the Company's auditor since 2011, issued a "going concern" qualification in its report dated May 29, 2020, citing that the Company has suffered recurring losses from operations and negative cash flows from operating activities and has a negative working capital and a stockholders' deficit that raise substantial doubt about its ability to continue as a going concern. ========= I N D I A ========= ANANTHAKRISHNA SHETTY.K: CARE Cuts Rating on INR5cr Loan to C ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of AnanthaKrishna Shetty.K (AKSK), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.00 CARE C; Stable; Issuer not Facilities cooperating; 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 April 22, 2019, placed the rating of AKSK under the 'issuer non-cooperating' category as the firm had failed to provide information for monitoring of the rating. The firm continues to be non-cooperative despite repeated requests for submission of information through phone calls and emails dated June 3, 2020 to June 11, 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. Detailed description of the key rating drivers At the time of last rating on April 22, 2019, the following were the rating strengths and weaknesses considered: Key Rating Weaknesses * Tender based nature of operations: The firm receives 100% work orders from government organizations. All these are tender-based and the revenues are dependent on the firm's ability to bid successfully for these tenders. Profitability margins come under pressure because of competitive nature of the industry. However, the promoter's long industry experience of more than two decade mitigates this risk to some extent. Nevertheless, there are numerous fragmented & unorganized players operating in the segment which makes the civil construction space highly competitive. * High customer and geographic concentration risk: KAKS receives its 100% of the work orders from government of Karnataka. Hence, the firm have high customer and geographic concentration risk. * Constitution of the entity as proprietary firm with inherent risk of withdrawal of capital: The sole proprietor typically makes all the decisions and runs the entire business operation. If he becomes ill or disabled, there may be nobody else who can step in and keep the business going. Running a business single-handedly can also pose a risk due to heavy burden. Constitution as a proprietorship has the inherent risk of possibility of withdrawal of the capital at the time of personal contingency which can adversely affect its capital structure. Key Rating Strengths * Experience of the proprietor for more than two decade in construction industry: Anantha krishna Shetty. K (AKSK) was established in the year 1995. The firm is managed by Mr. K.Anantha krishna Shetty is a qualified graduate and has more than two decade of experience in the civil construction industry. Due to long term presence in the market the proprietor has good relation with customer and suppliers resulted in bagging of new orders. Karnataka Based Ananthakrishna Shetty.K (AKSK) was established in the year 1995 as a sole proprietorship firm. The firm is promoted by Mr. K.Ananthakrishna Shetty. Apart, the firm is qualified class-I contractor. AKSK is engaged in the civil construction works like laying of roads, bridges and canal works in the state of Karnataka. DEVANS MODERN: CRISIL Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Devans Modern Breweries Limited (DMBL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 1 CRISIL D (ISSUER NOT COOPERATING) Cash Credit 45 CRISIL D (ISSUER NOT COOPERATING) Proposed Long Term Bank Loan Facility 22.3 CRISIL D (ISSUER NOT COOPERATING) Term Loan 50.7 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with DMBL for obtaining information through letters and emails dated February 12, 2020 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 DMBL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on DMBL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' rating category or lower'. Based on the last available information, the ratings on bank facilities of DMBL continues to be 'CRISIL D/CRISIL D Issuer not cooperating'. DMBL, set up as a liquor-bottling unit in 1962, manufactures malt spirit, beer, and Indian-made foreign liquor. DHARAMRAJ CONTRACTS: CRISIL Withdraws D Rating on INR50cr Loans --------------------------------------------------------------- CRISIL has revised the ratings on certain bank facilities of Dharamraj Contracts India Private Limited (DCIPL), as: Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 34 CRISIL D (ISSUER NOT COOPERATING; Rating Withdrawn) Cash Credit 16 CRISIL D (ISSUER NOT COOPERATING; Rating Withdrawn) CRISIL has been consistently following up with DCIPL for obtaining information through letters and emails dated October 31, 2018 and April 9, 2019, 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 DCIPL. This restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on DCIPL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB rating category or lower. Based on the last available information, the rating on bank facilities of DCIPL continues to be 'CRISIL D Issuer Not Cooperating'. CRISIL has withdrawn its ratings on the bank facilities of DCIPL on the request of the company and receipt of a no objection certificate from its bank. The rating action is in line with CRISIL's policy on withdrawal of its ratings on bank loans. DCIPL was incorporated by Mr. Chaman Singh and his father Mr. Raj Singh in January 2010 in Noida, Uttar Pradesh. The company undertakes civil contracting work for residential and commercial development for government authorities and private entities. DRUSHTI REALTORS: CARE Keeps D INR15cr Debt Rating in Not Coop. --------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Drushti Realtors Private Limited (DRPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 15.00 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 28, 2019, placed the rating(s) of DRPL under the 'issuer non-cooperating' category as Drushti Realtors Private Limited had failed to provide information for monitoring of the rating. Drushti Realtors Private Limited continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter dated May 26, 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 rating takes into account the delays in the debt servicing. CARE also views information availability risk as a key factor in its assessment of credit risk. Detailed description of the key rating drivers At the time of last rating on June 8, 2019 the following were the rating strengths and weaknesses: (updated for the information available from Registrar of Companies): Key rating Weakness * On-going delay in debt servicing: As per the interaction with the banker there are ongoing delays in repayment of principals/payment of interests by the company. Multifilms Plastics Private Limited (MPPL) was incorporated in 1981 by Mr. Sudhir Shankar Bandiwadekar, Mrs Incorporated in 2005 by Mr. Ashok Jagdale, DRPL belongs to the Drushti Group (DG), and is engaged in construction & development of residential as well as residential cum commercial spaces. The company has recently completed a residential cum commercial project named Varun at Pant Nagar, Ghatkopar (East), spanning across total area of 50,000 Sq. Ft. with ground & 1st floor of commercial spaces and 16 floors of residential spaces. The complex comprises 50 flats, 7 shops and 3 offices (however, the bank term loan is yet to be repaid fully). Moreover, DG has developed many residential as well as residential cum commercial spaces in Andheri (West) and Bandra (East). Currently, DRPL is undertaking a residential project named Embassy at Pant Nagar, Ghatkopar (East), spanning across total area of 1,28,250 Sq. Ft. with 16 floors plus basement & ground floor, with a total project cost of INR88.02 crore to be funded by promoters' contribution worth INR26 crore, bank term loan worth INR25 crore and the balance from customer advances. ELEGENT INFRASTRUCTURE: CRISIL Moves D Ratings to Not Cooperating ----------------------------------------------------------------- CRISIL has migrated the rating on bank facilities of Elegent Infrastructure Private Limited (EIPL) to 'CRISIL D Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Long Term Loan 10 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) Term Loan 15 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) CRISIL has been consistently following up with EIPL for obtaining information through letters and emails dated March 30, 2020 and April 24, 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 EIPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on EIPL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' rating category or lower'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL has