/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/201028.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Wednesday, October 28, 2020, Vol. 23, No. 216 Headlines A U S T R A L I A RAHME HOLDINGS: Second Creditors' Meeting Set for Nov. 4 SLKALT PTY: Riot Art Placed in Liquidation; Shuts 56 Stores C H I N A CHINA EVERGRANDE: Investors Can't Afford to Force a Default I N D I A ASSOCIATED LIGHTING: Insolvency Resolution Process Case Summary BADEPALLY MUNICIPALITY: ICRA Keeps B+ Rating in Not Cooperating BHAGWATI RICE: ICRA Withdraws B+ Rating on INR41cr Loans EMM VEE: Insolvency Resolution Process Case Summary EON ELECTRIC: Insolvency Resolution Process Case Summary GLAZEBROOKE TRADING: ICRA Assigns C+ Rating to INR150cr NCD GMR AMBALA-CHANDIGARH: ICRA Cuts Rating on INR236.48cr Loan to D GNI INFRASTRUCTURE: ICRA Cuts Rating on INR17cr Loan to B+ GREEN GATEWAY: Insolvency Resolution Process Case Summary GURU KIRANA: ICRA Keeps B Debt Ratings in Not Cooperating HONEST DERIVATIVES: ICRA Keeps D Debt Ratings in Not Cooperating IL&FS GROUP: Maintains Aggregate Debt Addressed Estimates JALAN SYNTHETIC: ICRA Lowers Rating on INR14cr Cash Loan to B+ JAY POLYPACK: Insolvency Resolution Process Case Summary JHV STEELS: ICRA Keeps B Debt Rating in Not Cooperating KESHAV HOLIDAY: ICRA Puts B+ Rating on Watch Developing LINKPOINT INFRASTRUCTURE: Ind-Ra Withdraws BB+/NonCoop. Rating M R STEEL: ICRA Withdraws B+/A4 Rating on INR8cr Loan MAD STUDIOS: ICRA Keeps D Debt Ratings in Not Cooperating MURARI PAVAN: ICRA Keeps B+ Debt Rating in Not Cooperating NEHANI TILES: ICRA Withdraws B+ Rating on INR11.50cr Loan NEW LAXMI: Ind-Ra Gives BB LongTerm Issuer Rating, Outlook Stable NIGO BEST: Insolvency Resolution Process Case Summary PRABHU AGARWALLA: ICRA Reaffirms D Rating on INR33cr Cash Loan RAYBAN FOODS: ICRA Lowers Rating on INR30cr LT Loan to D RISE ON: ICRA Keeps C Debt Rating in Not Cooperating Category SAI BABA ENTERPRISES: ICRA Withdraws B+ Rating on INR18cr Loans SAI BABA: ICRA Withdraws B+ Rating on INR12cr Loans SAI LEELA: ICRA Keeps B+ Debt Ratings in Not Cooperating SARGAM METALS: ICRA Keeps D Debt Ratings in Not Cooperating SAVIDHA MEDICAL: ICRA Keeps B Debt Ratings in Not Cooperating SIDDAPUR DISTILLERIES: Ind-Ra Affirms BB+ Rating, Outlook Negative SKS POWER: ICRA Lowers Rating on INR1,600cr Term Loan to C+ TRADCO DEESAN: ICRA Keeps D Debt Ratings in Not Cooperating TRADCO INDIA: ICRA Keeps D Debt Ratings in Not Cooperating VANSHIKA CONSTRUCTION: ICRA Cuts Rating on INR5cr Loan to B+ VARDHAMAN PRESSURE: ICRA Keeps B+ Debt Ratings in Not Cooperating VARUN ENTERPRISES: ICRA Lowers Rating on INR15.50cr Loan to B+ ZAVERI EXPORTS: ICRA Lowers Rating on INR13cr LT Loan to D M A L A Y S I A AIRASIA GROUP: MAHB Pursues Legal Rights to Recover Debt AIRASIA GROUP: Unit Confirms BOC Intervention Application N E P A L MAHILA LAGHUBITTA: ICRA NEPAL Assigns BB Issuer Rating S I N G A P O R E BM MOBILITY: Interim Liquidators Appointed for Subsidiary EAGLE HOSPITALITY: MAS Issues Notice to Remove Manager S O U T H K O R E A SOUTH KOREA: Rebounds from Recession as Exports Jump - - - - - ================= A U S T R A L I A ================= RAHME HOLDINGS: Second Creditors' Meeting Set for Nov. 4 -------------------------------------------------------- A second meeting of creditors in the proceedings of Rahme Holdings Pty Ltd, trading as Forsite Constructions, has been set for Nov. 4, 2020, at 3:00 p.m. via teleconference. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Nov. 3, 2020, at 4:00 p.m. Glenn Livingstone and Morgan Kelly of KPMG were appointed as administrators of Rahme Holdings on Oct. 26, 2020. SLKALT PTY: Riot Art Placed in Liquidation; Shuts 56 Stores ----------------------------------------------------------- Eloise Keating at SmartCompany reports that Art supplies retailer Riot Art & Craft has closed its 56 stores, after being placed in liquidation last week. SmartCompany, citing nine.com.au, relates that employees were given little notice about the closures, receiving text messages on Oct. 19 informing them they were "not required" to attend work the following day. SmartCompany says the majority of Riot Art & Craft stores were located in shopping centres in Australia's east coast states, with a smaller number in Western Australia and South Australia. "A massive thank you to everyone for all your years of service," read the text message from Riot Art & Craft director Michael Kurc. "The liquidator will be in touch with you regarding your entitlements." According to SmartCompany, liquidator Nicholas Giasoumi of insolvency firm Dye & Co has been appointed as liquidator for SLKALT Pty Ltd, the company that operated the Riot Art & Craft business for more than 40 years. Mr. Giasoumi confirmed to SmartCompany on Oct. 27 the business has about 137 employees, both permanent and casual, who are collectively owed approximately AUD3.5 million in wages and entitlements. Employees have been advised to make claims under the federal government's Fair Entitlement Guarantee Act to recover these entitlements. The business also owes about AUD8.5 million to 100 other unsecured creditors, the