/raid1/www/Hosts/bankrupt/TCRAP_Public/201016.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
Friday, October 16, 2020, Vol. 23, No. 208
Headlines
A U S T R A L I A
AFG 2020-1NC: S&P Assigns BB+ (sf) Rating on Class E Notes
ANS.HL TRADING: First Creditors' Meeting Set for Oct. 23
H D SQUARED: Second Creditors' Meeting Set for Oct. 22
HORIZON CONSTRUCTIONS: First Creditors' Meeting Set for Oct. 27
MAKO TIDAL: Second Creditors' Meeting Set for Oct. 22
VIRGIN AUSTRALIA: Paul Scurrah Will Leave After Bain Takeover
C H I N A
BLUEFOCUS INTELLIGENT: Fitch Affirms LT IDRs at B+, Outlook Stable
CHINA EVERGRANDE: Lower Share Sale Darkens Outlook for Cash Dash
FANTASIA HOLDINGS: Fitch Assigns B+ Rating on New USD Unsec. Notes
RADIANCE GROUP: Fitch Affirms IDR at B; Alters Outlook to Positive
I N D I A
A P GOYAL: Ind-Ra Keeps 'D' Bank Loan Rating in Non-Cooperating
ADITYA VIDYUT: ICRA Keeps D Debt Ratings in Not Cooperating
BANSI MALL: CRISIL Lowers Rating on INR250cr LT Loan to B-
BHAGWAN MAHAVEER: Ind-Ra Cuts Loan Rating to 'D', Outlook Stable
COLDMAN LOGISTICS: ICRA Lowers Rating on INR80cr Loans to B+
CUBATIC PROJECTS: CRISIL Lowers Rating on INR18cr Loan to D
D.S. DUCTOFAB: Ind-Ra Moves BB LT Issuer Rating to Non-Cooperating
DEVASHISH POLYMERS: Ind-Ra Withdraws B+/Non-Cooperating Rating
DOLPHIN MARINE: ICRA Reaffirms D Ratings; Removed from INC
DOTT SERVICES: ICRA Lowers Rating on INR100cr Loans to D
EAGLE CONTINENTAL: ICRA Lowers Rating on INR47.5cr Loan to D
EINGUR WIND: CRISIL Assigns B+ Rating to INR3cr Loans
G.M. PENS: ICRA Lowers Rating on INR48.14cr Term Loan to B+
JANHITKARI SEWA: CRISIL Assigns B+ Rating to INR1cr Loan
K.S. SELECTIONS: CRISIL Reaffirms B+ Rating on INR5cr Cash Loan
MOOL CHAND: CRISIL Reaffirms B+ Rating on INR5.5cr Cash Loan
NATIONAL TRADING: CRISIL Reaffirms B+ Rating on INR10cr Loans
OMSHANKAR MILKFOOD: CRISIL Reaffirms B+ Rating on INR15cr Loans
OVERSEAS TRADERS: ICRA Keeps B+ Debt Ratings in Not Cooperating
PARANJAPE SCHEMES: CRISIL Cuts Rating on INR8cr Cash Loan to C
PKM PROJECTS: ICRA Withdraws D Rating on INR40cr Term Loan
POWERTECH ENGINEER: ICRA Lowers Rating on INR76cr ST Loan to D
RADHEY NARAYAN: CRISIL Migrates B- Ratings from Not Cooperating
RAJDEEP BUILDCON: CRISIL Lowers Rating on INR61cr Loan to B
S.S. ENTERPRISES: ICRA Cuts Rating on INR4.0cr LT Loan to B+
SENTINI HOSPITALS: ICRA Lowers Rating on INR12.59cr Loan to B+
SGR (777): CRISIL Hikes Rating on INR5cr Loan to B+
SHYAMJEE AGRO: CRISIL Reaffirms B+ Rating on INR2cr Cash Loan
SRS HEALTHCARE: ICRA Keeps D Debt Ratings in Not Cooperating
UNIQUE MALLS: CRISIL Cuts Rating on INR187.5cr LT Loan to B-
VISHNU PRIYA: ICRA Reaffirms B+ Rating on INR18cr LT Loan
WALKER ESTATE: ICRA Lowers Rating on INR45cr Term Loan to B+
J A P A N
TAKATA CORP: Court Tosses Chapter 11 Air Bag Claims
N E W Z E A L A N D
AVANTI RMBS 2020-1: Fitch Assigns B+sf Rating on Class F Debt
TICKET ROCKET: Crusaders and Hurricanes Sue over Firm's Collapse
S I N G A P O R E
BM MOBILITY: To be Delisted from Main Board on Nov. 12
KS ENERGY: CEO, Directors Quit as Firm Goes Under JM
SUNMOON FOOD: Suspends Trading of Shares Amid Parent's Bankruptcy
T H A I L A N D
THAI AIRWAYS: Offers Leave, Early Retirement to Workers
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A U S T R A L I A
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AFG 2020-1NC: S&P Assigns BB+ (sf) Rating on Class E Notes
----------------------------------------------------------
S&P Global Ratings assigned its ratings to seven of the eight
classes of nonconforming and prime residential mortgage-backed
securities (RMBS) issued by Perpetual Corporate Trust Ltd. as
trustee for AFG 2020-1NC Trust in respect of Series 2020-1NC. This
is the first rated RMBS transaction with nonconforming loans
originated by AFG Securities Pty Ltd. (AFGS).
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including its view that the credit support is sufficient
to withstand the stresses it applies. The credit support for the
rated notes comprises note subordination and lenders' mortgage
insurance on 9.9% of the portfolio.
-- The availability of a retention amount, amortization amount,
and yield reserve, which will all be funded by excess spread, but
at various stages of the transaction's term. They will have
separate functions and timeframes, including reducing the balance
of senior notes, reducing the balance of the most subordinated
notes, and paying senior expenses and interest shortfalls on the
rated notes
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity facility
equal to 1.5% of the aggregate outstanding amount of the notes,
subject to a floor of A$750,000, and the principal draw function
are sufficient to ensure timely payment of interest.
-- The extraordinary expense reserve of A$150,000 funded by AFG
Securities Pty Ltd. on the closing date to meet extraordinary
expenses. The reserve is to be topped up from excess spread, if
any, to the extent it has been drawn.
-- The counterparty exposure to National Australia Bank Ltd. as
liquidity facility provider and bank account provider. The
transaction documents for the liquidity facility and bank account
include downgrade language consistent with S&P Global Ratings'
counterparty criteria.
-- That loss of income for borrowers in the coming months due to
the effects of COVID-19 might put upward pressure on mortgage
arrears over the longer term. S&P said, "We recently updated our
outlook assumptions for Australian RMBS in response to changing
macroeconomic conditions as a result of the COVID-19 outbreak. We
have also applied a range of additional stresses in our analysis to
assess the rated notes' sensitivity to liquidity stress and the
possibility of higher arrears." As of Oct. 6, 2020, borrowers with
COVID-19 related hardship arrangements make up 4.81% of the closing
pool balance.
S&P Global Ratings acknowledges a high degree of uncertainty about
the evolution of the coronavirus pandemic. The current consensus
among health experts is that COVID-19 will remain a threat until a
vaccine or effective treatment becomes widely available, which
could be around mid-2021. S&P said, "We are using this assumption
in assessing the economic and credit implications associated with
the pandemic. As the situation evolves, we will update our
assumptions and estimates accordingly."
RATINGS ASSIGNED
AFG 2020-1NC Trust in respect of Series 2020-1NC
Class Rating Amount (mil. A$)
A1-S AAA (sf) 137.00
A1-L AAA (sf) 225.50
A2 AAA (sf) 92.75
B AA (sf) 20.25
C A (sf) 9.75
D BBB+ (sf) 6.00
E BB+ (sf) 3.75
F NR 5.00
NR--Not rated.
ANS.HL TRADING: First Creditors' Meeting Set for Oct. 23
--------------------------------------------------------
A first meeting of the creditors in the proceedings of ANS.HL
Trading Pty Ltd ATF ANS.HL Trading Unit Trust, trading as The
Ironing Shop (Ascot) and The Ironing Shop (Kangaroo Point), will be
held on Oct. 23, 2020, at 10:30 a.m. at Level 18, 145 Ann Street,
in Brisbane, Queensland.
Cameron Crichton and Gerard McCann of Grant Thornton were appointed
as administrators of ANS.HL Trading on Oct. 13, 2020.
H D SQUARED: Second Creditors' Meeting Set for Oct. 22
------------------------------------------------------
A second meeting of creditors in the proceedings of H D Squared
Developments Pty Ltd has been set for Oct. 22, 2020, at 10:00 a.m.
via electronic means.
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 Oct. 21, 2020, at 5:00 p.m.
Steven Arthur Gladman of Hall Chadwick was appointed as
administrator of H D Squared on Sept. 16, 2020.
HORIZON CONSTRUCTIONS: First Creditors' Meeting Set for Oct. 27
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Horizon
Constructions Pty Ltd will be held on Oct. 27, 2020, at 10:30 a.m.
via a virtual meeting only.
Giovanni Maurizio Carrello of BRI Ferrier Western Australia was
appointed as administrator of Horizon Constructions on Oct. 15,
2020.
MAKO TIDAL: Second Creditors' Meeting Set for Oct. 22
-----------------------------------------------------
A second meeting of creditors in the proceedings of MAKO Tidal
Turbines Pty Ltd has been set for Oct. 22, 2020, at 10:00 a.m. at
the offices of Integra Restructuring & Insolvency, Level 17/9
Castlereagh Street, in Sydney, NSW, and via Zoom Meeting.
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 Oct. 21, 2020, at 4:00 p.m.
Adam Bernard Preiner of Integra Restructuring & Insolvency was
appointed as administrator of MAKO Tidal on Sept. 17, 2020.
VIRGIN AUSTRALIA: Paul Scurrah Will Leave After Bain Takeover
-------------------------------------------------------------
Patrick Hatch at The Sydney Morning Herald reports that Virgin
Australia's chief executive Paul Scurrah will depart the company
and be replaced by former Jetstar boss Jayne Hrdlicka after falling
out with the airline's new private equity owner Bain Capital over
its plan to take the carrier downmarket.
According to the report, the change in leadership has enraged
unions representing Virgin's workforce, which backed Mr. Scurrah
and his vision to maintain the airline as a full-service carrier
competing head-to-head with Qantas.
Bain said publicly in June it supported Mr Scurrah's plan, but
sources close to the company said a schism emerged in recent months
when the private equity firm reverted to its earlier plan to make
Virgin a "hybrid carrier", positioned somewhere between Qantas and
Jetstar, SMH relates.
SMH says Virgin's administrators Deloitte, appointed to run the
Virgin sale after it collapsed under debts of $6.8 billion in
April, confirmed on Oct. 15 Mr. Scurrah will stand down when Virgin
is formally handed over to Bain in early November.
Bain confirmed it will replace him with Ms. Hrdlicka, who was a
Bain executive prior to joining the Qantas group in 2010 and
advised the private equity firm on its bid for Virgin.
Mr. Scurrah's departure was imminent on Oct. 14, as revealed by The
Sydney Morning Herald and The Age, with sources saying he was
locked in a meeting with Bain negotiating his exit.
Mr. Scurrah joined Virgin in early 2019 and was engineering a
turnaround plan to improve the airline's poor financial performance
when the COVID-19 pandemic forced it to ground its fleet and pushed
it into insolvency owing $6.8 billion.
He said it had been a "great privilege" to lead the airline for the
past 18 months, even through "the most challenging time in aviation
history".
"I have continued to be so proud of the way my team and our entire
organisation has fought to save this airline and to keep
competition alive and well in Australia," the report quotes
Mr. Scurrah as saying in a statement on Oct. 15.
"We have succeeded in not just ensuring the future of the company,
but also reset the business to ensure it is well placed to deliver
for Bain Capital for many years to come."
SMH relates that Bain Capital managing director Mike Murphy paid
credit to Mr. Scurrah's leadership and personal commitment in
guiding Virgin through its insolvency, but said that Virgin needed
a "different form of leadership to survive in the long term".
"We need a hands-on CEO with deep aviation, commercial, operational
and transformation experience," Mr. Murphy said. "Jayne is the
right person to take the business forward."
According to the report, Virgin's unions have long had
apprehensions about Ms. Hrdlicka due to her budget airline
background and some residual ill-will stemming from her time at
Qantas during a period of toxic relations with unions.
Ms. Hrdlicka said she was delighted to join Virgin and appreciated
its "unique culture and I want to protect and build on it."
"I am determined that Virgin Australia re-invigorates its strong
brand and its passion for customer service, while embracing the
diversity, talent and strength of its people," she said.
SMH says Mr. Scurrah's impending exit on Oct. 14 heightened fears
among Virgin's workforce that Bain would renege on earlier
assurances about the airline's size and direction.
SMH adds that the Transport Workers Union said it would suspend
wage negotiations with Bain until it clarified its intentions for
Virgin's future.
Deloitte administrator Vaughan Strawbridge said he had reaffirmed
with Bain that Virgin Australia would not be repositioned as a
low-cost carrier.
"Virgin Australia will be a 'hybrid' airline, offering great value
to customers by delivering a distinctive Virgin experience at
competitive prices," SMH quotes Mr. Strawbridge as saying. "This
will appeal to the full spectrum of travellers, from premium
corporate through to more budget-focused customers."
About Virgin Australia
Brisbane, Queensland-based Virgin Australia is Australia's
second-largest airline. It commenced services in 2000 as Virgin
Blue, wholly owned by the Virgin Group.
Virgin Australia Holdings Ltd. was the first Asian airline to
succumb to the challenges of the coronavirus pandemic. The airline
carrier collapsed into voluntary administration in April 2020.
Richard John Hughes, John Greig, Vaughan Strawbridge and Sal Algeri
of Deloitte were appointed as administrators of Virgin Australia,
et al., on April 20. The administrators were tasked to restructure
and find new owners for the airline. The airline's frequent flyer
program is a separate company and is not in administration.
At the time of its collapse, Virgin Australia continued to operate
some flights for essential workers, freight and the repatriation of
Australians.
The company owes AUD6.8 billion to lenders, bondholders, aircraft
lessors, trade creditors and employees.
On April 29, 2020, Virgin Australia and more than 30 of its
affiliates filed petitions pursuant to Chapter 15 of the Bankruptcy
Code in the U.S. Bankruptcy Court for the Southern District of New
York. Vaughan Strawbridge, Richard Hughes, John Greig, Salvatore
Algeri were tapped as foreign representatives. Renee M. Dailey,
Esq. of Akin Gump Strauss Hauer & Feld LLP serves as counsel to the
Foreign Representatives.
In June 2020, administrator Deloitte agreed to sell the airline
carrier to American private equity giant Bain Capital. The size of
the bid for the airline has not been revealed.
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C H I N A
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BLUEFOCUS INTELLIGENT: Fitch Affirms LT IDRs at B+, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed China-based BlueFocus Intelligent
Communications Group Co., Ltd.'s Long-Term Foreign- and
Local-Currency Issuer Default Ratings (IDR) at 'B+'. The Outlook is
Stable.
The Stable Outlook reflects Fitch's expectation that BlueFocus will
have sufficient rating headroom as Fitch forecasts 2020-2021 FFO
leverage of 1.8x-2.2x, well below the threshold of 5.0x above which
Fitch will take negative rating action. Fitch expects the company's
domestic advertising and outbound businesses to be resilient amid
lower advertising budgets due to the coronavirus pandemic, which
will more than offset a decline in revenue from its traditional
public relations (PR) and overseas advertising businesses. However,
the company's small EBITDA scale and reliance on short-term loans
continue to constrain its IDRs at 'B+'.
KEY RATING DRIVERS
Resilience Against COVID-19: Fitch expects BlueFocus' revenue to
rise by a robust 23%-24% in 2020-2021 (2019: 22%) despite
advertisers' generally lower budgets amid the pandemic. The
company's diversified customer base, and higher spending from
customers in online games and e-commerce industries will help it
counter shrinking demand in travelling, hospitality and automotive
sectors. BlueFocus' 1H20 advertising revenue from online games and
e-commerce rose by 75% and 47% yoy, respectively, accounting for
51% and 16% of total revenue.
However, Fitch expects revenue from its PR and overseas advertising
businesses to decline by 7%-9% and 17%-18% in 2020, respectively.
Offline PR events were affected by the slowdown in business
travelling in China in 1H20, although the situation has started to
ease from 2H20. Fitch expects the overseas advertising segment,
which accounts for 7%-8% of group revenue, to face significant
disruptions in 2020 due to the continued negative impact of the
pandemic on the industry.
EBITDA Margin to Decline: Fitch expects BlueFocus' operating EBITDA
margin to narrow to 2.3%-2.4% in 2020-2021 (2019: 3.8%), driven by
margin dilution on higher contribution from domestic advertising
and outbound businesses, which have lower margins relative to the
PR business. Domestic advertising margins are likely to be squeezed
by the continued stiff competition in China's advertising industry
and the stronger bargaining power of leading online media
platforms. Outbound revenue has gross margins of only 1.3%-1.5%,
relative to domestic PR and advertising's gross margin of 17%-20%.
Adequate Rating Headroom: Fitch expects BlueFocus' 2020-2021 FFO
leverage and FFO interest coverage to be 1.8x-2.2x and 4.8x-5.7x,
respectively (2019: 2.3x and 6.5x). The company has sufficient
rating headroom as its leverage is well below its negative
threshold of 5.0x, while FFO interest coverage is above its
negative threshold of 2.5x. The company improved its leverage by
converting most of its CNY1.4 billion in convertible bonds into
equity by end-2019. Fitch estimates gross debt will be around
CNY1.5 billion-1.6 billion in the medium term.
Reliance on Short-Term Loans: BlueFocus' ratings reflect its
concentrated funding structure. The company is highly dependent on
rolling over short-term bank loans to fund working capital.
Short-term loans accounted for 80% of total debt at end-1H20. Fitch
believes liquidity risk is manageable given the company's
longstanding good relationships with domestic banks. Fitch expects
the company to have modestly positive free cash flow (FCF) in the
medium term due to low capex and disciplined working-capital
management.
Technological Improvement to Drive Growth: The growth in China's
advertising spending is likely to slow in the next several years in
light of the macroeconomic challenges and slower consumer spending
caused by the coronavirus pandemic. However, Fitch believes
advertising agencies with strong capability in programmatic buying
technology will gain market share in China's competitive
advertising industry. BlueFocus will benefit because of its leading
in-house capability to allow the use of automated technology to buy
advertisements.
DERIVATION SUMMARY
BlueFocus' smaller EBITDA scale and reliance on short-term loans
continue to weigh on the ratings and drive its much lower ratings
than that of leading global advertising holding companies with
investment-grade ratings, such as Interpublic Group of Companies,
Inc. (IPG, BBB+/Negative). However, BlueFocus has a better
financial risk profile with Fitch-forecast 2020 FFO leverage of
2.2x, lower than IPG's 3.1x. IPG's Negative Outlook incorporates
the significant uncertainty over advertising markets' near-term
performance in light of the coronavirus pandemic and a lack of
rating headroom at the current level to accommodate the anticipated
disruption to IPG's operating model.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenue growth of 23%-24% in 2020-2021 (2019: 22%)
- Operating EBITDA margin to narrow to 2.3%-2.4% in 2020-2021
(2019: 3.8%)
- Annual capex at around CNY80 million-100 million in 2020-2021
- Dividend payout ratio of around 20% in 2020-2021
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade is not probable without meaningfully larger EBITDA
scale, stronger FCF generation and reduced competition in China's
advertising agency industry
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Substantial weakening of the market positions of its key
products and services
- Significant M&A that negatively affects the operations or the
business profile
- Sustained negative cash flow from operations
- FFO leverage sustained above 5.0x (2020-2021 forecast:
1.8x-2.2x), which could result from weaker EBITDA generation or an
aggressive shareholder return policy
- FFO interest coverage sustained below 2.5x (2020-2021 forecast:
4.8x-5.7x)
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: BlueFocus had readily available cash of CNY1.8
billion and committed unutilised credit facilities of CNY100
million and CAD58 million (CNY290 million) at end-1H20, sufficient
to cover total short-term debt of CNY1.7 billion. Fitch believes
continued support from local banks should help BlueFocus to manage
its liquidity headroom.
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
BlueFocus has an ESG Relevance Score of '4' for Financial
Transparency due to some failings in segment analysis for financial
reporting, which has a negative impact on the credit profile and is
relevant to the ratings in conjunction with other factors.