migrated the rating on bank facilities of EIPL to 'CRISIL D Issuer not cooperating'. Elegent Infrastructure P Ltd. (EIPL), incorporated in 2005 by Mr. Mahender Arora, Mr. Sunil Chutani and Mr. Pradeep Bajaj is engaged in real estate development. The company is currently developing a residential project in name of 'Terra Elegance' at Bhiwadi (Rajasthan). EPYGEN BIOTECH: CRISIL Migrates D Rating to Not Cooperating ----------------------------------------------------------- CRISIL has migrated the rating on bank facilities of Epygen Biotech Private Limited (EBPL) to 'CRISIL D Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Term Loan 25 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) CRISIL has been consistently following up with EBPL for obtaining information through letters and emails dated April 29, 2020 and May 29, 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 EBPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on EBPL is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' rating category or lower'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL has migrated the rating on bank facilities of EBPL to 'CRISIL D Issuer not cooperating'. Incorporated in 2011, EBPL is setting up a manufacturing facility for producing the life-saving thrombolytic enzyme drug- Recombinant - Streptokinase for the cardiovascular market. The company was incorporated by Mr. Debayan Sukhamoy Ghosh and Mr. Ineeyan Ariyaratnam. The manufacturing facility has been set up at Patalganga, Maharashtra and the incubation center is located at Navi Mumbai. HINDUSTAN PRODUCE: CARE Keeps D Debt Ratings in Not Cooperating --------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Hindustan Produce Company (HPC) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 2.85 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Short-term Bank 6.93 CARE D; Issuer Not Cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from HPC to monitor the rating vide e-mail communications/letters dated June 2, 2020, June 4, 2020 and June 8, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on HPC's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating in April 25, 2019 the following were the rating weaknesses: Key Rating Weakness * Ongoing delays in debt servicing: There are on-going delays in the debt servicing of the entity. Hindustan Produce Company (HPC) was constituted as partnership firm in January 1964 by the Keyal family of Kolkata, West Bengal. However, the firm was reconstituted on admission of three new partners via partnership deed dated May 24, 2011. Currently the firm is managed by six partners namely: Mr. Surendra Kumar Keyal, Mr. Vijay Kumar Keyal, Mr. Puneet Keyal, Mr. Vivek Keyal, Mrs. Pramila Keyal and Mrs. Bandana Keyal having equal share in the firm. Since its inception, the firm has been engaged in trading of various kinds of ferro alloys, sponge iron, scraps, refractories, graphite powder and other raw materials required for iron and steel manufacturing plants. KEEN AND CORE: CRISIL Migrates C INR6cr Debt Rating to Not Coop. ---------------------------------------------------------------- CRISIL has migrated the rating on bank facilities of Keen and Core Developers (KCD) to 'CRISIL C/CRISIL A4 Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 5 CRISIL A4 (ISSUER NOT COOPERATING; Rating Migrated) Cash Credit 6 CRISIL C (ISSUER NOT COOPERATING; Rating Migrated) CRISIL has been consistently following up with KCD for obtaining information through letters and emails dated March 30, 2020 and April 24, 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 KCD, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on KCD is consistent with 'Scenario 1' outlined in the 'Framework for Assessing Consistency of Information with CRISIL BB' rating category or lower'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL has migrated the rating on bank facilities of KCD to 'CRISIL C/CRISIL A4 Issuer not cooperating'. KC is proprietorship of Mr. Satyabeer Singh registered in June 2008. The firm is engaged in civil, building and road construction work. Operations are concentrated in Uttar Pradesh and Madhya Pradesh. MANNE LABORATORIES: CARE Cuts Rating on INR13.74cr Loan to B- ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Manne Laboratories Private Limited (MLPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 13.74 CARE B-; Stable; Issuer not Facilities co-operating; Revised from CARE B+ Based on the best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated April 17, 2019, placed the ratings of MLPL under the 'issuer non-cooperating' category as company had failed to provide information for monitoring of the rating. The company continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated dated January 31, 2020 to May 29, 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. (Updated for the information available from ROC) Detailed description of the key rating drivers The revision in the rating assigned to the bank facilities of Manne Laboratories Private Limited (MLPL) takes into consideration financial risk profile marked by leveraged capital structure and weak debt coverage indicators. The ratings continue to be constrained by small scale of operations, working capital intensive nature of operations and highly regulated nature of pharma industry. However, the rating also takes into account experience and qualified promoters and stable outlook for pharmaceutical sector. Key Rating Weakness * Small scale of operations: The company was incorporated in March, 2014 and started its project activities in April, 2015. The company has TOI of INR0.14 crore in FY19 with networth of INR12.24 crore. Furthermore, the company has incurred net cash loss of INR0.68 crore in FY19 due to initial year of operations. * Leveraged capital structure and weak debt coverage indicators: The capital structure of the company marked by overall gearing ratio stood leveraged at 2.20x as on March 31, 2019. The debt coverage indicators of the company marked by total debt/GCA remained weak and stood at negative at -64.39x in FY19 due to negative cash accruals and .Furthermore, The PBILDT interest coverage ratio stood negative at -4.49x in FY19. * Working capital intensive nature of operations: The operating cycle of the company remained intensive nature of operations and stood negative at -1937 days in FY19 due to high inventory period and creditor's period. * Highly regulated nature of pharma industry: The pharmaceutical industry are regulated by several policies and bodies in terms of pricing, quality control, safety and health standards, and several other certifications and control standards. The company has to undergone for the necessary approvals and certifications, further the same has to be regularly upgraded for smooth functioning of their business. Any changes or regulations by the regulatory bodies may hamper the business of the companies prevailing in the industry. Key Rating Strengths * Experienced and qualified promoters: MLPL is promoted by Mr. Satyanarayana Prasad Manne (Managing Director) and his wife Mrs. Nagamani Manne. Mr. Satyanarayana Prasad is a qualified post graduate and having more than two decades of experience in pharma industry. He has worked with Dr. Reddy's Laboratories in different functions. Apart, he has worked in Natco Pharma Ltd. and Divis Laboratories. Furthermore, the promoter is well supported by team of technical, production and research departments. With the director's vast experience in pharma industry, he has gained established relations with customers and suppliers. * Stable outlook of pharmaceutical sector: Domestic drugs industry, which is valued at (US$ 25.87 billion), is also expected to grow in the local market with aggressive rural penetration by drug makers, increased government spending on health, urbanization and growing health awareness among people. India has become a prime destination for manufacture of branded, generic and branded generic medicines with a strong export element. It is estimated that around 40 per cent of the generic drugs in the US come from India. Manne Laboratories Private Limited (MLPL) was incorporated on March 19, 2014 and promoted by Mr. Satyanarayana Prasad Manne (Managing Director) and his wife Mrs. Nagamani (Director). The company has set-up a manufacturing unit for bulk drugs with an installed capacity of 90,000 KL(Kilo Letters) per annum. MLPL would manufacture the products like Valacyclovir, Gabapentin, Panpoprozole, Dextromethorphan, Carbidopa, which are used for manufacturing of Anti-viral and Anti-Biotic drugs. The company is expected to start its commercial operations from April 2018. The upcoming manufacturing unit of the company is located at Gurajapalam Village, Andhra Pradesh. PRITHVI DEVELOPERS: CARE Keeps D INR3.91cr Debt Rating in Not