/raid1/www/Hosts/bankrupt/TCRAP_Public/200810.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, August 10, 2020, Vol. 23, No. 159
Headlines
A U S T R A L I A
CS (WAREHOUSING): Second Creditors' Meeting Set for Aug. 18
CS LOGISTIC: Second Creditors' Meeting Set for Aug. 18
GASCOYNE RESOURCES: Faces Liquidation as Court Proceedings Begin
GLOBAL MERCES: ASIC Cancels AFS Licence Following Liquidation
NEWCO INFRASTRUCTURE: First Creditors' Meeting Set for Aug. 17
PAS GROUP: Second Creditors' Meeting Set for Aug. 17
C H I N A
BAOSHANG BANK: China Allows Bank to Go Bankrupt in Final Cleanup
LVGEM REAL: Fitch Affirms 'B' Foreign Currency IDR, Outlook Stable
REMARK HOLDINGS: Nullifies Increase in Authorized Common Stock
I N D I A
AMBEY ROLLER: CRISIL Moves B+ Debt Rating From Not Cooperating
AVIGNA PROPERTIES: Ind-Ra Cuts Term Loan Rating to BB-, Outlook Neg
B.K. EXPORTS: Ind-Ra Moves 'C' LT Issuer Rating to Non-Cooperating
BURNPUR CEMENT: CRISIL Keeps D Debt Ratings in Not Cooperating
CORPORATE LEISURE: CRISIL Assigns B+ Rating INR30cr Term Loan
COZY TOUCH: CRISIL Cuts Rating on INR2.5cr Cash Loan to C
DUTCH TECH: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Stable
EVEREADY INDUSTRIES: Ind-Ra Hikes LongTerm Issuer Rating to 'BB+'
FIVE CORE: CRISIL Keeps D Debt Ratings in Not Cooperating
G.G. FASHIONS: CRISIL Withdraws B+ Rating on INR13.4cr Loan
G.S. AUTO INT'L: CRISIL Keeps D Debt Ratings in Not Cooperating
HARYANA OILS: CRISIL Lowers Ratings on INR99cr Loans to D
IMPERIAL FASTNERS: Insolvency Resolution Process Case Summary
INDIAN ACRYLICS: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
JMT AUTO: CRISIL Keeps D Debt Ratings in Not Cooperating Category
KRISHNA SAHIL: CRISIL Withdraws C Rating on INR1.25cr LT Loan
KUPPANNA POULTRY: Ind-Ra Lowers LongTerm Issuer Rating to 'B+'
LSR FOODS: CRISIL Lowers Rating on INR10cr Cash Loan to D
MOBILE TELECOM: CRISIL Keeps D on INR14cr Loan on Not Cooperating
MODERN STEEL: CRISIL Keeps D Debt Ratings in Not Cooperating
MOHAN TOBACCOS: Ind-Ra Moves 'C' Issuer Rating to Non-Cooperating
MYSORE PAPER: CRISIL Keeps D Debt Ratings in Not Cooperating
NUFUTURE DIGITAL: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
ORISSA STEVEDORES: CRISIL Moves D Debt Rating to Not Cooperating
PHI LEARNING: CRISIL Migrates B- Debt Rating to Not Cooperating
PRAMUKH CAR: Insolvency Resolution Process Case Summary
PVM TECHNOLOGIES: CRISIL Lowers Ratings on INR8cr Loans to D
RAMESHVAR IMPEX: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
REAL CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR5cr Loan
RUBY CABLES: CRISIL Keeps D Debt Ratings to Not Cooperating
SHARE MACTS: CRISIL Moves B+ Debt Rating to Not Cooperating
SHYAM COAL: CRISIL Withdraws B+ Rating on INR14cr Cash Loan
STURDY INDUSTRIES: CRISIL Keeps D Debt Ratings in Not Cooperating
SUBICO FOOD: CRISIL Assigns B+ Rating to INR4.37cr LT Loan
VAIGAI LEATHER: CRISIL Migrates B+ Debt Rating to Not Cooperating
VODAFONE IDEA: Posts Eighth Straight Loss, Loses More Subscribers
J A P A N
LEOPARD TWO: Fitch Affirms BB Ratings on 2 Tranches
P H I L I P P I N E S
PHILIPPINES: Troubled Agri Workers Persevere Amid Recession
S I N G A P O R E
BY ANDCO: National Gallery Shop Shuts Doors; Seeks Liquidation
MARBLE II PTE: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable
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A U S T R A L I A
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CS (WAREHOUSING): Second Creditors' Meeting Set for Aug. 18
-----------------------------------------------------------
A second meeting of creditors in the proceedings of CS
(Warehousing) Pty Ltd has been set for Aug. 18, 2020, at 11:00 a.m.
via telephone or video conferencing.
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 Aug. 17, 2020, at 5:00 p.m.
Brent Leigh Morgan and Geoffrey Niels Handberg of Rodgers Reidy
were appointed as administrators of CS (Warehousing) on April 20,
2020.
CS LOGISTIC: Second Creditors' Meeting Set for Aug. 18
------------------------------------------------------
A second meeting of creditors in the proceedings of CS Logistic
Solutions Pty Ltd has been set for Aug. 18, 2020, at 11:00 a.m. via
telephone or video conferencing.
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 Aug. 17, 2020, at 5:00 p.m.
Brent Leigh Morgan and Geoffrey Niels Handberg of Rodgers Reidy
were appointed as administrators of CS Logistic on April 15, 2020.
GASCOYNE RESOURCES: Faces Liquidation as Court Proceedings Begin
----------------------------------------------------------------
Australian Mining reports that the Federal Court of Australia has
launched proceedings on Gascoyne Resources' plan to be relisted on
the Australian Securities Exchange.
This follows Habrok Mining, a Western Australia-based investment
company, putting forward an unsuccessful deed of company
arrangement (DOCA) proposal for Gascoyne, before purchasing
unsecured debt of an existing creditor, owing approximately
AUD616,000, Australian Mining says.
A DOCA is a when a company and its creditors reach a binding
arrangement that determines how the company's affairs will be
handled, the report notes.
According to Australian Mining, the Federal court proceedings seek
an order to end the DOCA Gascoyne entered in June and orders the
company to be put into liquidation.
Australian Mining relates that the proceedings may also lead to
Gascoyne being restrained from taking further steps to implement or
complete its proposed capital raising under the DOCA.
Gascoyne is considering the Habrok claims and its requests for
information, which relate to alleged deficiencies in Gascoyne's
administrative report which resulted in the proposed DOCA, the
report says.
Australian Mining notes that Habrok has stated that the DOCA is
"oppressive" and "unfairly prejudicial to creditors" and shields
Gascoyne from scrutiny and investigations.
Gascoyne however does not consider these allegations to be
sustainable and believes that the proposal remains in the best
interest of both the creditors and shareholders, the report
relays.
According to Australian Mining, NRW Holdings, which is a
shareholder of Gascoyne said while its participation in the
recapitalisation proposal has been referenced, it is not a party in
the proceedings.
Australian Mining says Gascoyne has managed to achieve seven
consecutive months of producing more than 6,000 ounces of gold at
the Dalgaranga gold project in Western Australia.
During July, Gascoyne produced 6,893 ounces of gold and processed
233,854 dry tonnes with a 92.9 per cent recovery rate.
"After a seventh consecutive month producing in excess of 6,000
ounces of gold, we are off to a solid start to the 2021 financial
year guidance of 70,000 to 80,000 ounces," the report quotes
Gascoyne chief executive officer Richard Hay as saying.
"We are looking forward to completing the upcoming capital raise to
reduce net debt and provide sufficient working capital to commence
drilling and exploration activities with the aim of growing the
company."
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.
In June 2019, Gascoyne Resources moved into administration due to
an expected material cash shortfall. The announcement was made via
FTI Consulting, which revealed that Michael Ryan, Kathryn Warwick
and Ian Francis assumed 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.
GLOBAL MERCES: ASIC Cancels AFS Licence Following Liquidation
-------------------------------------------------------------
The Australian Securities and Investments Commission has cancelled
the Australian financial services (AFS) licence of Global Merces
Funds Management Limited (Global Merces) effective July 20, 2020.
ASIC cancelled the licence because Global Merces is in
liquidation.
The licence was previously suspended following the appointment of
an external administrator to Global Merces on Jan. 13, 2020.
Global Merces is the responsible entity of Global Merces Access
Fund ARSN 604 201 952, Global Merces Equities Fund ARSN 604 220 662
and Covesta ARSN 625 625 803 (collectively referred to as 'the
Schemes').
Under the terms of the licence cancellation, the liquidators of
Global Merces can continue to conduct certain necessary activities
until July 31, 2022. These activities are:
* transferring the Schemes to a new responsible entity;
* investigating or preserving the assets and affairs of the
Schemes; and
* winding up the Schemes.
Global Merces may apply to the Administrative Appeals Tribunal
(AAT) for a review of ASIC's decision.
Global Merces has held AFS licence no. 460883 since Feb. 26, 2015.
Michael John Hill and Anthony Norman Connelly of McGrath Nicol were
appointed as joint and several liquidators to Global Merces on Jan.
31, 2020.
NEWCO INFRASTRUCTURE: First Creditors' Meeting Set for Aug. 17
--------------------------------------------------------------
A first meeting of the creditors in the proceedings of Newco
Infrastructure Services Pty Ltd will be held on Aug. 17, 2020, at
11:00 a.m. via electronic (virtual) means.
Stephen John Michell of PCI Partners was appointed as administrator
of Newco Infrastructure on Aug. 6, 2020.
PAS GROUP: Second Creditors' Meeting Set for Aug. 17
----------------------------------------------------
A second meeting of creditors in the proceedings of:
- The PAS Group Limited
- PASCO Group Pty Ltd
- PAS Finance Pty Ltd
- JETS Swimwear Pty Limited
- AFG Retail Pty Limited
- Chestnut Apparel Pty Limited
- PASCO Operations Pty Ltd
- Black Pepper Brands Pty Limited
- Designworks Holdings Pty Limited
- Designworks Clothing Company Pty Limited
- World Brands Pty Ltd
- Yarra Trail Holdings Pty Limited
- Yarra Trail Pty Limited
- Review Australia Pty Limited
- The Capelle Group Pty Limited
- Fiorelli Licensing Pty Limited
- Metpas Pty Ltd
- The Hopkins Group Aust Pty Ltd
- Bondi Bather Pty Limited
has been set for Aug. 17, 2020, at 2:30 p.m. The meeting will be
held electronically using a video conference facility. The link to
register for and access the meeting, can be found on the creditor
portal home page and the PWC PAS Group creditor information page at
https://insolvency.pwc.com.au/
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 Aug. 14, 2020, at 4:00 p.m.
Martin Ford, Stephen Longley and David McEvoy of PwC were appointed
as administrators of PAS Group et al. on May 29, 2020.
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C H I N A
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BAOSHANG BANK: China Allows Bank to Go Bankrupt in Final Cleanup
----------------------------------------------------------------
Caixin Global reports that China's troubled regional lender
Baoshang Bank will file for bankruptcy and liquidate its remaining
assets in a final step to clean up the mess that triggered a
high-profile asset seizure by the state, the central bank said on
Aug. 6.
The equity of Baoshang Bank's original shareholders and unprotected
creditors' rights will be liquidated in accordance with law, the
People's Bank of China (PBOC) said in its second-quarter monetary
policy report, Caixin relays. Authorities will hold accountable
relevant people linked to the bank's troubles, the central bank
said, according to Caixin.
Baoshang Bank Co., Ltd. provides various commercial banking
products services to individuals and corporate customers in China.
In May 2019, China's financial regulators took control of the small
private bank as part of authorities' efforts to break up fallen
tycoon Xiao Jianhua's business empire and contain financial risks.
The People's Bank of China (PBOC) and China Banking and Insurance
Regulatory Commission (CBIRC) announced on May 24, 2019, the
takeover of Baoshang Bank Co. for a year. The rare takeover came
two years after Xiao, the billionaire founder of conglomerate
Tomorrow Holding Group, went missing from a luxury Hong Kong hotel.
He is reportedly to have been placed under graft investigation by
Chinese authorities. The regulators said the takeover reflects the
"severe credit risk" the bank poses and is intended to protect the
interests of the bank's depositors and other clients.
LVGEM REAL: Fitch Affirms 'B' Foreign Currency IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed China-based LVGEM Real Estate Investment
Company Limited's Long-Term Foreign-Currency Issuer Default Rating
at 'B'. The Outlook is Stable.
Fitch has also affirmed LVGEM's senior unsecured rating and the
rating on its outstanding US dollar senior notes issued by
Gemstones International Limited at 'B' with a Recovery Rating of
'RR4'.
LVGEM's ratings are constrained by its low contracted sales,
limited geographical diversification and high leverage. The
company's concentration on a small number of projects may also
result in fluctuation in its cash flows. LVGEM's ratings continue
to be supported by its high-margin urban-redevelopment projects in
the Greater Bay Area (mainly Shenzhen and Zhuhai) and its portfolio
of quality investment properties.