majority of which are landlords, SmartCompany discloses. The Riot Art & Craft e-commerce store is continued to trade under new ownership, according to a message displayed on the website, SmartCompany relays. Mr. Giasoumi confirmed the online assets of the business have been sold, but was unable to disclose the purchasing party, adds SmartCompany. He said he will now be going through the sale contract to ensure the assets were sold at market value, but the "primary concern" at this stage was to take care of employees and landlords affected by the liquidation. It's still "early days" in terms uncovering what caused the business to be placed in liquidation, Mr. Giasoumi, although "clearly COVID-19 is not going to help, as a general rule". While Mr. Kurc said the matter is now in the hands of the liquidator, he told nine.com.au "after 46 years in business it's been very traumatic closing doors," the report adds. ========= C H I N A ========= CHINA EVERGRANDE: Investors Can't Afford to Force a Default ----------------------------------------------------------- Bloomberg News reports that to understand why some of China Evergrande Group's strategic investors agreed to throw the embattled developer a $13 billion lifeline last month, look no further than their own sources of revenue. Bloomberg says interior decorator Grandland Group Holdings Co.'s listed unit gets almost 58% of its sales from Evergrande. Hangzhou Robam Appliances's sales jumped after deepening its cooperation with Evergrande. And the developer has been the largest source of revenue for door maker Beijing Jiayu over the last four years, Bloomberg discloses citing company filings. With such strong ties to the indebted real estate firm, many suppliers agreed to waive their rights to a combined $13 billion repayment just five days after Evergrande became embroiled in a crisis of confidence, according to Bloomberg. The company warned in August it faced a potential default if it had to make the CNY130 billion ($19 billion) payment to these backers by a Jan. 31 deadline, according to people familiar with the matter. Evergrande remains in talks with investors owed the remaining $6 billion, Bloomberg notes. As part of the new deal, several strategic investors agreed to keep their shares and not require the company to buy them out, according to a filing cited by Bloomberg. The agreement turns their hybrid securities into common shares in Evergrande's property unit, said Raymond Cheng, a property analyst at CGS-CIMB Securities. Company officials told investors in an Oct. 16 call organized by Bank of America Corp. that the new agreement doesn't include any put options, Bloomberg relates. Among the holdouts is Evergrande Group's largest strategic investor, Shandong Hi-Speed Group, which is leaning toward demanding repayment of the $3.4 billion it's sunk into the embattled developer, Bloomberg reports citing people familiar with matter. Evergrande dropped 2.8% to HK$14.58 in Hong Kong, a one-month low. The shares have slumped by a third this year, Bloomberg notes. Bloomberg lists a rundown of how many of these investors are intertwined with Evergrande: * Suning Appliance Group Co.: As Evergrande's second-largest strategic investor, Suning invested CNY20 billion in the third investment round in late 2017. A month later, Suning teamed up with Evergrande to expand its brick-and-mortar business, with Evergrande opening stores in more than 500 residential communities. The next year, Evergrande invested CNY10.2 billion into a joint venture with Suning. Evergrande's insurance unit also invested in at least three property development projects owned by Suning around the time of the investments. * Grandland: The Shenzhen-based decorating firm has been an Evergrande supplier since at least 2007. Evergrande has been the biggest customer for its main listed unit Shenzhen Grandland Group Co., contributing between 42% to 58% of sales from 2010 to 2019. The annual contribution now exceeds Grandland's strategic investment of CNY5 billion, according to annual reports. Grandland's accounts receivables from Evergrande exceeds its cash balance. * Jiayu: The listed door and window maker, a company related to an investor, has supplied Evergrande for more than a decade. Evergrande has been the biggest revenue source for the Shenzhen-listed firm since at least 2016, contributing to 35% of sales in 2019. * Hangzhou Robam Appliances: The Hangzhou-based kitchen appliance firm said it made a strategic investment of CNY100 million in Evergrande in 2017 to "keep the business relationship." Sales surged in 2019 after it deepened its cooperation with Evergrande, according to its annual report. * Jason Furniture Hangzhou Co.: Weeks after its CNY503 million investment, the furniture maker received Evergrande contracts worth four times the value of its investment. * Guangdong Vanward New Electric: Six months after the heater maker invested CNY200 million in Evergrande, the developer agreed to purchase goods in the same amount. * Zhejiang Youpon Integrated Ceiling: Two months after its CNY300 million strategic investment, the integrated ceiling maker received