Coop. ------------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Prithvi Developers (PD) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 3.91 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Detailed Rationale & Key Rating Drivers CARE has been seeking information from PD to monitor the ratings vide letters/emails dated June 1, 2020, June 4, 2020, June 9, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on PD's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating in April 24, 2019 the following were the rating strengths and weaknesses. * On-going delay in debt servicing: There is on-going delay in term loan servicing of the entity. Jagdalpur (Chhattisgarh) based Prithvi Developers (PD) was established in 2000 as a partnership firm by Mr. Ashok Kumar Lunkad and Mrs. Anju Lunkad. Since its inception, the firm has been engaged in development of real estate projects in the state of Chhattisgarh. The firm has already developed six residential projects with total saleable area of 12.6 lakh square feet since its inception in the state. Currently, the firm is developing its seventh project 'Ashoka Greens' a residential bungalow complex with an aggregate project cost of INR23.72 crore with a saleable area of 1.44 lakh square feet. The project is located in the prime location of Halba Kachora, Jagdalpur in Chhattisgarh. The total project cost of INR23.72 crore is estimated to be funded by term loan of INR8.00 crore, customer advances of INR10.72 crore and balance from partners' contribution of INR5.00 crore. RAM COMTRADE: CARE Maintains D Debt Ratings in Not Cooperating -------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Shri Ram Comtrade Private Limited (SRCPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 6.00 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Short-term Bank 7.50 CARE D; Issuer Not Cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from SRCPL to monitor the ratings vide letters/emails dated June 1, 2020, June 4, 2020, June 8, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on SRCPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating in April 25, 2019 the following were the rating strengths and weaknesses. Key Rating Weaknesses * On-going delay in debt servicing: There is on-going delay in debt servicing of the entity. Incorporated in December 2012, Shri Ram Comtrade Private Limited (SRCPL) was promoted by Mr. Abhishek Agarwal and Mr. Pinkey Agrawal of Ranchi, Jharkhand. Since its inception, SRCPL has been engaged in trading of construction materials like cement, iron & steel, different types of pipes and pipe fittings. RAM INDUSTRIES: CRISIL Keeps D Debt Ratings in Not Cooperating -------------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Shree Ram Industries (Harij) (RI) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 9.75 CRISIL D (ISSUER NOT COOPERATING) Proposed Long Term Bank Loan Facility .25 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with RI 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 RI, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on RI 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 RI continues to be 'CRISIL D Issuer Not Cooperating'. RI, formed in 2007, is promoted by Patan, Gujarat-based Mr. Jaydev Thakkar and his family members. The firm gins cotton. RAMDEV STAINLESS: CARE Keeps B- INR11.39cr Debt Rating in Not Coop. ------------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Ramdev Stainless Strips Private Limited (RSSPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 11.39 CARE B-; Issuer Not Cooperating; Facilities on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 31, 2019, placed the rating(s) of RSSPL under the 'issuer non-cooperating' category as RSSPL had failed to provide information for monitoring of the rating for the rating exercise as agreed to in its Rating Agreement. RSSPL continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 1, 2020, June 3, 2020, June 5, 2020 and June 8, 2020 etc. In line with the extant SEBI guidelines, CARE has reviewed the rating based on 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 31, 2019 the following were the rating strengths and weaknesses. (Updated for the information available from Registrar of Companies) Key Rating Weaknesses * Modest scale of operations with thin profitability margins: The scale of operations of the company stood modest at INR77.82 crore in FY19, It has improved by 7.50% in FY19 as against FY18 and it has moderate profitability margins with PBILDT margin and PAT margin of 3.81% and 0.56% respectively in FY19 as against 4.48% and 0.17% respectively in FY18. * Weak solvency position: The capital structure of the company stood weak marked by overall gearing of 4.39 times as on March 31, 2019 as against 4.74 times as on March 31 2018. Debt coverage indicators stood weak marked by total debt to GCA of 21.18 times as on March 31, 2019 as against 22.58 times as on March 31, 2018. Interest coverage ratio stood moderate at 1.59 times as on March 31, 2019 as against 1.44 times as on March 31, 2018. * Stressed Liquidity position: The liquidity stood stretched marked by moderate working capital cycle of 61 days as on March 31, 2019 as against 63 days March 31, 2018. It has cash and bank balance of INR0.02 crore as on March 31, 2019. The current ratio remained at moderate level at 1.20 times and quick ratio stood at below unity level at 0.78 times respectively as on March 31, 2019. * Significant Intergroup Transactions: Key raw material for RSSPL is SS flats. SS Flat manufacturers sell their products to SS utensil manufacturers only. Therefore, RSSPL route their majority of SS Flats purchases through its group concern Sunshine Steel Industries (SSI) which is engaged in manufacturing of SS utensils. Further, RSSPL manufactures only eight varieties of utensils only and it sells SS sheets and circles to SSI. Key Rating Strength Vast Experience of the Promoters in Stainless Steel (Ss) Industry Mr. Mohan Lal Agarwal, Managing Director, has over three decades of experience in the manufacturing of SS sheets & circles through its associate concerns. He looks after overall affairs of RSSPL and is assisted by his grandson Mr. Raghav Agarwal, Director. Mr. Raghav Agarwal has an experience of more than a decade in the industry. Jodhpur (Rajasthan) based RSSPL, incorporated in May, 2010, is promoted by Mr. Mohan Lal Agarwal along with his family members. RSSPL was formed with a purpose to manufacture Stainless Steel (SS) sheets & circles and utensils from SS flats. RATHI FEEDS: CRISIL Keeps C Debt Ratings in Not Cooperating ----------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Rathi Feeds India Private Limited (RFPL; part of the Rathi group) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 11.45 CRISIL C (ISSUER NOT COOPERATING) Proposed Long Term Bank Loan Facility 3.75 CRISIL C (ISSUER NOT COOPERATING) Term Loan 2.80 CRISIL C (ISSUER NOT COOPERATING) CRISIL has been consistently following up with RFPL 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 RFPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on RFPL 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 RFPL continues to be 'CRISIL C Issuer Not Cooperating'. For arriving at its rating, CRISIL has combined the business and financial risk profiles of RFPL, RHPL, and Gourav Poultries India Pvt Ltd (GPPL). This is because the companies, collectively referred to as the Rathi group are in the same line of business, extend financial support to each other, and have a common management. RHPL and GPPL are engaged in poultry breeding, hatching and broiling, and RFPL in feed processing. RHPL was set up in 2003 by the Haryana-based Mr. Krishan Rathi and his family members as a hatchery-cum-broiler unit. It has day-old chick breeder farms with capacity of 220,000 parent birds in Jind Haryana). GPPL, set up in 2012, also owns a hatchery-cum-broiler unit. It has day-old chick breeder farms with capacity of 150,000 parent birds in Jind. RFPL was set up in 2008 and is a feed processing unit and meets the group's feed requirements. The group internally consumes around 60 per cent of feed processed by RFPL and sells the balance in the open market. Its feed processing capacity is 200 tonne per day. RATHI HATCHERIES: CRISIL Keeps D Debt Ratings in Not Cooperating ---------------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Rathi Hatcheries Private Limited (RHPL; part of the Rathi group) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 6.55 CRISIL D (ISSUER NOT COOPERATING) Proposed Long Term Bank Loan Facility .95 CRISIL D (ISSUER NOT COOPERATING) Term Loan 4.50 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with RHPL 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 RHPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on RHPL 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 