Fitch revised BlueFocus' ESG Relevance Score for Management
Strategy to '3' from '4' as the company has migrated smoothly to a
leading Chinese digital-advertising holding company from a
traditional PR company, evident from revenue growth that is above
the industry average, while remaining disciplined in
working-capital management.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
CHINA EVERGRANDE: Lower Share Sale Darkens Outlook for Cash Dash
----------------------------------------------------------------
Reuters reports that China Evergrande Group, the country's most
indebted property developer, on Oct. 14 said it has raised $555
million in a secondary share sale, settling for half its initial
target and sparking a 16% drop in its share price.
To help pay debt, the firm sold 260.65 million shares at HK$16.50
($2.13) each -- the low end of a price range flagged by its bankers
in a term sheet when the deal launched on Oct. 13, Reuters says.
According to the report, Evergrande has been scrambling to raise
cash as China's government tackles what it considers excessive
borrowing in the real estate development sector with new debt-ratio
caps.
Since August, the developer has raised $3 billion in pre-IPO
funding for a property management unit, given a 30% discount on
properties to boost sales, and reached a deal to stop investors
asking it to repurchase their $12.66 billion holding of another of
its units. This week, it conducted an onshore bond sale, the report
notes.
The Hong Kong-listed company had planned to sell 490 million shares
at HK$16.50 to HK$17.20 each, to raise $1.04 billion to $1.087
billion, the term sheet showed, Reuters relays.
"The market is particularly concerned about high-gearing property
developers, so even though the share discount this time was quite
big, investor appetite was cold," Reuters quotes Conita Hung,
investment strategy director at Tiger Faith Asset Management, as
saying.
The set price was a 14.7% discount to Evergrande's closing price on
Oct. 12 of HK$19.34. After the announcement, Evergrande shares were
trading at HK$16.24 as on Oct. 14, the report notes.
According to Reuters, Hung said while a liquidity crunch at
Evergrande was unlikely, the market needs to see how else the firm
is going to raise cash because it has already tapped several
channels.
People with direct knowledge of the matter said Evergrande often
set "ambitious" targets, and that investors in the deal were
already familiar with the developer and not worried the firm would
become insolvent, Reuters relays.
"It's too well connected," said one of the people, who were not
authorised to speak with media and so declined to be identified,
according to Reuters.
Reuters says market concern has mounted in recent weeks that
Evergrande -- whose borrowings totalled CNY835.5 billion ($123.93
billion) at June-end -- was headed for a cash crush if it could not
get government approval for a backdoor listing in Shenzhen that has
languished for four years.
But analysts including those at S&P Global Ratings said they did
not see a risk of default as the firm has various fund-raising
channels, including as much as CNY800 billion in sales this year,
domestic bond issuance and spin-off plans, Reuters relates.
Reuters says CGS-CIMB Securities forecast Evergrande's net gearing
to fall below 100% in 2021 from 200% in the first half of 2020.
After completion of the subscription, Chairman Hui Ka Yan's
interest in Evergrande will fall to 70.32% from 71.72%.
Evergrande said in a stock-exchange filing the share sale would
enhance its financial position and net asset base for long-term
development and growth, Reuters adds.
About China Evergrande
China Evergrande Group is an integrated residential property
developer. The Company, through its subsidiaries, operates in
property development, investment, management, finance, internet,
health, culture, and tourism markets.
As reported in the Troubled Company Reporter-Asia Pacific on Sept.
17, 2020, Fitch Ratings has affirmed the Long-Term Foreign-Currency
Issuer Default Ratings of China Evergrande Group and subsidiary
Hengda Real Estate Group Co., Ltd at 'B+' with Stable Outlooks. At
the same time, Fitch has affirmed Evergrande's senior unsecured
rating at 'B' with a Recovery Rating of 'RR5'. Fitch has also
assigned Hengda's wholly owned offshore financing platform, Tianji
Holdings Limited, a Long-Term IDR of 'B+' with Stable Outlook and a
senior unsecured rating of 'B' with a Recovery Rating of 'RR5'.
The Tianji-guaranteed senior unsecured notes issued by Scenery
Journey Limited have been downgraded to 'B' with a Recovery Rating
of 'RR5', from 'B+' with a Recovery Rating of 'RR4', to reflect
Fitch's revised rating approach, whereby the bond rating is linked
to Tianji, the guarantor, rather than Hengda, the keepwell
provider. Fitch affirmed Hengda's 'B+' senior unsecured rating with
a Recovery Rating of 'RR4' and then withdrew the rating because the
senior unsecured rating was no longer relevant to the agency's
coverage.
The affirmation of Evergrande's and Hengda's IDRs reflects the
group's large business scale and diversification, but higher
leverage and weaker liquidity than that of peers. The Stable
Outlook reflects the expectation that the Evergrande will be able
to deleverage after 2020, with improving contracted sales and
collection ratio, as well as its stated intention to reduce land
acquisitions. In addition, the Stable Outlook also reflects its
expectation that Evergrande will be able to negotiate with Hengda's
strategic investors not to redeem the CNY130 billion investment in
early 2021.
On Sept. 24, 2020, S&P Global Ratings revised the outlooks on China
Evergrande Group, the company's property arm Hengda Real Estate
Group Co. Ltd., and offshore financial platform Tianji Holding Ltd.
to negative from stable. At the same time, S&P affirmed its 'B+'
long-term issuer credit ratings on the three companies and its 'B'
long-term issue rating on the U.S. dollar notes issued by
Evergrande and guaranteed by Tianji.
FANTASIA HOLDINGS: Fitch Assigns B+ Rating on New USD Unsec. Notes
------------------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Fantasia
Holdings Group Co., Limited's (B+/Stable) proposed US-dollar senior
unsecured notes a 'B+' rating with a Recovery Rating of 'RR4'. The
proposed notes are rated at the same level as Fantasia's senior
unsecured rating because they will constitute its direct and senior
unsecured obligations. The company plans to use the net proceeds
from the proposed issue to refinance existing debt and for general
corporate purposes.
Fantasia's ratings are supported by the company's moderate
leverage, quality land bank and healthy margin, though these are
somewhat offset by a low churn rate. The ratings are constrained by
Fantasia's small scale, with attributable contracted sales of
CNY26.8 billion in 2019.
KEY RATING DRIVERS
Stable Leverage: Fantasia's 1H20 leverage, measured by net
debt/adjusted inventory, was stable at 45%. Fitch expects leverage
to remain at a similar level in 2020-2021, despite its forecast
that the company will spend around 40% of its sales proceeds on
land acquisitions, higher than the 2017-2019 average of 35%. This
should support contracted sales growth for the next two years
before its pipeline of urban redevelopment projects (URP) begins to
contribute significantly to sales from 2021-2022.
Quality Land Bank: Fantasia had a total land bank of 17.3 million
square metres, equivalent to saleable resources of around CNY200
billion, at end-2019. This covered around four years of development
based on the company's sales target of CNY45 billion for 2020.
Fantasia had 46 URPs with total planned gross floor area of 19.5
million square metres, equivalent to saleable resources of around
CNY380 billion. Tier one and two cities accounted for over 90% of
its land bank.
Fitch expects Fantasia's average selling price to rise, as it has
been increasingly participating in public auctions for land parcels
in prime tier one and two city locations since 2019. This is a
change from its previous policy, when it acquired land mainly
through M&A; this was a cheaper option, but required a longer
development period with more complications. The land mostly
comprised large parcels in less prime areas of the same tier one
and two cities.
Healthy Margin, Low Churn Rate: Fantasia's gross profit margin
increased to 34% in 1H20 due to the booking of certain high-margin
projects, but Fitch expects the gross profit margin to remain at
around 28%-30% for the full year (2019: 28%). Fitch forecasts the
EBITDA margin to be stable or to narrow slightly over the next few
years due to a lower gross profit margin of 25%-28% on land
acquired from public auctions in 2020. Thereafter, management
believes there is room for margin improvement, driven by URPs,
which have higher margins of over 50%.
Fitch expects Fantasia's churn rate to improve gradually, but
remain lower than that of peers. Fantasia had a low churn rate of
0.70x in 2019, as measured by attributable contracted sales/total
debt, even though it rose from 0.55x in 2018, because of its
involvement in URPs and its earlier strategy of acquiring large
plots of land through M&A, which typically require a longer
development time.
Colour Life Proportionally Consolidated: Fitch proportionally
consolidates Fantasia's 52% interest in Colour Life Services Group
Co., Limited, as the cash flow is not directly accessible to
Fantasia due to Colour Life's listed status. Fitch expects Fantasia
to receive CNY65 million in dividends declared in 2019 and most of
Fantasia's non-development property (DP) EBITDA is from Colour
Life. Fitch forecasts Colour Life's EBITDA will rise steadily,
driven by increasing revenue-bearing gross floor area. Fantasia had
a non-DP EBITDA interest coverage ratio of 0.19x at end-2019 (2018:
0.20x).
Ratings Constrained by Scale: Fantasia's total contracted sales
rose by 47% yoy in 9M20 to CNY32.7 billion, or 73% of its annual
target, and management believes Fantasia is on track to meet its
full-year target. However, with an attributable ratio of around
70%, Fitch expects Fantasia's attributable contracted sales to
remain lower than that of most 'B+' peers' CNY40 billion-50
billion.
DERIVATION SUMMARY
Fantasia can be compared with 'B+' peers, such as Helenbergh China
Holdings Limited (B+/Stable), Hong Kong JunFa Property Company
Limited (B+/Stable), Hong Yang Group Company Limited (B+/Stable)
and Sinic Holdings (Group) Company Limited (B+/Stable).
Fantasia's 44% leverage is at a similar level to that of most
peers, except for Sinic, which had significantly higher leverage of
57%, but also higher attributable contracted sales of CNY45 billion
and a wider EBITDA margin of 32%.
Fantasia's attributable contracted sales of CNY27 billion are lower
than most peers' CNY40 billion-50 billion, except for Hong Yang,
which had similar attributable contracted sales of CNY30 billion.
Fantasia's EBITDA margin of 27% is within the 17%-32% range of
peers, but its churn rate, or contracted sales/gross debt, of 0.7x
was lower than the 0.9x-1.7x of peers due to its focus on
long-cycle URPs.
Fantasia has similar land bank quality and geographical
diversification to that of most peers, except for Helenbergh, which
has significant exposure to tier three cities, and Junfa, which
focuses on Kunming. Fantasia focuses on tier one and two cities,
with some national diversification, while its non-DP EBITDA
interest coverage of 0.3x is higher than Sinic's 0.1x and better
than that of Helenbergh, which does not have coverage.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales growth of 7% and 10% in 2020 and
2021, respectively
- EBITDA margin (excluding capitalised interest) of around 27% in
2020 and 2021 (2019: 27%)
- Cash collection rate of 87% and 89% in 2020 and 2021,
respectively (2019: 86%; 2018: 91%)
- Land purchase cost of 43% and 40% of sales proceeds in 2020 and
2021, respectively (2019: 35%)
- Construction costs of 32% of sales proceeds in 2020 and 2021
(2019: 38%)
Key Recovery Rating Assumptions
The recovery analysis assumes that Fantasia would be liquidated in
a bankruptcy.
Fitch assumes 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 a sale or liquidation
process conducted during a bankruptcy or insolvency proceedings and
distributed to creditors.
- 60% advance rate applied to excess cash (CNY12,258 million)
- Available cash of CNY18,956 million (excluding Colour Life:
CNY1,845 million)
- Minimum cash of CNY6,699 million, or three months of sales,
which is more than trade payables of CNY4,564 million
- 100% advance rate applied to restricted cash (excluding Colour
Life: CNY91 million)
- 75% advance rate applied to net inventory, given an EBITDA
margin of around 25%-30%
- 70% advance rate applied to trade receivables (excluding Colour
Life: CNY658 million)
- 60% advance rate applied to property, plant and equipment
(excluding Colour Life: CNY203 million)
- 40% advance rate applied to financial investments (debt
instruments of CNY1,420 million)
- 30% advance rate applied to investment properties, given a 2%
rental yield on completed investment properties (excluding Colour
Life: CNY155 million)
The CNY1,522 million recovery value of Fantasia's stake in Colour
Life is based on the going-concern approach, which implies a 42%
discount to Colour Life's closing price on July 6, 2020.
The Recovery Rating is capped at 'RR4' because under Fitch's
Country-Specific Treatment of Recovery Ratings Rating Criteria,
China falls into Group D of creditor friendliness, and instrument
ratings of issuers with assets in the group are subject to a soft
cap at the issuer's Long-Term Issuer Default Rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Significant increase in attributable contracted sales
- Leverage, measured by net debt/adjusted inventory, sustained at
below 40%
- EBITDA margin (excluding capitalised interest) sustained at
above 25%
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Leverage, measured by net debt/adjusted inventory, at above 50%
for a sustained period
- EBITDA margin (excluding capitalised interest) at below 20% for
a sustained period
- Sales efficiency, measured by attributable contracted
sales/gross debt, at below 0.6x for a sustained period
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fantasia had CNY20.0 billion of available cash
and CNY11.0 billion of short-term debt at end-2019, resulting in an
available cash/short-term debt ratio of 1.8x. The company also had
CNY34 billion of undrawn credit facilities. Fantasia issued USD750
million in offshore bonds in 2020, more than covering offshore
maturities of around USD400 million for the year. It is applying
for an additional quota to refinance 2021 maturities.
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
Fantasia has an ESG Relevance Score of 4 for Waste & Hazardous
Materials Management; Ecological Impacts due to its exposure to
redevelopment projects, which has a positive impact on the credit
profile, and is relevant to the rating in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
RADIANCE GROUP: Fitch Affirms IDR at B; Alters Outlook to Positive
------------------------------------------------------------------
Fitch Ratings has revised the Outlook on China-based homebuilder
Radiance Group Co., Ltd.'s Long-Term Foreign-Currency Issuer
Default Rating (IDR) to Positive from Stable and affirmed its IDR
and senior unsecured rating at 'B'. The agency has also affirmed
the rating on Radiance's outstanding US dollar senior unsecured
notes at 'B' with a Recovery Rating of 'RR4'.
The Positive Outlook reflects its view that Radiance's leverage -
measured by net debt/adjusted inventory, with joint ventures (JV)
and associates proportionately consolidated - will improve to below
55% over the next 12-18 months. Fitch believes its sufficient land
bank and low non-controlling interest will provide flexibility in
land acquisition and leave room for further deleveraging.
Radiance's debt structure has also improved, with decreasing
reliance on trust and non-bank financial institution (NBFI) loans.
Furthermore, Fitch expects Radiance's disclosure of operational
data, which was considered a rating constraint, to improve if its
planned IPO takes place.
KEY RATING DRIVERS
Deleveraging on Track: Fitch believes Radiance's leverage will
improve to below 55% - its positive leverage trigger - with robust
sales collection and management's intention to control land
acquisition expenditure. The company is budgeting 40%-50% of sales
proceeds for land acquisition in 2020 and 2021, towards the lower
end of its targeted range as deleveraging is one of its priorities.
This is also in line with the guidance of regulators. The company
spent 48% of sales proceeds to purchase land in 1H20.
The company submitted an application for the Hong Kong Exchange
listing in March 2020 and completed its IPO hearing on September
30. Fitch has not considered any IPO proceeds in its forecast,
although Radiance's leverage would be further reduced to around 50%
by end-2020 if the IPO is completed this year. Fitch also thinks
the company's disclosure of operational data will improve if it is
listed.
Diversified and Sufficient Land Bank: Radiance's land bank focus on
provincial capital cities and municipalities should support
sustainable contracted sales growth and flexibility in land
acquisition, leaving room for deleveraging. Radiance had 160
projects across 31 cities in south, south-west, north-west and east
China, as well as the Yangtze River Delta and the Bohai Rim, at
end-7M20. Its land bank gross floor area (GFA), including total GFA
from consolidated projects and attributable GFA from JVs, of 29.1
million sq m as of 7M20 was sufficient for three years of
development.
Low Non-Controlling Interest: Radiance's non-controlling interest
(NCI) accounted for about 20% of total equity, which is low among
peers. This provides financial flexibility as homebuilders with
lower NCI can dispose of stakes in projects to reduce leverage.
Fitch regards NCI as a company's future obligation it would have to
repay when projects are completed. Therefore, Fitch believes
Radiance's cash flow and leverage face lower pressure from NCI than
homebuilders that have higher NCI.
Improved Debt Structure: Radiance reduced its reliance on trust and
NBFI loans and decreased short-term debt as a percentage of the
total. Trust and NBFI loans fell to 21% of total borrowings by
end-1H20 from 42% in 2018, while bank loans increased to 44% of the
total from 26%. Short-term debt (including bonds puttable in one
year) also decreased to 37% of total debt in 1H20 from 54% in 2018.
Fitch believes this is sustainable in light of management's
commitment towards further improvement.
Margin Thinner but Stabilising: Fitch expects Radiance's EBITDA
margin (excluding capitalised interest) to stay within 20%-25% in
2020 and 2021, which will be supported by the 24%-26% gross profit
margin of unrecognised sales at end-1H20.
Gross profit margin for Radiance's property-development business
decreased to 23% in 2019 from 32% in 2018, mainly affected by
revenue recognition of projects in Nanjing and Shanghai where the
approved average selling prices were lower than the company's
expectations due to tighter pricing control policies in the two
cities. The EBITDA margin had a smaller drop to 24%, as selling,
general and administrative expenses made up a smaller portion of
revenue on lower sales growth.
DERIVATION SUMMARY
Radiance's ratings are supported by its large sales scale and
diversified land bank. Its attributable sales of around CNY60
billion is comparable with that of 'BB' peers. Its land bank
diversification and quality are also comparable with those of
higher-rated peers, such as Zhenro Properties Group Limited
(B+/Stable) and Yuzhou Group Holdings Company Limited (BB-/Stable).
Fitch thinks Radiance's credit profile will be comparable with that
of 'B+' peers if the company can sustain a leverage of below 55%.
Radiance's sales scale is larger than that of Hong Kong JunFa
Property Company Limited (B+/Stable) and it has a more diversified
land bank. Up to 80% of Junfa's land bank is located in Kunming and
another 10%-15% in the rest of Yunnan province, although
concentration risk is mitigated by the company's strong
relationship with the local government and expertise accumulated
over 20 years of operations. Junfa's rising recurring
non-development property (DP) EBITDA from its large-scale wholesale
trade centre in Kunming contributes to non-DP EBITDA interest cover
of over 0.5x, while that of Radiance is less than 0.1x. Fitch
thinks Radiance will be comparable with Junfa - whose leverage is
below 50% - with the expected deleveraging.
Radiance has similar sales scale and land bank quality as Zhenro.
The two companies also have comparable sales efficiency and EBITDA
margins. Zhenro's leverage of 45%-50% is lower than that of
Radiance, but Zhenro's capital contribution from NCI (NCI/total
equity: 45%) is much higher than that of Radiance, which will put
more pressure on future cash flow and leverage.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales increasing by around 10% in 2020
and 5%-10% thereafter (2019: 8%)
- Sales collection rate of around 85% in 2020-2021 (2019: 85%)
- Land replenishment rate at 1.1x in 2020 and 2021 to sustain a
land-bank life of at least three years (2019: 1.3x)
- Land premium to represent 45%-50% of sales receipts in 2020 and
2021 (2019: 57%)
- Funding costs at 7.5% for new borrowings
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that Radiance would be liquidated in
a bankruptcy rather than reorganised as a going-concern.
Fitch has assumed a 10% administrative claim.
The liquidation estimate reflects Fitch's view of the value of
balance-sheet assets that can be realised in a sale or liquidation
process conducted during a bankruptcy or insolvency proceeding and
distributed to creditors.
Cash balance is adjusted such that only cash in excess of the
higher of accounts payable and three months of contracted sales is
factored in
30% haircut to net inventory in light of Radiance's healthy EBITDA
margin of 20%-25%
45% haircut to investment properties after considering rental yield
of Radiance's investment-property assets and location of those
assets
30% haircut to accounts receivable
0% haircut to restricted cash
Based on its calculation of the adjusted liquidation value after
administrative claims, Fitch estimates the recovery rate of
Radiance's offshore senior unsecured debt to be within the 'RR4'
recovery range.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Leverage, measured by net debt/adjusted inventory with JV and
associates proportionately consolidated, sustained below 55%
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Failure to reach its Positive Outlook guidelines would lead to
the Outlook reverting to Stable.