KEY RATING DRIVERS
Elevated Leverage: Fitch expects LVGEM's leverage to increase to
53%-61% in 2020-2021, driven by the cash flow needs of the
Baishizhou project (including land premium, compensation to
villagers and construction costs) before pre-sales kick off in late
2022 or early 2023. Fitch estimates that the company's leverage
would remain below 50% in the next few years, if the project's fair
value is used.
Low Contracted Sales: LVGEM had contracted sales of CNY6.3 billion
in 2019 (up 48% from CNY4.2 billion in 2018), 73% of which was from
the Mangrove Bay project in Shenzhen. LVGEM's contracted sales of
CNY2.5 billion in 1H20 were about 40% of estimated contracted sales
of CNY6.3 billion for the year. The company has CNY15 billion of
saleable resources for 2020-2021, and Fitch expects the
sell-through rate to be close to 100% given their prime locations.
The cash collection rate was high at around 100% in 2019 and 1H20.
Fitch expects LVGEM's contracted sales to increase sharply when the
Baishizhou URP begins pre-sales.
High EBITDA Margin: EBITDA margin (excluding capitalised interest)
reached 60% in 2019, primarily driven by the Mangrove Bay project,
which had very high gross profit margin of 70%. Average gross
profit margin on contracted sales in 1H20 was over 50%. In the next
few years, Fitch expects EBITDA margin to decline to 40%-50% due to
a change in project mix. Nonetheless, this remains significantly
higher than that of its peers.
Land-Banking via URPs: LVGEM was confirmed as the operating entity
of the URP in Dongqiao, Zhuhai in July 2019 and it paid CNY1.6
billion in land premium for phase-one development during the year.
The company did not acquire any other new land in 2019. Fitch
expects LVGEM's land bank of just under 1 million sq m (saleable
value of CNY18 billion) at end-2019 to be sufficient for more than
two years of development. In addition, it has a significant
pipeline of maturing URPs (Dongqiao Phase 2, Liguang and
Baishizhou) and the controlling shareholder has early-stage URPs
that can be injected into the company in the future. As a result,
Fitch believes the company is well positioned for contracted sales
growth.
Stable Non-Development Interest Coverage: Fitch expects LVGEM's
non-development property EBITDA interest coverage to remain stable
at over 0.3x in 2020-2021. Fitch forecasts the company's rental
income to increase to over CNY700 million in 2020, helped by a full
year's contribution from the HK NEO office building in Hong Kong
and stable rental income from Shenzhen NEO and its Zoll malls.
Rental income rose to CNY619 million in 2019 from CNY543 million in
2018, driven by the ramp up of HK NEO. The building's occupancy
remained at just under 50% at end-1H20 due to social unrest in late
2019 and the coronavirus outbreak in early 2020. LVGEM aims to
raise it to 70% by end-2020.
DERIVATION SUMMARY
Fitch assesses LVGEM's investment property portfolio as having a
business profile of around 'BB', with around CNY500 million (USD70
million) in rental EBITDA and CNY22 billion in rental-deriving
assets, that are mostly well-located office towers in Shenzhen and
Hong Kong. This sets the company apart from most Chinese
homebuilders that rely on riskier development-property sales to
service their debt. The scale of LVGEM's investment property
portfolio is comparable with that of Lai Fung Holdings Limited
(B+/Stable), which had around HKD400 million (USD50 million) in
rental EBITDA and HKD20 billion in rental-deriving assets.
LVGEM's leverage is lower than Kaisa Group Holdings Limited's
(B/Stable) over 60%, but Kaisa has a much larger business scale
(attributable contracted sales of over CNY80 billion). LVGEM's
leverage is higher than Modern Land (China) Co., Limited's
(B/Stable) 39% and its attributable contracted sales is lower than
Modern Land's CNY19 billion. However, Modern Land has minimal
non-development property income and much lower EBITDA margins of
around 20%.
LVGEM's leverage is comparable to the 54% of Beijing Hongkun Weiye
Real Estate Development Co., Ltd. (B/Stable). Hongkun had higher
attributable contracted sales of CNY14 billion, but its EBITDA
margin was lower at 31%. Its rating is also constrained by its
geographical concentration in Beijing, where home-purchase
restrictions are stringent, and weaker regulatory oversight as a
private company.
Fitch expects Golden Wheel Tiandi Holdings Company Limited's
(B-/Stable) non-development property interest coverage to weaken to
0.22x in 2020 from 0.41x in 2019. In contrast, Fitch forecasts
LVGEM's non-development property interest coverage to remain stable
at 0.32x in 2020 despite the impact of the pandemic. This is due to
the resilience of its quality investment properties in Shenzhen and
property management income, as well as the ramping up of HK NEO. In
addition, Golden Wheel's attributable contracted sales is smaller
at CNY2.5 billion.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
- Injection of additional stake in Baishizhou into LVGEM at
minimal consideration in 2020. Total cash flows related to the
project to include CNY3 billion of land premium in 2021; CNY3
billion-5 billion of construction costs in 2021-2023 and CNY8
billion of contracted sales in 2023
Other than Baishizhou:
- Attributable contracted sales growth of 0% and 7% in 2020 and
2021 to CNY6 billion-7 billion
- EBITDA margin (excluding capitalised interest) of 53% and 48%
in 2020 and 2021, respectively (2019: 60%)
- Cash collection rate of 95% in 2020 and 2021 (2019: 106%;
2018: 114%)
- Land premium of CNY900 million in 2020 and CNY1.1 billion in
2021 (15% and 17% of sales proceeds, respectively, compared
with 24% in 2019)
- Construction costs of CNY3 billion-4 billion per year
(60%-70% of sales proceeds) in 2020 and 2021 (2019: 59%)
- Rental income of CNY730 million in 2020 and CNY820 million
in 2021 (2019: CNY620 million)
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that LVGEM would be liquidated in
bankruptcy.
Fitch has assumed a 10% administrative claim.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of
balance sheet assets that can be realised in sale or liquidation
processes conducted during a bankruptcy or insolvency proceeding
and distributed to creditors. Fitch assumes:
- 60% advance rate applied to excess cash
- 100% advance rate applied to restricted cash
- 80% advance rate applied to net inventory (+ JVs) given that
EBITDA margin is over 30%
- 70% advance rate applied to trade receivables
- 60% advance rate applied to property, plant and equipment
- 40% advance rate applied to financial investment
- 50% advance rate applied to investment properties, including
10% added for their superior locations (Shenzhen and Hong
Kong)
The allocation of value in the liability waterfall results in a
Recovery Rating of 'RR4' for the offshore senior unsecured debt.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Positive rating action is unlikely in the next 12-18 months,
as the company enters the investment stage of the Baishizhou
project.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Leverage, measured by net debt/adjusted inventory, sustained
above 55%
- Deterioration in liquidity position
- Significant delays or execution issues in the Baishizhou
project
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: LVGEM's available cash/short-term debt ratio
decreased to 0.5x by end-2019 from 0.6x at end-2018, due to a
significant amount of bonds and convertible bonds maturing or
turning puttable in 2020. The company refinanced over half of the
maturities earlier this year and is in negotiations with
bondholders of a CNY2.2 billion onshore bond to not exercise the
put option. The company is confident that most investors will not
exercise the put option, but has also applied for new bond issuance
quota as an alternative. The company also had CNY4 billion of
short-term bank loans, which Fitch expects to be rolled over.
The company had total cash of CNY10 billion at end-1H20, including
CNY7 billion in available cash and CNY3 billion in restricted cash
(unaudited), which exceed the capital market maturities of around
CNY3 billion in 2H20.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
LVGEM has an ESG Relevance Score of 4[+] for Environmental - Waste
and Hazardous Materials Management; Ecological Impacts as the
company focuses primarily on URPs, which helps to improve the
environment. This has a positive impact on the credit profile, and
is relevant to the rating in conjunction with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance is a score of 3 - ESG issues are credit neutral or have
only a minimal credit impact on the entity, either due to their
nature or the way in which they are being managed by the entity.
REMARK HOLDINGS: Nullifies Increase in Authorized Common Stock
--------------------------------------------------------------
At the 2020 annual meeting of stockholders of Remark Holdings, Inc.
held on July 23, 2020, the Company's stockholders approved an
amendment to its Amended and Restated Certificate of Incorporation
to increase the number of authorized shares of its common stock to
300,000,000, and the Company filed a Certificate of Amendment to
its Amended and Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware on July 23, 2020 to
reflect this amendment.
The Company subsequently determined that the disclosure contained
in the definitive proxy statement disseminated to its stockholders
in connection with the 2020 Annual Meeting included an inadvertent
drafting error describing the proposal to approve the Charter
Amendment as a non-discretionary item instead of a discretionary
item. In particular, the proxy statement suggested that brokers
would not have the ability to vote shares held on behalf of a
beneficial owner for which no voting instructions are provided with
respect to the approval of the proposal, even though, consistent
with applicable rules, such discretionary voting is permitted on
this proposal.
As a result, on July 30, 2020, the Companye filed a Certificate of
Correction of the Charter Amendment with the Secretary of State of
the State of Delaware that serves to nullify the increase in the
number of authorized shares included in the Charter Amendment,
which became effective immediately upon filing.
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 March 31, 2020, the Company had $12 million in total assets,
$37.27 million in total liabilities, and a total stockholders'
deficit of $25.27 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.
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AMBEY ROLLER: CRISIL Moves B+ Debt Rating From Not Cooperating
--------------------------------------------------------------
Due to inadequate information, CRISIL, in line with SEBI
guidelines, had migrated the rating of Ambey Roller Flour Mills
(ARFM) to 'CRISIL B+/Stable Issuer Not Cooperating'. However, the
management has subsequently started sharing requisite information,
necessary for carrying out comprehensive review of the rating.
Consequently, CRISIL is migrating the rating on bank facilities of
ARFM from 'CRISIL B+/Stable Issuer Not Cooperating' to 'CRISIL
B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B+/Stable (Migrated from
'CRISIL B+/Stable ISSUER NOT
COOPERATING')
The rating reflects the firm's modest scale of operations, weak
financial risk profile, and sizeable working capital requirement.
These weaknesses are partially offset by the extensive experience
of the partners.
Key Rating Drivers & Detailed Description
Weakness:
* Small scale of operations in the intensely competitive flour mill
industry: AFRM's scale of operations remains modest with a wheat
processing capacity of 1000 quintal per day and turnover of INR21
crore for fiscal 2020. Furthermore, the industry in which it
operates is highly fragmented marked by numerous small-scale
unorganised players as the entry barrier is low due to low value
addition.
* Average financial risk profile: Financial risk profile is
constrained by high gearing of 3.30 times as on March 31, 2020, and
average debt protection metrics, with interest coverage and net
cash accrual to total debt ratios ratio at 1.45 times and (0.01)
time, respectively, for fiscal 2020.
* Working-capital-intensive operations: Operations are working
capital intensive, with high gross current assets of 1585 days as
on March 31, 2020, because of sizeable inventory.
Strengths:
* Extensive experience of the partners: The two decade-long
experience of the partners in the wheat industry, their keen grasp
over local market dynamics, and healthy relationships with
customers and suppliers, should continue to benefit the business.
Liquidity Poor
Bank limit utilisation is high at around 102.64 % for the past
twelve months ended March, 2020. Cash accruals are expected to be
INR0.34 Cr, against no major repayment obligation, cash accruals
are expected to aid the liquidity of the company. Current ratio are
moderate at 1.24 times on March31, 2020
Outlook: Stable
CRISIL believes ARFM will continue to benefit from the extensive
experience of its partners.
Rating Sensitivity factors
Upward factor
* Improvement in Scale of operation by 25%
* Decrease in average BLU utilisation to below 90%
Downward factor
* Decrease in operating margin by 100 bps.
* Significant stretch in working capital requirements.
Set up in 2007, ARFM is a partnership concern manufacturing grinded
wheat products such as atta, maida, bran and suji. The facility at
Khanna (Punjab), is managed by Mr. Pardeep Kumar and his family.
AVIGNA PROPERTIES: Ind-Ra Cuts Term Loan Rating to BB-, Outlook Neg
-------------------------------------------------------------------
India Rating and Research (Ind-Ra) has downgraded M/s Avigna
Properties Private Limited's (APPL) to 'IND BB-' from 'IND BB+'.
The Outlook is Negative.
The instrument-wise rating action is:
-- INR700 mil. Term loan due on June 2022 downgraded with IND BB-
/Negative rating.
KEY RATING DRIVERS
The downgrade reflects the cost overruns and the slowdown in sales
velocity witnessed by APPL's ongoing residential real estate
project (consisting of apartments and villas), Avigna Celeste. The
project cost escalated to INR3,832 million in FY20 from APPL's
initial estimates of INR2,539 million. Moreover, the company's
sales volume declined in FY20 due to the adverse impact of various
macro-economic factors, which was exacerbated by the COVID-19
outbreak and the associated lockdown towards the year-end. The
Negative Outlook reflects the continued saleability and funding
risks associated with the project due to the aforementioned
factors. As of June 2020, the company had received bookings for
around 48% (415 units - 303 villas and 112 apartments) out of the
total 867 units in its project, and had collected 93% (INR2,043
million) of the total booking amount of INR2,189 million. The
figures for FY20 are provisional in nature.