RHPL continues to be 'CRISIL D Issuer Not Cooperating'. For arriving at its rating, CRISIL has combined the business and financial risk profiles of RHPL, Rathi Feeds India Pvt. Ltd. (RFPL) and Gourav Poultries India Pvt Ltd (GPPL). This is because the companies, collectively referred to as the Rathi group are in the same line of business, extend financial support to each other, and have a common management. RHPL and GPPL are engaged in poultry breeding, hatching and broiling, and RFPL in feed processing. RHPL was set up in 2003 by the Haryana-based Mr. Krishan Rathi and his family members as a hatchery-cum-broiler unit. It has day-old chick breeder farms with capacity of 220,000 parent birds in Jind Haryana). GPPL, set up in 2012, also owns a hatchery-cum-broiler unit. It has day-old chick breeder farms with capacity of 150,000 parent birds in Jind. RFPL was set up in 2008 and is a feed processing unit and meets the group's feed requirements. The group internally consumes around 60 per cent of feed processed by RFPL and sells the balance in the open market. Its feed processing capacity is 200 tonne per day. RICE TECH: CARE Keeps D INR6cr Debt Rating in Not Cooperating ------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Rice Tech Agro Mills (RTAM) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 6.00 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated April 17, 2019, placed the rating(s) of RTAM under the 'issuer non cooperating' category as RTAM had failed to provide information for monitoring the rating. Rice Tech Agro Mills continues to be non-cooperative despite repeated requests for submission of information through phone calls and e-mails dated June 3, 2020 to June 10, 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. Detailed description of the key rating drivers At the time of last rating April 17, 2019 the following were the rating strengths and weaknesses: Key Rating Weakness * Overdue in cash credit facility: The firm was unable to generate sufficient cash flows leading to strained liquidity position resulting in overdrawals in meeting interest obligation towards the cash credit facility. Key Rating Strengths * Long experience of promoters' family in agricultural industry The promoters possess experience of more than two decades in the rice milling business, agriculture being the conventional business of the promoters' family. Before the inception of MAM, the promoters were engaged in the rice milling business in small scale apart from managing the other business engaged in manufacturing of black stone for building materials, manufacture of sand from black stone etc. * Support of promoters and group entity: RTAM is supported by the promoters, M/s Metro Metal Industry and M/s Metro Agro Mills by way of corporate guarantee. However, no comfort is being taken from the corporate guarantee as the group details and the corporate guarantee documents were not furnished. Rice Tech Agro Mills (RTAM) was established in 1998 as a partnership firm. Mr. A. M. Koya, Mr. A. M. Sijumon, Mrs. Mini Koya, Mrs. Laila Makkar and Mrs. A. M. Seemon are partners of the firm. The firm belongs to the 'Beepath' Group and is engaged in the business of milling and trading of rice. SATYA MEGHA: CRISIL Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Satya Megha Industries (SMI) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 8 CRISIL D (ISSUER NOT COOPERATING) Cash Term Loan 9.18 CRISIL D (ISSUER NOT COOPERATING) Funded Interest Term Loan 2.98 CRISIL D (ISSUER NOT COOPERATING) Proposed Short Term Bank Loan Facility 2.86 CRISIL D (ISSUER NOT COOPERATING) Working Capital Term Loan 14.18 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with SMI 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 SMI, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on SMI 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 SMI continues to be 'CRISIL D/CRISIL D Issuer not cooperating'. SMI was set up as a partnership firm in Assam in August 2009 by Mr. Ratan Sharma, Mr. Purushottam Murarka, and Mr. Mangilal Jalan. The firm started operations in August 2011, by manufacturing steel billets. Partners have around two decades of experience of manufacturing and trading in steel products, through other group companies. SHIRDI SAI: CRISIL Migrates D Debt Ratings from Not Cooperating --------------------------------------------------------------- Due to inadequate information, CRISIL, in line with the Securities and Exchange Board of India guidelines, had migrated its ratings on the bank facilities of Shirdi Sai Electricals Ltd (SSEL) to 'CRISIL D/CRISIL D Issuer Not Cooperating'. However, the management has subsequently started sharing the requisite information necessary for carrying out a comprehensive review of the ratings. Consequently, CRISIL is migrating its ratings to 'CRISIL D/CRISIL D' from 'CRISIL D/CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 512 CRISIL D (Migrated from 'CRISIL D ISSUER NOT COOPERATING') Cash Credit 78 CRISIL D (Migrated from 'CRISIL D ISSUER NOT COOPERATING') Cash Credit/ 30 CRISIL D (Migrated from Overdraft facility 'CRISIL D ISSUER NOT COOPERATING') Letter of Credit 147 CRISIL D (Migrated from 'CRISIL D ISSUER NOT COOPERATING') Proposed Long Term 28 CRISIL D (Migrated from Bank Loan Facility 'CRISIL D ISSUER NOT COOPERATING') The ratings factor in the company's poor liquidity driven by working capital-intense operations, and exposure to geographical concentration in revenue. However, the company benefits from its established market position in the transformer manufacturing and engineering, procurement, and construction (EPC) contracts business, and healthy order book. Key Rating Drivers & Detailed Description Weaknesses * Working capital intensive operations: Operations are likely to remain working capital intensive over the medium term because of tender-based business, resulting in significant funding requirement towards security deposits and margin money for bank guarantees and letters of credit. Gross current assets were estimated to be high at 186 days primarily because of stretched receivables and sizeable inventory of 125 days and 62 days, respectively, as on March 31, 2020. Moreover, about 75% of the receivables (including withheld and retention money) is outstanding for over 6 months as of May 2020. * Geographical concentration in revenue: Revenue is mainly derived from Bihar and Andhra Pradesh; about 80-90% of the current orders are from these states. Any delay in project execution or disputes, or other events in these regions can affect cash flows from customers. Strength * Established market position: The company has been undertaking EPC contracts since 1999, resulting in an established market position in this business backed by strong execution capability, healthy relationships with customers, and robust order book (Rs 1,564 crore as on April 1, 2020). It also benefits from the technological tie-up with Metglas Inc for manufacturing amorphous core-based transformers. Liquidity Poor Liquidity is expected to remain poor over the medium term because of working capital-intensive operations mainly due to stretched receivables. Bank limits were extensively utilized due to large working capital requirements. There is no irregularity in the working capital facilities for more than 120 days as on date; however timely realisation of receivables from discoms will remain critical for sustaining the improved liquidity profile and the current rating factors in potential default in case of delay in realization of receivables from discoms. Rating Sensitivity Factors Upward factors * Timely debt servicing for more than 3 months with sustained improvement in liquidity profile * Any large equity infusion improving liquidity. SSEL was set up in 1994 as a partnership firm by Mr. N Visweswara Reddy and his family members. It was reconstituted as a private limited company and then as a closely held public limited company in 2010. SSEL designs and manufactures distribution transformers and executes EPC contracts, primarily distribution system improvement projects. The company has a technology licence from Metglas Inc (a wholly owned subsidiary of Hitachi Metals America Ltd, the world's leading producer of amorphous metal ribbon) for technology transfer and supply of material to manufacture amorphous metal-based core distribution transformers. SSEL focuses on projects funded by Central government and international agencies. Its manufacturing plant is in Kadapa, Andhra Pradesh. SIDDHI PAPER: CARE Assigns B+ Rating to INR7.0cr LT Loan -------------------------------------------------------- CARE Ratings has assigned rating to the bank facilities of Siddhi Paper Mill Private Limited (SPMPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 7.00 CARE