LIQUIDITY AND DEBT STRUCTURE
Reliant on Refinancing: Radiance had unrestricted cash of CNY13.2
billion (excluding customer deposits at regulatory accounts) at
end-1H20, which was insufficient to fully cover CNY17.2 billion in
short-term debt. Domestic corporate bonds made up CNY7.57 billion
of the short-term debt, including CNY4.72 billion in bonds that are
puttable in one year. Management expects 50%-70% of puttable
bondholders will continue to hold these bonds. Radiance will repay
the puttable portion and the CNY2.85 billion in domestic bonds due
with new domestic bond issuance in 4Q20 and 1Q21. Fitch thinks the
company has adequate access to the domestic bond market after it
issued CNY4 billion in corporate bonds in 2019 and CNY1.15 billion
to date in 2020.
Fitch believes the company will be able to refinance the remaining
CNY15.1 billion of short-term loans, which are mostly secured with
property projects and likely to be rolled over. In addition,
Radiance had unutilised credit facilities of CNY76.8 billion at
end-1H20.
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
Radiance has an ESG Relevance Scores of '4' for Financial
Transparency as it is not a listed company and regular disclosure
of operational data is not widely available, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors. The company is currently undergoing
the IPO process.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
=========
I N D I A
=========
A P GOYAL: Ind-Ra Keeps 'D' Bank Loan Rating in Non-Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained A P Goyal Shimla
University's bank loan rating in the non-cooperating category. The
issuer did not participate in the rating exercise despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will continue to appear as
'IND D (ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR433.4 mil. Term loans (Long-term) due on May 2021 –
September 2022 maintained in non-cooperating category with
IND D (ISSUER NOT COOPERATING) rating; and
-- INR50 mil. Bank overdraft (Long-term) maintained in non-
cooperating category with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The rating was last reviewed on
October 17, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the rating.
COMPANY PROFILE
A P Goyal Shimla University is run by A P Goyal Charitable Trust, a
non-profit educational trust established in 2004 by Pramod Goyal
and Rajesh Goyal.
ADITYA VIDYUT: ICRA Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------
ICRA said the rating for INR220-crore bank facilities of Aditya
Vidyut Appliances Limited continues to remain under 'Issuer Not
Cooperating' category. The ratings are denoted as "[ICRA]D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 44.00 [ICRA]D ISSUER NOT COOPERATING;
Term Loans Rating continues to remain under
'Issuer Not cooperating'
Category
Fund-based 53.00 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain under
'Issuer Not cooperating'
Category
Non-fund 123.00 [ICRA]D ISSUER NOT COOPERATING;
Based Limits Rating continues to remain under
'Issuer Not cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity. The
rating action has been taken in accordance with ICRA's policy in
respect of non-cooperation by a rated entity available at
www.icra.in.
Aditya Vidyut Appliances Limited started its
transformer-remanufacturing business in 1989 and has successfully
remanufactured over 9,000 transformers till date. At present, the
company has two business verticals – transformer remanufacturing
(repairs) and transformer manufacturing, including contract
manufacturing. AVAL remanufactures and uprates transformers
manufactured in India and as well as abroad and in the due course
has incorporated technologies from leading companies across the
world such as Siemens (Germany), Westinghouse (USA), Trafo Union
(Germany), ABBSecheron (SA), English Electric (UK), AEG (Germany),
Tamini (Italy), ABB (Italy), Stromberg (Finland), Concar (Croatia),
Elta (Poland), Hyundai (Korea), Mitsubishi (Japan), GEC (England),
etc. In addition, the company has developed European as well as
inhouse proprietary design programs for accurate and optimised
designing of transformers. Apart from EHV transformers, the company
has expertise in remanufacturing auto transformers, generating
transformers, furnace transformers and rectifier transformers of
all major transformer OEMs. AVAL has two manufacturing units in
Thane, Maharashtra. The total area of the units is over 60,000 sq.
meters. The units are capable of delivering more than 16,000 MVA
per year. The company has well-experienced teams of engineers and
technicians with ample experience in the transformer industry.
BANSI MALL: CRISIL Lowers Rating on INR250cr LT Loan to B-
----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Bansi Mall Management Co Pvt Ltd (BMMCPL; part of the Future group)
to 'CRISIL B-' from 'CRISIL B+/Negative' and has placed the rating
on 'Rating Watch with Developing Implications.'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 250 CRISIL B- (Downgraded from
'CRISIL B+/Negative'; Placed
on 'Rating Watch with
Developing Implications')
The rating action reflects weakening in BMMCPL's credit risk
profile, especially liquidity, because of Covid-19 induced
disruption. -No rental income was received even in the month of
September 2020 since the lockdown in March 2020. Although the mall
reopened from August 5, 2020, footfalls continue to remain subdued.
Consequently, the company's liquidity has depleted; however, debt
service reserve account (DSRA) of INR5.47 crores (equivalent of two
months of debt obligation) is being maintained. Counterparty risk
has also increased because of weakening in the financial risk
profile of its sole tenants, Future Lifestyle Fashions Ltd (FLFL;
'CRISIL BBB-/Watch with a negative implications) and Future Retails
Ltd (FRL), occupying 58% and 41% of leased area respectively. FRL
missed the interest payment on bonds worth USD 500 million due on
July 22, 2020. Hence, BMMCPL's ability to collect timely rentals is
compromised.
The management has confirmed applying for restructuring of all its
term loans as on September 27, 2020, under guidelines issued by
Reserve Bank of India (RBI) on August 6, 2020 ' Resolution
framework for Covid-19-related stress. As confirmed by bankers, the
proposal is being evaluated.
Under the aforementioned conditions, BMMCPL's management did not
honour its monthly debt repayment due on September 30, 2020. The
repayment is part of the restructuring plan under consideration.
Since the application for restructuring was made before the due
date of the debt repayment and the concerned lenders have not cited
any reservation to accepting the application, CRISIL is not
treating the missed debt repayment as default. The rating action is
in line with CRISIL's approach to default recognition for entities
applying for restructuring under RBI resolution framework published
in the criteria alert titled CRISIL's approach to Covid-19 related
restructuring.
CRISIL will continue to monitor the developments on the formal
sanctioning of the restructuring by lenders and resolve the watch
once the formal approval is received by the company.
The rating reflects weakening of the credit profiles of tenants,
which are also group companies and BMMCPL's modest capital
structure. These weaknesses are partially offset by extensive track
record of the promoters in managing malls, need-based financial
support from group companies, and the personal guarantee from
promoters for the rated loans.
Analytical Approach
CRISIL has taken a standalone view on BMMCPL, as there is no
financial linkage with other group companies.
Unsecured loan of INR611 crore as on March 31, 2019) from the
promoters has been treated as neither debt nor equity as the loan
is interest-free and subordinate to bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Weakening of credit profiles of tenants: BMMCPL has leased out
its entire leasable area to entities of the Future group, FLFL and
FRL. The credit profiles of the tenants have weakened due to the
impact of the pandemic, resulting in the company not receiving any
rental income since March 2020. This has led to instability and
mismatch in cash flow, which is expected to continue over the near
term. BMMCPL had availed the six-month moratorium provided by RBI
and has now opted for one-time restructuring to tide over the
mismatch. Ability of the company to receive the overdue rental
income in a timely manner and formal sanctioning of the
restructuring by lenders will remain key rating sensitivity
factors.
* Average capital structure: Net-worth was negative INR188 crore as
on March 31, 2019. The company has been highly leveraged
historically. However, as on March 31, 2019, the secured bank loan
comprised only INR209 crore of the total debt, with the rest being
unsecured loans extended by related parties. Furthermore, the
company does not plan to contract any incremental external debt and
intends to reduce overall debt.
* High exposure to group companies, but not expected to increase
further: As on March 31, 2019, loans and advances to group
companies were INR134 crore, as against INR342-529 crore in the
past five fiscals. In line with the undertaking provided to CRISIL,
the company will not be increasing its exposure to group companies
in the near term.
Strengths
* Extensive experience of the promoters and their financial
support, as well as personal guarantee of Mr. Kishore Biyani and
Mr. Vijay Biyani: The promoters have been in the retail and mall
management businesses for over 25 years through the Future group,
which operates retail chains in 95 cities across India, covering
about 160 lakh sq ft. The group has been supporting BMMCPL's
operations since it was acquired by Mr. Kishore Biyani in 2006. The
property has a favourable location and high potential for
redevelopment. The company will continue to receive operational and
need-based financial support from the promoters and group
companies. In addition, there is high commitment from the promoters
towards this mall, with personal guarantees given by Mr. Kishore
Biyani and Mr. Vijay Biyani for the rated loans. BMMCPL also
received unsecured loans of over INR1,000 crore by the promoters;
these loans came down to INR611 crore as of March 2019.
Liquidity Stretched
Liquidity is expected to remain constrained over the medium term.
The company has not received any rental income since the lockdown
in March 2020. Even though the mall reopened on August 5, 2020,
footfall is low. The company maintains DSRA of INR5.47 crore
(equivalent of two months of debt servicing). However, DSRA is not
sufficient to meet debt obligation falling due post expiry of the
moratorium. The promoter group's financial flexibility is also
expected to be weak. Consequently, the company has approached its
lenders for restructuring of term loans.
Rating Sensitivity factors
Upward factors
* Stabilisation of operations and collection of rentals due till
September in a timely manner, leading to earnings before interest,
taxes, depreciation and amortisation (EBITDA) of INR56 crore for
fiscal 2021 and growth of 5% thereafter
* Significant reduction in debt through prepayment
Downward factors
* Delay in implementation or rejection of restructuring plan
weakening the liquidity and financial risk profile
* Weakening of debt protection metrics because of
lower-than-anticipated cash flow, resulting from rent waiver to
tenants, vacancy over 10% or lower-than-expected lease rental
rates
* Drawdown of any incremental debt to support group companies
* Further deterioration of credit profiles of counterparties
BMMCPL was incorporated in 2005 by the promoters of the Future
group to develop and manage SOBO Central Mall (formerly Crossroad
Mall) at Haji Ali, in Mumbai. It also acts as a special-purpose
vehicle for other group companies of the Future group. SOBO Central
Mall has total leasable area of 148,198 sq ft, which has been
entirely rented out to clients such as Future Consumer Enterprises
Ltd, FRL and FLFL, with Future Consumer Enterprises Ltd occupying
only 1% of the leasable area.
BHAGWAN MAHAVEER: Ind-Ra Cuts Loan Rating to 'D', Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Bhagwan Mahaveer
Memorial Jain Trust's (BMMJT) bank facilities to 'IND D' from 'IND
BB'. Simultaneously, Ind-Ra has reassigned BMMJT's bank facilities
a long-term rating of 'IND B+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR219.80 mil. (reduced from INR402.40 mil.) Bank loans *
downgraded and reassigned with IND B+/Stable rating;
-- INR137.70 mil. Fund-based working capital facilities *
downgraded and reassigned with IND B+/Stable rating; and
-- INR5.00 mil. Non-fund-based working capital facilities **
downgraded and reassigned with IND A4 rating.
* Reassigned 'IND B+'/Stable after being downgraded to 'IND D'
** Reassigned 'IND A4' after being downgraded to 'IND D'
The downgrade to 'IND D' reflects BMMJT's delay in debt servicing
in term loans over October 2019-May 2020 due to its stretched
liquidity position. The reassignment of the 'IND B+' reflects the
timely servicing of debt during the four months ended September
2020.
Liquidity Indicator - Poor: BMMJT's available funds (cash and
unrestricted investments) stood low at INR14.41 million in FY20
(FY19: INR14.09 million) and did not adequately cover the total
debt and operating expenditure. The funds available to cover the
total debt and operating expenditure stood at 1.55% and 1.01%,
respectively, in FY20 (FY19: 1.45%, 1.09%). BMMJT's collection
period remained moderate but improved to 31 days in FY20 (FY19: 37
days) due to an improvement in its collection efficiency. The
average utilization of the working capital limits was 85.48% for
the 12 months ended September 2020. FY20 numbers are provisional in
nature.
BMMJT's debt-service commitments amounted to INR262.73 million in
FY20 (16.41% of total income) and it is likely to stand at
INR258.17 million in FY21. Ind-Ra expects the trust's cash flows to
provide moderate coverage for its debt servicing obligations in
FY21. The trust did not avail the Reserve Bank of India-prescribed
moratorium facility.
The ratings are also constrained by BMMJT's weak credit metrics,
despite a marginal improvement in its debt burden and coverage
ratios. In FY20, the trust's debt/current balance before interest
and depreciation (CBBID) remained high but improved to 5.46x (FY19:
9.62x) owing to an increase in CBBID to INR170.59 million
(INR100.75 million). The debt/income was 58.14% in FY20 (FY19:
69.14%). The interest coverage ratio improved to 1.49x in FY20
(FY19: 0.88x) on account of the improvement in CBBID. However, the
debt service coverage ratio remained weak at 0.65x in FY20 (FY19:
0.40x). BMMJT serviced its debt over FY17-FY20 through unsecured
loans and the donations provided by the trustees.
The ratings also factor in BMMJT's weak operating profitability.
The trust's operating margin improved but stood low at 8.52% in
FY20 (FY19: 4.36%) due to a higher year-on-year increase in the key
operating income (15.48%) than the key operating expenditure
(10.46%). Simultaneously, the CBBID margin also increased to 10.65%
in FY20 from 7.22% in FY19. The trust reported a net deficit of
INR68.12 million in FY20 against the net deficit of INR134.51
million in FY19.
The ratings benefit from 14.71% yoy growth in BMMJT's total income
to INR1,601.44 million in FY20. The hospital's income continued to
dominated the revenue profile with 77.83% contribution to the total
income in FY20, followed by the sale of medicine (19.22%). The
hospital income grew 16.24% yoy to INR1,246.44 million and the
revenue from the sale of medicine increased 12.44% yoy to INR307.74
million in FY20.
The ratings are further supported by BMMJT's three decades of
operating experience and strong financial support from the trustees
in the form of unsecured loans (FY20: INR514.46 million, FY19:
INR379.10 million) and donations (FY14-FY20: INR512.30 million).
Ind-Ra expects the support from the trustees to continue, if
required.
RATING SENSITIVITIES
Positive: The following factors could collectively result in a
positive rating action:
- an increase and the sustenance of the operating margins above
10%
- debt burden (debt/CBBID) sustaining below 4x
- an improvement and the sustenance of the liquidity ratio
(available fund/total debt) above 10%
Negative: A negative rating action could result from a combination
of:
- a 20% fall in the total income
- operating margin reducing below 3%
- debt burden (debt/CBBID) sustaining above 7.00x
COMPANY PROFILE
Established in 1975 as a public charitable trust in Bengaluru,
Karnataka, BMMJT operates a super speciality hospital in Vasanth
Nagar, Bengaluru. The hospital offers a wide range of speciality
services which include pulmonology, nephrology, gastroenterology,
cardiology, neurology, oncology, vascular surgery and pediatrics,
among others. In 2016, the trust constructed a second hospital with
100-bed capacity in Giri Nagar, Bengaluru.
COLDMAN LOGISTICS: ICRA Lowers Rating on INR80cr Loans to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Coldman
Logistics Private Limited (CLPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based– 79.68 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
moved to 'Issuer Not
Cooperating' category
Unallocated 0.32 [ICRA]B+ (Stable) ISSUER NOT
Limits COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
moved to 'Issuer Not
Cooperating' category
Rationale
The ratings downgrade is because of lack of adequate information
regarding CLPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by a rated entity"
available at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Coldman Logistics Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with the aforesaid policy of ICRA, a rating view has
been taken on the entity based on the best available information.
Coldman Logistics Private Limited (CLPL) operational since
September 2012, provides cold storage facilities for various agro
commodities, dairy products, and Pharmaceutical industries at its
temperature-controlled warehouses (TCW). At present, the company
has eight operational TCWs and 4 TCWs are under construction, which
are spread across 9 locations on Pan India level. The operational
and upcoming warehouse will have a combined cold storage
(frozen/chilled) capacity of ~54,439 pallets, ambient capacity of
~7,018 pallets, pharma storage capacity of ~2880 pallets and food
processing capacity of ~2462 pallets.. Apart from storage
facilities, the company also provides end to end food distribution
service and value-added services like transport service, container
stuffing, de-stuffing, Blast freezer, labeling, real-time inventory
report etc. to its customers. The company has developed a brand
name 'Coldman'. Mr. Sadanand Sule and Mr. Dev Anand Veerabhadra are
the key directors and management personnel.
CUBATIC PROJECTS: CRISIL Lowers Rating on INR18cr Loan to D
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Cubatic Projects Private Limited (CPPL) to 'CRISIL D' from
'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 18 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects the delay in servicing of interest payment
on term debt obligation by the company in September 2020.
The rating reflects exposure to risk related to completion and
salability of the ongoing residential projects at Rajahmundry
(Andhra Pradesh), and cyclicality inherent in the real estate
industry. These weaknesses are partially offset by the extensive
experience of the promoters in the real estate business.
Key Rating Drivers & Detailed Description
Weaknesses:
* Delay in payment of interest on term loan: Due to the Covid-19
pandemic, liquidity was constrained and this led to a delay in
payment of interest on the term loan in September 2020.
* Susceptibility to risk related to completion and salability of
the ongoing residential project: CPPL faces significant
implementation risk in its new project, Arte. The company has
completed over 90% of work in phases 1 while phase 2 and phase-3 is
still in the initial stage. Progress in construction and
improvement in cash flow are key monitorables.
* Exposure to risks relating to cyclicality in the industry: The
domestic real estate sector is cyclical, marked by volatile prices,
opaque transactions, and a highly fragmented market structure.
Project execution is affected by multiple property laws and
non-standardised government regulations, across states. The risk is
compounded by aggressive timelines for completion, and shortage of
manpower (project engineers and skilled labor). With increase in
supply, and attractive prices offered by various builders and
constant regulatory changes, profitability of various real estate
players may come under strain over the medium term.
Strengths:
* Extensive experience of the promoters in the residential real
estate development business: Mr. TS Babu, Mr. Srinivasa Rao and Mr.
Sathi Konda Reddy are the promoters of CPPL. Mr. TS Babu, the
founder of the Cubatic group, is a technocrat and a civil engineer
by profession. His strong insights in areas of real estate and
infrastructure development and marketing, and ability to deliver
projects on time, has helped the Cubatic group establish its market
position.
Liquidity Poor
Liquidity remains weak, as reflected by delay in servicing of
interest payment in September 2020, amidst the Covid-19 pandemic.
The company availed the moratorium on its bank loans during March-
August 2020. Due to the extended lockdown imposed to curb the
pandemic, business activity has been subdued during the past five
months. Modest net worth and a leveraged capital structure will
continue to constrain liquidity over the medium term.
Rating Sensitivity factors
Upward factors
* Timely servicing of debt obligation for at least three months
* Improvement in liquidity, supported by receipt of customer
advances
Incorporated in May 2013, by Mr. TS Babu, Mr. Srinivasa Rao and Mr.
Sathi Konda Reddy, CPPL undertakes residential real estate
projects. The company is based out of Madhapur, Hyderabad.
D.S. DUCTOFAB: Ind-Ra Moves BB LT Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated D.S. Ductofab
Systems Private Limited's (DSDSPL) Long-Term Issuer Rating of 'IND
BB' to the non-cooperating category and has simultaneously
withdrawn it.
The instrument-wise rating actions are:
-- INR230 mil. Fund-based limit* migrated to the non- cooperating
and withdrawn;
-- INR65.10 mil. Term loan* due on January, 2026 migrated to the
non-cooperating and withdrawn; and
-- INR24.90 mil. Non-fund-based limit** migrated to the non-
cooperating 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
DSDSPL 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 the agency
has received a no objection certificate from the lender. This is
consistent with the Securities and Exchange Board of India's
circular dated March 31, 2017 for credit rating agencies.
COMPANY PROFILE
DSDSPL was incorporated on August 1, 2006. It manufactures
fabricated, rectangular, spiral round and spiral oval (elliptical)
hollow ducts that are used for the air management systems used in
heating ventilation in air conditioning (HVAC) industries. It
provides a one spot solution to HVAC companies. The promoters have
more than 25 years of experience in the trading of iron and steel
products. The company's manufacturing facilities are located in
Haryana, Gujrat and Hyderabad.
DEVASHISH POLYMERS: Ind-Ra Withdraws B+/Non-Cooperating Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Devashish
Polymers Pvt Ltd's Long-Term Issuer Rating of 'IND B+ (ISSUER NOT
COOPERATING)' in the non-cooperating category and has
simultaneously withdrawn it.
The instrument-wise rating actions are:
-- INR12.5 mil. Fund-based limit* maintained in the non-
cooperating and withdrawn; and
-- INR37.5 mil. Term loan* due on December 2023 maintained in the
non-cooperating and withdrawn.