Liquidity Indicator - Poor: APPL was sanctioned a term loan of
INR700 million by Punjab Housing Finance in December 2017. Of this,
INR370 million was used for the repayment of an existing loan from
IIFL Finance Ltd and INR330 million was used for the project. The
company has a repayment obligation of INR47.5 million during FY21.
APPL has a minimum debt service coverage ratio of 1.3x and 1.07x in
FY21 and FY22, respectively. However, cash flow mismatches are
likely to arise if the sales are lower than Ind-Ra's expectations,
as customer advances are the main source of funds (76%) for the
company. APPL has availed the Reserve Bank of India-prescribed debt
moratorium.
The ratings factor in the moderate execution status of the project.
As of June 2020, APPL had completed around 72% of its construction
and incurred INR2,769.7 million out of the total project cost
INR3,832 million. The project cost has been funded by a debt of
INR330 million, promotor contribution of INR557 million, and rest
through customer advances. The promoters have already infused the
entire amount in the project. The company expects to complete its
construction by March 2022.
The ratings benefit from the project's strategic location, as all
civic amenities are within a 1km radius; the nearest railway
station is at 4.5km, and the international airport is at 50km.
The ratings also continue to be supported by the promoters'
experience of over 16 years in executing real estate projects in
Chennai.
RATING SENSITIVITIES
Negative: Lower-than-expected sales volume, lower realizations from
bookings, or significant time or cost overruns could result in a
negative rating action.
Outlook Revision to Stable: Successful project completion, increase
in sales velocity and a significant increase in sales realizations,
leading to strong cash flow visibility, could lead to a Stable
Outlook.
COMPANY PROFILE
Incorporated in 2013, APPL undertakes real estate projects. Its
ongoing project comprises 415 apartments and 452 villas, spread
across more than 1.2 million square feet.
B.K. EXPORTS: Ind-Ra Moves 'C' LT Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated B. K. Exports'
Long-Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using the
rating. The rating will now appear as 'IND C (ISSUER NOT
COOPERATING)' on the agency's website.
The instrument-wise rating action is:
-- INR240 mil. Fund-based facilities migrated to non-cooperating
category with IND C (ISSUER NOT COOPERATING)/IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
August 7, 2019. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Founded in 2008 by Mr. Bellam Kotaiah, B. K. Exports is a
proprietorship concern engaged in the trading of tobacco.
BURNPUR CEMENT: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Burnpur
Cement Limited (BCL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.5 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 13.7 CRISIL D (ISSUER NOT
COOPERATING)
Letter of Credit 1 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Bank 1.5 CRISIL D (ISSUER NOT
Guarantee COOPERATING)
Proposed Cash 11.3 CRISIL D (ISSUER NOT
Credit Limit COOPERATING)
Proposed Letter 5 CRISIL D (ISSUER NOT
of Credit COOPERATING)
Term Loan 125 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with BCL for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 BCL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on BCL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of BCL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
BCL was set up in 1986 as a private limited company, Ashoka
Concrete and Allied Industries Pvt Ltd, by late Mr. Ramawatar
Gutgutia and his son, Mr. Ashok Gutgutia. It was reconstituted as a
limited company with the current name in 2001. It manufactures
portland blast furnace slag cement.
CORPORATE LEISURE: CRISIL Assigns B+ Rating INR30cr Term Loan
-------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Corporate Leisure and Property Developments
Private Limited (CLPD).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 30 CRISIL B+/Stable (Assigned)
The rating reflects the nascent stages of its current on-going
project with geographical concentration in revenue and exposure to
cyclicality in the Indian real estate sector. These weaknesses are
partly offset by the extensive experience of the promoters in the
real estate sector.
Key Rating Drivers & Detailed Description
Weaknesses:
* Initial stages of on-going project with geographical
concentration in revenue: The company has 1 project GR Sunshine
which was launched recently and is in initial stages of progress.
Also, the company is likely to take bank funding for this project
which is yet to be tied up. The company has 2 other projects'
Gloria and Arcadia where construction is complete and some portion
remains unsold. Further, the company's projects are concentrated in
a single region, Bengaluru, thereby increasing the geographic
concentration in revenues.
The company has demonstrated track record of steady bookings and
flow of customer advances in the past. However, given the current
scenario amid the lockdown due to COVID ' 19, there is uncertainty
pertaining to the saleability of its on-going projects which in
turn will impact the receipt of customer advances. The company's
ability to increase scale with steady bookings and have steady
receipt of customer advances will remain a key monitorable.
* Exposure to cyclicality in the Indian real estate sector: The
real estate sector in India is marked by volatile prices, opaque
transactions, and a highly fragmented market structure because of
presence of regional players. The risk is compounded by aggressive
timelines for completion with shortage of man power (project
engineers and skilled labor), delay in approvals from various
agencies. Also, any impact of COVID ' 19 on the buying ability of
customers might affect the sales progress and receipt of customer
advances for the company.
Strengths:
* Extensive industry experience of the promoter: The promoter's
experience of close to 4 decades and an established market position
in the real estate sector in the region it operates should continue
to support the business risk profile.
Liquidity Stretched
Liquidity is stretched for funding the construction of ongoing
project through a mix of customer advances, and bank loans.
Customer advances for ongoing projects have been moderate,
therefore likely to result in better DSCR. Although the estimated
cash flows from the projects are expected to remain sufficient to
meet term debt obligation, sluggish demand or any unforeseen delay
in construction might result in cost overruns, thereby affecting
repayment of term debt. Further, any delay in receipt of advances
from customers would significantly impact liquidity.
Outlook: Stable
CRISIL believes CLPD will continue to benefit from the extensive
industry experience of its promoter.
Rating Sensitivity factors
Upward factors:
* Significant improvement in cash flows supported by customer
advance receipt of more than INR12 crore from the current project
* Improvement in financial risk profile
Downward factors
* Impact on the cash flow due to lower than expected bookings
* Decline in cash buffer ratio to less than 1.5 times
Set up in 2001 CLPD is engaged in the development of residential
real estate projects majorly. The company has been promoted by Mr.
Govindachary and Ms. K Rukmini and is based out of Bengaluru.
COZY TOUCH: CRISIL Cuts Rating on INR2.5cr Cash Loan to C
---------------------------------------------------------
CRISIL has revised the long term rating of Cozy Touch Poly Foams
India Private Limited (CPPL) to 'CRISIL C Issuer Not Cooperating'
from 'CRISIL B+/Stable Issuer Not Cooperating' and continues with
'CRISIL A4 Issuer Not Cooperating' rating on the short term bank
facilities, based on lack of clarity on timeliness of debt
servicing,
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.5 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B+/Stable ISSUER
NOT COOPERATING')
Letter of Credit 3 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Long Term 1.03 CRISIL C (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL B+/Stable ISSUER
NOT COOPERATING')
Term Loan .47 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B+/Stable ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with CPPL for obtaining
information through letters and emails dated June 28, 2019, August
30, 2019, September 3, 2019 and May 23, 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 CPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on CPPL is consistent
with 'Assessing Information Adequacy Risk'.
CRISIL has revised the long term rating to 'CRISIL C Issuer Not
Cooperating' from 'CRISIL B+/Stable Issuer Not Cooperating' and
continues with 'CRISIL A4 Issuer Not Cooperating' rating on the
short term bank facilities, based on lack of clarity on timeliness
of debt servicing,
Incorporated in 2007 and promoted by Mr. Inderjit Khurana, CPPL
manufactures foam, bonded, and spring mattresses. Operations began
from 2010 and current capacity utilisation is about 50%. Products
are sold under the Coir Foam brand.
DUTCH TECH: Ind-Ra Affirms 'BB+' LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Dutch Tech Tools
Private Limited's (DTT) Long-Term Issuer Rating at 'IND BB+'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR92.5 mil. (increased from INR72.5 mil.) Fund-based working
capital limit affirmed with IND A4+ rating; and
-- INR2 mil. (reduced from INR27 mil.) Non-fund-based working
capital limit affirmed with IND A4+ rating.
KEY RATING DRIVERS
The affirmation reflects DTT's continued small scale of operations,
as indicated by revenue of INR181.89 million in FY20 (FY19:
INR189.19 million). The revenue declined by 3.86% yoy due to the
company's inability to execute the export orders in hand amounting
to INR12.4 million in March 2020 due to COVID-19-led disruptions.
The management expects the revenue to fall further by 9% yoy to
INR166.02 million in FY21 owing a lower quantum of orders received
because of the COVID-19 outbreak and associated lockdown. The
figures for FY20 are provisional in nature.
The ratings reflect DTT's modest EBITDA margins due to the intense
competition in the industry. The margins are susceptible to forex
fluctuations but the company hedges the risk through forward
contracts. The margin increased slightly to 17.6% in FY20 (FY19:
17.4%), mainly on account of an increase in export incentives to
INR11.9 million (FY19: INR6.9 million). Ind-Ra expects the EBITDA
margin to decline marginally in FY21 owing to the impact of the
lockdown.
Liquidity Indicator - Adequate: DTT's average peak use of its
fund-based working capital limits was 74.4% for the 12 months ended
June 2020. In FY20, the net working capital cycle deteriorated to
234 days (FY19: 207 days) due to an increase in the inventory
holding period to 191 days (160 days), as the company was unable to
export its products due to the pandemic-related disruptions.
Consequently, DTT's cash flow from operations remained positive but
declined to INR12.83 million in FY20 (FY19: INR37.48 million). SSPL
had a cash balance of INR17.56 million at end-FY20 (end-FY19:
INR5.42 million). DTT has availed the Reserve Bank of
India-prescribed debt moratorium only for its working capital
demand loan of INR10.6 million.
The ratings continue to be supported by DTT's comfortable credit
metrics owing to the absence of any significant external
borrowings. In FY20, the net leverage ratio (total adjusted net
debt/operating EBITDAR) improved to 2.3x (FY19: 2.5x) due to an
increase in the cash and cash equivalents to INR17.56 million
towards the year-end (FY19: INR5.42 million). However, the interest
coverage (operating EBITDA/gross interest expense) weakened to 8.6x
(FY19: 10.43x) because of an increase in interest expenditure.
Ind-Ra expects the credit metrics to remain comfortable in FY21 due
to the absence of any debt-led capex plans.
The ratings are also supported by the promoters' experience of over
10 years in the manufacturing of solid carbide metal cutting
tools.
RATING SENSITIVITIES
Negative: Deterioration in the credit metrics, with the gross
interest coverage falling below 2x, on a sustained basis, or a
substantial deterioration in the working capital cycle could lead
to a negative rating action.
Positive: Substantial increase in the scale of operations while
maintaining the overall credit metrics, along with an improvement
in the working capital cycle, would be positive for the ratings.
COMPANY PROFILE
Incorporated in 2007, DTT manufactures solid carbide rotary metal
cutting tools, majorly used in industries such as automotive and
aeronautical industries, at its site in the Falta special economic
zone (West Bengal).
EVEREADY INDUSTRIES: Ind-Ra Hikes LongTerm Issuer Rating to 'BB+'
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Eveready
Industries India Limited's (EIIL) Long-Term Issuer Rating to 'IND
BB+' from 'IND BB'. The Outlook is Positive.
The instrument-wise rating actions are:
-- INR2.743 bil. (reduced from INR3,010.4 bil.) Term loans due on
FY24 upgraded with IND BB+/Positive rating;
-- INR944 mil. (reduced from INR1.60 bil.) Fund-based limits
Long-term rating upgraded; short-term rating affirmed with
IND BB+/Positive /IND A4+ rating; and
-- INR1.20 bil. Non-fund-based limits Long-term rating upgraded;
short-term rating affirmed with IND BB+/Positive /IND A4+
rating.
The upgrade reflects EIIL's improved liquidity position aided by
deleveraging in 2HFY20, coupled with sustained profitability in
FY20. The Positive Outlook reflects Ind-Ra's expectations of a
further improvement in EIIL's business profile and its liquidity
position in FY21, backed by the improving performance of its
battery and flashlight segments, a possible resolution of the
contingent liability issue and the possibility of a
managerial/board representation by EIIL's largest shareholder the
Burman family.
KEY RATING DRIVERS
Liquidity Indicator - Adequate: EILL's liquidity position improved
steadily over 4QFY20-1QFY21, aided by asset monetization-led
deleveraging, relief in near-term repayments because of it availing
the Reserve Bank of India-prescribed moratorium over March-August
2020 and sustained cash flow generations from operations on the
improving performance of the high-margin battery and flashlights
business. EIIL had cash and equivalents of INR200 million at
end-June 2020 (FYE20: INR100 million). The cash flow from
operations in FY20 was INR268 million (FY19: INR285 million). The
free cash flow turned positive to INR97 million in FY20 (FY19:
negative INR684 million) on account of the lower year-on-year CAPEX
incurred. With no major CAPEX lined up in FY21, the free cash flow
is likely to remain positive.