B+; Stable Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of SPMPL are constrained on account of project implementation and stabilization risk, susceptibility to the underlying volatility in raw material prices and its prospects of growth in highly competitive and fragmented industry. The rating however, draws strength from the experienced promoters although limited experience in paper mill industry. Rating Sensitivities Positive Factors * Stabilization of operations within envisaged timelines * Consistent increase in the company's scale of operations while maintaining profitability margin on a sustained basis. Negative Factors * Delay in commencement and stabilization of operations * Any major impact of Covid-19 on the operational and financial performance of the company Detailed description of the key rating drivers Key Rating weaknesses * Project implementation and Stabilization Risk: The Company has recently completed setting up its manufacturing facility for kraft paper with a total cost of INR7.10 crore, funded through debt to equity ratio of 2.08x. The project is likely to commence operation from June 20, 2020. The ability of the firm to successfully commence its operation as per the scheduled time, will be critical from credit perspective. Lower than envisaged level of cash flow generation from the debt funded cap-ex will remain as the key rating monitorable. * Prospects of growth in highly competitive and fragmented industry: The Indian paper industry that accounts for about 3% of the world's production of paper is highly fragmented and competitive in nature. The stiff competition in the industry is characterized by a presence of large number of well-established players and unorganized small units. The high value added segments like copier paper, coated packaging paper & board are primarily focused by the large players, whereas the small manufacturing units widely cater to low value added segments such as cream-wove, Kraft paper etc. Increasing FDI and demand of paperboard from packaging sector are providing good support to the industry, while increasing export will help the sector in enhancing global presence. The flourishing organized retail sector has increased consumption of corrugated packaging. MNCs are demanding corrugated boxes of international standards and the pattern of buying the packaging is changing. This led to entry of new players in Kraft paper manufacturing in India which has limited the bargaining power with customers and suppliers and as a result impacted profit margin. Key Rating Strengths * Experienced promoters although limited experience in paper mill industry: SPMPL is promoted by Dr. Kiran Katore (Managing Director), Mrs. Swapnali Katore and Ganesh Bharne. The promoters have an average experience of around seven years in trading industry through their proprietorship entity “Katore Bharat Gas (LPG Gas Agency)” established in 2013. The company is likely to benefit from the experience of promoters. However, the promoters have limited experience in managing any company in paper mill industry. The company directors and management have active participation in the overall management of the business operations. Liquidity: Stretched Stretched liquidity marked by high reliance on debt for execution of the project along with pending commencement of commercial operations. Siddhi Paper Mills Private Limited (SPMPL) is a Nashik (Maharashtra) based company incorporated in October 2019. SPMPL has recently completed setting up its facility for manufacturing of Kraft Paper. The facility is located at Nashik with a proposed installed capacity to process 45 tonnes of paper per day (TPD). SOKHI STEELS: CRISIL Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------ CRISIL Ratings said the rating for the bank facilities of Sokhi Steels Private Limited (SSPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 5 CRISIL D (ISSUER NOT COOPERATING) Term Loan 6 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with SSPL 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 SSPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on SSPL 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 SSPL continues to be 'CRISIL D Issuer Not Cooperating'. SSPL was incorporated in 2011, promoted by Mr. Lakhbir Singh Sokhi, Mr. Jagbir Singh Sokhi, and Mr. Sukhbir Singh Sokhi; it commenced operations in fiscal 2014. The company manufactures SG iron, cast iron, and steel products. It has a total furnace induction capacity of about 750 tonne per annum at its plant in Ludhiana, Punjab. SUPREME MANOR: CRISIL Migrates D Rating to Not Cooperating ---------------------------------------------------------- CRISIL has migrated its rating on the long-term bank facility and non convertible debenture of Supreme Manor Wada Bhiwandi Infrastructure Pvt Ltd (SMWBIPL) to 'CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Term Loan 377 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) CRISIL has been consistently following up with SMWBIPL through letters and emails (from April 15 to June 11, 2020) for getting information. However, the issuer has continued to be non-cooperative. This has led to CRISIL undertaking rating surveillance with the best available information. '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 company's management, CRISIL has not received any information on either the financial performance or strategic intent of SMWBIPL. This restricts CRISIL's ability to take a forward-looking view on the entity's credit quality. CRISIL believes the information available for SMWBIPL is consistent with 'Scenario 1' outlined in the 'Assessing information adequacy risk' criteria. Therefore, on account of inadequate information and lack of management cooperation, CRISIL has migrated its rating on the long-term bank facility and non convertible debenture of SMWBIPL to 'CRISIL D Issuer Not Cooperating'. The rating remains in the 'CRISIL D' category given the continued delay by the company in debt servicing and its bank account being a non-performing asset. SMWBIPL was incorporated as a special-purpose vehicle for four-laning of the 54.32 km Manor-Wada section of State Highway (SH)-34 and the 40.07 km Wada-Bhiwandi section of SH-35 in Thane, Maharashtra, on a build, operate and transfer (toll) basis. The scope of work includes widening of the existing 94.39 km two-lane stretch and its improvement, operation and maintenance. SVR CORPORATION: CARE Keeps D INR9.50cr Debt Rating in Not Coop. ---------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of SVR Corporation Private Limited (SVR) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 9.50 CARE D; Issuer Not Cooperating; Facilities on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated March 15, 2019, placed the ratings of SVR under the 'issuer non-cooperating' category as company had failed to provide information for monitoring of the rating. The company continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated January 2020 to May 29, 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. Detailed description of the key rating drivers (Updated for the information available from ROC) The ratings assigned to the bank facilities of SVR Corporation Private Limited (SVR) continues to be tempered by delays in debt servicing. Key Rating Weakness * Delays in meeting of debt obligation: There were delays in meeting the debt obligation due to liquidity issues in the company * Lowest scale of operations during the review period: The operations of the company are low marked by total operating income during the review period due to the company has commenced its operations from December 2017 onwards. The scale of operations of the firm, as marked by the total operating income is INR1.91 crore in FY19. However, the scale of operations remain lowest with a net worth base of INR1.82 crore as on March 31, 2019. * Leveraged capital structure and weak debt coverage indicators in FY19: The capital structure of the company marked by overall gearing ratio stood leveraged at 6.14x as on March 31, 2019. The debt coverage indicators of the company marked by total debt/GCA remained weak and stood at 12.08x in FY19. Furthermore, The PBILDT interest coverage ratio stood at 2.68x in FY19. Key Rating Strengths * Experienced promoters with short track record in renewable sector: Mr.R.Uday Kumar Reddy is a Civil Engineering graduate based in Tirupathi. He is a well experienced person in execution of infrastructure projects for both government and private sector for 5 years. He is having more than 6 years of experience in electrical industry. Mr. S.V.Gowtham Reddy is a Electrical Engineering graduate based in Hyderabad. He has around 5 years of experience in mining and construction business. His engineering and management skills are vital to the success of this project. He is having more than 6 