contracts worth three times that total. * Shum Yip Group Ltd.: The property service provider's listed unit, with business confined to China's larger cities, said its strategic investment in Evergrande can help tap new markets. ========= I N D I A ========= ASSOCIATED LIGHTING: Insolvency Resolution Process Case Summary --------------------------------------------------------------- Debtor: Associated Lighting System Private Limited Registered office: 17, Community Centre New Friends Colony New Delhi 110065 Works at: Khasra No. 184/2 situated at Rehmapur Taluka Jaspur District Udhamsingh Nagar Uttrakhand Insolvency Commencement Date: October 21, 2020 Court: National Company Law Tribunal, New Delhi, Bench-II Estimated date of closure of insolvency resolution process: April 19, 2021 (180 days from commencement) Insolvency professional: Devendra Singh Interim Resolution Professional: Devendra Singh ATS Greens Paradiso Flat No. 02054, Tower-2 Plot No. GH-03 Sector-CHI-04 Greater Noida Uttar Pradesh 201308 E-mail: dev_singh2006@yahoo.com - and - D-54, 1st Floor Defence Colony New Delhi 110024 E-mail: cirp.alspl@gmail.com Last date for submission of claims: November 4, 2020 BADEPALLY MUNICIPALITY: ICRA Keeps B+ Rating in Not Cooperating --------------------------------------------------------------- ICRA said ratings for the Issuer Rating of Badepally Municipality continue to remain under 'Issuer Not Cooperating' category'. The ratings are denoted as "[ICRA]B+(Stable) ISSUER NOT COOPERATING". 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. The BDM, being an ULB, provides civic services to the Badepally town. The town is located in Mahbubnagar district of Telangana and is at a distance of around 90 km from the state capital, Hyderabad. Badepally covers an area of 10.37 sq. km. and has population base of 32,598, of which, ~37% is accounted by slum dwellers. The major functions of the BDM involve water supply, solid-waste management, repair and maintenance of roads, street lighting and amenities such as shopping stalls, community hall, playgrounds, parks/gardens, among other civic amenities. The council of the BDM comprises 20 Ward Councillors. The executive wing is headed by a Municipal Commissioner, who is appointed by the GoTS and is supported by the heads of various departments. BHAGWATI RICE: ICRA Withdraws B+ Rating on INR41cr Loans -------------------------------------------------------- ICRA has withdrawn the ratings on certain bank facilities of Bhagwati Rice Mill Pvt. Ltd (BRMPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-Based Limits 40.64 [ICRA]B+ (Stable); ISSUER NOT COOPERATING; Withdrawn Unallocated 0.36 [ICRA]B+ (Stable); ISSUER NOT COOPERATING; Withdrawn Rationale The long-term and short term ratings assigned to BRMPL have been withdrawn at the request of the company and based on the No Objection Certificate received from the banker, and in accordance with ICRA's policy on withdrawal and suspension. ICRA is withdrawing the rating and that it does not have information to suggest that the credit risk has changed since the time the rating was last reviewed. Key rating drivers and their description Key rating drivers have not been captured as the rating is being withdrawn. BRMPL was established in 1996. The company is primarily involved in rice milling at its unit at Mainpuri,Uttar Pradesh, which is in close proximity to the local grain market. It sells rice under its four different regional brands –Shree, Hathi, Gulab and Ujjwal –in the domestic market. EMM VEE: Insolvency Resolution Process Case Summary --------------------------------------------------- Debtor: Emm Vee Infrastructure (India) Private Limited Opp. Appex College, Ved Vyas Puri Meerut Dehradun By Pass Road Meerut UP 250103 IN Insolvency Commencement Date: October 13, 2020 Court: National Company Law Tribunal, Meerut Bench Estimated date of closure of insolvency resolution process: April 13, 2021 Insolvency professional: Manish Agarwal Interim Resolution Professional: Manish Agarwal 707, Saket Opp. Rohtash Sweets Meerut 250001 Uttar Pradesh E-mail: manishfcs@gmail.com - and - 205, 2nd Floor, Rohit House Tower-2, Tolstoy Marg Connaught Place New Delhi 01 E-mail: emmvee.cirp@gmail.com Classes of creditors: Allottees under a Real Estate Project under section 5(8)(f) of IBC, 2016 Insolvency Professionals Representative of Creditors in a class: Mr. Amit Agrawal H-63, Ground Floor Vijay Chowk Laxmi Nagar Delhi 110092 E-mail: amitagcs@gmail.com Atiuttam Prasad Singh A-97 & 98, Upper ground floor Street No. 6, Madhu Vihar Delhi 110092 E-mail: atiuttamsingh@gmail.com Mr. Sudhanshu Gupta 311, Agarwal Chamber-2 Plot No. 30, 31 Veer Savarkar Block Opp. Metro Pillar No. 58 Shakarpur, New Delhi 110092 E-mail: sg_1973@rediffmail.com Last date for submission of claims: October 31, 2020 EON ELECTRIC: Insolvency Resolution Process Case Summary -------------------------------------------------------- Debtor: Eon Electric Limited Registered office: House No. 1048 Sector-14, Sonepat Haryana 131001 Office other than Reg. off.: Plot No. 10, Sector-4 SIDCUL Haridwar Uttarkhand 249403 - and - C-81, 2nd Floor Hosiery