At end-May 2020, the company's sanctioned fund-based limits were
INR944 million and it had uncommitted lines of around INR656
million. Of the sanctioned fund-based limits, INR214 million
remained unutilized at end-May 2020. EIIL's average monthly
utilization of the fund-based limits was moderate at 78% over the
12 months ended May 2020. The company had total balance sheet debt
of INR3,940 million on March 31, 2020, of which INR2,431 million
was term loans. EIIL has scheduled repayments of around INR639
million (after incorporating moratorium during March-August 2020)
and INR972 million due in FY21 and FY22, respectively. Ind-Ra
believes the internal cash accrual will suffice for the scheduled
repayments and expects the debt service coverage ratio to sustain
above 1x over FY21-FY22.
Improving Profitability Led by Growth in the Battery Business:
EIIL's revenue fell 17% yoy to INR12,109 million in FY20, mainly
due to the reduced contribution of the lighting and appliance
business, coupled with the COVID-19-led lockdown in March 2020.
However, EIIL's profitability was on an improving trend in FY20
(4QFY20: 12.8%; 3QFY20: 11.4%; 2QFY20: 9.1%; 1QFY20: 7.6%), aided
mostly by the improved performance of its high-margin battery and
flashlight businesses. Its EBITDA margins improved to 10% in FY20
(FY19: 8.4%). The battery and flashlight segments together
contributed around 74% to the total revenue and 148% to the EBITDA
during FY20 (FY19: 64%, 117%).
Despite the COVID-19-led disruption, the yearly EBIDTA margin for
the battery segment improved to 21.1% in FY20 (FY19: 16.7%), mainly
attributable to favorable commodity prices, coupled with upward
pricing revisions. The flashlight segment also had a strong margin
of 15.7% during FY20 (FY19: 10.3%). The battery and flashlight
segments remain the core businesses of the company and are likely
to witness healthy demand in FY21, given the sharp decrease in
dumped imports from China due to the implementation of the quality
standards issued by Bureau of Indian Standards, coupled with the
disruptions caused to the unorganized market for the unavailability
of supplies. Ind-Ra expects EIIL's profitability to continue to
improve in FY21 on the increased contribution from the battery and
flashlight businesses and the discontinuation of the loss-making
tea business. In July 2019, EIIL had sold off its loss-making
packet tea business. During FY20, EIIL reported an EBITDA loss of
INR128 million from the packet tea business.
Increasing Equity Stake by Burman Family: The Burman family, which
promotes Dabur India Ltd, increased its stake in EIIL by around
8.8% in 14 July 2020 to 19.8%, becoming the largest shareholder of
EIIL. The Burman family picked up the 19.8% stake in EIIL from the
open market over the last year or so. Furthermore, the stake of
EIIL's current promoter, the Khaitan family, and promoter group
firms has dropped over the 12 months ended in July 2020. With the
invocation of pledged shares on 14 July 2020, the current promoter
group's stake in EIIL has declined to around 14.9% (March 2020:
23%, March 2019: 44%), of which around 68% remain pledged on 20
July 2020.
Credit Metrics Likely to Improve Further in FY21: EIIL's net
adjusted leverage improved to 4.2x at FYE20 (FYE19: 5.4x) as
adjusted debt decreased to INR5,245 million (INR6,679 million).
EIIL concluded the sale of its non-core assets in Chennai and
Hyderabad for INR1,000 million each during 3QFY20 and 4QFY20,
respectively. Although the company had entered the agreement to
sell the Hyderabad asset in September 2019, it was unable to
conclude the transaction on account of the stay by Delhi High Court
on the monetization of all assets of EIIL. However, in December
2019, the court vacated the ad-interim order of injunction in the
IL&FS case and allowed EIIL to go ahead with the sale of the
property at Hyderabad. The proceeds from the sale of these assets
were mostly used to repay working capital debt.
At FYE20, the company held long-term loans of INR2,431 million and
short-term debt of INR1,254 million. The adjusted debt also
includes lease liabilities of INR254 million and guarantees to
group companies worth INR1,305 million as of March 31, 2020. The
interest coverage declined to 1.7x in FY20 from 2.3x in FY19 as the
average debt was high during FY20. The company is looking at
further monetizing certain other non-core assets to improve its
liquidity position and credit metrics. With a steady improvement in
the profitability and likely further deleveraging, Ind-Ra expects
the credit metrics to improve in FY21.
Strong Market Position in the Battery and Flashlight Segment: EIIL
remains one of the leading manufacturers of zinc-carbon and
alkaline batteries in India. It continues to hold a strong market
position in the batteries and flashlight segments with a dominant
market share of around 50% and 75%, respectively, in the organized
market, according to the management.
Lighting and Appliance Business Remain Subdued: The revenue from
the lighting segment fell around 26% YoY to INR2,381 million in
FY20, mainly due to supply constraints as well as lower
realizations due to the steep price fall in the bulbs segment.
According to EIIL's management, the decline in revenues from the
lighting segment also includes a 5% YoY drop for the disruption
caused by lockdown in March 2020. Lower revenues led to lower
operating leverage resulting in negative segment EBIDTA of INR188
million from the lighting segment during FY20. Similarly, the
revenue from the appliance segment plummeted 56% YoY to INR615
million in FY20, primarily due to the weak demand and supply
constraints for key products, which necessitated a consolidation of
a portfolio, rationalizing channels for distribution and price
decreases. The segment registered EBIDTA loss of INR271 million
during FY20. In light of the COVID-19 led disruptions, the demand
for the appliance and lighting products is likely to remain muted
in FY21. The company expects the lighting segment to breakeven at
the EBITDA level and the appliance segment to post lower losses
year-on-year in FY21. Ind-Ra expects these segments, combined, to
continue to post losses in FY21, with a material improvement only
likely FY22 onwards.
Exposure to Stressed Group Limiting Financial Flexibility: EIIL
continues to have high exposure to ailing group companies. At
FYE20, its outstanding loans to group companies including interest
stood at INR4,228.9 million. Furthermore, the company reported
INR1,305 million of guarantees and post-dated cheques issued to
group companies at FYE20 (FYE19: INR2,830.9 million). Thus, the
total exposure to group companies stood high at INR5,534 million at
FYE20 (FYE19: INR5,759 million). Most of the support is funded
through long-term debt. The invocation of guarantee can impact
EIIL's liquidity position. Any development on the resolution of the
contingent liability issue remains monitorable.
Penalty by Competition Commission of India Remains a Monitorable:
In April 2018, the Competition Commission of India imposed a fine
of INR1,715.5 million on EIIL, for allegedly forming a cartel to
control the distribution and price of zinc-carbon dry cell
batteries in India over 2008-2016. In May 2018, EIIL received a
stay from National Company Law Appellate Tribunal on the penalty
order. The company has not made any provision for the penalty.
Ind-Ra will continue to closely monitor further developments in
this case. If EIIL is ordered to make the full payment, its
liquidity and credit metrics will be affected.
RATING SENSITIVITIES
Positive: A positive rating action could result from any of the
following events:
- a sustained improvement in EIIL's operating performance and/or
the successful resolution of contingent liabilities leading to the
debt service coverage ratio sustaining above 1.25x
- any changes in the board and management, leading to material
representation by the Burman family
Negative: Deterioration in the liquidity or credit metrics,
emanating from deterioration in the operating performance or the
spill-over of stress from group companies or restricted access to
external funding, could lead to negative rating action.
COMPANY PROFILE
EIIL, a part of the Williamson Magor Group, offers a range of
products such as batteries, flashlights, lighting solutions, and
home appliances.
FIVE CORE: CRISIL Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Five Core
Electronics Limited (FCEL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bill Discounting 53 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 4 CRISIL D (ISSUER NOT
COOPERATING)
Packing Credit 15 CRISIL D (ISSUER NOT
COOPERATING)
Packing Credit in 19 CRISIL D (ISSUER NOT
Foreign Currency COOPERATING)
CRISIL has been consistently following up with FCEL for obtaining
information through letters and emails dated December 31, 2019 and
June 17, 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 FCEL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on FCEL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of FCEL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
FCEL is a part of the Five Core group that manufactures electronic
equipment, including public address systems, speakers, amplifiers,
microphones, woofers; and electrical accessories under the 5 Core
brand. The group exports products to 56 countries. Mr. Amarjit
Kalra and his family manage the operations.
Incorporated in 2002, FCEL is listed on the NSE Emerge platform
since May 2018, and has manufacturing units in Delhi and Bhiwadi,
Rajasthan.
Set up in 2008 as a partnership firm, EMS has a facility in
Kashipur, Uttarakhand. Visual is a limited liability partnership
firm set up in 2008, with a unit in Mundka, Delhi. Neha was set up
as a proprietorship firm in 2009, and has a unit at Daruhera,
Gurugram.
Set up in 2010, 2011, and 2012, IAPL, Digi, and Happy are private
limited companies with units in Noida, Bhiwadi, and Delhi,
respectively. 5Core, set up in 2012, has a unit in Bhiwadi.
G.G. FASHIONS: CRISIL Withdraws B+ Rating on INR13.4cr Loan
-----------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of G.G.
Fashions (GGF) on the request of the company and after receiving no
objection certificate from the bank. The rating action is in-line
with CRISIL's policy on withdrawal of its rating on bank loan
facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Open Cash Credit 13.40 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawn)
Term Loan 1.34 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Migrated from
'CRISIL B+/Stable'; Rating
Withdrawn)
CRISIL has been consistently following up with GGF for obtaining
information through letters and emails dated July 16, 2020 and July
21, 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 GGF. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that rating action on GGF is consistent
with 'Assessing Information Adequacy Risk'. CRISIL has migrated the
ratings on the bank facilities of GGF to 'CRISIL B+/Stable Issuer
not cooperating'.
CRISIL has withdrawn its rating on the bank facilities of GGF on
the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
A proprietorship firm established in 1990 by Mr. G Kannan, GGF
manufactures cotton fabric at its facility in Salem, Tamil Nadu.
G.S. AUTO INT'L: CRISIL Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of G.S. Auto
International Limited (GSAIL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.5 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 27.25 CRISIL D (ISSUER NOT
COOPERATING)
Foreign Currency 24 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
Letter of Credit 1.5 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 23.74 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 1.25 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 4.76 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with GSAIL for obtaining
information through letters and emails dated April 23, 2019 and
October 11, 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 GSAIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on GSAIL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of GSAIL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
CRISIL has withdrawn its rating on INR24 Crore Foreign Currency
Term Loan and INR4.76 Crore Term Loan on the bank facilities of
GSAIL on the request of the company and after receiving no
objection certificate from the bank. The rating action is in-line
with CRISIL's policy on withdrawal of its rating on bank loan
facilities.
Set up in 1938 as a proprietorship concern, Gurmukh Singh & Sons,
GSAIL was reconstituted as a private limited company in 1973, and
then as a public limited company in 1984. GSAIL is listed on the
Bombay Stock Exchange Ltd and The Ludhiana Stock Exchange Ltd. The
company manufactures automotive components. The units can produce
10,000 tonne per annum of machined, hot- and cold-forged, and
casting (ferrous and non-ferrous) automotive components at its
plant in Ludhiana, Punjab.
HARYANA OILS: CRISIL Lowers Ratings on INR99cr Loans to D
---------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Haryana
Oils and Soya Limited (HOSL) to 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL BB/Stable/CRISIL A4+ Issuer Not
Cooperating'. The downgrade reflects delays by HOSL in servicing of
debt obligations.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Letter of 95 CRISIL D (ISSUER NOT COOPERATING;
Credit Downgraded from 'CRISIL A4+;
ISSUER NOT COOPERATING')
Overdraft 4 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL BB/Stable
ISSUER NOT COOPERATING')
CRISIL has been consistently following up with HOSL 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 HOSL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on HOSL is consistent
with 'Assessing Information Adequacy Risk'.
CRISIL has downgraded its ratings on the bank facilities of HOSL to
'CRISIL D/CRISIL D Issuer Not Cooperating' from 'CRISIL
BB/Stable/CRISIL A4+ Issuer Not Cooperating'. The downgrade
reflects delays by HOSL in servicing of debt obligations.
Based in Delhi, HOSL is primarily into trading of edible oil, de
oiled cakes and other agricultural commodities and is managed by
Mr. Laxmi Chand Aggarwal, Mr. Sanjeev Aggarwal, and Mr. Rajesh
Aggarwal. Previously, HOSL involved in the production of rice bran
oil and de-oiled cake (DOC) and was taken over by the current
promoters in 1994.