years of experience in electrical industry. SVR was incorporated in the year 2013 by Mr. R.Uday Kumar Reddy and Mr.S.V.Gowtham Reddy. The company has proposed to set up a unit for the generation, accumulation, distribution and supply of electricity and all forms of energy at Chittoor, Andhra Pradesh. The total installed capacity of the unit is 2MW SPV (Solar Photovoltaic) new grid-tied projects per annum. The raw material required for the production, to the extent of 56% will be imported from Hongkong and remaining to be purchased from other states in India. SVR has commenced its operations from December 2017 onwards. The total cost proposed for setting up the unit is INR13.44 crore funded by equity share capital of INR3.36 crore and remaining through term loan of INR10.08 crore in which INR4.50 crore is FLC to be converted to term loan after 3 years usance period. TROPICAL COATINGS: CRISIL Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------------- CRISIL Ratings said the rating for the bank facilities of Tropical Coatings International Private Limited (TCIPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 1 CRISIL D (ISSUER NOT COOPERATING) Cash Credit 1.57 CRISIL D (ISSUER NOT COOPERATING) Letter of Credit .36 CRISIL D (ISSUER NOT COOPERATING) Term Loan 6.20 CRISIL D (ISSUER NOT COOPERATING) CRISIL has been consistently following up with TCIPL 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 TCIPL, which restricts CRISIL's ability to take a forward looking view on the entity's credit quality. CRISIL believes information available on TCIPL 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 TCIPL continues to be 'CRISIL D/CRISIL D Issuer not cooperating'. Established in 2012, TCIPL manufactures waterproofing membranes and allied products at Vishakapatnam. Operations are managed by Mr. Ravindranath. ================= I N D O N E S I A ================= MODERNLAND REALTY: S&P Lowers ICR to CCC-, On Watch Negative ------------------------------------------------------------ On July 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on PT Modernland Realty Tbk. and the long-term issue rating on the company's guaranteed senior unsecured notes to 'CCC-' from 'CCC'. At the same time, S&P placed all ratings on CreditWatch with negative implications. The downgrade reflects the increasing risk that Modernland will undertake to restructure its Indonesian rupiah (IDR) 150 billion domestic notes, a move that would constitute a distressed exchange in S&P's view. The notes are maturing on July 7, 2020. Modernland has yet to demonstrate concrete progress in refinancing the notes. The company has entered into discussions with bondholders and S&P understands that it is still working on various refinancing options to avoid restructuring the debt. The COVID-19 outbreak in Indonesia and the resultant impact on the company's operating results have narrowed its refinancing options. S&P also believes Modernland's cash balance declined significantly in the second quarter after it made the coupon payment on its outstanding U.S. dollar notes. The company had about IDR180 billion in cash and equivalents as of March 31, 2020, and about US$8 million in coupon payment in April. Even if Modernland manages to repay, refinance, or postpone the principal payment on its domestic notes, the company still faces nearly US$16 million in total coupon payments on its outstanding U.S. dollar notes in August and October. It would have limited remaining sources of repayment unless it collects outstanding receivables. A default on the domestic notes due to an inability to repay or a failure to restructure within the remedial period could also trigger a cross-default on the company's guaranteed senior unsecured U.S. dollar notes. The CreditWatch placement with negative implications reflects Modernland's depleting cash balance, weakening debt-servicing ability, and the likelihood that the company will restructure its domestic notes in the next few weeks. S&P would lower the ratings to 'SD' within the next few weeks if: (1) Modernland fails to repay or refinance its domestic notes before they mature; or (2) the company restructures its domestic notes in a manner that we consider to be a distressed exchange. ================= S I N G A P O R E ================= HATTEN LAND: Units Owe MYR605MM mostly to Group Entities -------------------------------------------------------- The Business Times reports that two Hatten Land subsidiaries owe a combined MYR605 million (SGD196.9 million) to scheme creditors, although the bulk of these debts will be erased as they are owed to group entities. In a filing late on July 2, the Catalist-listed property developer said total debt under MDSA Resources' proposed scheme of arrangement is about MYR322 million. Some 79 per cent of this is owed to entities within the Hatten Land group, and will be eliminated at consolidation, BT discloses. The balance debt of MDSA Resources thus amounts to MYR68 million, which represents about 17 per cent of the group's total trade and other payables of MYR403 million as at March 31, 2020, Hatten Land said in response to the Singapore Exchange's queries, BT relays. For the other subsidiary, MDSA Ventures, total debt under its proposed scheme is MYR283 million, of which about 84 per cent is owed to group entities and will be eliminated at consolidation. The balance debt of MDSA Ventures totals MYR45 million, or about 11 per cent of the group's total trade and other payables, the report says. Earlier on July 2, Hatten Land announced that the two subsidiaries were planning to undergo debt restructuring and had applied to the High Court of Malaysia for leave to call for creditors' meetings to consider and approve their proposed schemes, reports BT. MDSA Resources and MDSA Ventures were the developers for integrated mixed-use projects Hatten City Phase 1 and 2 in Melaka, Malaysia. The Phase 1 project was completed in 2016, while Phase 2 was completed in 2018. For its third quarter ended March 31, 2020, revenue contribution to the group was about 23.3 per cent or MYR33.2 million from MDSA Resources, and 25.1 per cent or MYR35.8 million from MDSA Ventures, Hatten Land said on July 2. BT says MDSA Resources has sold about 83 per cent of the 2,580 units developed in Hatten City Phase 1 as at March 31, 2020, while MDSA Ventures has sold some 79.5 per cent of the 1,734 units in Phase 2. Hatten Land's board of directors believe the group is able to continue operating as a going concern, it said in response to SGX's queries, adds BT. This is after taking into account the group's net assets of MYR370 million and net current assets of MYR307 million as at March 31, 2020, as well as about MYR1.3 billion of unsold completed properties. "These assets can be monetised through collection and sales to generate cash flow," Hatten Land, as cited by BT, said. In addition, the group's repayment obligations for borrowings have been extended, and it has also implemented initiatives to manage and/or reduce operating costs such as salary adjustments and reducing non-essential expenses, the report relays. About Hatten Land Hatten Land Limited operates as a property developer. The Company develops malls, hotels, and residential properties. Hatten Land serves customers in Singapore and Malaysia. As reported in the Troubled Company Reporter-Asia Pacific on Nov. 12, 2019, The Business Times said Hatten Land's independent auditor, Ernst & Young, has made a disclaimer of opinion on Hatten's financial statements for the year ended June 30, 2019. While Hatten's directors have prepared the financial statements on a going concern basis based on the assumptions disclosed in the financial statements, Ernst & Young highlighted conditions that have given rise to material uncertainties on the group's ability to continue as a going concern. Among other things, Ernst & Young noted in its report dated Nov. 8, 2019, that as at end-June 2019, the group's total loans and borrowings amounted to MYR416.52 million, of which MYR328.83 million was classified as current liabilities and exceeded the group's cash and bank balances of MYR28.48 million, BT related. IBC CAPITAL: Moody's Reviews B2 CFR for Downgrade ------------------------------------------------- Moody's Investors Service has placed on review for downgrade IBC Capital Limited's (Goodpack's) B2 corporate family rating (CFR), B2 senior secured rating on the $610 million first lien term loan due in September 2023 and B3 senior secured rating on the $155 million second lien term loan due in September 2024. These loans are issued by Goodpack as the Parent Borrower and IBC Capital US LLC as the US Co-borrower, and substantially guaranteed by all subsidiaries. The previous outlook on the company was negative. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS "The review for downgrade reflects Goodpack's heightened liquidity risk, given the company's limited progress on the refinancing of its $195 million credit line maturing March 2021," says Stephanie Cheong, a Moody's Analyst. Goodpack will need to address the March 2021 maturity of its $195 million credit line, which is separated into a $95 million revolving credit facility and a $100 million standalone letter of credit facility. At March 31, 2020, Goodpack's revolving credit facility was nearly fully drawn together with $4 million under the standalone letter of credit facility. As a result, total debt registered $851 million, including the company's $610 million first-lien term loan due September 2023 and a $155 million second-lien term loan due September 2024. "We expect the company to have negative free cash flow through June 2021, so that it will need to rely on refinancing arrangements to meet its cash obligations. Although management announced it is evaluating several refinancing options on its recent earnings call, a binding and definitive agreement has yet to appear, which increasingly weighs on the credit profile," adds Cheong, who is also Moody's Lead Analyst for Goodpack. The company's total cash balance of $85 million at March 31, 2020 will not be sufficient to cover its short-term maturities of around $100 million, which includes: (1) $94 million outstanding under the revolving credit facility (2) $4 million standalone letter of credit facility and (3) around $1.5 million of debt amortization payments under its first lien loan due 2023. In addition, Goodpack has $84 million of supplier payables coming due over the next 12 months. Prior to the review process, Goodpack was already weakly positioned at its B2 rating given its high leverage and looming refinancing requirements. Moody's expects its operating performance to weaken further amid the pronounced slowdown in the auto sector, which has lowered demand for Goodpack's solutions. As a result, Moody's expects adjusted gross debt/EBITDA -- which includes supplier payables as debt - to rise to 6.9x-7.2x over the next 12 months, remaining above the downward rating trigger of 6.5x. In addition, the company is required to maintain net first-lien leverage below 6.5x under its revolving facilities. Moody's expects the company to remain compliant with this covenant, which stood at 4.43x as of March 31, 2020. Moody's review will focus on the progress of Goodpack's refinancing plans. Failure to execute a definitive refinancing plan or an inability to meet its obligations would pressure the company's ratings. The review will also assess the negative effect of the coronavirus outbreak and its impact on Goodpack's earnings, credit metrics and free cash flow. Moody's expects to conclude the review within 30-90 days. In terms of environmental, social and governance (ESG) factors, Moody's has considered governance risk arising from Goodpack's concentrated ownership and its aggressive financial policy as demonstrated by its heightened refinancing risk and tolerance for elevated leverage following the leveraged buy-out by Kohlberg Kravis Roberts & Co L.P. in 2014. Given The rating action, an upgrade is unlikely in the short term. However, the ratings could be confirmed if Goodpack successfully addresses its upcoming maturities and maintains a stable liquidity position, with its financial metrics remaining within its current B2 rating parameters. The ratings are likely to be downgraded if Goodpack fails to address upcoming debt maturities by the end of September 2020, or if the negative impact on revenues and working capital becomes more severe than currently expected, such that its financial leverage exceeds 6.5x and EBITA/interest falls below 1.5x over a prolonged period. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. IBC Capital Limited, operating as Goodpack, acquired Goodpack in September 2014 for $1.4 billion. IBC Capital Limited is an indirect wholly owned subsidiary of a fund affiliated and advised by Kohlberg Kravis Roberts & Co L.P. Goodpack, headquartered in Singapore, owns a fleet of 3.9 million intermediate bulk containers used for the packaging, transportation and storage of cargo; primarily natural rubber and synthetic rubber. ================= S R I L A N K A ================= ABANS FINANCE: Fitch Affirms BB+(lka) Nat'l LT Rating, Outlook Neg ------------------------------------------------------------------ Fitch Ratings has affirmed the National Long-Term Ratings of the following four Sri Lankan finance and leasing companies: - AMW Capital Leasing And Finance PLC (AMWCL) at 'BBB(lka)'; Outlook Negative - Abans Finance PLC at 'BB+(lka)'; Outlook Negative - Fintrex Finance Limited at 'B+(lka)'; Outlook Stable - Bimputh Finance PLC at 'B+(lka)'; Outlook Negative In addition, Fitch has maintained the 'BB-(lka)' rating on Ideal Finance Limited on Rating Watch Positive (RWP). KEY RATING DRIVERS AMWCL AMWCL's National Long-Term Rating is driven by Fitch's expectation that its 90% parent, Associated Motorways Private Limited (AMW), will extend extraordinary support, if needed. Fitch believes the finance company is strategically important to its parent, which is a large importer of motor vehicles in Sri Lanka. This is based on AMWCL's role in the group, the common AMW brand and reputational damage to AMW should AMWCL default. Fitch sees the synergies between the two companies as high because a large share of AMWCL's advances are provided to clients to purchase AMW products. AMW set up AMWCL in 2006 with the objective of supporting its core business. Fitch sees AMWCL's intrinsic credit profile as being weaker than its support-driven rating due to its small franchise and weaker financial profile relative to similarly rated peers. Abans Finance Abans Finance's rating reflects Fitch's view that support would be forthcoming from its parent - Abans PLC (BBB+(lka)/Negative) - if needed. Its expectation stems from Abans being the largest shareholder in Abans Finance, the parent's involvement in the subsidiary's strategic decisions through board representation and a common brand name. Abans Finance is rated three notches below its parent because of its limited contribution to the group's core businesses, in its view. The company financed a negligible share of Abans' consumer durables revenue in the financial year ending March 2020 (FY20). It mainly provides vehicle financing, with nearly a third of its leasing portfolio being to the two-wheeler sales of Abans Auto (Pvt) Limited, a company owned by Abans' shareholders, but positioned outside the Abans group. Abans Finance only contributed 8% of the group's profit before tax in 9MFY20. Its assessment of Abans Finance's limited importance also incorporates the parent's decreasing shareholding in its subsidiary, which has fallen to 50%, from 89% in FY16, due to capital infusions, mostly via its private-equity investor. In addition, Fitch believes support from the parent could be constrained by Abans Finance's large size, as its assets represented 93% of group equity and 27% of group assets at end-2019. Abans Finance's intrinsic financial strength is weaker than its support-driven rating due to its small franchise, limited operating history and high-risk appetite. Its reported regulatory gross non-performing loan ratio (NPL) over six months had further deteriorated to 21.6% in FY20, from 18.0% in FY19, to be among the highest in its peer group. Ideal Ideal's rating reflects its improved capitalisation following the introduction of new capital by an initial LKR1.1 billion investment in February 2020 from India's Mahindra & Mahindra Financial Services Limited (MMFSL). This has strengthened the company's financial profile and bolstered its loss-absorption buffers against Sri Lanka's challenging operating environment. Ideal's rating also takes into account its high-risk appetite, aggressive growth, exposure to more-vulnerable customer segments and its still-developing franchise, which is reflected in its small market share and limited operating history. The RWP reflects Fitch's belief that Ideal's rating could benefit from the change in shareholding and increased probability of support once MMFSL's effective control is established, in light of MMFSL's potentially stronger credit profile. As part of this process, MMFSL will progressively invest LKR2 billion (approximately USD11 million) to acquire a 58.2% stake in Ideal in three tranches up to 2021. Fitch expects the minimum regulatory capital requirement of LKR2.5 billion for finance companies to be met at the end of the transaction, at which point Fitch expects MMFSL to have acquired effective control of Ideal. Fitch believes the challenging operating conditions exacerbated by the pandemic have elevated funding and liquidity risks for Ideal. The company's financial flexibility in