* Maintained at 'IND B+ (ISSUER NOT COOPERATING)' before being
withdrawn
KEY RATING DRIVERS
The ratings have been maintained in the non-cooperating category
because the issuer did not participate in the rating exercise
despite continuous requests and follow-ups by Ind-Ra.
The agency is no longer required to maintain the ratings, as the
agency has received a no-objection certificate from the lenders.
This is consistent with the Securities and Exchange Board of
India's circular dated March 31, 2017 for credit rating agencies.
Ind-Ra will no longer provide analytical or rating coverage for
Devashish Polymers.
COMPANY PROFILE
Incorporated in 1996, Devashish Polymers manufactures rubber
compounds at its installed capacity of 200 metric tons per annum.
The company is managed by Mr. Chandrakant Satyanarayan Mody and his
family.
DOLPHIN MARINE: ICRA Reaffirms D Ratings; Removed from INC
----------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Dolphin
Marine Foods & Processors (India) Private Limited (DMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term– 2.00 [ICRA]D; reaffirmed and
Cash Credit removed from Issuer Not
Cooperating category#
Short-term– 9.00 [ICRA]D; reaffirmed and
FDBP/FIDBP** removed from Issuer Not
Cooperating category#
** FDBP - Foreign Documentary Bill Purchase/ FUDBP - Foreign
Usance Documentary Bill Purchase
# due to non submission of No Default Statement (NDS)
Rationale
The rating reaffirmation reflects the continued delays in debt
servicing by DMPL resulting from the strain on the company's
liquidity profile. This is attributable to shrinking scale of
operations since FY2019, leading to under absorption of fixed costs
resulting in loss making operations. The accumulated losses have
led to an adverse capital structure following complete erosion of
the net worth, weak return and coverage indicators. Moreover, on
the working capital front, besides strained receivables recovery,
the company wrote off considerable inventory which was past its
expiration date leading to steep operating losses and further
strain on liquidity profile in FY2020. The ratings are also
constrained by the impact of COVID-19 imposed lockdown on the
company due to which DMPL faced severe labour issues along with
liquidity constrains to procure fresh inventory, resulting in
shutting down of the cold storage and sea food facility since March
2020. ICRA also notes the intense competition due to the highly
fragmented nature of seafood industry and inherent industry risks
such as susceptibility to diseases, climate change risks and
regulatory changes. The ratings, however, factor in the extensive
experience of the promoters, spanning over two decades, in the
seafood industry.
Key rating drivers and their description
Credit strengths
* Extensive experience of the promoters in the seafood industry:
Incorporated in 1996, the company is involved in processing seafood
products which are mainly exported to Asia and Africa. The
extensive experience of the promoters, spanning over two decades,
in the seafood processing industry helps in securing business from
established customers.
Credit challenges
* Delays in debt servicing due to strained liquidity position: The
company's liquidity position remained strained due to shrinking
scale of operations, continued losses leading to negative cash
accruals and high inventory as well as receivables as on March 31,
2020. The weakened credit profile has led to delays in debt
servicing.
* Financial profile characterised by shrinking scale of operations,
net losses with low accruals and weak return Indicators: The
company's revenue has reported steep de-growth in FY2019 (Rs. 22.7
crore) from FY2018 (Rs. 38.3 crore) due to scarcity of fresh
produce in FY2019 and further in FY2020 (Rs. 8.3 crore) as DMPL
could not procure sufficient raw material due to its stretched
liquidity profile. Alongwith, under absorption of fixed costs, the
company wrote off INR11 crore (provisional) of inventory which was
past its expiration date leading to widening of losses and negative
return indicators in FY2020.
* Adverse gearing levels and coverage indicators due to erosion of
net worth base from sizeable accumulated losses: The total debt of
the company mainly consists of working capital borrowings from the
bank and unsecured loans from promoters. High debt level along with
erosion of net worth has resulted in an adverse capital structure
and weakened coverage indicators.
* Exposed to risks associated with coronavirus outbreak: The
operations of the company are adversely impacted by COVID-19
imposed lockdown due to which DMPL faced severe labour issues along
with lack of fresh inventory as the company could not procure fresh
inventory to store in peak season and sell in lean season due to
liquidity issues, resulting in shutting down of the cold storage
and sea food facility since March 2020.
* Intense competition owing to the low complexity of work: The
company faces stiff competition from other domestic as well as
international players, which limits its pricing flexibility and
bargaining power with customers, thereby putting pressure on its
revenues and margins.
* Exposure to regulatory, environmental and foreign-exchange
fluctuations risks: DMPL primarily derives its revenue from the
overseas market. The export of seafood to foreign countries is
subject to regulatory approvals. Any major change in the trade
policies of the importing country can have an impact on the
operations of the company. Due to high dependence on exports, the
profitability remains vulnerable to adverse fluctuations in foreign
exchange. The profitability further remains susceptible to risks
inherent in the seafood industry such as diseases and climate
change.
Liquidity Position: Poor
DMPL's liquidity position is poor with considerable cash losses
reported in FY2020. Further, with processing facility closed down
for 7 months from March 2020 end till date, the liquidity position
continues to remain under strain leading to delays in debt
servicing.
Rating sensitivities
Positive triggers - Timely servicing of debt obligation for
consecutive 3 months supported by substantial growth in the
revenues along with improved profitability, thereby improving
liquidity position will be the key for a higher rating.
Negative triggers - Not applicable
Incorporated in 1996 by Mr. Rosario D'Souza, Dolphin Marine Foods &
Processors (India) Pvt. Ltd. (DMPL) is engaged in processing of sea
food products which are mainly exported to Asia and Africa. It
commenced operations in 1999 from its 5000 square meters plot in
Taloja, MIDC. From 1999 to 2009, DMPL was only involved in
pre-processing activities like cleaning, washing and peeling. It
started exporting in 2009 as a merchant exporter from the rented
facility of Sumraj Sea Foods. It set up its own freezing and cold
storage unit in 2011. After receiving licenses from The Marine
Products & Export Development Authority (MPEDA) and Export
Incentive Agency (EIA), it commenced operation in October 2011.
In FY2020, on a provisional basis, the company reported a net loss
of INR11.9 crore on an operating income of INR8.3 crore compared to
a net loss of INR0.3 crore on an operating income of INR22.7 crore
in the previous year.
DOTT SERVICES: ICRA Lowers Rating on INR100cr Loans to D
--------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Dott
Services Limited (DOTT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Short-Term-Non- 36.30 [ICRA]D; Revised from
Fund Based [ICRA]A4+
Short Term- 63.70 [ICRA]D; Revised from
Unallocated [ICRA]A4+
Rationale
The rating revision follows the delays in debt servicing (principal
and interest payments) in September-2020 by DOTT owing to its poor
liquidity. The company's operations have been impacted
significantly by the Covid-19 pandemic owing to labour availability
issues, affecting the cash flows and impacting the liquidity
position. Further, the rating factors in the company's stretched
financial profile with high repayment obligations and lower
accruals leading, to a low DSCR. The rating also considers the high
order book concentration with a single order from The Singareni
Collieries Company Limited (SCCL) accounting for more than 80.0% of
the total order book. Delays in executing the order book have
adversely impacted DOTT's revenues in the current year. Further,
the rating considers the company's weak bargaining power amid stiff
competition in the construction industry, and a tender-based
contract awarding system followed by the Government departments,
keeping margins under check.
The rating, however, considers the operational support received by
DOTT from its parent company, Dott Services Limited, Uganda (DSLU),
in the form of technical expertise to source orders. The parent
also provides equipment and machinery to DOTT on lease. DSLU has
vast experience and global presence in the construction industry,
spanning over two decades.
Key rating drivers and their description
Credit strengths
* Operational support from parent company: DOTT has been getting
support from its parent company, DSLU, which has vast experience
and global presence in the construction industry, spanning over two
decades. The parent company has supported DOTT in meeting technical
criteria to bid for orders.
Credit challenges
* Delays in debt servicing: There were delays in the company's debt
servicing (interest and principal payment) in September 2020 due to
its poor liquidity position. The company's operations have been
impacted significantly by the Covid-19 pandemic owing to labour
availability issues, affecting the cash flows and impacting
liquidity position.
* Stretched financial profile: The company's financial profile
remains stretched given high repayment obligations and lower
accruals leading to a low DSCR.
* High order book concentration: The company is exposed to high
order book concentration with a single order from SCCL, Telangana
contributing over 80% to the total outstanding order book. Any
delays in executing the order book would adversely impact its
revenues and could lead to penalties/liquidated damages.
* Intense competition in industry: The fragmented and highly
competitive nature of the industry, coupled with a tenderbased
contract awarding system followed by the Government departments,
keeps margin under check.
Liquidity position: Poor
The company's liquidity position is poor with high repayment
obligation of INR8.4 crore in FY2021 as against low free cash
balances of INR4.00 crore and low retained cash flows.
Rating sensitivities
Positive triggers - ICRA could upgrade DOTT's rating if the company
demonstrates timely debt servicing on a sustained basis, supported
by the improved liquidity position.
Negative triggers - Not Applicable
DOTT, incorporated in February 2014, is a wholly-owned subsidiary
of M/s Dott Services Limited, which is an East Africa based
construction company with experience of over two decades in
executing construction projects. DSPL is managed by its Directors,
Mr. K. Venkateswara Rao and Mr. Ravi Varma. It has been executing
overburden removal works at mines since its inception.
DOTT reported an operating income (OI) of INR376.5 crore and a net
profit of INR5.0 crore in FY2019 against an OI of INR488.9 crore
and a net profit of INR4.7 crore in FY2018.
EAGLE CONTINENTAL: ICRA Lowers Rating on INR47.5cr Loan to D
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Eagle
Continental Foods Private Limited (ECFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based long- 47.5 [ICRA]D; downgraded from
term/short-term [ICRA]BB+ (Stable)/A4+
facility-Working
Capital
Fund-based long- 2.0 [ICRA]D; downgraded from
term facility- [ICRA]BB+ (Stable)
Term Loan
Long-term/short- 30.5 [ICRA]D; downgraded from
term-Unallocated [ICRA]BB+ (Stable)/A4+
Material Event
ECFPL's prior contract agreement allowing company's production at
third party's facility didn't get renew in the current fiscal
resulting in discontinued operations. This triggered withdrawal of
working capital facilities by the banker.
Rationale
The rating downgrade of of Eagle Continental Foods Private Limited
(ECFPL) takes into account the delay in the repayment of bank
liabilities. As informed by the banker, ECFPL's working capital
limits could not be renewed due to non-reinstatement of companies
operating licenses. Subsequently, the working capital facilities
were withdrawn by the bank in June 2020 and demand was raised to
clear the overdues within 90 days ending on September 30, 2020.
Icra notes that the overdues against pre-shipment limits are yet to
be cleared by the company. It may be noted that the company had
been sharing No Default Statements with ICRA, indicating a regular
track record of debt servicing. However, the ratings drive comfort
from the extensive experience of the promoters in the buffalo
meat-processing industry and their established relations with
customers and suppliers.
Key rating drivers and their description
Credit strengths
* Extensive experience of promoters in buffalo meat-processing
industry: ECFPL is promoted by Mr. Sajid Ali Qureshi and Mr. Shahid
Ali Qureshi, both of whom have extensive experience in the buffalo
meat-processing industry. The promoter family has close to 30 years
of experience in the industry and sound understanding of the
industry dynamics.
Credit challenges
* Delays in debt servicing by the company on account of
discontinued operations: The operations were shut down in January
2018 in ECFPL's owned processing facility as the plant was sealed
by Ghaziabad Development Authority (GDA). Due to this, the company
entered into an agreement with a third party (Al Nasir Exports
Private Limited), wherein the latter processes meat in its own
facility and dispatches it for exports on behalf of ECFPL in
exchange of a fixed processing charge per unit weight. However,
the said contract expired in last fiscal and the company has been
non-operational throughout current fiscal. Owing to discontinued
operations, the working capital limits of the company were
withdrawn by the bank. However, the company failed to clear the
overdues within the bank specified timelines.
* Commoditised nature of business and intensely competitive
industry: The buffalo meat processing industry is highly fragmented
and competitive because of the presence of a large number of
organised players along with numerous midsized players. The
competition is further aggravated by exports from other major
meat-exporting countries such as Brazil and Australia. This keeps
the pricing flexibility of the industry participants in check and
limits profitability.
Liquidity position: Poor
ECFPL has poor liquidity position considering bank induced
withdrawal of working capital facilities and no operations in the
company in current fiscal. In case the company is able to resume
operations in future, considering the working capital intensive
nature of entity's business, liquidity is expected to remain tight
in the absence of external funding.
Rating sensitivities
Positive trigger: - Upgrade in the ratings is dependent on a track
record of timely servicing of debt obligations.
ECFPL, formerly known as Eagle Potteries Private Limited (EPPL),
was incorporated in 1982. The promoters of the company are Mr.
Shahid Ali Qureshi and Mr. Sajid Ali Qureshi, both of whom have
extensive experience in the buffalo meat processing industry. The
company has an integrated plant with slaughtering, processing,
packaging, freezing and cold storage facilities at Dasna in the
Ghaziabad district of Uttar Pradesh.
EINGUR WIND: CRISIL Assigns B+ Rating to INR3cr Loans
-----------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long term
bank facilities of Eingur Wind Energy Private Limited (EWEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2 CRISIL B+/Stable (Assigned)
Proposed Long Term
Bank Loan Facility 1 CRISIL B+/Stable (Assigned)
The rating reflects EWEPL's modest scale of operation, working
capital intensive operations and weak financial risk profile. These
weakness are partially offset by its extensive industry experience
of the promoters.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operation: EWEPLs business profile is constrained
by its scale of operations in the intensely competitive civil
contracts industry. The company made revenues of INR16 crores for
fiscal 2020. EWEPLs scale of operations will continue limit its
operating flexibility.
* Working capital intensive operations: Gross current assets were
high at 580-650 days over the three fiscals ended March 31, 2020.
Its intensive working capital requirements arise from its high
debtor levels of 464 days and inventory of 50 days as on March 31,
2020.
* Weak financial risk profile: Networth is small at INR3.16 crores
and gearing is high at 2.88 times as on March 31, 2020. Interest
coverage and net cash accruals to total debt were moderate at 2.09
times and 0.10 times respectively for fiscal 2020.
Strength:
* Extensive industry experience of the promoters: The promoters
have an experience of 15 years in civil contract industry. This has
given them an understanding of the dynamics of the market, and
enabled them to establish relationships with suppliers and
customers.
Liquidity Stretched
The sanctioned limits of INR2 crores were utilised on an average at
around 97.33 percent for the past twelve months ended June 2020.
Cash accrual is expected to be at around INR0.50 ' 0.70 crores
which will be sufficient against term debt obligation of INR0.44
crores over the medium term. The promoters are also likely to
extend support in the form of unsecured loans to meet its working
capital requirements and repayment obligations. Promoter loans
stood at INR1.74 crores as on March 31, 2020.
Outlook: Stable
CRISIL believes EWEPL will continue to benefit from the promoters
industry experience.
Rating Sensitivity factors
Upward factor
* Significant improvement in scale and/or margins leading to higher
cash accruals
* Improvement in working capital cycle to less than 300 days
Downward factor
* Decline in scale and/or profitability leading to accruals of less
than INR0.40 crores
* Further stretch in working capital cycle and/or significant debt
funded capex leading to deterioration in the financial risk
profile
EWEPL was incorporated in 2010. EWEPL is engaged in generation and
sale of power, EPC works and manufacture and sale of scaffolding
materials. EWEPL is owned & managed by Mr. K. Amarmurugan, P.
Karthikeyan, P. Keerthivarman and M. Sivakumar. EWEPL manufacturing
facility is located in Erode (Tamil Nadu).
G.M. PENS: ICRA Lowers Rating on INR48.14cr Term Loan to B+
-----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of G.M.
Pens International Private Limited (GMPIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term: 48.14 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating downgraded
From [ICRA]BB+ (Stable) and
continues to be in 'Issuer Not
Cooperating' category
Long Term: 11.05 [ICRA]B+ (Stable) ISSUER NOT
Fund-based COOPERATING; Rating downgraded
Facilities From [ICRA]BB+ (Stable) and
continues to be in 'Issuer Not
Cooperating' category
Long Term: 4.72 [ICRA]B+ (Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
Facilities From [ICRA]BB+ (Stable) and
continues to be in 'Issuer Not
Cooperating' category
Short Term: 8.00 [ICRA]A4; ISSUER NOT
Non-fund Based COOPERATING; Rating downgraded
Facilities from [ICRA]A4+ and continues
to be in 'Issuer Not
Cooperating' category
Short Term: 0.09 [ICRA]A4; ISSUER NOT
Unallocated COOPERATING; Rating downgraded
Facilities from [ICRA]A4+ and continues
to be in 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding GMPIPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by a rated entity"
available at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with GMPIPL, ICRA has been trying to seek information from the
entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with the aforesaid policy of ICRA, a rating view has been
taken on the entity based on the best available information.
G. M. Pens International Private Limited (GMPIPL) has been in the
writing instruments industry for over three decades and was the
exclusive licensee to manufacture and market Reynolds writing
instruments in India till FY2016. The company currently sells
Rorito writing instruments. The stationery business is GMPIPL's
major revenue driver and contributed to over 93.6% of the top line
in FY2019. Apart from this, the company distributes/trades Clipper
cigarette lighters, Flamagas kitchen lighters and gas cans, and
labelling instruments under the brand name Dymo. The company also
used to trade Papermate pens earlier, but discontinued the business
from April 2015.
JANHITKARI SEWA: CRISIL Assigns B+ Rating to INR1cr Loan
--------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facility of Janhitkari Sewa Samiti (JKSS) and assigned its 'CRISIL
B+/Stable' rating to the facility. CRISIL had suspended the rating
on March 21, 2016, as JKSS had not provided the information
required to maintain a valid rating. JKSS has now shared the
requisite information, enabling CRISIL to assign a rating to the
bank facility.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Fund- 1 CRISIL B+/Stable (Assigned;
Based Bank Limits Suspension Revoked)
The rating reflects the small scale of operations, average
financial flexibility constrained by modest networth, and high
dependence on government authorities for contracts. These
weaknesses are partially offset by the society's established
network and track record of successful contract execution.
Key Rating Drivers & Detailed Description
Weakness:
* Small scale of operations: JKSS is organized as a not-for-profit
society. The primary purpose of JKSS is to promote the mid-day meal
scheme and provide free nutritional food in Swastha Kendras and
old-age welfare centres.
Owing to low-value government projects in limited tier-2 and -3
cities, JKSS's operations have remained small, as reflected in
annual turnover of around INR6.04 crore in fiscal 2020. Scale of
operations will remain a key monitorable over the medium term.
* Average financial flexibility constrained by modest networth:
Modest networth of INR1.03 crore as on 31st March 2020, constrains
the ability to raise additional debt during adverse times.
* High dependence on government authorities for contracts: Work
order is received from the authority on an annual basis. Societies
and NGOs need a license that is renewed yearly. It also manages
training and development programs and mobile creche and Anganwadi
centers for workers, which are also government schemes and require
yearly licenses.
Strengths:
* Established network and track record of successful contract
execution: The society has extensive network coverage across eight
districts of Uttar Pradesh from the past 15 years. It caters mostly
to the weaker sections of society in rural and urban areas, and
also plans to provide more benefits under various government
schemes mandated by the central government.
Liquidity Stretched
The society has not availed any bank loan facility and hence will
remain debt-free over the medium term, further the cash accruals
remains modest at INR8-10 lacs. However, limited networth will
continue to constrain the financial flexibility. Current ratio was
moderate at 1.42 times as on March 31, 2020.
Outlook: Stable
CRISIL believes the business risk profile of JKSS will remain
constrained over the medium term on account of its small scale of
operations.
Rating Sensitivity factors
Upward factors
* Increase in revenue by 20% and stable operating margin, leading
to higher cash accrual
* Improvement in the working capital cycle
Downward factors
* Decline in profitability or stretched working capital cycle
* Large, debt-funded capital expenditure weakening the capital
structure, with gearing over 2-3 times
JKSS is based in Aligarh, Uttar Pradesh, and registered under the
Society Act XXI of 1860. It was set up in 2005 as a not-for-profit
society; it is managed by Mr. Yogendra Kumar, Ms Santosh Devi and
nine other members. The society provides free meals under the
mid-day meal scheme and various other government-mandated schemes.