IMPERIAL FASTNERS: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Imperial Fastners Private Limited
Registered office:
1092, Shiv Motor Market
Bara Bazar, Kashmare Gate
Delhi 110006
Factory/Corporate office address:
Behrampur Road, Khandsa
HSIIDC, Udyog Vihar
Phase VII
Behind Haryana Roadways Workshop
Gurgaon 122001
NCR Haryana, India
Insolvency Commencement Date: July 29, 2020
Court: National Company Law Tribunal, Gurugram Bench
Estimated date of closure of
insolvency resolution process: January 25, 2021
(180 days from commencement)
Insolvency professional: Sanyam Goel
Interim Resolution
Professional: Sanyam Goel
Unit No. 110, First Floor
JMD Pacific Square
Sector 15, Part II
Gurugram, Haryana 122001
E-mail: goelsanyam@gmail.com
cirp.imperial@gmail.com
Last date for
submission of claims: August 12, 2020
INDIAN ACRYLICS: Ind-Ra Moves BB Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Indian Acrylics
Limited's (IAL) Long-Term Issuer Rating of 'IND BB' to the
non-cooperating category and has simultaneously withdrawn it.
The instrument-wise rating actions are:
-- INR300 mil. Fund-based limits* migrated to non-cooperating
category and withdrawn;
-- INR2,113.70 bil. Non-fund-based limits** migrated to non-
cooperating category and withdrawn; and
-- INR1,086.30 bil. Term loan* due on March 2026 migrated to non-
cooperating category and withdrawn.
*Migrated to 'IND BB (ISSUER NOT COOPERATING)' before being
withdrawn
**Migrated to 'IND A4+ (ISSUER NOT COOPERATING)' before being
withdrawn
KEY RATING DRIVERS
The ratings have been migrated to the non-cooperating category
because the issuer did not participate in the rating exercise
despite continuous requests and follow-ups by Ind-Ra.
Ind-Ra is no longer required to maintain the ratings, as it has
received a no-objection certificate from the lender, before 30 June
2020. This is consistent with the Securities and Exchange Board of
India's circular dated March 31, 2017, for credit rating agencies.
COMPANY PROFILE
Incorporated in 1986, IAL manufactures acrylic fiber at its 45,000
metric ton per annum facility in Sangur, Punjab. The company has
the largest acrylic fiber manufacturing facility in India. It has
installed 43,992 spindles for manufacturing worsted and modified
cotton. IAL sells acrylic fiber to all major spinning mills engaged
in acrylic yarn manufacturing in India and also exports to many
countries.
JMT AUTO: CRISIL Keeps D Debt Ratings in Not Cooperating Category
-----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of JMT Auto
Limited (JMT) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL D (ISSUER NOT
COOPERATING)
Bill Discounting 1 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 67 CRISIL D (ISSUER NOT
COOPERATING)
Letter of Credit 44 CRISIL D (ISSUER NOT
COOPERATING)
Rupee Term Loan 24 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 55 CRISIL D (ISSUER NOT
COOPERATING)
Working Capital 8 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
CRISIL has been consistently following up with JMT for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 JMT, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on JMT is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of JMT
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
JMT (formerly, Jamshedpur Metal Treat) was incorporated as a
private limited company in April 1987 to take over the business of
Metal Treat Company, an ancillary of Tata Motors Ltd ('CRISIL
AA/Negative/CRISIL A1+') that manufactures auto components. It was
reconstituted as a public limited company in April 1992 and was
acquired by Amtek Auto Ltd (AAL) in June 29, 2013, which now holds
70.74% stake in it. The company acquired REGE Holding GmbH (REGE)
and Amtek Components Sweden through Amtek Machining systems Pte Ltd
in fiscal 2016. It has also formed a joint venture, Amtek Riken
Castings Pvt Ltd.
KRISHNA SAHIL: CRISIL Withdraws C Rating on INR1.25cr LT Loan
-------------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Krishna
Sahil Constructions Private Limited (KSCPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL's policy on withdrawal of
its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 8 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Overdraft 0.75 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long Term 1.25 CRISIL C (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with KSCPL for obtaining
information through letters and emails dated January 6, 2020 and
January 10, 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 KSCPL. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that rating action on KSCPL is consistent
with 'Assessing Information Adequacy Risk'. CRISIL has migrated the
ratings on the bank facilities of KSCPL to 'CRISIL C/CRISIL A4
Issuer not cooperating'.
CRISIL has withdrawn its rating on the bank facilities of KSCPL on
the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
KSCPL was incorporated in 2008, is engaged in tender based
sub-contracts for construction projects.
KUPPANNA POULTRY: Ind-Ra Lowers LongTerm Issuer Rating to 'B+'
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Kuppanna Poultry
Farm's (KPF) Long-Term Issuer Rating to 'IND B+' from 'IND BB-'.
The Outlook is Stable.
The instrument-wise rating actions are:
-- INR140 mil. (reduced from INR153.5 mil.) Fund-based working
capital limit downgraded with IND B+/Stable/IND A4 rating;
-- INR30.9 mil. (reduced from INR43.9 mil.) Term loan due on
February 2028 downgraded with IND B+/Stable rating; and
-- INR8 mil. Working capital demand loan assigned with IND B+
/Stable rating.
The downgrade reflects KPF's poor liquidity due to stretched
working capital limits, as a result of which it had to avail
additional working capital demand loan to support its operations
during 1HFY21. Ind-Ra expects the company's working capital cycle
to remain stretched in FY21 due to the uncertainty in the business
environment stemming from the COVID-19 outbreak. The consequent
lockdown could exert further pressure on KPF's near-term liquidity,
and adversely impact its sales and profitability.
KEY RATING DRIVERS
Liquidity Indicator - Poor: KPF's average maximum utilization of
working capital facilities was around 80% with a few instances of
overutilization over the 12 months ending June 2020. The unaudited
year-end cash balance was INR10.5 million at FYE20 (FYE19: INR4.4
million). The firm's cash flow from operations stood at INR54
million in FY20 (FY19: INR41.5 million). KPF's working capital
cycle remained long despite improving to 47 days in FY20 (FY19: 53
days) due to a shorter inventory holding period of 47 days (71
days) and the improved debtor days of 11 (18).
KPF has availed principal and interest moratorium under the Reserve
Bank of India's COVID-19 regulatory package for its term loans and
working capital over April-August 2020. KPF also availed an
additional COVID-19 loan by way of fund-based limits and short-term
loan to support its operations during 1HFY21. Ind-Ra expects KPF's
liquidity position to deteriorate further in FY21 on reduced
revenue and the higher utilization of the working capital limits
owing to the challenging COVID-19 led economic situation.
The ratings continue to be constrained by KPF's small scale of
operations even though its revenue improved to INR1,227.3 million
in FY20 (FY19: INR925.8 million), driven by the increase in its
production capacity and growth in pellet unit operations that
started in September 2019. In 1QFY21, the firm registered revenue
of INR275.4 million.
The ratings are further constrained by KPF's modest operating
margin, which remained largely unchanged year-on-year at 3.1% in
FY20 due to the commodity nature of raw material coupled with the
unfavorable market conditions. The agency estimates KPF's return on
capital employed to have stood at 10% in FY20 (FY19: 11%). Ind-Ra
expects the sales and profitability to continue to be impacted in
FY21 by the inherent vulnerability of the poultry industry to
disease, viral attacks and competition, amid the overall economic
slowdown.
The ratings also factor in KPF's weak credit metrics even as the
net leverage (adjusted net debt/operating EBITDA) improved to 3.4x
in FY20 (FY19: 4.6x) on improved absolute EBITDA to INR37.6 million
(INR29.8 million). However, the gross interest coverage (operating
EBITDA/gross interest expense) slightly decreased to 3.3x in FY20
(3.4x) owing to an increase in the interest expense to INR11.5
million (INR8.7 million) on account of the increased utilization of
short-term working capital facility in FY20. Ind-Ra expects the
credit metrics to remain close to FY20 levels in FY21.
Moreover, KPF is exposed to customer concentration risk, as 89% of
its FY20 revenue was derived from its largest customer YRS Boilers.
The ratings are constrained by the proprietor concern nature of the
firm.
However, the ratings continue to benefit from KPF's proprietor's
experience of over three decades in the horticulture and poultry
industry.
RATING SENSITIVITIES
Negative: Any decline in the revenue or the EBITDA margin, leading
to any further deterioration in the credit metrics and increased
liquidity pressure, will be negative for the ratings.
Positive: An improvement in the scale of operations, leading to
improved liquidity and the gross interest coverage exceeding and
sustaining above 3.5x, will be positive for the ratings.
COMPANY PROFILE
Established in 1989 as a sole proprietorship concern, KPF is
engaged in the commercial broiler producing and egg production
activities with an installed capacity of 200,000 birds per batch,
around 300,000 eggs production per week, 8-10 tons of mash feed and
20-25 tons of pellet feed mill production capacity per hour at
Alampalayam, Tirupur.
LSR FOODS: CRISIL Lowers Rating on INR10cr Cash Loan to D
---------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of LSR
Foods Limited (LSR) to 'CRISIL D/CRISIL D Issuer Not Cooperating'
from 'CRISIL B+/Stable/CRISIL A4 Issuer Not Cooperating'. The
downgrade reflects delays by LSR in servicing of debt obligations.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Inland/Import 10 CRISIL D (ISSUER NOT COOPERATING;
Letter of Credit Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
CRISIL has been consistently following up with LSR 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 LSR, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on LSR is consistent
with 'Assessing Information Adequacy Risk'.
CRISIL has downgraded its ratings on the bank facilities of LSR to
'CRISIL D/CRISIL D Issuer Not Cooperating' from 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating'. The downgrade reflects
delays by LSR in servicing of debt obligations.
LSR, formerly Kush Dairy Ltd, and Kushagra Oils and Fats Ltd, was
incorporated in 1996 and is headquartered in New Delhi. The company
trades in edible oils and cashew nuts and also manufactures milk
and products such as skimmed milk powder and ghee. Mr. Lakshmi
Chand Agarwal and family are the promoters.
MOBILE TELECOM: CRISIL Keeps D on INR14cr Loan on Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Mobile
Telecommunications Limited (MTL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft 14 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with MTL for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 MTL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on MTL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of MTL
continues to be 'CRISIL D Issuer not cooperating'.
Established in 1995 by Mr. Anil Ved Mehta, MTL manufactures and
trades in electronic hardware. It is listed on the Bombay Stock
Exchange.
MODERN STEEL: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Modern
Steel Limited (MSL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 73 CRISIL D (ISSUER NOT
COOPERATING)
Funded Interest 10.2 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
Letter of Credit 51.5 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 41.88 CRISIL D (ISSUER NOT
COOPERATING)
Working Capital 38.90 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
CRISIL has been consistently following up with MSL for obtaining
information through letters and emails dated December 31, 2019 and
June 17, 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 MSL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on MSL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of MSL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
MSL was set up in 1974 by Mr. Amarjit Goyal. It is listed on the
Bombay Stock Exchange, and is managed by Mr. Krishan Kumar Goyal,
son of Mr. Amarjit Goyal. MSL manufactures low-alloy and
carbon-steel-rolled products for commercial vehicles, such as
trucks and tractors, passenger vehicles, two-wheelers, and
engineering companies.
MOHAN TOBACCOS: Ind-Ra Moves 'C' Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Mohan Tobaccos'
Long-Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using the
rating. The rating will now appear as 'IND C (ISSUER NOT
COOPERATING)' on the agency's website.
The instrument-wise rating action is:
-- INR88 mil. Fund-based facilities migrated to non-cooperating
category with IND C (ISSUER NOT COOPERATING)/IND A4 (ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
August 7, 2019. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Mohan Tobaccos was set up in 2011 as a proprietorship concern by
Mr. Bellam Ramu. The firm is involved in the trading of tobacco.
MYSORE PAPER: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of The
Mysore Paper Mills Limited (MPM) 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)
Letter of Credit 55 CRISIL D (ISSUER NOT COOPERATING)
CRISIL has been consistently following up with MPM for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 MPM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on MPM is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of MPM
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
MPML was founded in May, 1936 by the then Maharaja of Mysore
(Karnataka). Government of Karnataka, which acquired a controlling
stake in November 1977, held 64.7% of equity shares as on September
30, 2016; the remainder was held by financial institutions and the
general public.
MPML is an ISO-14001-certified company, producing newsprint,
writing and printing paper, and sugar at its plant at Bhadravati in
the Shimoga district of Karnataka.
NUFUTURE DIGITAL: Ind-Ra Lowers LongTerm Issuer Rating to 'D'
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded nuFuture Digital
(India) Limited's (NFDIL) Long-Term Issuer Rating to 'IND D' from
'IND BB+'. The Outlook was Negative.
The instrument-wise rating action is:
-- INR175 mil. Fund-based working capital facilities downgraded
with IND C/IND A4 rating.
The downgrade reflects NFDIL's delays in the debt servicing of
non-convertible debentures due on July 31, 2020, on account of its
tight liquidity position.
KEY RATING DRIVERS
Liquidity Indicator – Poor: NFDIL, which belongs to the Future
group of companies, is fully dependent on the payments received
from its key counterparties – Future Retail Limited, Future
Consumer Limited, and Future Lifestyle Fashion Limited - to meet
its repayment obligations. However, the counterparties have not
been making the payments on a timely basis as their performance has
been impacted by the COVID-19 outbreak and the associated lockdown.