terms of unsecured debt / total debt remains low and its deposit base remains small and highly concentrated. Fitch expects Ideal's asset quality to be further weakened by the economic fallout from the pandemic. Its reported NPL ratio (greater than 180 days overdue) increased to 5.2% in FY20, from 3.2% in FY19, but was still below the average ratio for the sector. Ideal's leverage in terms of debt/tangible equity has been supported by the capital infusions, but Fitch expects it to increase in the medium-term as the company builds scale. Profitability, measured by pre-tax net income/average assets, dropped to 5.2% in FY20, from 6.0% in FY19, and is likely to remain under pressure due to rising credit costs. Fintrex Fintrex's rating reflects its weakened asset quality caused by its high-risk appetite, which stems from its aggressive growth aspirations and evolving underwriting standards and risk controls. The rating also captures Fintrex's heavy reliance on secured funding and its small franchise. Fitch etimates that Fintrex's six-month NPL ratio exceeded 20.0% in FY20, almost triple the reported 7.7% in FY19, due to a sharp accumulation of NPLs caused by the weak operating environment and a contraction of the loan book. Fitch sees further downside risk to Fintrex's weaker-than-the-sector asset quality in FY21 due to the economic fallout from the pandemic. The company's loan loss allowance only covers around 50%-53% of its NPLs, below its historical coverage ratio of 68% during FY16-FY19, exposing its equity to provisioning risk. Fintrex's predominant use of secured wholesale borrowings will hamper its financial flexibility in distressed market conditions. The share of unsecured debt in its funding mix continued to decline alongside a contracting deposit base. Fitch etimates this ratio was around 17% in FY20 - one of the lowest among Fitch-rated finance and leasing companies - reflecting the low share of deposits in its funding mix. Fitch does not expect a significant change in Fintrex's funding profile in the medium term. Fitch etimates that leverage, measured by debt/tangible assets, improved to around 2.8x in FY20, following a capital infusion of LKR430 million in 3QFY20. Nonetheless, the increased share of unprovided NPLs amid the company's small absolute equity size has exposed its capitalisation to credit shock. Fitch expects pressure on Fintrex's profitability, as measured by operating profit/average total assets, to extend into FY21 due to rising credit costs; Fitch etimates that profitability plunged to around 1.0%-1.5% in FY20, from 4.0% in FY19, reflecting higher credit costs. Bimputh Bimputh's rating reflects its higher-than-peer leverage due to weak capitalisation and profitability, and increased pressure on funding conditions. The rating also captures its weakening asset quality, which Fitch believes could intensify in the current challenging operating environment. The Negative Outlook reflects the possibility for further downside risk caused by the economic fallout from the pandemic, which is likely to exacerbate the capital impairment by further pressuring Bimputh's already-weak profitability, causing heightened risk to its funding profile. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: AMWCL An improvement in AMW's ability to provide support would most likely result in an upgrade. However, the deterioration in AMW's credit profile in the current environment makes such an improvement unlikely in the near term. Abans Finance An upgrade of Abans' rating or a significant increase in Abans Finance's importance to its parent, which could be evident in a greater role in the group and/or a material increase in Abans' ownership that increases its propensity to provide support to the subsidiary. However, Fitch does not expect such a change in the near term. Ideal Fitch expects to resolve the RWP on completion of the phased increase in shareholding by MMFSL, when Fitch has greater clarity on the linkages between Ideal and MMFSL and once Fitch concludes its assessment of MMFSL's ability to provide support to Ideal. Fitch will maintain the RWP beyond the typical six-month horizon, with parental support likely to be factored into the rating once MMFSL has acquired effective control of Ideal. Fitch's view of support will include an assessment the level of strategic importance of the Sri Lankan market and Ideal to MMFSL, the extent of integration and branding. Fitch will remove the RWP if the investment is not completed. The rating would then remain driven by Ideal's intrinsic credit profile. Fintrex Positive rating action appears unlikely in the near term in light of the ongoing macroeconomic pressures. Sustainable improvement in asset quality measures, mainly through better underwriting standards and risk controls, while maintaining acceptable capitalisation commensurate with Fintrex's risk profile would be positive for its rating. Over the longer term, a substantial strengthening of the scale and franchise of the business would support positive rating actions. Bimputh Positive rating action appears unlikely in the near-term in light of the ongoing macroeconomic pressure and its expectation of further deterioration in the company's credit profile. In the longer term, an upgrade is contingent on a sustained improvement in Bimputh's credit metrics, especially its capital buffers, to be more commensurate with its risk appetite, stronger pre-impairment profit and better asset quality through an economic cycle. The Outlook would be revised to Stable if Fitch assesses that the downside risks to Bimputh's credit profile have abated, especially where there is structural improvement in profitability and normalisation of asset quality, reducing pressure on its capital buffers. Factors that could, individually or collectively, lead to negative rating action/downgrade: AMWCL A further weakening in AMW's credit standing, driven by its weakening performance, could lead to a reassessment of its ability to provide support to its subsidiary, and lead to a multiple notch downgrade on AMWCL. A decrease in AMW's propensity to provide support, likely due to a reduction in AMWCL's strategic importance or a significant dilution of AMW's shareholding, would also lead to a downgrade. The impact of any reduction in support on the national rating will be limited to two notches given the current assessment of the standalone strength of AMWCL. Abans Finance Any reduction in perceived support from Abans through, for instance, further dilution in the parent's shareholding to meet higher regulatory capital requirements or an increase in the scale of the business relative to the parent through organic or inorganic growth could be negative for its rating. The removal of parental support could result in a downgrade of the rating to the level of Abans Finance's Standalone Credit Profile, which could be multiple notches below its current rating. A downgrade of Abans' National Long-Term Rating could also trigger a rating downgrade on Abans Finance. Ideal Ideal's rating is driven by its standalone profile. Negative rating action could occur if a severe deterioration in the operating environment, beyond its base-case expectations, were to diminish the company's asset quality, profitability and capital adequacy, leading to downward pressure on Ideal's standalone profile. Fintrex A significant reduction in loss absorption buffers owing to asset-quality slippage or further weakening in the funding and liquidity profile driven by the poor operating environment would pressure the rating. Bimputh Further capital impairment due to sustained losses and weak asset quality coverage, in the absence of a material capital infusion, may trigger a multiple notch downgrade. The inability to raise new capital to meet regulatory requirements could also lead to operational and funding-access constraints that would be negative for the rating. Issuer Disclosure on Regulatory Action A deposits cap of LKR2.05 billion has been placed by the Central Bank of Sri Lanka (CBSL) until Bimputh meets the required core capital as per Direction No. 02 of 2017 - Minimum Core Capital. Abans Finance is in compliance with the minimum core capital set out in the Finance Business Act following CBSL's decision to defer the requirement of LKR2.0 billion until end-2020. As such, CBSL approved on April 10, 2020 for Abans Finance to freely canvas deposits up to LKR6.0 billion and upon reaching that limit may apply to CBSL to canvas additional deposits. The "Issuer Disclosure on Regulatory Action" sub-heading was provided by the issuer and is included pursuant to applicable regulatory requirements. Fitch Ratings Lanka is not responsible for the contents of such information. ********* 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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