Complex, Phase-2 Noida 201305 UP IN Insolvency Commencement Date: October 13, 2020 Court: National Company Law Tribunal, Chandigarh Bench Estimated date of closure of insolvency resolution process: April 15, 2021 (180 days from commencement) Insolvency professional: Vishva Deep Sharma Interim Resolution Professional: Vishva Deep Sharma 4/4, Ground Floor East Patel Nagar New Delhi National Capital Territory of Delhi 110008 E-mail: videeco@yahoo.com irp.eonelectric@gmail.com Last date for submission of claims: October 30, 2020 GLAZEBROOKE TRADING: ICRA Assigns C+ Rating to INR150cr NCD ----------------------------------------------------------- ICRA has assigned rating to the bank facilities of Glazebrooke Trading Private Limited (Glazebrooke), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term–Non- 150 [ICRA]C+ assigned Convertible Debentures (NCD)- Proposed Rationale The assigned rating for Glazebrooke considers the firm's nascent stage of operation in spice trading (began in FY2018) and the mining logistics business (which is expected to commence operations in the current year). With a limited track record, the company's scaling up of operations and cash accruals will depend on sustained order inflows and timely execution of projects. The rating also considers the expected financial risk profile of the company, which is likely to be characterised by a stretched capital structure and debt protection metrics on account of high debt level and low net worth base. Further, given the high cost of debt and relatively low tenure, the company is exposed to the refinancing risk. Its debt protection metrices are highly dependent on its ability to rapidly scale up operations and generate high return on assets, resulting in strong free cash flows. Key rating drivers Credit strengths * High potential opportunities in mining business: The company plans to diversify its revenue stream to the mining segment, which is characterised by high growth potential and healthy return on investment. Given the country's high dependence on coal, ICRA expects healthy long-term growth potential in this sector. Credit challenges * Impact of NCD issue on debt levels and debt protection metrices: The company is issuing NCD worth INR150 crore to invest in the mining logistics business. The high interest rate (at 25%), coupled with short repayment tenure is expected to stretch its capital structure (as its net worth stood low at INR1 crore as on March 31, 2020) and debt protection metrices (the coverage ratios will get impacted because of high interest cost and high repayment obligation at the end of the third year). While the debt is expected to be invested for capex requirement for the mining project, the generation of free cash flow is highly dependent on sustained order inflow and execution. ICRA notes that the management is expecting an order inflow of INR450 crore through its likely joint venture partner and is expecting further orders, going forward. * Limited track record: The firm's existing revenue comes from the spice trading business and its operation in the mining segment is at the nascent stage, which is expected to commence operations in the current year only. The firm is likely to be dependent on partners for operational aspects and is likely to function as an investment entity. Liquidity position Glazebrooke's liquidity position is likely to be stretched given its high debt level and quarterly interest payment. ICRA notes that the company's debt will be used for investing in machinery directly or through a special purpose vehicle (SPV), which is likely to result in high dependence on cash flow from operations for debt repayment. Further given the tenure of three years for NCDs, there is high refinancing risk associated as well. Rating sensitivities Positive triggers – The ratings may be upgraded if the company demonstrates healthy cash accruals and free cash flow on a sustainable basis. Negative triggers – The ratings may be downgraded if there is delay in commencement of projects or if the company's liquidity profile or financial flexibility weakens or if the company incurs losses on a sustained basis. The company was incorporated in 2017 to carry out import and trading of spices in India. The company is diversifying into mining related logistics in association with another firm, Kallal Logistics. Glazebrooke is promoted by Mr. Vijayakumaran Dwarakanathan and Mrs. Lakshmi Muthuraman. GMR AMBALA-CHANDIGARH: ICRA Cuts Rating on INR236.48cr Loan to D ---------------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of GMR Ambala-Chandigarh Expressways Private Limited (GACEPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based- 236.48 [ICRA]D; downgraded from Term Loan [ICRA]BB(Stable) Rationale The rating downgrade takes into account the recent delays in debt servicing by GACEPL. ICRA has come to know that the company has missed debt servicing to lenders due on September 30, 2020. Recently, the arbitration case between GACEPL and National Highway Authority of India (NHAI) was awarded in favour of NHAI post which the pending negative grant liability has become payable. As per