This has adversely affected NFDIL's ability to meet its debt
obligations.
NFDIL continued to report negative free cash flow of INR409.87
million in FY20 (FY19: negative INR5,206.77 million) on account of
a stretched working capital cycle, loans and advances extended by
NFDIL to other Future group entities, and the CAPEX of about
INR1,840 million incurred over FY19-FY20. The deficit was met by a
mix of debt and private equity. At FYE20, NFDIL had cash and
equivalents of INR35.76 million (FYE19: INR0.52 million), against
the scheduled repayments of around INR1,197 million in FY21 and
INR1,225 million in FY22. During FY20, the company's networking
capital cycle deteriorated to 86 days (FY19: negative 39 days) on
account of an increase in the debtor days to 164 (119).
NFDIL had been granted the Reserve Bank of India-prescribed debt
moratorium on its loans for March-May 2020. The company has working
capital limits of INR175 million on a run-down basis, against which
it has applied for a second moratorium for June-August 2020. The
application is being processed by the bank. An improvement in the
overall liquidity profile of NFDIL and timely repayments of debt
will remain key monitorables.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months would be positive for the ratings.
COMPANY PROFILE
Incorporated in 2007, NFDIL provides IT and business services to
the Future group companies.
ORISSA STEVEDORES: CRISIL Moves D Debt Rating to Not Cooperating
----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Orissa
Stevedores Limited (OSL) to 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 74 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL has been consistently following up with OSL for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 OSL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on OSL is consistent
with 'Assessing Information Adequacy Risk'. Therefore, on account
of inadequate information and lack of management cooperation,
CRISIL has migrated the rating on bank facilities of OSL to 'CRISIL
D Issuer not cooperating'.
OSL is part of the Orissa-based OSL group, promoted by Mr.
Mahimananda Mishra. Incorporated in 1978, the company offers
stevedoring and forwarding services, and liner/charter agency
activities, customs clearance, intra-port transportation, and bulk
handing of coal and other minerals. The company also undertakes
iron ore mining and related works.
PHI LEARNING: CRISIL Migrates B- Debt Rating to Not Cooperating
---------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of PHI Learning
Private Limited (PHI) to 'CRISIL B-/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit/ 8 CRISIL B-/Stable (ISSUER NOT
Overdraft COOPERATING; Rating Migrated)
facility
CRISIL has been consistently following up with PHI 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 PHI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on PHI is consistent
with 'Assessing Information Adequacy Risk'. Therefore, on account
of inadequate information and lack of management cooperation,
CRISIL has migrated the rating on bank facilities of PHI to 'CRISIL
B-/Stable Issuer not cooperating'.
Established in 1963, PHI is an academic publisher. The company is
promoted by Mr. Asoke K Ghosh, and is based in New Delhi.
PRAMUKH CAR: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: Pramukh Car Riders Limited
Electric Mansion
Appasaheb Marathe Marg
Prabhadevi
Mumbai 400025
Insolvency Commencement Date: July 31, 2020
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: January 27, 2021
Insolvency professional: Manoj Anant Mainkar
Interim Resolution
Professional: Manoj Anant Mainkar
B/203, Durvankur Coop.
Hsg. Socy. Ltd.
Sant Janabai Road
Vile Parle (East)
Mumbai 400057
E-mail: manojmmainkar@yahoo.com
Last date for
submission of claims: August 14, 2020
PVM TECHNOLOGIES: CRISIL Lowers Ratings on INR8cr Loans to D
------------------------------------------------------------
Based on last available information, the ratings on bank facilities
of PVM Technologies Private Limited (PVM) is downgraded to be
'CRISIL D/CRISIL D Issuer Not Cooperating' from 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL A4 ISSUER
NOT COOPERATING')
Cash Credit 4 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL A4 ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with PVM for obtaining
information through letters and emails dated May 31, 2019 and
November 15, 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 PVM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on PVM is consistent
with 'Assessing Information Adequacy Risk'.
Based on last available information, the ratings on bank facilities
of PVM is downgraded to be 'CRISIL D/CRISIL D Issuer Not
Cooperating' from 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'. As it was brought to CRISIL's attention that there
are delays in servicing debt reflected in overutilization of the
cash credit limit for more than 30 days.
Established in 1998 by Mr. Bhagwat Singh Lodha, Mr. JS Lodha, Ms.
Vimla Lodha, and Ms. Parmila Lodha, PVM is a Class AA
government-approved contractor that undertakes public water supply
and irrigation projects for Public Health Engineering Department.
RAMESHVAR IMPEX: Ind-Ra Moves B+ Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Rameshvar Impex's
Long-Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using the
rating. The rating will now appear as 'IND B+ (ISSUER NOT
COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR70 mil. Fund-based limits migrated to non-cooperating
category with IND B+ (ISSUER NOT COOPERATING) / IND A4
(ISSUER NOT COOPERATING) rating; and
-- INR8.75 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4 (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on 7
August 2019. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Formed in 2011 by Haresh Miyani, Mukesh Vaghani and Hiren Kevadiya,
Rameshwar Impex is engaged in the cutting and polishing of
diamonds.
REAL CONSTRUCTIONS: CRISIL Assigns B+ Rating to INR5cr Loan
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
bank facilities of Real Constructions (RC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 7.25 CRISIL A4 (Assigned)
Cash Credit 5.00 CRISIL B+/Stable (Assigned)
The ratings reflect RC's modest scale of-and tender-based
operations. These weaknesses are partially offset by the extensive
experience of the partners in the civil construction industry and
healthy order book ensuring revenue visibility.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Revenue, at INR20.42 crore in fiscal
2020, though is expected to increase over the medium term on
account of large unexecuted orders, should remain modest. Further,
timely execution of the order book while maintaining adequate
liquidity will remain a key rating sensitivity factor.
* Tender based nature of operations: Competition is intense in the
civil construction sector due to low entry barriers. Moreover,
there is high dependence on orders received from government bodies,
which are awarded through competitive tender bidding.
Strengths:
* Extensive experience of the chief partner: Mr. Kamaluddin's
(special class contractor) experience of over three decades in the
roads and over bridges segment and healthy relationship with
customers should continue to support the business.
* Healthy order book ensuring revenue visibility: Orders of INR76
crore as on date ensures revenue visibility for the next two
years.
Liquidity Stretched
Cash accrual, expected at INR2 crore per annum should comfortably
cover yearly debt obligation of INR0.4 crore and support liquidity.
However, bank limit utilisation was high at around 95% on average
in the three months ended March 31, 2020.
Outlook: Stable
CRISIL believes RC will continue to benefit from the extensive
experience of its partners.
Rating Sensitivity factors
Upward factors
* Increase in revenue and profitability to be maintained above
15%
* Improvement in working capital requirement with reduction in
gross current asset days
Downward factors
* Decline in revenue by more than 20%
* Stretch in working capital requirements leading to deterioration
in the financial risk profile
Established as a partnership firm in Karimnagar, Telangana, in 1998
by Mr. Kamaluddin, Mr. Rakhimuddin, Ms Lateef Unnisa Begum, and Ms
Deeba Nishanth, RC primarily constructs roads and over-bridges.
RUBY CABLES: CRISIL Keeps D Debt Ratings to Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Ruby
Cables Limited (RCL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 10 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 4.35 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 7.65 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with RCL for obtaining
information through letters and emails dated July 10, 2020 and July
15, 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 RCL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on RCL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of RCL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
Established in 1993 as Ekank Cables Ltd by members of the Parekh
family, RCL got its present name in 2010, following a change in
management. The company manufactures conductors and low-tension
power cables at its facility in Vadodara (Gujarat). In fiscal 2014,
Mr. S N Bhatnagar acquired 50% stake in the company. RCL is
currently managed by Mr. Bhatnagar and Mr. Chirag Gada. The company
is listed on Bombay Stock Exchange (BSE).
SHARE MACTS: CRISIL Moves B+ Debt Rating to Not Cooperating
-----------------------------------------------------------
CRISIL has migrated the rating on bank facilities of The Share
Macts Ltd (TSML) to 'CRISIL B+/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 10 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL has been consistently following up with TSML for getting
information. CRISIL requested cooperation and information from the
issuer through its letters dated April 13, 2020 and May 08, 2020
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 regarding business operations of
TSML, which restricts CRISIL's ability to take a forward looking
view on the entity's credit quality. CRISIL believes that rating
action on Share Macts is consistent with 'Assessing Information
Adequacy Risk'. Therefore, on account of inadequate information and
lack of management cooperation, the rating on bank facilities of
TSML has been migrated to 'CRISIL B+/Stable Issuer Not
Cooperating'.
The TSMLis co-operative society registered under mutually aided
co-operative act. The society started its operations in 1995. It is
100% women's society. The society operates through 4 branches
mainly in 2 districts in Andhra Pradesh. It accepts deposits from
its members and provides loans to self-help groups, individual
loans to members, sanitary loans and loans against deposits. The
society had 20000 members, 4 branches with an AUM of INR19.5 crore
and networth of INR2.2 crore as on March 31, 2020.
SHYAM COAL: CRISIL Withdraws B+ Rating on INR14cr Cash Loan
-----------------------------------------------------------
CRISIL has withdrawn its rating on the bank facilities of Shyam
Coal Corporation (SCC) on the request of the company and after
receiving no objection certificate from the bank. The rating action
is in-line with CRISIL's policy on withdrawal of its rating on bank
loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL has been consistently following up with SCC for obtaining
information through letters and emails dated January 23, 2019, July
11, 2019 and April 18, 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 SCC. This restricts CRISIL's
ability to take a forward looking view on the credit quality of the
entity. CRISIL believes that rating action on SCC is consistent
with 'Assessing Information Adequacy Risk'. CRISIL has migrated the
ratings on the bank facilities of SCC to 'CRISIL B+/Stable Issuer
not cooperating'.
CRISIL has withdrawn its rating on the bank facilities of SCC on
the request of the company and after receiving no objection
certificate from the bank. The rating action is in-line with
CRISIL's policy on withdrawal of its rating on bank loan
facilities.
Established in 2013 as a partnership firm, Shyam Coal Corporation
(SCC) is engaged in the grading and trading of Indonesian coal. The
firm's plant is situated in Morbi, Gujarat. The firm is managed by
Mr. Pravinbhai Bariya.
STURDY INDUSTRIES: CRISIL Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the rating for the bank facilities of Sturdy
Industries Limited (SIL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 70 CRISIL D (ISSUER NOT
COOPERATING)
Funded Interest 26.21 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
Letter of credit 141.9 CRISIL D (ISSUER NOT
& Bank Guarantee COOPERATING)
Proposed Cash .13 CRISIL D (ISSUER NOT
Credit Limit COOPERATING)
Term Loan 18.6 CRISIL D (ISSUER NOT
COOPERATING)
Working Capital 75.09 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
CRISIL has been consistently following up with SIL for obtaining
information through letters and emails dated December 31, 2019 and
June 17, 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 SIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SIL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of SIL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
Established in 1995, SIL, promoted by Mr. Ramesh Guptamanufactures
polyvinyl chloride pipes and irrigation systems, aluminium
composite panels, and aluminium cables and conductors, and trades
in aluminium products. The company also has a plant for
manufacturing asbestos cement roofing sheets.
SUBICO FOOD: CRISIL Assigns B+ Rating to INR4.37cr LT Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of Subico Food Products (SFP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 4.37 CRISIL B+/Stable (Assigned)
The rating reflects SFP's susceptibility to volatility in commodity
prices, presence in a highly fragmented industry with limited size
and initial stage of operations. These weaknesses are partially
offset by the extensive experience of the partners in biscuit
manufacturing and geographical diversification in revenues.
Key Rating Drivers & Detailed Description
Weaknesses:
* Susceptibility to volatility in commodity prices: Operating
margin is exposed to volatility in raw material prices, moreover
raw material cost accounts for 70% of the operating revenue/total
manufacturing cost.
* Presence in a highly fragmented industry with limited size: The
industry is highly fragmented and competitive, with a large number
of unorganised players. Such high fragmentation limits the pricing
flexibility and bargaining power of the players. Also, the threat
from large integrated players in the form of capacity additions
limits growth. The industry is exposed to the risk of low entry
barriers. The small initial investment and the low complexity of
operations have resulted in the existence of innumerable entities,
much smaller in size, leading to significant fragmentation.
* Initial stage of operations: As operations have only commenced in
December 2018, the firm has limited track record. Consequently,
scalability is constrained, as reflected in revenue of INR17.26
crore during fiscal 2020. Nascent stage will continue to limit
scalability over the medium term.
Strengths
* Extensive experience of the partners: The partners' experience of
over 10 years in biscuit manufacturing, their understanding of the
dynamics of the market, and healthy relationships with suppliers
and customers should continue to support the business.