K.S. SELECTIONS: CRISIL Reaffirms B+ Rating on INR5cr Cash Loan
---------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of K.S.
Selections Private Limited (KSSPL) at 'CRISIL B+/Stable/CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .5 CRISIL A4 (Reaffirmed)
Cash Credit 5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect an average financial risk profile,
and the working capital-intensive nature and small scale, of
operations. These weaknesses are partially offset by the extensive
experience of the promoters in the branded garments distribution
industry.
Analytical Approach
Unsecured loans from the promoters have been treated as 75% equity
and 25% debt as these loans are subordinated to external borrowing
and carry an interest rate that is lower than the bank rate.
Key Rating Drivers & Detailed Description
Weakness:
* Small scale of operations: Revenue was modest INR20.81 crore in
fiscal 2020 in an intensely competitive industry, though the
operating margin was moderate at 5.48%. Revenue is expected to
decline in fiscal 2021 as the Covid-19 pandemic resulted in lower
demand for apparel.
* Working capital-intensive operations: Working capital requirement
is large, with gross current assets (GCAs) of 363 days as on March
31, 2020. Sizeable debtors, creditors and inventory (201, 242 and
160 days, respectively) keep the working capital under pressure.
The GCAs are expected to remain high over the medium term.
* Below-average financial risk profile: The networth was small at
INR4.19 crore, and the total outside liabilities to tangible net
worth ratio high at 4.19 times, as on March 31, 2020. The interest
coverage ratio was below average at 1.75 times in fiscal 2020.
Strength:
* Extensive industry experience of the promoters: The promoters
have an experience of over two decade in the industry. This has
given them an understanding of the dynamics of the market, which
has enabled them to establish tie-ups with high-end brands.
Liquidity Stretched
Cash accrual is expected at INR 5-81 lakhs, against minimal term
debt obligation of INR2-32 lakh, per fiscal in fiscals 2021-23.
Bank limit utilisation was high at around 94% during the 12 months
through August 2020. The company is expecting enhancement of
INR75-90 lakh under the Guaranteed Emergency Credit Line Loans
(GECL). This will cushion liquidity. Further, need-based support
from the promoters should help to meet working capital requirement
and repayment obligation. The current ratio was moderate at 1.22
times on March 31, 2020.
Outlook: Stable
CRISIL believes KSSPL will continue to benefit from its established
relationship with key principals and the extensive experience of
the promoters.
Rating Sensitivity factors
Upward factors
* Revenue growth of more than 30% per fiscal with sustenance of the
operating profit margin
* Improvement in the working capital cycle, leading to a better
financial risk profile, especially liquidity
Downward factors
* Lower-than-expected revenue or a decline in the operating margin
to below 3.5%
* A stretch in the working capital cycle, further constraining
liquidity
Established in 2011, KSSPL is promoted by Mr. Surender Chawla and
his family members. The company is a distributor of sportswear,
leisure wear, and inner and thermal wear for men, women, and
children. It operates through its warehouse in New Delhi.
MOOL CHAND: CRISIL Reaffirms B+ Rating on INR5.5cr Cash Loan
------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of Mool Chand Edibles Private Limited
(MCEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.5 CRISIL B+/Stable (Reaffirmed)
Term Loan .75 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect a modest scale of operations amidst
intense competition, and an average financial risk profile. These
weaknesses are partially offset by the extensive experience of the
promoters in the rice industry.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans of
INR1.83 crore from the promoters as neither debt nor equity. That's
because these loans carry an interest rate that is lower than the
market rate, and are expected to remain in the business over the
medium term.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: The modest scale limits negotiating
power with suppliers and customers, and makes the company more
vulnerable to business downturns. Moreover, competition is intense
due to the presence of a large number of unorganised players in the
industry given the low capital requirement.
* Average financial risk profile: The gearing remained high at 4.83
times as on March 31, 2020, on account of low cash accrual as
compared with incremental working capital requirement.
Strength:
* Extensive experience of the promoters: Benefits from the
promoters' experience of over 15 years, their understanding of
market dynamics and healthy relationship with suppliers and
customers should continue to support the business.
Liquidity Stretched
Bank limit utilisation was moderate at 85.33% during the 12 months
through August 2020. Cash accrual is expected at around INR0.33
crore, against term debt obligation of INR0.18 crore, per fiscal
over the medium term. The balance will act as a cushion to
liquidity. The current ratio was healthy at 1.51 times on March 31,
2020. The promoters are likely to extend support through equity and
unsecured loans to meet working capital requirement and repayment
obligation.
Outlook: Stable
CRISIL believes MCEPL will continue to benefit from the extensive
experience of the promoters.
Rating Sensitivity factors
Upward factors
* An increase in revenue by 20% per fiscal with stable operating
efficiency
* Improvement in the capital structure, with an increasing networth
and a lower total outside liabilities to tangible networth ratio
* Prudent working capital management
Downward factors
* A decline in revenue by 10% per fiscal and in the operating
profitability margin to below 3.0%
* A substantial increase in working capital requirement weakening
the financial risk profile, especially liquidity
Incorporated in 2010, MCEPL is promoted by Mr. Om Prakash Tekriwal
and family members. The company processes rice in the north-eastern
region of Uttar Pradesh.
NATIONAL TRADING: CRISIL Reaffirms B+ Rating on INR10cr Loans
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of National Trading Company (NTC).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9.6 CRISIL B+/Stable (Reaffirmed)
Proposed Working
Capital Facility .4 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the firm's modest scale of
operations, below-average financial risk profile and large working
capital requirement. These weaknesses are partially offset by the
extensive experience of the partners and their strong relationships
with the principal suppliers.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: Scale of operations remains modest,
reflected in revenue of INR 40.5 crores in fiscal 2020, in the
intensely competitive lightening and electrical components
distribution industry, which has numerous small traders and
wholesalers.
* Large working capital requirement: Operations are working capital
intensive as indicated by gross current assets of 212 days as on
March 31, 2020, driven by receivables of 110 days and inventory of
96 days. NTC offers large credit to its customers while high
inventory is maintained to meet exigencies. Limited credit from
suppliers has led to high reliance on bank lines.
* Below-average financial risk profile: The financial risk profile
is constrained by small networth of INR4.6 crore and high total
outside liabilities to adjusted networth (TOLANW) ratio of 4.61
times as on March 31, 2020. Debt protection metrics were subdued,
with interest coverage at 1.27 times in fiscal 2020. With low cash
accruals, financial risk profile is expected to remain at similar
level in the medium term.
Strength
* Extensive experience of the partners: The three-decade-long
experience of the partners in the lightening and electrical goods
trading and distribution industry in Kerala and healthy
relationships with reputed principal suppliers, such as Philips
India Ltd and L&T Switchgears, should continue to support the
business.
Liquidity Poor
NTC has poor liquidity marked by marginal cash and cash equivalents
of INR 0.09 cr as on March 31, 2020 and tightly matched accruals to
term debt obligations of INR0.43-0.44 crores over FY21 as well as
FY22. The firm has access to fund based limits of INR9.6 crores,
which are almost highly utilized around 9.3% over the 12 months
ended August 31, 2020. The ability of the entity to meet its
repayments depends on an increase in accruals or access to
incremental fund based limits.
Outlook: Stable
CRISIL believes NTC will continue to benefit from the partners'
extensive experience and healthy relationships with principal
suppliers.
Rating Sensitivity Factors
Upward Factors
* Substantial growth in revenue and profitability, leading to
annual accrual of INR1.5 crore
* Improvement in the capital structure backed by equity infusion or
reduction in working capital requirement
Downward Factors
* Significant decline in revenue or profitability, leading to lower
accrual
* Deterioration in TOLANW ratio of more than 6 times due to
stretched working capital cycle.
Established as a partnership firm in 1993, Ernakulam-based NTC is a
distributor and retailer of lighting products of Philips India Ltd
and electrical products of L&T Switchgears. Mr. Sree Prasad and Ms.
K Sona are partners in the firm.
OMSHANKAR MILKFOOD: CRISIL Reaffirms B+ Rating on INR15cr Loans
---------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of Omshankar Milkfood Industries Private
Limited (OMIPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Cash
Credit Limit 8 CRISIL B+/Stable (Reaffirmed)
Term Loan 7 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect the company's exposure to
stabilisation and demand risk, and weak financial risk profile.
These weaknesses are partially offset by the extensive experience
of the promoters in the dairy industry.
Key Rating Drivers & Detailed Description
Weakness:
* Exposure to stabilisation and demand risk: As operations started
only from December 2018, they are still at a nascent stage. Hence,
the company remains vulnerable to risks related to timely
stabilisation of operations and demand. Revenue, profitability and
working capital cycle will be key monitorables.
* Weak financial risk profile: The financial risk profile is
constrained by weak capital structure, indicated by gearing of 1.85
times as on March 31, 2020. Debt protection metrics were weak in
fiscal 2020 due to low operating margin.
Strength:
* Extensive experience of the promoters and funding support: The
promoters' experience of over two decades in the dairy industry and
need-based funding support will continue to support the business.
Liquidity Stretched
Cash accrual is expected at INR4-4.5 crore per fiscal, which will
sufficiently cover yearly term debt obligation of INR1.8 crore over
the medium term. Current ratio was low at 0.71 time as on March 31,
2020. The promoters are likely to extend support through equity
infusion and unsecured loans to meet working capital requirement
and debt obligation.
Outlook: Stable
CRISIL believes OMIPL will continue to benefit from the extensive
experience of its promoters.
Rating Sensitivity factors
Upward factors:
* Timely stabilisation of operations and healthy demand
* Increase in revenue to INR170 crore and profitability of more
than 5%
* Prudent working capital management
Downward factors:
* Poor demand leading to subdued revenue growth, with sales below
INR150 crore, and weak operating margin, below 4%
* Delay in stabilisation of operations
* Large working capital requirement with gross current assets of
over 200 days
OMIPL manufactures ghee and skimmed milk powder. The company is
promoted by Mr. Ankur Agarwal,
Mr. Ankur Jain, Ms Manju Agarwal, and Mr. Ramesh Chand Jain. It
started operations in December 2018.
OVERSEAS TRADERS: ICRA Keeps B+ Debt Ratings in Not Cooperating
---------------------------------------------------------------
ICRA said the rating for the INR19.0-crore bank facilities of
Overseas Traders continues to be in the 'Issuer Not Cooperating'
category. The rating is denoted as "[ICRA]B+/[ICRA]A4 ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund 12.00 [ICRA]B+(Stable) ISSUER NOT
based Limit COOPERATING; Rating continues
to remain in 'Issuer Not
Cooperating' category
Long-term (18.00) [ICRA]B+(Stable) ISSUER NOT
Interchangeable COOPERATING; Rating continues
Limit to remain in 'Issuer Not
Cooperating' category
Short-term Non 2.00 [ICRA]A4 ISSUER NOT
fund Based Limit COOPERATING; Rating continues
to remain in 'Issuer Not
Cooperating' category
Long-term and 5.00 [ICRA]B+(Stable)/[ICRA]A4
Short-term ISSUER NOT COOPERATING;
Unallocated Rating continues to remain
Limits in 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity. The
rating action has been taken in accordance with ICRA's policy in
respect of non-cooperation by a rated entity available at
www.icra.in.
Overseas Traders is a partnership firm established in 1977 and is
involved in exporting agricultural commodities like onions,
potatoes, tendu (beedi) leaves, fresh fruits and vegetables, with
onion constituting majority of the sales. The commodities are
procured from the domestic market and exported majorly to Sri
Lanka, Malaysia, Pakistan and the UAE. OT has its registered office
in Mumbai and is managed by the Katharani family.
PARANJAPE SCHEMES: CRISIL Cuts Rating on INR8cr Cash Loan to C
--------------------------------------------------------------
CRISIL has revised the ratings on bank facilities of Paranjape
Schemes (Construction) Limited (PSCL) to 'CRISIL C/FC Issuer not
cooperative' from 'CRISIL B/FB/Stable; Issuer not cooperative'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 7 CRISIL C (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Term Loan 30 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with PSCL for obtaining
information through letters and emails dated October 15, 2019,
April 3, 2020, April 7, 2020 and October 7, 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 PSCL. Which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on PSCL is consistent
with 'Assessing Information Adequacy Risk'.
As per the terms of the debentures and the subsequent extension
approved by the debenture trustee, the interest from 1st January,
2017 till 30th September, 2017 and 1st October 2017 till 31st March
2018 had to be paid by PSCL on or before 08th October, 2020.
CRISIL has not received any information on the payment of above
interest from PSCL. The information has not been received in spite
of repeated efforts by CRISIL.
Based on the last available information, the ratings on bank
facilities of PSCL is revised to 'CRISIL C/FC Issuer not
cooperative' from 'CRISIL B/FB/Stable; Issuer not cooperative'.
PSCL was incorporated in 1987 by brothers Mr. Shashank Paranjape
and Mr. Shrikant Paranjape as a private limited company, and was
reconstituted as a public limited company in 2005.
PKM PROJECTS: ICRA Withdraws D Rating on INR40cr Term Loan
----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of PKM
Projects Private Limited (PKM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 40.00 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Withdrawn
Rationale
The ratings assigned to the bank facilities of PKM have been
withdrawn in accordance with ICRA's policy on withdrawal and
suspension at the request of the company, basis the no-objection
certificates provided by its bankers. ICRA does not have adequate
information to suggest that the credit risk has changed since the
time the rating was last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the rated
instrument(s) are being withdrawn.
Liquidity position
Not captured as the rating is being withdrawn.
Rating sensitivities
Not captured as the rating is being withdrawn.
PKM was incorporated in December 2006 and is a part of the Mahesh
Mehta Group of companies, which has interests in hotel business,
real estate business and is also into manufacturing of Kattha
Products. The company had acquired one hotel property in Goa, which
is yet to commence operations.
POWERTECH ENGINEER: ICRA Lowers Rating on INR76cr ST Loan to D
--------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Powertech Engineer (PTE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
ST–Non-Fund 76.0 [ICRA]D; downgraded from
based–BG [ICRA] A4
LT-Cash Credit 5.0 [ICRA]D; downgraded from
[ICRA]BB (Stable)
LT/ST-Unallocated 19.0 [ICRA]D/[ICRA]D; downgraded
from [ICRA]BB (Stable)/
[ICRA] A4
Rationale
The rating downgrade takes into account the instances of
overutilisation in the Cash Credit limit (by more than 30 days) in
September 2020 of PTE's, owing to the firm's weak liquidity
position. The liquidity was strained due to high receivables and
the impact of the ongoing Covid-19 pandemic, which led to
inadequate cash accruals. The ratings, however, draw comfort from
the extensive experience of promoters in the power transmission
industry.
Key rating drivers and their description
Credit strengths
* Extensive track record of promoters: The promoters have an
extensive experience in the construction segment spanning more than
four decades. PTE has an extensive track record, coupled with a
reputed client base comprising state power transmission and
distribution entities such as Bihar State Power Transmission
Company Limited (BSPTCL), Uttar Pradesh Power Corporation Limited
(UPPTCL), etc.
Credit challenges
* Overutilisation of cash credit limit due to stretched
receivables: Tight liquidity position due to inadequate cash
accruals and high working capital intensity emanating from sluggish
receivables have led to overutilisation of the Cash Credit limit
(by more than 30 days) in September 2020.
Liquidity Position: Poor
PTE's liquidity is poor due to weak cash accruals and high working
capital intensity due to stretched receivables. This has resulted
in overutilisation of the Cash Credit limit (by more than 30 days)
in September 2020. The liquidity is expected to remain tight going
forward.
Rating sensitivities
Positive triggers - ICRA could upgrade PTE's the rating if the
company becomes regular in its debt servicing.
Negative triggers - Not applicable
PTE was incorporated in 2004 to carry out installation of electric
sub-stations, electric lines and transmission towers and metres.
The firm primarily undertakes turnkey projects for state power
utilities such as BSPTCL, Paschimanchal Vidyut Vitaran Ltd (PVVNL),
Purvanchal Vidyut Vitran Nigam Ltd (PUVVNL), UPPTCL, etc. At
present, it is owned and managed by Mr. Sudhir Agrawal, Mr. Rakesh
Ahuja, Mr. S. C. Nautiyal, Mr. R. P. Srivastava and Mr. P. K.
Bhatt. At present, its operations are confined to U.P, Bihar, J&K
and Goa.
RADHEY NARAYAN: CRISIL Migrates B- Ratings from Not Cooperating
---------------------------------------------------------------
Due to inadequate information and in line with Securities and
Exchange Board of India guidelines, CRISIL had migrated its rating
on the long-term bank facilities of Radhey Narayan Industries
Private Limited (RNIPL) to 'CRISIL B-/Stable Issuer Not
Cooperating'. However, RNIPL has subsequently started sharing
requisite information for carrying out a comprehensive review of
the rating. Consequently, CRISIL is migrating its rating on the
long-term bank facilities of RNIPL to 'CRISIL B-/Stable' from
'CRISIL B-/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.4 CRISIL B-/Stable (Migrated from
'CRISIL B-/Stable ISSUER NOT
COOPERATING')
Long Term Loan 4.85 CRISIL B-/Stable (Migrated from
'CRISIL B-/Stable ISSUER NOT
COOPERATING')
The rating reflects RNIPL's initial stages of operations and weak
financial risk profile. These weaknesses are partially offset by
the benefits derived from the strategic location of the plant.
Analytical Approach
Unsecured loans (Rs 2.42 crore as on March 31, 2020) extended by
the promoter have been treated as neither debt nor equity as these
loans are expected to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Initial stages of operations: Operations commenced only in fiscal
2018, thus constraining scalability and restricting the ability to
bid for large orders. Revenue was INR3.41 crore in fiscal 2020.
Further, revenue is projected at a modest INR3 crore in fiscal 2021
as the business has been significantly constrained by the economic
slowdown that resulted from the nationwide lockdown imposed by the
government to curb the spread of Covid-19.
* Weak financial risk profile: Financial risk profile is expected
to remain modest owing to low profitability and large working
capital debt. Networth was a negative INR2.48 crore as on March 31,
2020, with gearing high at -2.07 times. Debt protection metrics
coverage were subdued too, with interest coverage and net cash
accrual to total debt ratios of 0.89 times and -0.01 times,
respectively, in fiscal 2020.
Strength
* Benefits derived from strategic location of plant
The manufacturing unit is placed advantageously near Raebareli
(Uttar Pradesh), which is in close proximity to most key customers,
thereby lowering the company's overhead expenses and providing a
competitive advantage over peers.
Liquidity Poor
Liquidity is expected to be stretched because of insufficient cash
accrual against repayment obligations due to small scale and
initial stage of operations. However repayments are expected to be
met through stretching the creditors' and infused unsecured loans
from promoter's .Current ratio is also weak at 0.89 times as on
March 2020.
Outlook: Stable
RNIPL should continue to benefit from its reputed clientele and the
advantageous location of its plant.
Rating Sensitivity factors
Upwards factors
* Substantial and sustainable increase in revenue and
profitability, leading to cash accrual of more than INR50 lakh
* Significant improvement in financial risk profile
Downward factors
* Weakening of liquidity on account of lower fund support from
promoters
* Delay in debt servicing and interest repayment
RNIPL, incorporated in 2015, manufactures fabricated items used for
producing railway coaches mainly for Modern Coach Factory,
Raebareli; the company commenced commercial operations in August
2017.
RAJDEEP BUILDCON: CRISIL Lowers Rating on INR61cr Loan to B
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Rajdeep Buildcon Private Limited (RBPL; part of the Rajdeep group)
to 'CRISIL B' from 'CRISIL BB-/Negative' and reaffirmed the rating
on its short-term bank facility at 'CRISIL A4'. The ratings have
been placed on 'Rating Watch with Negative Implications'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 309 CRISIL A4 (Placed on 'Rating
Watch with Negative
Implications')
Cash Credit 61 CRISIL B (Downgraded from
'CRISIL BB-/Negative'; Placed
on 'Rating Watch with
Negative Implications')
Letter of Credit 20 CRISIL A4 (Placed on 'Rating
Watch with Negative
Implications')
The rating downgrade reflects deterioration in the credit risk
profile, especially liquidity, amid the disruptions caused by the
Covid-19 pandemic. There have been instances of devolvement of
letters of credit (LCs) since August 17, 2020 and bank limit
utilisation has also remained high at over 97% during the nine
months through September 2020.