escrow agreement and cashflow waterfall mechanism, the negative grant payments have priority over debt servicing, hence, available cash was not used for debt servicing. However, lenders plan to utilise the funds available in debt service reserve account (DSRA) for debt servicing. Key rating drivers and their description Credit strengths NA Credit challenges Delays in debt servicing - There has been delays in debt servicing of payments due on September 30, 2020 by GACEPL. Recently, the arbitration case between GACEPL and NHAI was awarded in favour of NHAI post which the negative grant liability of INR66.41 crore plus accrued interest for GACEPL has become payable. As per escrow agreement and cashflow waterfall mechanism, the negative grant payments have priority over debt servicing, hence, available cash was not used for debt servicing. However, lenders plan to utilise the funds available in debt service reserve account (DSRA) for debt servicing. Liquidity position: Poor The company's liquidity position is poor with cash flow from operations net of negative grant payments expected to be insufficient to meet its debt servicing obligation over the near term. Rating sensitivities Positive triggers - The rating could be upgraded if the company demonstrates track record of regular debt servicing. Negative triggers - Not Applicable GACEPL is a wholly-owned subsidiary of the GMR Group—GMR Highways Limited (51.65%), GMR Infrastructure Limited (23.69%), GMR Energy Limited (24.66%). GACEPL is an SPV set up for executing a build operate transfer (BOT) toll-based project on a 20-year concession agreement (ending in May 2026) with the NHAI. The project scope entails improvement, operation and maintenance including strengthening, widening of the existing two-lane road to a four-lane dual carriage way of 35 km stretch of the Ambala-Chandigarh (NH-21/NH-22) highway. The project was completed on schedule and achieved the commercial operation date (COD) on November 14, 2008. However, the toll collection on the project highway started a month later on December 10, 2008. In FY2020, the company reported a net loss of INR49.45 crore on an operating income (OI) of INR59.66 crore compared to a net loss of INR53.62 crore on an OI of INR56.73 crore in the previous year. GNI INFRASTRUCTURE: ICRA Cuts Rating on INR17cr Loan to B+ ---------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of GNI Infrastructure Private Limited (GIPL)'s, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term 17.00 [ICRA]B+ (Stable) ISSUER NOT Cash Credit COOPERATING; Rating downgraded from [ICRA]BB(Stable) and continues to remain under 'Issuer Not Cooperating' Category Rationale The ratings downgrade is because of lack of adequate information regarding GIPL's performance and hence the uncertainty around its credit risk. ICRA assesses whether the information available about the entity is commensurate with its rating and reviews the same as per its "Policy in respect of non-cooperation by the rated entity". The lenders, investors and other market participants are thus advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity, despite the downgrade. As part of its process and in accordance with its rating agreement with GNI Infrastructure Private Limited, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's Rating Committee has taken a rating view based on the best available information. Incorporated in August 2007 as private limited company, GIPL is registered as Class 1-A contractors with PWD, Maharashtra. It is involved in infrastructure development activities viz. construction, repair and maintenance of roads, bridges, highways, railways and other public infrastructures for Government, semi Government and autonomous bodies. GREEN GATEWAY: Insolvency Resolution Process Case Summary --------------------------------------------------------- Debtor: M/s. Green Gateway Leisure Limited 1st Floor, New Corporation Building Palayam P.O. Thiruvananthapuram Kerala 695033 India Insolvency Commencement Date: October 15, 2020 Court: National Company Law Tribunal, Cochin Bench Estimated date of closure of insolvency resolution process: April 13, 2021 Insolvency professional: Mr. Raju Palanilkunnathil Kesavan Interim Resolution Professional: Mr. Raju Palanilkunnathil Kesavan KodamasseryLane, Chalikkavattom Vennala P.O. Kochi 682028 E-mail: rajupkin@gmail.com - and - M/s Agasti & Associates Chartered Accountants First Floor, CNRWA-6 Cherupushpam Lane Kadavanthra Kochi 682020 E-mail: rajupkin@gmail.com Last date for submission of claims: November 2, 2020 GURU KIRANA: ICRA Keeps B Debt Ratings in Not Cooperating --------------------------------------------------------- ICRA said ratings for the INR6.00 crore bank facilities of Guru Kirana Motors continue to remain under Issuer Not Cooperating category. The rating is denoted as [ICRA]B (Stable) ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 2.00 [ICRA]B (Stable); ISSUER NOT Based/CC COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category Long Term-Fund 4.00 [ICRA]B (Stable); ISSUER NOT Based/TL COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Established in