* Geographical diversification in revenues: SFP caters to a wide
number of clients, both in India and abroad. Almost 90-95% of
revenue accrues from exports. Diversity in geographic reach and
clientele should continue to support the business.
Liquidity Poor
Cash accrual, expected at INR1.13- 1.64 crore yearly over the
medium term should just cover term debt repayment of INR1.0-1.1
crore per annum. The small accrual provides limited cushion in case
of any incremental working capital or capital expenditure (capex)
requirements. Cash credit limit of INR2.5 crore sanctioned in
November 2019 has not been utilised as of June 2020. Current ratio
is low at 0.96 time as on March 31, 2020. Need-based funding
support from the partners in the form of unsecured loans'at INR2.76
crore as on March 31, 2020 - is expected to continue.
Outlook: Stable
CRISIL believes SFP will continue to benefit from the extensive
experience of its partners, and established relationships with
clients.
Rating Sensitivity Factors
Upward Factors
* Increase in revenue by 20% and sustenance of operating margin,
leading to higher cash accrual
* Improvement in the working capital cycle
Downward Factors
* Steep decline in revenue or profitability or
* Stretch in working capital cycle with gross current assets of
175 days or large debt funded capex weakening the financial risk
profile.
Established in 2015 as a partnership firm, SPF manufactures and
exports bakery products such as glucose biscuits. Commercial
operations commenced in December 2018 at its facility in Kanodar-
Gujarat. Mr. Saidali Sunasara, Mr. Aminhaider Sunasara and five
others are the partners.
VAIGAI LEATHER: CRISIL Migrates B+ Debt Rating to Not Cooperating
-----------------------------------------------------------------
CRISIL has migrated the rating on bank facilities of Vaigai Leather
Corporation (VLC) to 'CRISIL B+/Stable Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing 6 CRISIL B+/Stable (ISSUER NOT
Credit COOPERATING; Rating Migrated)
CRISIL has been consistently following up with VLC for obtaining
information through letters and emails dated April 29, 2020, July
10, 2020 and July 15, 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 VLC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on VLC is consistent
with 'Assessing Information Adequacy Risk'. Therefore, on account
of inadequate information and lack of management cooperation,
CRISIL has migrated the rating on bank facilities of VLC to 'CRISIL
B+/Stable Issuer not cooperating'.
Set up in 1986 by Mr. Mani and Mr. P Selvam, VLC is engaged in
manufacture of finished leather. The firm derives majority of its
revenues from the export market.
VODAFONE IDEA: Posts Eighth Straight Loss, Loses More Subscribers
-----------------------------------------------------------------
P R Sanjai at Bloomberg News reports that Vodafone Idea Ltd., the
beleaguered Indian wireless carrier facing a government demand for
billions of dollars in back fees, reported an eighth straight
quarterly loss and said a court verdict on a staggered payment plan
for the dues is critical for survival.
Net loss was INR254.6 billion (US$3.4 billion) in the three months
ended June, the country's No. 3 mobile phone carrier said on Aug.
6, Bloomberg discloses. It took a one-time charge of INR194.4
billion for back fees paid.
According to Bloomberg, the operator, formed by the merger of
Vodafone Group Plc's local unit with billionaire Kumar Mangalam
Birla's Idea Cellular Ltd., hasn't reported an annual profit since
the deal was announced in 2017. Birla warned in December that the
venture was headed for insolvency in the absence of government
relief with the dues, which are related to an October Supreme Court
ruling, the report relays.
Bloomberg adds that Vodafone Idea is losing subscribers to rivals
as it trims coverage to cut costs and has so far failed to win
better payment terms from the government on the money it owes. Net
debt was INR1.2 trillion as of the quarter ended June.
The company's net worth has turned negative, it said in the
statement, Bloomberg relays.
Even before the court ruling, the carrier had been reporting losses
amid cutthroat competition unleashed by Reliance Jio Infocomm Ltd.,
which offered free voice and cheap data packages to lure
subscribers.
In June, Vodafone Idea said paying dues in tranches was the only
way to stay afloat and that its financial state was "precarious."
Net losses over the three years prior to the quarter ended June
totaled INR930.5 billion, Bloomberg discloses.
Vodafone Idea shares have more than doubled over the past three
months as retail investors bet it would be able to pay the dues and
recover, the report states. The stock fell 0.6% to INR8.25 on Aug.
6 before the earnings were announced, Bloomberg adds.
Vodafone Idea Limited operates as a telecom service provider. The
Company offers 2G, 3G, and 4G mobile services, as well as mobile
payments, advanced enterprise offerings, and entertainment.
Vodafone Idea serves customers in India.
=========
J A P A N
=========
LEOPARD TWO: Fitch Affirms BB Ratings on 2 Tranches
---------------------------------------------------
Fitch Ratings has downgraded Class A and Class B notes issued by
L-MAP One Funding Limited to 'AA-sf' and 'A+sf', from 'AAAsf' and
'AAsf', respectively. The Outlook is Negative. Fitch has also
affirmed the ratings of all notes issued by Leopard Two Funding
Limited with a Stable Outlook.
Leopard Two Funding Limited
- Class A-1 XS0199335554; LT AAAsf; Affirmed
- Class A-2 XS0199335711; LT AAAsf; Affirmed
- Class B XS0199335984; LT AAsf; Affirmed
- Class C XS0199336446; LT Asf; Affirmed
- Class D XS0199337097; LT BBsf; Affirmed
- Class E XS0199337501; LT BBsf; Affirmed
L-MAP One Funding Limited
- Class A XS0251152954; LT AA-sf; Downgrade
- Class B XS0251160544; LT A+sf; Downgrade
TRANSACTION SUMMARY
The transactions are securitisations of fully amortising mortgage
loans backed by multi-family apartment properties located
throughout Japan. The underlying properties of the transactions
were developed and managed by Leopalace 21 Corporation.
KEY RATING DRIVERS
Deterioration of Property Performance: The vacancy rates of the
transactions' underlying properties have been increasing since the
announcement by Leopalace regarding the construction defects on its
properties in May 2018, especially in seven product lines, which
have been subject to a priority investigation over the cause.
According to the data released by Leopalace, the vacancy rate of
the properties of the seven product lines in its entire portfolio
was 32.8% as of March 2020. Fitch has assumed that the reason for
the high vacancy is the suspension of leasing activities for the
properties to complete the investigation and repair work.
Leopalace also announced in June 2020 that the completion of all of
its properties and repair work on seven product lines as well as
other product types was delayed further, and the schedule for
repair work will be updated when its business performance improves.
Leopalace had a net loss for two consecutive financial years and
its equity ratio declined to 0.7% by March 2020, from 27.7% in the
previous year.
The properties' performance has been deteriorating in both
transactions, but the vacancy rates have been increasing at a
faster pace in L-MAP One, as it has a larger proportion of the
seven product lines than Leopard Two. The proportion of the seven
product lines in the underlying property pool was 48% in L-MAP One
and 26% in Leopard Two at end-June 2020.
Fitch expects the performance of the properties of the seven
product lines to recover and stabilise after the completion of the
repair work. However, Fitch expects that the current high vacancy
rates will continue due to increasing uncertainty about the
completion of the repair work on the properties.
Fitch forecasts Japan's GDP will contract by 5.0% in 2020 due to
the coronavirus pandemic and its effects, with the unemployment
rate increasing to 3.6%. Fitch also expects this to affect the
underlying properties' performance.
Therefore, Fitch takes into consideration the current property
performance to derive the cash flow of the underlying properties
for its model.
Less CE in L-MAP One: L-MAP One has lower credit enhancement (CE)
than Leopard Two due to its target CE structure, where CE is capped
at 2x of the initial CE. The downgrade on the notes of L-MAP One
reflects that the CE is not sufficient to cover the expected loss
under the relevant rating stress. The Outlook is Negative due to
increasing uncertainty about the completion of the repair work.
This may lead to performance volatility in the underlying
properties, while an increase of CE is limited.
The affirmation of the notes of Leopard Two reflects improvement in
CE levels due to its sequential repayment structure. Fitch believes
these notes have sufficient cushion for their current ratings, even
if the underlying properties' performance deteriorates.
Stable Loan Performance: Stable economic conditions, a low interest
rate environment and the master lease structure in place have
resulted in stable loan performance since the transactions closed.
There have only been three defaults and the cumulative loss rate is
very limited. No new default has occurred since the previous review
in September 2019. Deterioration of cash flow in the underlying
properties due to the construction issue will not directly affect
loan performance because of the master lease structure; however,
Fitch does not consider the master lease in the analysis.
Sufficient Liquidity Reserve: Fitch continues to believe both
transactions have available cash reserves to address liquidity
risk, although their advance agents have yet to be replaced, as
stipulated under their transaction documents.
ESG - Governance: L-MAP One has an ESG Relevance Score of 5 for the
Transaction Parties and Operational Risk due to prolonged
construction issues leading to underlying cash flow deterioration,
which has a negative effect on the credit profile, and is highly
relevant to the rating, resulting in a rating downgrade to 'AA-sf'
for Class A and 'A+sf' for Class B notes of the transaction.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Stable to improved loan and property performance, coupled with
paydown which increases the CE, would lead to upgrades.
- Upgrades of classes of Leopard Two would occur with continued
paydown and an increase of CE as well as improvement of underlying
property performance.
- Upgrades of classes of L-MAP One would be limited based on its
target CE structure, unless the performance of underlying
properties has improved and CEs are increased sufficiently with
buffers to the relevant rating levels.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A decline in performance of the underlying properties, an
increase of default or losses from underperforming loans.
- Downgrades to the classes rated 'AAAsf' in Leopard Two are not
likely as the current CEs are sufficient and Fitch expects them to
increase further by paydown.
- Downgrades of other notes are possible should net cash flows
decline unexpectedly, defaults occur or loss expectations
increase.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the underlying
pools and the transactions. There were no findings that were
material to this analysis. Fitch has not reviewed the results of
any third-party assessment of the underlying pools or conducted a
review of loan origination files as part of its ongoing
monitoring.
Fitch did not undertake a review of the information provided about
the underlying pools ahead of the transactions' initial closing.
The subsequent performance of the transactions over the years is
consistent with the agency's expectations given the operating
environment.
Overall, Fitch's assessment of the information on the underlying
pools relied upon for the agency's rating analysis, according to
its applicable rating methodologies, indicates that it is
adequately reliable.
SOURCES OF INFORMATION
Transaction data and reports provided by Capital Servicing Co.,
Ltd., the servicer of the transactions, at August 4, 2020.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
L-MAP One has an ESG Relevance Score of 5 for Transaction Parties
and Operational Risk, as detailed in the Key Rating Drivers
section.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or the way in which they
are being managed by the entity(ies).
=====================
P H I L I P P I N E S
=====================
PHILIPPINES: Troubled Agri Workers Persevere Amid Recession
-----------------------------------------------------------
Inquirer.net reports that as the new coronavirus disease delivered
an indiscriminate blow to most businesses that forced some
establishments to shut down, farmers and fisherfolk in the
Philippines have been hard at work producing food supplies.
But they are doing so amid a climate of uncertainty and fear, with
some industry stakeholders ready to raise the white flag as the
country's economy plunged into its worst recession in 40 years, the
report says.
According to Inquirer.net, Gregorio San Diego Jr., United
Broilers Raisers Association (Ubra) chair, noted the rising number
of poultry farms being foreclosed by banks, while Pork Producers
Federation of the Philippines Inc. president Edwin Cheng said hog
raisers in Visayas and Mindanao continued to bleed financially as
demand for pork continued to stagnate.
Without proper incentives and as imports continue to come in, the
Samahang Industriya ng Agrikultura (Sinag) and the Federation of
Free Farmers (FFF) said it might be impossible for local food
producers to heed the government's call to increase food supply
this year by 2 percent, Inquirer.net relays.
They added increasing supply without adequate cold-storage
facilities in place could worsen the distressingly normal cycle of
farmers throwing away crops season after season, according to
Inquirer.net.
Inquirer.net says compared to rice farmers, which have seen an
improvement in both prices and supply in the staple, other
subsectors in agriculture are not faring as well.
Between April and June, the output and prices of livestock and
poultry declined and groups are expecting the downward trend to
continue. Fisheries production increased by 0.2 percent but its
value also decreased by 2.6 percent.
"The major incentive for farmers to produce is the price. You will
not continue to operate if you will continue to lose. If you think
about it, 2 percent is only a small number but the sector has been
really slow. We see intervening factors like weather, and now,
there is COVID-19 . . . Until now, even with the pandemic, we are
still competing with imports," Inquirer.net quotes FFF national
chair Raul Montemayor as saying.
Ubra president Bong Inciong added the continuous entry of imported
agricultural goods would eventually lead to the local industry's
demise, noting that local raisers cannot compete with heavily
subsidized goods from overseas especially at uncertain times like
this.
"The agriculture industry has been in recession for so long," the
report quotes Sinag chair Rosendo So as saying. "Not unless we
improve government support, we lessen production costs and we
regulate imports, the government's targets would just be empty
statistics."