The management has confirmed applying for moratorium on its LC
payments in May 2020 in line with guidelines of the Reserve Bank of
India for providing relief from the impact of the pandemic and
hence payments due towards LCs devolved from August 17 to 31, 2020,
have not been made till date. As per the management, payment
towards LCs devolved post August 31, 2020 will be made within 30
days of devolvement and the same is a key monitorable.
The application for moratorium was made before the due date for
debt servicing and there have been procedural delays by the lender
in its approval. However, the lender is presently considering
granting the moratorium through necessary regulatory mechanism as
informed by the lender. Therefore, CRISIL is not treating the
devolvement of these LCs as a default.
The rating watch reflects the uncertainty that is associated with
the lenders' decision and its timing, and likely implications to
the rating in case the same is not received within reasonable
timelines. CRISIL will continue to monitor developments on the
sanctioning of the moratorium for the LC payments missed in August
2020, and will remove the ratings from watch once the lender makes
the decision.
On account of the Covid-19 outbreak, there was a slowdown in
business from March 15, 2020. Following the nationwide lockdown
announced by the central and various state governments from March
25, 2020, activity was halted. Works on site were severely impacted
till the end of June 2020, and while operations have commenced in
most of the sites, operating efficiency has still not reached full
capacity and is currently at 50-60%. However, the company has won
two new orders of around INR200 crore in fiscal 2021 and execution
of these is expected to commence in near term, thus supporting the
business.
The ratings reflect the Rajdeep group's large working capital
requirement resulting in stretched liquidity and exposure to
intense competition in the construction industry. These weaknesses
are partially offset by moderate business and financial risk
profiles, backed by proven project-execution capabilities.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of RBPL and five more entities of the
Rajdeep group. That's because all these entities receive funds from
the same source and have a common management. CRISIL has also
consolidated other entities that are joint ventures (JVs) RBPL has
formed with the Rohan group. All interest-bearing mobilisation
advances have been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital-intensive operations: Gross current assets (GCAs)
of the group have remained high on account of large receivable and
inventory. Receivables of RBPL (standalone) increased to over 250
days as on March 31, 2020, from 181 days as on March 31, 2019, due
to a stretch in receivables which got intensified on account of the
lockdown. Further, lower business activity led to a stretch in
liquidity and devolvement of LCs from August 17, 2020.
* Exposure to intense competition and to cyclicality in the
construction industry: Cyclicality is inherent in the industry, and
with intense competition in the
engineering-procurement-construction segment, leads to volatile
profitability. The industry is dominated by large players such as
Larsen & Toubro Ltd, Dilip Buildcon Ltd, Ashoka Buildcon Ltd,
Sadbhav Engineering Ltd and Nagarjuna Construction Co Ltd, which
have an edge over small and medium-sized players. The smaller
players mainly have a regional presence. Given the group's
expanding geographical reach, it could face competition from
entrenched regional players, which would put pressure on the
operating margin.
Strengths
* Moderate business risk profile: The company has a moderate order
flow, a diversified revenue profile, and proven project-execution
capabilities. With an established track record of over two decades
in the construction sector, RBPL has Class IA (highest level)
status in Karnataka, Gujarat, Rajasthan and Maharashtra. The
company had outstanding orders of around INR520 crore as on
September 30, 2020, resulting in an order book to sales (of fiscal
2020) ratio of about 2 times. The company has won two new orders of
around INR200 crore in fiscal 2021 and execution of these is
expected to commence in the near term. The business has been
impacted in the first half of the current fiscal by the lockdown.
While operations have commenced from June 2020, construction
intensity is just 50-60%, resulting in lower operating income of
INR45-50 crore in the first half of fiscal 2021. While operations
are expected to pick up in the second half of fiscal 2021, overall
revenue for fiscal 2021 is expected to be impacted.
* Moderate financial risk profile: Despite lower revenue (a decline
of 17% fiscal-on-fiscal) in fiscal 2019, the operating margin has
been healthy at 15%. Standalone revenue for fiscal 2020 declined by
24.5% to INR230 crore while the standalone operating margin was
maintained at around 13% in line with that for fiscal 2019.
Moderate profitability in the past five fiscals resulted in steady
accretion to reserves and, therefore, to a sizeable networth of
INR205 crore as on March 31, 2019.
The total outside liabilities to tangible networth (TOLTNW) ratio
improved to 1.67 times as on March 31, 2019, from 2.30 times a year
earlier. However, the financial risk profile is constrained by
exposure to JVs with the Rohan group, which face earnings risk
inherent in road projects.
Liquidity Stretched
The bank limit was almost fully utilised (97% on an average during
the nine months through September 2020). A stretch in liquidity
resulted in devolvement of LCs. The devolved LCs in August 2020 was
around INR6.3 crore on which moratorium has been sought and the
amount for September 2020 (devolved between September 14 and 30)
was around INR4.2 crore, which will be regularised within 30 days
of devolvement as per the management.
Rating Sensitivity factors
Upward factors
* Improvement in liquidity and the working capital cycle, with GCAs
reducing to below 300 days
* Better operating performance with sustenance of order book and
profitability
Downward factors
* Significant deterioration in operating performance
* Rejection of moratorium application, resulting in further
weakening of the overall financial risk profile especially
liquidity
* No significant improvement in the working capital cycle, with
GCAs remaining at the current level of 400 days
About the Group
Based in Ahmednagar, Maharashtra, RBPL is the flagship company of
the Rajdeep group that undertakes industrial and infrastructure
construction projects through affiliates. The company was set up by
Mr. Dilip Dhadiwal, Mr. Kishor Dhadiwal and Mr. Rajesh Kataria as
a partnership firm in 1992, but was reconstituted as a private
limited company in 1997. In infrastructure construction, the group
makes bridges, gantries and roads. In the rural electrification
segment, it has taken up projects for supply, testing, transport,
construction, erection, and commissioning of sub-transmission
lines, power transformers, and new substations. In the industrial
segment, it constructs factories, structures and warehouses.
The Rajdeep group operates through 15 entities, of which six are
standalone companies and nine are JVs with the Rohan group. The
Rajdeep group tied up with the Rohan group (for build' operate'
transfer road projects) primarily to qualify for large bids.
On a standalone basis, the company's revenue for fiscal 2020 stood
at INR230 crore (about INR50 crore in the first half of fiscal
2021) against INR305 crore for fiscal 2019.
S.S. ENTERPRISES: ICRA Cuts Rating on INR4.0cr LT Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of S.S.
Enterprises Electricals (SSEE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term–Fund- 4.00 [ICRA]B+ (Stable); downgraded
based-CC from [ICRA]BB- (Stable)
Short-Term–
Non-fund based 1.00 [ICRA]A4; reaffirmed
Rationale
The rating downgrade factors in the weakening of SSEE's financial
profile in the recent past, as illustrated by the contraction in
its profit margins and cash accruals and expected stretch in cash
accruals in FY2021. The ratings also note the leveraged capital
structure of SSEE characterized by its low net worth position and
high reliance on external borrowings for working capital
requirement. The ratings remain constrained by intense competition
from other players in the electrical contracting business limiting
the pricing flexibility of the entity.
While arriving at the ratings, ICRA continues to derive comfort
from the extensive experience of the management in the electrical
contracting business for over three decades. The ratings positively
factor in the long presence and proven track record of SSEE, which
has facilitated in established customer relationship, thereby
ensuring repeat orders.
The Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that the company will continue to benefit from its established
position and from the experience of the management in the
electrical contracting business.
Key rating drivers and their description
Credit strengths
* Extensive experience of the management: The firm's CEO, Mr. S.
Selvaraju, has an established presence of over three decades in the
electrical contracting business. SSEE's extensive presence in the
business and the CEO's vast experience has enabled the firm in
establishing a strong association with its key customers and
suppliers.
* Healthy revenue growth: The firm's operating income witnessed a
15% YoY growth in FY2020 to INR20.2 crores (as per provisional
financials) from INR17.6 crores in FY2019. The firm has grown at a
healthy CAGR of 16.2% during the period FY2015 to FY2020. However,
the OI for FY2021 is expected to be impacted by the lockdown on
account of Covid-19 pandemic. The healthy orders in hand of the
entity of around INR10 crore adds revenue visibility for the near
term.
Credit challenges
* Modest scale of operations: Despite the healthy growth in
operating income in the recent past, the firm's scale of operations
remains modest, as characterised by an operating income (OI) of
INR20.2 crore in FY2020 (as per provisional financials) restricting
the benefits arising from economies of scale. The OI for FY2021 is
also expected to be impacted by the lockdown on account of Covid-19
pandemic.
* Operating margins constrained by the limited pricing flexibility
of the entity: The electrical contracting business is characterised
by intense competition limiting the pricing flexibility of the
entity. The limited pricing flexibility has exerted pressure on the
profit margins, with PAT/OI declining to 0.7% in both FY2019 and
FY2020 from 3.7% in FY2018.
* Leveraged capital structure and weakening coverage indicators:
SSEE's capital structure is leveraged, owing to its low net worth
position and its high reliance on external borrowings for its
working capital requirement. The coverage indicators witnessed a
decline in FY2019 on account of the decline in margins, with
interest coverage ratio declining to 1.2 times in FY2019 from 2.0
times in FY2018.
Liquidity position: Stretched
SSEE's liquidity position remains stretched as characterised by the
limited buffer available in its working capital facilities and the
minimal cash balances maintained. The average utilisation of its
working capital facility remained high at 100% of the sanctioned
limits during January 2020 and August 2020.
Rating sensitivities
Positive triggers - ICRA may upgrade the ratings if the company is
able to improve its scale of operations while improving its
profitability metrics and liquidity position.
Negative triggers - Pressure on SSEE's ratings could arise if the
company's profitability metrics witness decline resulting in
deterioration in its debt coverage indicators and further weakening
of liquidity position.
SSEE was established in 2006, with Ms. Amutha Selvaraju as its
proprietor. The firm is primarily involved in design and execution
of electrical projects of voltage class up to 33 KV. The day-to-day
operations are managed by Mr. Selvaraju, its Chief Executive
Officer, who has an extensive experience of over thirty-five years
in the electrical contracting business.
SENTINI HOSPITALS: ICRA Lowers Rating on INR12.59cr Loan to B+
--------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sentini
Hospitals Private Limited (SHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 8.25 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
Moved to 'Issuer Not
Cooperating' category
Term Loan 12.59 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
Moved to 'Issuer Not
Cooperating' category
Unallocated 16.16 [ICRA]B+ (Stable) ISSUER NOT
Limits COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
Moved to 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding SHPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by a rated entity"
available at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with SHPL, ICRA has been trying to seek information from the entity
so as to monitor its performance, but despite repeated requests by
ICRA, the entity's management has remained non-cooperative. In the
absence of requisite information and in line with the aforesaid
policy of ICRA, a rating view has been taken on the entity based on
the best available information.
SHPL was established in 2010 to operate a 150-bed super speciality
hospital in Vijayawada, Andhra Pradesh and commenced its operations
in February 2012. The company is promoted by the Sentini Group and
is headed by Dr. Padma Movva. The hospital is spread over an area
of 80,000 sq. ft located about 9 km from the heart of the city. It
received NABH accreditation in September 2015.
SGR (777): CRISIL Hikes Rating on INR5cr Loan to B+
---------------------------------------------------
Due to inadequate information, CRISIL, in line with the Securities
and Exchange Board of India guidelines, had migrated its rating on
the long term bank facilities SGR (777) Foods Private Limited (SGR)
to 'CRISIL B/Stable/CRISIL A4 Issuer Not Cooperating'. However, the
management has subsequently started sharing information necessary
for carrying out a comprehensive review of the ratings.
Consequently, CRISIL is migrating its ratings on the company's
facilities to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL
B/Stable/CRISIL A4 Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Term Loan 0.79 CRISIL B+/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Secured Overdraft
Facility 5.00 CRISIL B+/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Short Term Loan 2.00 CRISIL A4 (Migrated from
'CRISIL A4 ISSUER NOT
COOPERATING')
The ratings reflect a modest scale of operations with low
profitability, exposure to intense competition, and a below-average
financial risk profile. These weaknesses are partially offset by
the extensive experience of the promoters in the spices and food
products industry.
Key Rating Drivers & Detailed Description
Strengths:
* Extensive industry experience of the promoters: A presence of
over two decades in the spices and food products segment has
enabled the promoters to establish their brand in Tamil Nadu and
forge a strong relationship with several suppliers.
* Average financial profile: While the company has turned around
its financial risk profile in FY 2020, the same remains average.
Losses in fiscal 2018 has resulted in erosion of networth which has
subsequently increased to INR0.7 cr as on March 31, 2020. Hence,
the gearing also moderated to 6 times on the same date from the
high at 27 times as on 31st March 2018. The debt protection metrics
have improved with NCATD and interest coverage ratios at above 3
times and 0.3 times for FY 2020.
Weaknesses:
* Modest scale of operations: Revenue was modest at INR35 - 45
crore in the past 3 years ending FY 2020 and the operating margin
in the past was negative, resulting in modest cash accruals. While
the company has turned around its operating profitability in FY
2020, the intensity of scale up of revenue going forward will be a
key monitorable.
* Susceptibility to climatic conditions and volatility in raw
material prices: The crop yield of agricultural commodities is
dependent on adequate and favorable climatic conditions. Thus,
company is exposed to the risk of limited availability of its key
raw material during unfavorable climatic conditions. Also
production may be impacted by-pests or crop infection leading to
higher unpredictability in production and pricing of agri
commodities and derived products.
Liquidity Stretched
The liquidity is stretched with modest accruals against repayment
obligations. It is expected to report cash accruals about INR1 ' 2
crore, with repayment obligations of about INR0.56 crore in the
corresponding period. However, there is cushion in its bank limits
which can be utilized to meet the repayment obligations. The
company has access to fund based limit of INR5 crore which has been
utilised at an average of 60% in the trailing 8 months ending
August 2020.
Outlook: Stable
CRISIL believes SGR will continue to benefit from the extensive
industry experience of its promoters.
Rating Sensitivity factors
Upward Factors:
* Improvement in turnover by more than 20% while sustaining
operating profitability
* Improvement in working capital management
Downward Factors:
* Decline in operating profitability to less than 1%
* Any large debt funded capital expenditure adversely impacting the
financial risk profile.
SGR was established as a partnership firm, Sri Ganeshram & Company,
in 1954 by Mr. R S N Iyer and Mr. R S G Iyer; the firm was
reconstituted as a private limited company in April 2003. The
company manufactures blended spices, grounded spices, Instant ready
mix food, pickle, Gingelly Oil and other ethnic processed foods
under the 777 brand.
SHYAMJEE AGRO: CRISIL Reaffirms B+ Rating on INR2cr Cash Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Shri Shyamjee Agro Industries (SSAI).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 7 CRISIL A4 (Reaffirmed)
Cash Credit 2 CRISIL B+/Stable (Reaffirmed)
Overdraft 0.44 CRISIL A4 (Reaffirmed)
Proposed Non
Fund based limits 0.56 CRISIL A4 (Reaffirmed)
The ratings continue to reflect SSAI's small scale of operations
and below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of the proprietor in
the rice milling business.
Analytical Approach
CRISIL has treated unsecured loans extended by the proprietor (Rs
1.34 crore as on March 31, 2020) as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations: Intense competition in the rice
milling business restricts scalability of operations, as reflected
in SSAI's small turnover of around INR8.82 crore in fiscal 2020.
The revenue is expected to remain small over the medium term.
* Below-average financial risk profile: Financial risk profile was
marked by a small networth and high gearing of INR1.24 crore and
2.61 times, respectively, as on March 31, 2020, and may remain
constrained by limited accretion to reserves and high reliance on
external debt. Debt protection metrics were average, with interest
coverage and net cash accrual to total debt ratios at 1.47 times
and 8%, respectively, for fiscal 2020.
Strength:
* Extensive experience of the proprietor: The three-decade-long
experience of the proprietor in the rice milling business, his
strong understanding of local market dynamics, and healthy
relationships with suppliers and customers, will continue to
support the firm's business risk profile.
Liquidity Stretched
Liquidity remains constrained by low cash accrual of over
INR0.25-0.30 crore, though against no maturing debt. Bank limit
utilisation was modest, averaging around 60.70% for the 12 months
ended August 31, 2020. Current ratio was moderate at 1.08 times as
on March 31, 2020. In case of any exigency, the proprietor is
willing to infuse unsecured loans.
Outlook: Stable
CRISIL believes SSAI will continue to benefit from the extensive
experience of its proprietor in the rice milling business, and
established relationships with clients.
Rating Sensitivity Factors
Upward Factors
* Sustained revenue growth and stable operating margin, leading to
cash accrual of 0.80 crore
* Better working capital management
Downward Factors
* Decline in revenue by 20% and decline in operating margin
* Stretch in working capital cycle.
SSAI was formed as a proprietorship firm of Mr. Mohanlal Agrawal in
2008. The Bilaspur-Chhattisgarh based firm mills and processes
paddy into rice, bran and broken rice.
SRS HEALTHCARE: ICRA Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
ICRA said the rating for the INR115.0-crore bank facilities of SRS
Healthcare and Research Centre Limited continues to be in the
'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]D/[ICRA]D ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term/ 115.00 [ICRA]D/[ICRA]D ISSUER NOT
short term- COOPERATING; Rating continues
Unallocated to remain under the 'Issuer
Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis limited information on
the issuers' performance. Accordingly, the lenders, investors and
other market participants are advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity.
Incorporated in May 2013, SRS Healthcare and Research Centre
Limited is a part of Faridabad-based SRS Group. Approximately 85%
stake in SRS Healthcare is owned by BTL Holding Company Limited,
which is the holding company of SRS Limited. SRS Healthcare was set
up with the objective of venturing into hospitals business. For
this purpose, the Company entered into an operations and management
agreement (OMA) with a charitable trust -Bharadwaj Welfare Trust
(BWT) - for a hospital in Sector 16A Faridabad (Haryana).
Thereafter, it commenced a major renovation of the hospital while
also expanding its bed capacity to 285 beds from 210 beds earlier.
UNIQUE MALLS: CRISIL Cuts Rating on INR187.5cr LT Loan to B-
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Unique Malls Private Limited (UMPL; a part of the Future group) to
'CRISIL B-' from 'CRISIL B+/Stable'. The ratings have been placed
on 'Rating Watch with Developing Implications'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 187.5 CRISIL B- (Downgraded from
'CRISIL B+/Stable'; Placed on
'Rating Watch with Developing
Implications')
The rating action reflects weakening in UMPL's overall credit risk
profile, especially its liquidity profile amidst Covid-19 induced
disruptions. No rental income has been received between March and
September 2020 and although the malls reopened in August 2020,
footfalls remain subdued. Consequently, the company's liquidity has
depleted; however the promoters are expected to offer need-based
and timely funding support, especially as UMPL's bank loans carry a
corporate guarantee from its parent, Future Market Networks Ltd
(FMNL), and personal guarantees from its promoters, members of the
Biyani family. Deterioration in the financial risk profile of
tenants, Future Lifestyle and Fashions Ltd (FLFL, rated 'CRISIL
BBB-/Watch with a Negative implications') and Future Retail Ltd
(FRL), who occupy the majority area, has also led to a substantial
increase in counterparty risk. FRL missed the interest payment on
bonds worth USD 500 million due on July 22, 2020. Hence, the
ability of the company to collect timely rentals is compromised.
UMPL's management has confirmed applying for restructuring of all
its term loans under the Reserve Bank of India (RBI) guidelines
issued on August 6, 2020 and the 'Resolution framework for
COVID-19-related Stress,' on September 27, 2020. As confirmed by
bankers, the proposal is being evaluated.
Under the aforementioned conditions, UMPL's management did not
honour its monthly debt repayment falling due on September 30,
2020. The said repayment is part of the restructuring plan under
consideration.
Since the application for restructuring was made before the due
date of the debt repayment and the concerned lenders have not cited
any reservation to accepting the application, CRISIL is not
treating the missed debt repayments as default. The rating action
is in line with CRISIL's approach to default recognition for
entities applying for restructuring under RBI resolution framework
published in the criteria alert titled 'CRISIL's approach to
Covid-19 related restructuring.'
CRISIL will continue to monitor the developments on the formal
sanctioning of the restructuring by lenders and resolve the watch
once the formal approval is received by the company.
The rating takes into account the weakening of credit profile of
tenants, which are also group companies and weak financial risk
profile and capital structure. These weaknesses are partially
offset by extensive track record of the promoters in managing
malls, need-based financial support from group companies, and the
personal guarantee of promoters for the rated loans.