According to Inquirer.net, Finance Secretary Carlos Dominguez III
said the agriculture industry would need to grow by at least 2
percent every year to keep up with the country's population
expansion rate, which continues to balloon at 1.7 percent yearly.
But for this year, the sector ended the first semester with a
contraction of 0.35 percent. Despite the stakeholders'
reservations, Agriculture Secretary William Dar remained
optimistic.
The agriculture chief was promised by lawmakers and the President
of a bigger budget allocation, although money would not come until
next year, Inquirer.net says.
"The President already said that agriculture is one of the keys to
rebooting the economy . . . while the livestock and poultry
industries are really adversely affected, we are positive that we
will be able to turn things around by adding logistics centers," he
said.
Despite the economic meltdown, Mr. Dar added the agency "will
continue to work with all stakeholders to improve the sector, and
ensure that there would be enough supply of food for everyone,"
Inquirer.net relays.
=================
S I N G A P O R E
=================
BY ANDCO: National Gallery Shop Shuts Doors; Seeks Liquidation
--------------------------------------------------------------
TODAY Online reports that By AndCo, the firm behind Gallery & Co, a
cafeteria and shop selling Singapore-made goods at the National
Gallery Singapore, has closed its doors and is seeking liquidation
after the Covid-19 pandemic took a heavy toll on the
tourism-dependent business.
Perun Consultants, the liquidator of By AndCo, told TODAY that it
is collating the total amount owed to creditors, including small
businesses and individuals who consigned the business goods. A
preliminary estimate is that the shop owes about SGD500,000.
TODAY says the creditors include:
- The Little Drom Store, which claims that it is owed SGD12,000
- Super Farmers, which produces urban farming kits
- Accessory maker Heckin' Unicorn
- A Singapore artist who had consigned some copies of her books
to the store
TODAY relates that in a strongly worded Facebook post on Aug. 6,
The Little Drom Store alleged that Gallery & Co, which started
operating more than four years ago, had stopped paying it for the
cultural products and other goods that it supplied and that had
been sold since last November.
It also alleged that it has no access to SGD30,000 worth of its
goods that are still sitting in the shop.
"Ten years into the retail business, we have never felt so . . .
disappointed before, with the team going radio silence on us. We
trusted you, topped up goods promptly, agreed to a credit term and
sponsored gifts for your events," the store said, directing its
comments at the firm, TODAY relays.
The Little Drom Store was founded in 2010 by two graphic designers,
husband-and-wife-team Stanley Tan and Antoinette Wong. They
received an email from Perun Consultants on Aug. 6, informing them
of the closure and asking them to show a proof of debt.
Speaking to TODAY, Mr. Benjamin Thong of Perun Consultants, who is
administering the liquidation, said that By AndCo's directors
placed the firm under a creditors' voluntary liquidation on July
30, and that his team is still in the process of gathering
information.
"As you know, there are many small creditors being affected, so we
are trying to gather from them what is the amount of money that is
owed to them," Mr. Thong told TODAY.
Next, a shareholders' meeting will be held to pass resolutions to
put the company into liquidation before they would call a meeting
with creditors to give further details and formalise the
liquidation process, he said. These will take place over two
weeks.
TODAY relates that Mr. Thong said unsold goods on consignment will
be returned.
However, he could not yet be sure whether sums owed to each
merchant can be recovered, stressing that there is a due process as
stated in the new Insolvency, Restructuring and Dissolution Act,
which came into effect on July 30.
"It really depends on how much we can recover . . . As in any
liquidation, it will be through a process. When there are
sufficient funds to be recovered from the assets of the company,
they will be distributed," TODAY quotes Mr. Thong as saying.
He said that employee salaries would be paid first, along with
satisfying government authorities, before suppliers could be paid.
Gallery & Co was founded by Ms. Yu Yah-Leng and Mr. Arthur Chin,
who are directors of design studio Foreign Policy Design; Mr. Alwyn
Chong, managing director of Luxasia; and hotelier and restaurateur
Loh Lik Peng, founder and director of Unlisted Collection.
It announced its closure on Facebook on Aug. 7 and referred TODAY's
queries to the liquidator.
In the Facebook post, the shop said that its business volume is
unable to support its operating model despite its "best efforts",
adding that it is "hugely dependent on tourism and retail", the
very two sectors severely impacted by the Covid-19 crisis, TODAY
relays.
It sought to assure affected parties by saying that the company's
assets and liabilities will be organised "in the fairest way
possible by a neutral third party". "Please be assured that the
liquidator will process our assets on hand as fairly as possible to
the affected parties," it said.
MARBLE II PTE: Fitch Affirms 'BB' LongTerm IDRs, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Marble II Pte. Ltd.'s Long-Term Foreign-
and Local-Currency Issuer Default Ratings at 'BB'. The Outlook is
Stable. Simultaneously, the agency has affirmed the 'BB' rating on
Marble II's USD500 million 5.3% senior secured notes due 2022,
which are secured by Marble I Pte. Ltd.'s 100% equity stake in
Marble II and an interest reserve account.
The Stable Outlook reflects its view that Marble II's 56%
subsidiary, Mphasis Limited, will continue its solid operating and
financial performance, generate higher cash flow and keep the
group's FFO net leverage stable at around 4.5x.
Fitch expects the coronavirus pandemic's impact on Marble II's
credit profile to be manageable. Marble II's acquisition of an
additional 4% stake in Mphasis in March 2020 was funded by equity
from The Blackstone Group Inc. (A+/Stable).
Strong relationships with key customers, robust deals awarded by
DXC Technology Company (BBB/Stable) and HP Inc. (BBB+/Negative), as
well as access to the portfolio companies of its parent,
Blackstone, support Marble II's business development over the
medium term.
KEY RATING DRIVERS
Slower Revenue Growth Amid COVID-19: Fitch expects Mphasis' revenue
in the financial year ending March 2021 (FY21) to be flat in US
dollar terms, compared with CAGR of 13% in the past three financial
years. Fitch expects Mphasis' customers to reduce their
discretionary IT spending, leading to technology project delays or
cancellations, amid a likely global recession in 2020. Market
research firm IDC expects global spending on IT services in 2020 to
decline by 3%, compared with its previous forecast of 4% growth.
Offsetting the impact of a weaker economic environment is increased
demand for digital transformation as customers strive to keep
businesses afloat when end-customers and employees stay at home
more. Fitch believes that Mphasis is less affected than some Indian
IT industry peers, given its solid relationships with key clients,
opportunities from Blackstone portfolio companies, continued growth
in digital services and new deal wins. In 1QFY21, Mphasis' Direct
International segment was awarded total contract value (TCV) of
USD259 million, up 65% yoy. Another USD216 million deal was signed
in July 2020.
Stable EBITDA Margin: Fitch forecasts EBITDA margin to be stable at
16%-17% (FY20: 16%), supported by a greater proportion of
fixed-price projects, improving operating efficiency and the
adoption of automation. Fixed-price projects rose to 26% of all
projects by value by FYE20 (FYE19: 24%), which helps the company
better manage its cost structure and margin. In addition, the
average billing rate rose to USD93 an hour for onsite application
services in FY20, while offsite billing was stable at USD23 an
hour. Operating costs will fall due to reduced business trips and
discretionary spending amid the pandemic.
Moderate Market Position: Marble II's ratings reflect its mid-tier
position in the global IT services industry and modest cost and
technology advantages over other mid-tier peers. The ratings are
supported by solid long-term relationships with key customers due
to moderate to high switching costs, strong domain expertise in the
banking, financial services and insurance sectors, and stable
revenue, which is buoyed by minimum revenue guarantees from DXC.
The revenue guarantees will expire in October 2021, but Fitch
believes the risk of losing the revenue stream is low as Mphasis
became DXC's strategic partner in 2018, and its work has expanded
substantially in business scope and geographically since then.
Customer Concentration Risk: Mphasis has high customer
concentration risk as the revenue contribution from its top-10
clients, including DXC and HP channel customers, remained at 60% in
FY20, higher than mid-tier peers' average of 40%-50%. Pressure on
DXC's operating performance due to a decline in traditional IT
outsourcing and restructuring highlights client-concentration risk
at Mphasis, as DXC is one of Mphasis' largest accounts.
This is partly offset by Mphasis' strong relationship with top
customers, customer stickiness and the integrated nature of
services it provides to clients. Mphasis has a strong record of
retaining key customers, with an average tenor of 14-15 years,
providing some operating stability.
Strong Free Cash Flow: Fitch expects Mphasis to continue to
generate mid-single-digit margin free cash flow, with low capital
intensity of 1%-1.5%, modest working capital requirements and
rising revenue. Mphasis is likely to maintain a healthy balance
sheet with minimal debt, similar to most Indian IT services
companies. Mphasis only had USD79 million (INR5.7 billion) in
working capital loans against Fitch-defined readily available cash
and cash equivalents of USD238 million (INR17.1 billion), including
mutual-fund investments, at end-March 2020.
Proportional Consolidation, High Leverage: Marble II's debt service
ability depends on dividends from Mphasis. Fitch analyses Marble II
by proportionally consolidating Mphasis due to the substantial
level of minorities. Shareholder returns via dividends or share
buybacks in excess of Fitch's expectation are a risk to Marble II's
deleveraging. In FY19, Marble II paid USD301 million to Blackstone
using proceeds from stake disposals and share buybacks. Fitch
believes management is committed to maintaining the ratings by
keeping to the current net leverage, with a bullet maturity to be
refinanced in 2022.
H1B Visa Ban Impact: Fitch believes that the impact from the US ban
on new H1B visa applications until the end of 2020 is limited to
Indian IT services firms. Only 22% of Mphasis' total headcount
worked onsite at end-March 2020, and less than one-third of the
onsite workers required employment-related visas as Mphasis has
hired local workers over the years. In addition, most Indian IT
services firms have adopted remote working during the pandemic. The
impact of the visa ban is thus minimised as few workers would
travel to the US, even if the ban is lifted.
DERIVATION SUMMARY
Marble II is a holding company that was established to acquire
Mphasis, the operating company. Marble II is the issuing entity and
has no other assets or liabilities except its investment in Mphasis
and its bond. Therefore, Fitch bases Marble II's business profile
solely on Mphasis and proportionally consolidate 56.2% of Mphasis'
financial numbers to Marble II's standalone credit profile, as per
its Corporate Rating Criteria, given the significant level of
minorities.
Marble II's market position is stronger than that of HT Global IT
Solutions Holdings Limited (BB-/Rating Watch Evolving) in terms of
operating scale, domain expertise, especially in the banking,
financial services and insurance sectors, and higher utilisation
rate, in addition to strong customer relationships. Marble II has
lower leverage ratios, as HT Global's balance sheet was weakened by
a large acquisition in 2019. Marble II's FY21 forecast FFO net
leverage is 4.4x, lower than HT Global's 2020 forecast FFO net
leverage of 5.4x under the current capital structure. HT Global
also faces higher refinancing risks for its secured notes due July
2021.
US-based IT services company, Perspecta, Inc. (BB/Stable) has a
slightly stronger business risk profile than Marble II given its
significantly larger scale and a favourable contract mix with a
materially higher share of fixed-price contracts. Fitch downgraded
Perspecta to 'BB' from 'BB+' in February 2020 due to the loss of a
major contract that would lead to higher leverage and lower
financial flexibility. Marble II's business risk is mitigated by
its contracts and strategic partnership with DXC, and the strong
growth in the Direct International segment due to contracts with
Blackstone portfolio companies. Marble II and Perspecta have
similar financial risk profiles as their FY21 forecast net
debt/EBITDA ratios trend towards 3.5x-4.0x.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
- Marble II's revenue to be flat in FY21 (despite a low-single
digit revenue growth in rupee terms at Mphasis, due to depreciation
of the Indian currency) and resume high-single digit percentage
growth from FY22 due to strong growth in the Direct International
segment
- Marble II's operating EBITDA margin to remain stable at around
16%
- Capex/revenue to be around 1%, in line with historical levels
- Marble II to pay dividends of around 30% of net income
- No share buyback in the short term
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An improvement in proportionally consolidated FFO net leverage
to below 3.0x on a sustained basis
- Improved market position, demonstrated by higher profitability
and lower customer concentration. Fitch is unlikely to consider an
upgrade until it can confidently forecast free cash flow at Mphasis
of over USD125 million in light of the company's small size
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Higher shareholder returns than Fitch expects, greater
competition or loss of key customers leading to a deterioration in
proportionally consolidated FFO net leverage to above 5.0x
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Mphasis' liquidity was adequate as of end-June
2020, with reported cash and cash equivalents of USD89 million
(INR6.7 billion). This comfortably covered total debt of USD70
million (INR5.3 billion), which was all short-term obligations. In
addition, the company has substantial investments in open-ended
liquid mutual funds of around USD253 million (INR19.1 billion),
most of which Fitch treated as readily available cash. Marble II
(standalone) had cash and cash equivalents of USD29 million at
end-March 2020, of which USD13 million was restricted, against USD7
million of interest payable within a year.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
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).
*********
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-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
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