Analytical Approach
CRISIL has factored in financial and operational support received
from the Future group on an ongoing basis, in its assessment of
UMPL's standalone profile. CRISIL has taken a standalone view on
UMPL as there is no financial fungibility between UMPL and other
Future group companies. Unsecured loan from the promotors have been
treated as equity as they are non-interest bearing.
Key Rating Drivers & Detailed Description
Weakness:
* Weakening of credit profile of the tenants: UMPL has leased out
bulk of its leasable area to entities of the Future group. With
credit profile of the tenants weakening due to the pandemic, the
company has not received any rental income since March 2020; this
has led to instability and mismatch in existing cash flow and the
trend may continue over the near term. UMPL had availed the
six-month moratorium provided by RBI, and has now opted for a
one-time restructuring to tide over this mismatch. Ability of the
company to recover the overdue rental income in a timely manner and
formal sanctioning of the restructuring by lenders will remain key
rating sensitivity factors.
* Weak financial risk profile and capital structure: Stretched debt
protection metrics, weak capital structure, ballooning repayment
format and unpredictability of cash flows constrain financial risk
profile. Although revenue have seen improvement with full occupancy
and expected pick-up in out of home media advertising revenues in
malls, cash flows are still expected to remain inadequate to meet
debt servicing obligations over the medium term. The company has
no plans to take up any new malls for refurbishment in the near
term.
* Susceptibility to vacancy risks and volatility in interest rate:
Lease rentals are the major source of revenue for UMPL, thereby
leading to exposure to vacancy risks in any of its malls. However,
majority of the tenants being Future group companies, mitigates
this risk. The interest rate on debt is floating, thereby exposing
the company to risks associated with volatility in interest rate.
Strengths:
* Extensive experience of the promoters and their financial
support, as well as personal guarantee of Mr. Kishore Biyani and
Mr. Vijay Biyani: The promoters have been in the retail and mall
management business for over 25 years through the Future group,
which operates retail chains in 95 cities across India, covering
about 160 lakh sq. ft. The group has been supporting UMPL's
operations since it was acquired by Mr. Kishore Biyani in 2006. The
company receives significant financial and operational support,
being part of the Future group. CRISIL believes the Future group
will provide timely need-based financial support to UMPL,
especially as the latter's bank loans carry a corporate guarantee
from its parent, Future Market Networks Ltd (FMNL), as well as
personal guarantees from its promoters and members of the Biyani
family. Further, FMNL has extended timely financial support to take
care of UMPL's debt servicing obligations and capital expenditure
(capex). The extent of support received will, nevertheless, be a
key rating monitorable.
Liquidity Stretched
Liquidity is weak and is expected to remain constrained over the
medium term. No rental income has been collected since the lockdown
in March 2020. Even though malls have reopened from August, 2020,
footfalls remain low. The company has no debt service reserve
acount. Financial flexibility of the promoter group is also
expected to be weak. Consequently, the company has approached its
lenders for restructuring of term loans.
Rating Sensitivity factors
Upward factors
* Improvement in rental income by 10% as well as timely receipt of
rental income.
* Improvement in business risk profile with improvement in
profitability and timely financial support from promoters or group
companies
Downward factors
* Delay in implementation/rejection of restructuring plan weakening
liquidity and overall financial risk profile
* More than 10% impact on the expected rental cashflow.
* Not receiving timely financial support from promoters or group
companies if required.
UMPL was incorporated in August 2005, by the promoters of the
Future group to focus on mall management activities, management and
development of space for out-of-home media, and for supporting the
group's retail businesses. The company is held entirely by the
Future group through FMNL and nine other entities. FMNL, through
its 37.65% shareholding, has de-facto control of UMPL.
VISHNU PRIYA: ICRA Reaffirms B+ Rating on INR18cr LT Loan
---------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Sri
Vishnu Priya Finance (VP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term bank 18.00 [ICRA]B+ (Stable); reaffirmed
facilities
Rationale
For arriving at the rating, ICRA has taken a consolidated view of
Sri Padma Priya Finance Corporation (PP) and Sri Vishnu Priya
Finance (VP) as these entities are under the same management and
operate in the same business segment. The combined entity is
henceforth referred to as PPVP/the entities.
The rating reaffirmation factors in PPVP's small scale with a
combined portfolio of INR67.11 crore (provisional) as on March 31,
2020, high geographical concentration with a presence in a single
state and weak profitability indicators. The rating continues to
factor in the operational and managerial support from the SB Group.
The Group's promoters have diverse business interests including
auto dealership, real estate and tour & travel operations. The
rating also factors in PPVP's good asset quality indicators with
the 90+ delinquencies at 1.5% and the comfortable capital structure
with a gearing of 2.4 times (provisional) as on March 31, 2020.
ICRA notes that there is scope for improvement in PPVP's credit
appraisal, internal control and risk management systems, which is
crucial for business expansion. The rating also takes into
consideration the lack of regulatory oversight as the entities
operate as partnership firms. PPVP's ability to improve its funding
diversity, maintain the asset quality and scale up its operations,
going forward, would be crucial from a rating perspective.
Key rating drivers
Credit strengths
* Comfortable capitalisation profile: PPVP's capitalisation is
comfortable with a gearing of 2.4 times (provisional, as on March
31, 2020), supported by muted portfolio growth. ICRA expects the
capital structure to remain comfortable over the medium term
considering the expected growth and, assuming no sizeable
withdrawals by the partners.
* Good asset quality: The asset quality remains healthy with a 90+
dpd of 1.5%2 as on March 31, 2020 (1.5% as on March 31, 2019). ICRA
notes that the soft bucket delinquencies remain high as the 0+ dpd
stood at 30% as on March 31, 2020. However, the forward flows are
restricted by timely and effective repossession and recoveries. In
FY2020, PPVP recovered 19% of opening portfolio via auctions
without any significant losses. The credit profile of the borrowers
in these segments is modest, making PPVP vulnerable to adverse
economic cycles. As on March 31, 2020, about 83% of PPVP's total
loans were towards used two-wheelers and the remaining towards new
two-wheelers.
* Support from Group entities and promoters: The SB Group has
business interests in various fields including auto dealership,
auto financing, real estate and tour & travel operations. PPVP
derives operational and managerial support from the SB Group and
leverages the Group's established auto dealerships namely, SB
Wheels Zone and SB Motor Corporation, for business growth. PPVP
also derives financial support from the Group companies in the form
of unsecured loans to bridge its funding requirement. These loans
accounted for 27% of the total borrowings as on March 31, 2020 (34%
as on March 31, 2016).
Credit challenges
* Small scale and geographically concentrated operations: PPVP has
a small scale of operations (portfolio of INR67.1 crore as on March
31, 2020 and INR65.9 crore as on March 31, 2019) limited to Andhra
Pradesh. ICRA also takes note of the initiatives taken by PPVP to
reduce its reliance on Group entities for business. ICRA expects
the operations to remain concentrated in Andhra Pradesh over the
medium term.
* Subdued profitability indicators: PPVP's profitability (Profit
after tax/Average total assets) was modest at 0.9% in FY2020
(provisional) owing to higher operating expenses. Going forward, it
would be crucial for PPVP to improve its operating efficiency. The
cost income ratio was 96.6% in FY2020.
* Scope for improvement in credit appraisal; lack of regulatory
oversight: PPVP's appraisal process does not include borrower
income analysis or credit bureau checks. It relies largely on
reference checks for feedback while making credit decisions, which
accentuates the credit risk considering the modest target customer
profile. The management information system is not integrated with
the accounting system. Given the absence of regulatory oversight
and constitution (partnership firms), PPVP does not provide for
non-performing assets.
* Modest funding diversity: The funding profile largely consists of
unsecured loans from Group entities and partners in addition to a
cash credit facility from a bank. The entities ability to diversify
funding sources and secure long-term borrowings at competitive
rates would be critical for portfolio expansion.
Liquidity position: Stretched
PPVP has a stretched liquidity profile with the average utilisation
of the cash credit limit standing at 92% for the sixmonth period
ended August 2020.
ICRA notes that the entity's collections, like other NBFCs, was
adversely impacted in April 2020 by the Covid-19-related lockdown.
However, the same improved in subsequent months to INR6.5 crore in
July 2020 and INR7.3 crore in August 2020. The company does not
have any external term loan repayment obligations; the presence of
sizeable unsecured loans from Group companies provide liquidity
cushion to some extent.
Rating sensitivities
Positive triggers – ICRA could change the outlook or upgrade the
rating if PPVP improves its earnings and funding profile, as the
portfolio expands, while keeping control on its asset quality and
capital profile
Negative triggers – ICRA could change the outlook or downgrade
the rating of PPVP, in case of a deterioration in asset
quality adversely impact its earnings. A significant deterioration
in the capital or liquidity profile would also negatively impact
rating.
VP was set up in 1996 as a partnership firm in Rajahmundry (Andhra
Pradesh). It finances two-wheelers in the West Godavari region of
Andhra Pradesh. As on March 31, 2020, VP's total vehicle loan
portfolio stood at INR27.9 crore (provisional; including unmatured
hire charges). In FY2020, VP reported a net profit of INR0.2 crore
on an asset base of INR27.9 crore.
Group Profile
PPVP is a part of the SB Group, based in Rajahmundry. The key
entities in the SB Group include SB Motor Corporation, SB Wheels
Zone, Sri Padma Priya Finance Corporation and Sri Vishnu Priya
Finance. With an established track record of over three decades,
the SB Group is primarily engaged in two- and four-wheeler
dealerships and financing. Mr. Rangaprasad, Mr. Ramkumar, Ms.
Parimala, and Mr. Suresh Kumar are the partners in all the entities
of the Group with varying shares in each firm.
The Group's financing activities are undertaken by PP and VP. Both
are partnership firms and provide finance for twowheelers, mostly
used vehicles, with a focus on the rural market. As on March 31,
2020, PPVP's total vehicle loan portfolio stood at INR67.1 crore
(Provisional; including unmatured hire purchase charges; INR45.1
crore excluding unmatured hire purchase charges). For FY2020
(Provisional), the combined entity reported a net profit of INR0.6
crore on an asset base of INR61.0 crore. As on March 31, 2020,
PPVP's total net worth in relation to total assets was 29.1%
(provisional).
WALKER ESTATE: ICRA Lowers Rating on INR45cr Term Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Walker
Estate LLP (WELLP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 45.0 [ICRA]B+ (Negative); Rating
Term Loan revised from [ICRA]BB and
Outlook revised to Negative
From Stable
Rationale
The rating revision takes into account the significant slippages in
execution of the serviced apartment project by WELLP and
longer-than-expected time taken in the envisaged disbursal of the
sanctioned INR45-crore term loan for the project. The challenges in
disbursement have been exacerbated due to procedural delays
witnessed owing to the outbreak of the Covid-19 pandemic. In the
absence of required disbursal, the project faces significant
funding and execution risks. Till then, WELLP is entirely dependent
on timely infusion by promoters for meeting the minimum necessary
expenditure and servicing the debt obligations. The interest
payments are being met through promoter support, while the
principal repayments are expected to start from March 2021,
although the company proposes to seek restructuring as per the
Reserve Bank of India's (RBI) guidelines. ICRA notes that WELLP has
opted for moratorium on interest payments as permitted by the RBI.
However, as per SEBI's circulars and guidelines, ICRA has not
considered the above missed payment as a default. ICRA notes that
the delays in the commencement of operations as per the terms of
agreement with GOCO Hospitality (the O&M partner) would entail
payment of sizeable penalty per month of delay. While the SCOD as
per the agreement was March 2020, the same is likely to be reset to
April 2022. The rating continues to be constrained by the limited
track record of the promoters in the hospitality segment, with
their first venture in this space (in the form of serviced villas
being undertaken in an associate entity), expected to become
operational in Goa in the current financial year, against the
originally envisaged SCOD in FY2020.
Moreover, WELLP remains exposed to project stabilisation and
marketing risks, post the completion and these risks are
accentuated by the intense competition in the area with the
availability of numerous established hotels and serviced
apartments. The rating is impacted by the low projected debt
coverage indicators resulting from the project's high leverage
levels and high cost of the sanctioned debt. The same is likely to
keep the project dependent on promoter funding, even post
completion.
However, the rating favourably factors in the demonstrated track
record of financial support by the promoters – Mr. Ashwin
Chandiok and family, of the Walker Chandiok Group– for the
hospitality project being undertaken by WELLP, with the promoters
having already brought in their committed contribution, primarily
in the form of unsecured loans and have also brought in additional
funds to meet interest payments and minimum necessary
expenditure during the period the loan has not been disbursed.
WELLP is developing a 28-key serviced apartment project in
Calangute, Goa, and has entered into an operating service agreement
with GOCO Hospitality to manage the same. ICRA notes that although
GOCO Hospitality has acted as a service provider (mostly in the
wellness segment) for reputed clients such as Mariott
International, its presence in India remains limited. The rating
factors in the favourable project location near Baga and Calangute
beaches in Goa, which witnesses high tourist footfalls. The Outlook
on the rating is Negative as the entity is exposed to substantial
funding risk and possibility of cost overruns, with limited
construction progress over the past year. Additionally, the
expected cost overrun, penalty payout to GOCO, and low projected
debt coverage indicators resulting from the project's high leverage
levels and high cost of the debt, are expected to keep the project
dependent on promoter funding during the extended execution and
stabilisation phase.
Key rating drivers and their description
Credit strengths
* Demonstrated track record of financial support from promoters
(part of the Walker Chandiok Group): WELLP, incorporated in 2016
for developing a hospitality project, is promoted by the Walker
Chandiok family, which is associated with Walker Chandiok & Co and
Grant Thornton India. These are among the largest audit and
assurance firms in India and have a long and demonstrated track
record in this segment. The promoter family has demonstrated its
commitment towards the hospitality project being developed by WELLP
by timely fund infusion as required, and ICRA expects such
financial support to continue going forward, particularly during
the project execution and stabilisation phase.
* Favourable location of the project: The project is located near
Baga and Calangute beaches in Goa, which witnesses high tourist
footfalls. The same is expected to aid in ramping up as well as
maintaining healthy occupancy. ICRA notes that the demand outlook
over the medium to long term remains favourable (excluding the
period of impact of the Covid-19 pandemic), given the proximity of
the project to popular tourist beaches.
Credit challenges
* Significant slippages in execution and exposure to high
execution, funding and marketing risks: Given that there has been
no disbursal of funds for over a year, with ~50% of the total cost
yet to be incurred, the funding and project execution risks remain
high for the firm. The project is likely to be delayed beyond the
initial SCOD, while no disbursement has happened for over a year,
which further exacerbates these risks. WELLP is exposed to
Outstanding ratings by ICRA across the Walker Chandiok Group
include Walker Chandiok& Co LLP {WCC, rated [ICRA]A- (Stable)},
Grant Thornton India LLP {GT, rated [ICRA]A (Stable)}, and Grant
Thornton Advisory Pvt Ltd. {GTAPL, rated [ICRA]A (Stable)}
marketing and stabilisation risk, post the completion of the
project. The risks are further aggravated by the intense
competition in the area, given the numerous established hotels and
serviced apartments in the vicinity.
* Limited experience of promoters in hospitality segment: The
promoter group has limited track record in hospitality, with their
first project in this sector, positioned as serviced villas,
expected to become operational in Goa in FY2021 (revised from
FY2020). The project being undertaken by WELLP represents its
second hospitality venture.
* High leverage and cost of debt; significant dependence on
promoter funding during execution and stabilisation Phase: Of the
total estimated project cost of INR75 crore excluding cost overrun,
INR45 crore(60%) is budgeted to be funded by bank debt, of which
INR33 crore remains to be disbursed. While there is a moratorium on
principal repayments till March 2021, SCOD is expected by April
2022. This results in significant dependence on promoters during
the execution and stabilisation phase for meeting the debt
obligations as well as interest, which had to be serviced
throughout the entire period, till the same can be met through
operational cash flows. The debt coverage indicators are likely to
remain low till operational cash flows ramp-up, given the high
leverage levels of the project, coupled with the high interest cost
of the debt contracted.
Liquidity position: Stretched
With significant slippages in project execution and
longer-than-expected follow-on disbursements of the loan, the
liquidity position has become stretched. This has led to
significant dependence on promoters for meeting the interest
obligations and minimum necessary expenditure during the period the
loan is not being disbursed. The cash and equivalents stood at
INR0.02 crore as of March 2020, while there is no other funding
line available as of now, except for the sanctioned loan where
disbursement has not taken place in more than a year.
Rating sensitivities
Positive triggers - While upgrade over the near term seems
unlikely, the outlook may be changed to Stable from Negative if
meaningful execution is done on the project going forward and the
company is able to demonstrate the availability of adequate funding
to complete the project.
Negative triggers - The rating may be revised downwards if there is
any further delay in project execution or lower-than-expected
RevPar post commissioning.
Walker Estate LLP (WELLP) was incorporated on January 22, 2016 as a
special purpose vehicle (SPV) to execute a hotel/service apartment
project in Goa. It is developing a 28-key serviced apartment
project in Calangute, Goa, and has established an operating service
agreement with GOCO Hospitality to manage the same. The expected
commissioning of the project is in April 2022 (delayed from March
2021).
=========
J A P A N
=========
TAKATA CORP: Court Tosses Chapter 11 Air Bag Claims
---------------------------------------------------
Law360 reports that a Delaware judge on Oct. 8, 2020, disallowed
claims filed against Takata's bankruptcy trust by 13 individuals
asserting they were injured as a result of air bags failing to
deploy during automobile accidents, saying the manufacturer's parts
didn't have a role in the failed deployment.
In a 16-page opinion, U.S. Bankruptcy Judge Brendan L. Shannon
agreed with the trustee of the Takata Airbag Tort Compensation
Trust Fund, which was set up as part of the Chapter 11
reorganization of Takata Corp.'s U. S. subsidiary TK Holdings Inc.,
in finding that inflators made by the manufacturer "have no role in
the failure of an airbag."
About Takata Corp.
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts. Headquartered
in Tokyo, Japan, Takata operates 56 plants in 20 countries with
approximately 46,000 global employees worldwide. The Company has
subsidiaries located in Japan, the United States, Brazil, Germany,
Thailand, Philippines, Romania, Singapore, Korea, China and other
countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the U.S.,
amid recall costs and lawsuits over its defective airbags. Takata
and its Japanese subsidiaries commenced proceedings under the Civil
Rehabilitation Act in Japan in the Tokyo District Court on June 25,
2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.
17-11375) on June 25, 2017. Together with the bankruptcy filings,
Takata announced it has reached a deal to sell all its global
assets and operations to Key Safety Systems (KSS) for US$1.588
billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is tax
advisor. Prime Clerk is the claims and noticing agent. The
Debtors Meunier Carlin & Curfman LLC, as special intellectual
property counsel.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also provides
financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of the
Chapter 11 Debtors, obtained an order of the Ontario Superior Court
of Justice (Commercial List) granting, among other things, a stay
of proceedings against the Chapter 11 Debtors pursuant to Part IV
of the Companies' Creditors Arrangement Act. The Canadian Court
appointed FTI Consulting Canada Inc. as information officer. TK
Holdings, as the foreign representative, is represented by McCarthy
Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Tyson
Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York;
and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in Washington, D.C., as its bankruptcy counsel. The Committee
has also tapped Chuo Sogo Law Office PC as Japan counsel.
The Official Committee of Tort Claimants selected Pachulski Stang
Ziehl & Jones LLP as counsel. Gilbert LLP will evaluate of the
insurance policies. Sakura Kyodo Law Offices will serve as special
counsel.
Roger Frankel, the legal representative for future personal injury
claimants of TK Holdings Inc., et al., tapped Frankel Wyron LLP and
Ashby & Geddes PA to serve as co-counsel.
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
* * *
In February 2018, the U.S. Bankruptcy Court confirmed the Fifth
Amended Chapter 11 Plan of Reorganization filed by TK Holdings,
Inc. ("TKH"), Takata's main U.S. subsidiary, and certain of TKH's
subsidiaries and affiliates.
=====================
N E W Z E A L A N D
=====================
AVANTI RMBS 2020-1: Fitch Assigns B+sf Rating on Class F Debt
-------------------------------------------------------------
Fitch Ratings has assigned final ratings to Avanti RMBS 2020-1
Trust's mortgage-backed pass-through floating-rate bonds. The
issuance consists of notes backed by a pool of first-ranking New
Zealand residential prime and non-conforming, and full- and
low-documentation mortgage loans originated by Avanti Finance
Limited.
The notes were issued by The New Zealand Guardian Trust Company
Limited in its capacity as trustee of Avanti RMBS 2020-1 Trust,
which is a separate and distinct trust created in accordance with a
master trust deed.
The final rating of the class F notes is higher than the expected
rating, primarily because of the reduction in the transaction's
weighted-average (WA) margin from the indicative WA margin
previously modelled, which increases the excess spread available.
RATING ACTIONS
Avanti RMBS 2020-1 Trust
Class A1 NZAVAD1013R9; LT AAAsf New Rating; previously at
AAA(EXP)sf
Class A2 NZAVAD1014R7; LT AAAsf New Rating; previously at
AAA(EXP)sf
Class B NZAVAD1015R4; LT AAsf New Rating; previously at AA(EXP)sf
Class C NZAVAD1016R2; LT A+sf New Rating; previously at A+(EXP)sf
Class D NZAVAD1017R0; LT BBB+sf New Rating; previously at
BBB+(EXP)sf
Class E NZAVAD1018R8; LT BBsf New Rating; previously at BB(EXP)sf
Class F NZAVAD1019R6; LT B+sf New Rating; previously at B(EXP)sf
Class G; LT NRsf New Rating; previously at NR(EXP)sf
TRANSACTION SUMMARY
The asset pool totalled NZD250 million at the September 24, 2020
cut-off date and consisted of 659 obligors with a weighted-average
(WA) unindexed loan/value ratio (LVR) of 65.4%.
KEY RATING DRIVERS
Pandemic-Related Economic Shock: Fitch has made assumptions about
the spread of the coronavirus and the economic impact of
containment measures. In a base-case (most likely) scenario, Fitch
assumes economic activity will jump in 3Q20, to be followed by a
slower recovery trajectory from 4Q20 amid high unemployment and a
further pullback in private-sector investment.
In a downside (sensitivity) scenario, Fitch assesses a more severe
and prolonged period of stress, with recovery to pre-crisis GDP
levels delayed until around the middle of the decade.
Pandemic-Related Impact: Measures put in place to limit the spread
of the virus are affecting New Zealand's economy, with many
businesses continuing to experience a decline in income. Fitch
expects these measures to affect the performance of mortgages, but
there should be no rating impact on the notes, as the ratings can
absorb Fitch's base-case scenario of the pandemic.
- "Global Economic Outlook: September 2020", published on
September 7 2020.
- "Fitch Ratings Coronavirus Scenarios: Baseline and Downside
Cases - Update", published on September 8, 2020.
- "Global SF Rating Assumptions Updated to Reflect Coronavirus
Risk", published on April 3, 2020.
In addition, analytical notes relevant for Australian and New
Zealand RMBS transactions are discussed in the following
commentaries:
- "Fitch Ratings' Approach to Addressing Coronavirus-Related
Risks for Australian, NZ RMBS", published on May 5, 2020.
- "Fitch Ratings Updates Australia, NZ RMBS Criteria Assumptions
on Coronavirus Effects", published on July 28, 2020.
Liquidity Risk from Payment Holidays: The transaction benefits from
a liquidity facility sized at 1.5% of the note balance, which is
sufficient to cover more than six months of required payments based
on the current bank-bill market rate (BKBM), assuming all borrowers
apply for a payment holiday. There currently are no mortgages on
payment holidays in the pool. The transaction can also use any
principal received to pay interest if available.
Operational Risk: Avanti is a non-bank financial institution with
over 30 years of experience in origination, underwriting, servicing
and special servicing across various asset classes in New Zealand.
Fitch undertook an operational review and found that the operations
of the originator and servicer were mostly comparable with market
standards and that there were no material changes that may affect
Avanti's ongoing ability to undertake origination, administration
and collection activities.
Fitch applied a lender adjustment of 1.05x to address specific
aspects that differ from market practices of other prime non-bank
lenders, which Fitch believes may affect the credit risk of the
transaction/assets. This has led to an overall adjustment in the
foreclosure frequency, in line with previous analysis of Avanti
transactions. The collections and servicing activities have not
been disrupted due to the coronavirus outbreak as staff work
remotely and are able to access the disaster recovery site, if
needed.
Asset Analysis: The 'AAAsf' weighted-average foreclosure frequency
(WAFF) of 21.4% is driven by the WA unindexed loan/value ratio
(LVR) of 65.4%. Under Fitch's methodology investment loans equated
to 23.8% and non-conforming loans 35.9% by balance, and
steady-state arrears of 5.5% is applied to the 60-89-day arrears
category. The steady-state arrears adjustment increased the WAFF
modelled by 2.7%, and is calculated using the WA 30+ day arrears of
Avanti RMBS 2018-1 and 2019-1 Trusts, to July 2020, multiplied by
1.2. The 'AAAsf' WA recovery rate of 51.2% is driven by the
portfolio's WA indexed scheduled LVR of 64.8% and the portfolio
'AAAsf' WA market value decline of 61.3%.
Liability Analysis: The class A1, A2, B, C, D, E and F notes
benefit from credit enhancement of 30.0%, 13.0%, 10.0%, 7.4%, 5.4%,
3.6% and 2.4%, respectively. Structural features include a
liquidity facility sized at 1.5% of the invested note balance and
subject to a floor of NZD100,000. The Class B to G notes pay
interest based on the notes' stated balance. Fitch's ratings
reflect the timely and ultimate payment of interest and its cash
flow model addresses the risk that interest may be not be recovered
in scenarios where there are charge-offs. This is more conservative
than transaction documentation. All classes of notes can withstand
all relevant Fitch cash flow modelling stresses.
Macroeconomic Factors: Fitch expects mortgage performance in New
Zealand to deteriorate in the near term. Fitch currently forecasts
New Zealand's GDP to shrink by 5.0% in 2020 with unemployment
rising to 7.1%. This is partially offset by a low Official Cash
Rate of 0.25% and the application of both central bank and
government stimulus measures. In the medium term, Fitch expects GDP
growth to bounce back to 3.9% in 2021 and the unemployment rate to
fall to 6.8%.
The Stable Outlook on the notes reflects liquidity support and
ability to withstand the sensitivity to higher defaults stemming
from the pandemic.
Avanti 2020-1 has an ESG Relevance Score of '5' for Exposure to
Social Impacts because analysis takes into account the limited
ability of the mortgage lender to reprice loans upwards as a result
of borrowers paying above-market rates, which has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors. This reduces the transaction's
benefit from the threshold rate mechanism for the purposes of the
cash flow analysis, and therefore has limited the rating uplift of
the class B, C, D, E and F notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
The class A1 and A2 notes' final ratings are at 'AAAsf', which is
the highest level on Fitch's scale. The ratings cannot be
upgraded.
Upgrade Sensitivity:
Class B / C / D / E / F
Current Rating: AAsf / A+sf / BBB+sf / BBsf / B+sf
Impact on note ratings of multiple factors:
Decrease defaults by 15%; increase recoveries by 15%: AAAsf / AAsf
/ A+sf / BBBsf / BBBsf
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
A longer pandemic than Fitch expects that leads to deterioration in
macroeconomic fundamentals and consumers' financial position in New
Zealand beyond Fitch's baseline scenario. Unanticipated increases
in the frequency of defaults and loss severity on defaulted
receivables could produce loss levels higher than Fitch's base
case, and are likely to result in a decline in credit enhancement
and remaining loss-coverage levels available to the notes.
Decreased credit enhancement may make certain note ratings
susceptible to potential negative rating action, depending on the
extent of the coverage decline.
Fitch conducted sensitivity analysis by increasing gross default
levels and decreasing recovery rates over the life of the
transactions.
Downgrade Sensitivity:
Notes class: A1/ A2/ B / C / D / E / F
Current Rating: AAAsf/ AAAsf/ AAsf / A+sf / BBB+sf / BBsf / B+sf
Impact on note ratings of increased defaults:
Increase defaults by 15%: AA+sf / AA+sf / AA-sf / Asf / BBBsf /
B+sf / Bsf
Increase defaults by 30%: AAsf / AAsf / A+sf / A-sf / BBB-sf / Bsf
/ below Bsf
Impact on note ratings of decreased recoveries:
Reduce recoveries by 15%: AA+sf / AA+sf / AA-sf / A-sf / BBB-sf /
below Bsf / below Bsf
Reduce recoveries by 30%: AAsf / AAsf / A+sf / BBBsf / BB-sf /
below Bsf / below Bsf
Impact on note ratings of multiple factors:
Increase defaults by 15% and reduce recoveries by 15%: AAsf / AAsf
/ A+sf / BBB+sf / BBsf / below Bsf / below Bsf
Increase defaults by 30% and reduce recoveries by 30%: Asf / Asf /
BBB+sf / BBsf / below Bsf / below Bsf / below Bsf
Coronavirus Downside Scenario Sensitivity:
Under Fitch's downside scenario, re-emergence of infections in
major economies prolongs the health crisis and confidence shock,
prompts extensions or renewals of lockdown measures and prevents a
financial-market recovery. Fitch tested this scenario by increasing
defaults by 15% and decreasing recoveries by 15%.
Notes class: A1/ A2/ B / C / D / E / F
Current Rating: AAAsf/ AAAsf/ AAsf / A+sf / BBB+sf / BBsf / B+sf
Impact on note ratings of downside scenario: AAsf / AAsf / A+sf /
BBB+sf / BBsf / below Bsf / below Bsf
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
As part of its ongoing monitoring, Fitch reviewed a small targeted
sample of Avanti Finance's origination files and found the
information contained in the reviewed files to be adequately
consistent with the originator's policies and practices and the
other information provided to the agency about the asset portfolio.
Fitch sought to receive a third-party assessment conducted on the
asset portfolio information, but none was made available.
Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis, according to its applicable
rating methodologies, indicates that it is adequately reliable.
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.
The issuer has informed Fitch that not all relevant underlying
information used in the analysis of the rated notes is public.
REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS
A description of the transaction's representations, warranties and
enforcement mechanisms (RW&Es) that are disclosed in the offering
document and which relate to the underlying asset pool is available
by clicking the link to the Appendix. The appendix also contains a
comparison of these RW&Es to those Fitch considers typical for the
asset class as detailed in the Special Report titled
'Representations, Warranties and Enforcement Mechanisms in Global
Structured Finance Transactions'.
ESG CONSIDERATIONS
Avanti RMBS 2020-1 Trust has an ESG Relevant Score of '5' for
Exposure to Social Impacts. This has a negative impact on the
credit profile (as described in the Key Rating Drivers), and is
relevant to the ratings in conjunction with other factors. Unless
otherwise disclosed in this section, the highest level of ESG
credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
TICKET ROCKET: Crusaders and Hurricanes Sue over Firm's Collapse
----------------------------------------------------------------
Hamish McNeilly at Stuff.co.nz reports that two rugby franchises
are heading to court as they seek to recover money owed by Ticket
Rocket.
Stuff says lawyers acting for the Crusaders and Hurricanes will
appear in the High Court at Dunedin later this month.
The Super rugby franchises are separate plaintiffs in a case
against Ticket Rocket, formerly known as TicketDirect, and its
parent company, Fortress Informations Systems Ltd.
An application to place the former Dunedin-based company in
liquidation was made on August 14, Stuff says. The company had
operated under the tagline: 'We're the good guys you have been
waiting for.'
According to Stuff, the company's collapse has left many ticket
holders and organisations out-of-pocket – including those
involved in sports, music and entertainment.
Repeated attempts to contact sole director Matt Davey at his listed
contact addresses in New Zealand, Australia and his home country of
Canada have been unsuccessful.
Both rugby franchises declined to comment about the case, or the
exact amount owed, which is understood to be six figures, the
report notes.
Wellington lawyer Julie Crengle, acting on behalf of the
Hurricanes, said: "We are not in a position to provide those
details in advance of the proceedings."
Stuff earlier reported the Hurricanes had contacted police in an
attempt to recover NZD200,000 from the struggling ticketing
company, after fans failed to secure refunds.
Mr. Davey was the largest shareholder of the Highlanders after
buying into the Dunedin-based rugby franchise in 2015. The
franchise has stopped using Ticket Rocket and is not owed money,
the report discloses.
Mr. Davey sold 300 of his 462 shares in the Highlanders in May, and
stepped down as a director.
The Palmerston North City Council also filed proceedings against
Ticket Rocket's holding company to freeze NZD676,000.
Documents from that case, which was heard in the High Court at
Dunedin in June, noted concerns over the company accessing ''funds
held on trust to meet its cashflow requirements, or debts unrelated
to the trust fund," the report states.
According to Stuff, the company's receivers, BDO Christchurch, put
Ticket Rocket up for sale in October.
The receivership did not affect the sale of tickets, with the
company's websites continuing to sell tickets as normal, the report
notes.
Proceeds made post-receivership go directly to the relevant
promoter/venue, with current promotions including Mitre 10 Cup
games involving Hawke's Bay and Waikato, the report adds.
=================
S I N G A P O R E
=================
BM MOBILITY: To be Delisted from Main Board on Nov. 12
------------------------------------------------------
The Business Times reports that BM Mobility will be delisted from
the main board on Nov. 12.
In a statement on Oct. 14, BM Mobility said it had been notified of
the delisting date by the Singapore Exchange.
BT says shareholders can check with Kim Lim or Randy Pay at
kimflim@deloitte.com and rpay@deloitte.com respectively.
The counter has suspended trading in its shares since July last
year, the report notes.
Headquartered in Singapore, BM Mobility Ltd., an investment holding
company, builds and operates charging stations for electric
vehicles in China. It operates 22 charging stations in Beijing,
which are used by the public and electric-car rental companies. The
company also sells and rents electric scooters to commercial users.
In addition, it is involved in the research and development,
manufacture, and sale of SBR and other foamed materials; and
trading of foamed materials, textiles, sports and sports
accessories, garments, and footwear. The company was formerly
known as Ziwo Holdings Ltd. and changed its name to BM Mobility
Ltd. in January 2018.
On July 20, 2020, Andrew Grimmett, Lim Loo Khoon and Tan Wei Cheong
of Deloitte & Touche LLP were appointed as Judicial Managers of the
Company.
KS ENERGY: CEO, Directors Quit as Firm Goes Under JM
----------------------------------------------------
Tay Peck Gek at The Business Times reports that KS ENERGY'S chief
executive and directors have resigned, a day after the company was
ordered by the High Court to be put under judicial management
(JM).
Richard Wiluan quit as the CEO and chairman of the distressed oil
services firm, BT says. Lawrence Basapa, Chew Choon Soo and Soh Gim
Teik resigned from their positions of independent directors.
BT relates that mainboard-listed company announced these cessations
in a regulatory filing on Oct. 14. The directors cited the company
coming under the command of the judicial managers following the JM
order by the court on Oct. 13 as the reason.
According to BT, Mr. Wiluan was appointed to helm the company as
CEO and chairman only in August, after his father Kris Wiluan
stepped down after he was charged with 112 counts of false trading
and market-rigging transactions.
About KS Energy
Headquartered in Singapore, KS Energy Limited operates as an energy
services provider primarily to the oil and gas, marine, and
petrochemical industries in Kurdistan, Egypt, Pakistan, Vietnam,
Indonesia, Malaysia, and internationally. KS Energy Limited is a
subsidiary of Pacific One Energy Limited.
On Oct. 13, 2020, the Singapore High Court appointed Deloitte &
Touche's Andrew Grimmett and Lim Loo Khoon as judicial managers of
KS Energy and a key operating subsidiary KS Drilling (KS
Companies). Both were earlier, on Aug. 31, appointed the group's
interim judicial managers (IJMs).
In August, OCBC applied to place the mainboard listed firm and its
unit under JM after it sent letters of demand to the firms as well
as six other subsidiaries for a US$230.7 million term loan and a
SGD5 million bridging loan to KS Drilling. KS Drilling is an
80.09%-owned subsidiary of KS Energy, which has provided US$150
million in guarantee for the term loan.
SUNMOON FOOD: Suspends Trading of Shares Amid Parent's Bankruptcy
-----------------------------------------------------------------
Fiona Lam at the Business Times reports that SunMoon Food Company
on Oct. 15 requested its trading halt be converted into a voluntary
suspension.
According to the report, the mainboard-listed company said it needs
more time to prepare an announcement to update its shareholders in
relation to its parent's voluntary bankruptcy reorganisation.
SunMoon disclosed on Oct. 12 that three entities 00 Shanghai Yiguo
E-Commerce, Shanghai Winchain Supply Chain Management and Shanghai
Exfresh Logistic -- had been placed under voluntary bankruptcy
reorganisation under Chinese law on July 30, BT relays.
Shanghai Yiguo E-Commerce is the ultimate holding company of Yiguo
General Food Pte Ltd, which in turn holds a 59.9 per cent stake in
SunMoon.
The Singapore-listed firm's total accounts receivable amounted to
about SGD13.2 million, including some SGD12.4 million of accounts
receivable from the three Yiguo entities, the report discloses.
The deadline to file the creditors' proof of debt in respect of the
bankruptcy reorganisation is Oct. 19.
BT relates that SunMoon's board on Oct. 12 also flagged a going
concern issue in view of the reorganisation, and said it might
raise funds from investors.
After the announcement, SunMoon shares fell 22.5 per cent to 3.1
Singapore cents, until the company called for a trading halt at
1:41 p.m. on Oct. 12, BT says.
Under listing rules, a trading halt cannot exceed three market days
or a short extension if the Singapore Exchange agrees to one.
Accordingly, SunMoon's halt should have ceased before the end of
the midday break at 1:00 p.m. last Oct. 15, BT notes.
About Sunmoon Food
Singapore-based Sunmoon Food Company Limited (SGX:AAJ) --
https://www.sunmoonfood.com/ --- distributes and markets branded
fresh fruits, vegetables, and consumer products worldwide. Its
fresh fruits include apples, pears, stone fruits, and seasonal
fruits; and consumer products comprise fruit cups, juices, snacks,
and frozen products. The company also manages a network of retail
franchise outlets. It distributes products through supermarkets,
convenience stores, online and wholesale channels, airlines, and
food services.
===============
T H A I L A N D
===============
THAI AIRWAYS: Offers Leave, Early Retirement to Workers
-------------------------------------------------------
Bangkok Post reports that Thai Airways International (THAI) has
announced it is planning to furlough more workers and offer early
retirement to its staff to trim its workforce, as it attempts to
make what is left in its cash reserves last until April next year.
The Post relates that the flag carrier's acting president, Chansin
Treenuchagron, said about 80% of THAI's 19,000 employees have
cooperated with the company by voluntarily cutting their salaries
or by taking unpaid leave, saying their cooperation will enable the
company to last until December.
However, he said, revenues from other sources won't be enough to
keep the company afloat next year, especially given the pandemic
has yet to show signs of subsiding, the report relays.
On Oct. 9, THAI held a meeting to inform staff of various
developments, including the company's rehabilitation process, its
current financial status, the progress of the company's debt
settlement and its new early retirement and furlough policies.
Some employees were willing to leave the company before their
retirement, on the condition that they are suitably compensated,
the report relays.
It is not known how many will be eligible for the offer, the Post
states.
According to the Post, THAI workers' union members wore black to
the meeting to protest against the recent promotion of several
executives as the company struggles to stay in business -- one of
which was a spouse of the chairman of the THAI board of directors.
The company has spoken to the workers' union, which Mr. Chansin
said seemed receptive to the proposal.
THAI employees who wish to participate in the next round of early
retirement can submit their applications between Oct. 15 and Oct.
30, the Post discloses.
Those who are approved for early retirement will receive severance
pay of two to 14.33 months according to the law, plus other
benefits from the company. The furlough programme will be effective
from Nov. 1 to April 30, adds the Post.
About Thai Airways
Thai Airways International PCL (BAK:THAI) --
http://www.thaiairways.co.th/-- is the national carrier of
Thailand. The company provides air transportation, freight and
mail services on domestic and international routes including Asia,
Europe, North America, Africa and South West Pacific. The Company
is a state enterprise which is controlled by the government and
partly owned by the public.
As reported in Troubled Company Reporter-Asia Pacific on May 21,
2020, Thailand's cabinet approved a plan to restructure troubled
Thai Airways International Pcl's finances through a bankruptcy
court, the Southeast Asian country's prime minister said on May
19.
The plan for a court-led restructuring of the national carrier
replaces a previous proposal of a government-backed rescue package
that was heavily criticised in the country.
Thai Airways on May 27, 2020 said it appointed board members as
rehabilitation planners in a bankruptcy court submission.
On Sept. 14, 2020, Thailand's Central Bankruptcy Court approved
Thai Airways debt restructuring.
Thai Airways posted losses every year after 2012, except in 2016.
In 2019, it reported losses of THB12.04 billion.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000.
*** End of Transmission ***