December 2014 as a partnership firm by Mr. Thanmaya M and Mrs. Arpitha, Guru Kirana Motors is an authorized dealer of Yamaha Motor Private Limited (YMPL). The firm started its operations in October 2015 with sales, spares and service facility in Tumkur, Karnataka and became a certified dealer of YMPL in May 2016. The firm has six subdealers under it spread across Karnataka. It has an employee base of around 35 people. HONEST DERIVATIVES: ICRA Keeps D Debt Ratings in Not Cooperating ---------------------------------------------------------------- ICRA said ratings for the INR79.00 crore bank facilities of Honest Derivatives Private Limited (HDPL) continue to remain under Issuer Not Cooperating category. The rating is denoted as '[ICRA]D/[ICRA]D ISSUER NOT COOPERATING'; Rating continues to remain under 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-Based- 17.50 [ICRA]D; ISSUER NOT COOPERATING; Term Loan Rating Continues to remain under the 'Issuer Not Cooperating' category Fund-Based- 58.00 [ICRA]D; ISSUER NOT COOPERATING; Working Capital Rating Continues to remain under Facilities the 'Issuer Not Cooperating' category Short-Term- 3.50 [ICRA]D; ISSUER NOT COOPERATING; Non Fund Based Rating Continues to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Consolidation/Standalone For arriving at the ratings, ICRA has consolidated the financials of Shri Tradco India Private Limited (STIPL), Shri Tradco Deesan Private Limited (STDPL) and Honest Derivatives Private Limited (HDPL) given the close business, financial and managerial linkages among them. The Tradco Group comprises three companies - STIPL, HDPL and STDPL - and is primarily involved in maize trading and manufacturing of starch and derivatives. Maize trading contributed ~76.8% to the Group's revenues in FY2019, with starch and derivative manufacturing comprising ~21.1%. In addition, it generates revenue from chemical trading and windmill business (13.5 MW capacity). The Tradco Group is promoted by Mr. Rajratan Agarwal, who manages its operations, growing his business by a CAGR of ~12.5% from FY2014 to FY2019. STIPL, the Group's flagship company, was incorporated in 2006. The Group has two maize processing facilities, one each at Dhule (for STDPL) and Jalgaon (for HDPL), with a processing capacity of 1,05,000 metric tonne per annum (MTPA) each. IL&FS GROUP: Maintains Aggregate Debt Addressed Estimates --------------------------------------------------------- The Management and the New Board of IL&FS Limited on Oct. 24 shared its quarterly update on the progress of the ongoing Group resolution process, maintaining its earlier estimates of addressing more than 50 per cent of the overall debt of over INR99,000 crore as of October 2018. The aggregate value of debt being addressed is pegged at INR56,300 crore -- with over INR50,000 crore likely to be addressed by March 2021. As per the last update shared in July 2020, the overall debt addressed based on cash balances stood at INR17,640 crore. By September 2020, an additional debt of approx. INR1,460 crore has been addressed -- by way of sale of Education business, recovery from Non-IL&FS group entities, increase in cash balances and debt repayment in Green entities, increasing the overall debt addressed based on cash balances to INR19,100 crore. The number of entities resolved as of September 2020 stands at 173 -- that is half the original number of 347 entities of the IL&FS Group. Elsamex S.A. an IL&FS Group company with 100 step down subsidiaries, was admitted into insolvency during September 2020 quarter, thus contributing to the substantial reduction in the number of entities of the IL&FS Group. As compared to the previous update, the INR7,300 crore shortfall in target for debt addressed by September 2020 is being rolled over for achievement in subsequent quarters. The delay has been mainly caused on account of significant impact of COVID-19, which has added time and logistical complexities in the process of completing discussions with stakeholders and in obtaining approvals from lenders, regulators and judicial authorities. As per revised estimates, INR13,200 crore of additional debt is projected to be addressed by December 2020. This includes INR8,150 crore resolved through the proposed InvIT for which an 'in-principle' approval from SEBI has been received. Further, resolution of INR4,200 crore being achieved through debt restructuring has moved from September 2020 to December 2020. Resolution for INR10,000 crore, earlier communicated for achievement in Q3 FY21, is being moved to be achieved in subsequent periods. The New Board of IL&FS has developed a unique "Group resolution framework" that received approval from Hon'ble NCLAT on March 12, 2020. The framework has the potential to form a benchmark for future group insolvencies in the country. The IL&FS New Board has been following a three-pronged strategy - Resolve, Restructure and Recover - while adopting an approach of equitable distribution and balancing interests of stakeholders across the IL&FS Group under IBC and Corporate Finance principles, to resolve the debt of the Group. About IL&FS Infrastructure Leasing & Financial Services Limited (IL&FS) -- https://www.ilfsindia.com/ -- is an infrastructure development and finance company based in India. It focuses on the development and commercialization of infrastructure projects, and creation of value added financial services. The company operates in Financial Services, Infrastructure Services, and Others segments. The Indian government, in October 2018, stepped in to take control of crisis-ridden IL&FS by moving the National Company Law Tribunal (NCLT) to supersede and reconstitute the board of the firm which has defaulted on a series of its debt payments, according to Indian Express. This was said to be an attempt to restore the confidence of financial markets in the credibility and solvency of the infrastructure financing and development group. JALAN SYNTHETIC: ICRA Lowers Rating on INR14cr Cash Loan to B+ -------------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of Jalan Synthetic, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 14.00 [ICRA]B+(Stable) ISSUER NOT COOPERATING; Rating downgraded from [ICRA]BB- (Stable) and continues to remain in the 'Issuer Not Cooperating' Category Rationale The rating downgrade is because of lack of adequate information regarding Jalan Synthetic'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 Jalan Synthetics, 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. Jalan Synthetic is a partnership firm established in October 1995 by Late Mr Dindayal Jalan, Mr Keshav Jalan (son of Late Mr Dindayal Jalan) and their family members. The firm is engaged in wholesale trading of extensive variety of fabrics for different purposes and uses ranging from apparels to home décor such as sarees, fancy sarees, ladies suit, dress materials, suiting, shirting, handloom rugs, curtain cloth and other cloth materials. The firm deals with majority of leading brands of the country. The controlling office of the firm is located in Varanasi, UP, which is also the sales office, whereas the purchase offices are located at Mumbai, Surat, Kolkata, Jaipur and Erode (Tamil Nadu). The firm mainly caters to traders based in Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh and West Bengal. JAY POLYPACK: Insolvency Resolution Process Case Summary -------------------------------------------------------- Debtor: M/s. Jay Polypack Private Limited B-30, Amarjyot Duplex Chankyapuri New Sama Road Vadodara 390024 Gujarat, India Insolvency Commencement Date: May 27, 2020 Court: National Company Law Tribunal, Surat Bench Estimated date of closure of insolvency resolution process: April 19, 2021 Insolvency professional: CA Pradeep Kumar Kabra Interim Resolution Professional: CA Pradeep Kumar Kabra M-19-21, Metro Tower Ring Road Surat 395002 Gujarat E-mail: ippradeepkabra@gmail.com ippradeep.jay@gmail.com Last date for submission of claims: November 4, 2020 JHV STEELS: ICRA Keeps B Debt Rating in Not Cooperating ------------------------------------------------------- ICRA said rating for the INR12.50 crore bank facilities of JHV Steels limited continues to remain in the 'Issuer Not Cooperating' category. The ratings are denoted as "[ICRA]B (Stable) ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based- 12.50 [ICRA]B (Stable) ISSUER NOT Cash Credit COOPERATING; Rating continues to remain under 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available/dated/ limited information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. 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. Incorporated in 2009, JHV is promoted and managed by the Mr. Hira Lal Jaiswal and Mr. Abhishek Jaiswal. The company is engaged in the manufacturing of TMT bars with a production capacity of 1,00,000 tons per annum (TPA). The manufacturing facilities are located at Mirzapur in Uttar Pradesh. JHV has also setup a manufacturing unit for mildsteel billets in its existing plant with an installed capacity of 75,000 TPA. The commercial production of the billet unit commenced in June 2016. KESHAV HOLIDAY: ICRA Puts B+ Rating on Watch Developing ------------------------------------------------------- ICRA has placed the long-term rating of [ICRA] B+ outstanding on the bank facilities of Keshav Holiday Resorts Private Limited under watch with developing implications. The company has applied for loan restructuring on September 30, 2020 under the framework for resolution specified by the Reserve Bank of India (RBI) vide its circular of August 6, 2020. Further, the company has missed its payment obligations due on September 30, 2020; however, ICRA has not recognised the missed payment as default in accordance with the rating approach published recently on ICRA's website and available in this link (Click here). Hence, ICRA has put the rating of KHRPL on watch with developing implications to reflect the uncertainty of whether the resolution plan (RP) would be invoked or not, and if invoked, what the terms of the RP might be. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based– 50.00 [ICRA]B+; rating placed on Term Loan Watch with developing Implications The rating remains constrained by the company's weak financial risk profile, especially the liquidity, due to the disruptions in operations caused by the Covid-19 pandemic, which is expected to severely reduce cash flows in FY2021 against the sizeable impending debt repayment. The rating also factors in the intense competition in the water park segment, the geographic concentration risk, the vulnerability of footfalls to exogenous factors and the discretionary spend by customers. The rating, however, favourably factors in the company's established track record and the promoters experience in the water park and hospitality industry, along with its diversified revenue streams. Key rating drivers and their description Credit strengths * Company's established presence and promoter's extensive experience in waterpark and hospitality industry: Incorporated in 1992, the company opened India's first water park near Mehsana (Gujarat) in 1993 and subsequently ventured into the hotel, natural health care centre, catering and banquet hall businesses. Hence, the company and its promoters have a long track record and experience in the water park and hospitality industry. * Diversified revenue streams: The revenue mix of the company comprised of ticket revenue from water park, income from the hotel business, liquor sales, food & beverage sales, natural health care centre and catering services. Hence, the dependence on a single revenue source is limited. Credit challenges * Disruption in business operations because of pandemic: The company's operations remains severely affected by the pandemic, particularly from mid-March 2020 to mid-June 2020. The water park operation has not resumed yet as per government prohibitions. Moreover, a significant decline in non-ticket revenue is likely to erode scale and cash accruals in FY2021. Consequently, the revenue flow might not be adequate to cover the repayments, which are high because of the recently concluded capex. Accordingly, the company has applied for loan restructuring to one of its lenders. * Footfall vulnerable to discretionary spend by consumers; seasonal demand and climatic risks cause fluctuations in Earnings: The footfall in the water park is driven by school/college vacations, festive seasons, monsoons and discretionary consumer spending. Hence, the revenue from the water park is highest in Q1. * Geographical concentration risk; stiff competition from other water parks in Gujarat and Maharashtra: KHRPL's operations remain exposed to geographical concentration risk as the company's facilities are located only in Mehsana, Gujarat. Further, competition in the water park business remains high because of the presence of other established water parks Gujarat and Maharashtra such as Wet n Joy, Aqua Imagica etc, which will continue to keep the ticket prices under check and consequently the profitability. Liquidity position: Poor The KHRPL's overall liquidity position will remain poor, given the sizeable debt repayment against which the cash accruals are expected to remain tightly matched. Hence, support from the promoter through unsecured loans/equity infusion remains crucial in case of cash flow mismatch. Further, the company had opted for a moratorium on its bank loans from April 2020 to August 2020 and has also applied to one of its lenders for loan restructuring under the recently announced framework for resolution specified by the Reserve Bank of India (RBI) vide its circular of August 6, 2020. Rating sensitivities Positive triggers - ICRA could upgrade KHRPL's ratings if the company demonstrates substantial growth in revenue and profitability, leading to higher-than-expected cash accruals on a sustained basis. Further, increase in net-worth that improves capital structure and liquidity profile may also lead to rating upgrade. Negative triggers - Negative pressure on the company's ratings could arise if lower-than-expected scale up of operations because of lower footfalls lead to lower-than-expected cash accruals. Further, any major debt-funded capex or any further stretch in the working capital cycle, leading to weakening of capital structure and liquidity profile, may also lead to a rating downgrade. Apart from this any delay in implementing/rejection of restructuring plans may also lead to a rating downgrade. Incorporated in 1992, KHRPL was founded by Mr. Shankar Chaudhary. The company opened India's first water park in 1993 by name of Shanku's in Mehsana, Gujarat. The water park has a capacity to accommodate 11,000 visitors per day and offers 39 rides. The company concluded a capex of ~Rs. 180 crore in FY2020 to install new rides and modernise the water park. KHRPL also has a 3-star hotel named The Retreat, which has 71 rooms, 2-restaurant along with liquor store, natural health care centre, catering services, Shanku's Entertainment etc. KHRPL is a part of the Shanku's Group, which also has interest in hospital/medical, pharma, fertilizers, education and agricultural products businesses. In FY2020 (provisional financials), the firm reported a profit (profit before tax) of INR8.9 crore on an operating income of INR34.4 crore, as compared to a net profit of INR2.8 crore on an operating income of INR25.6 crore in FY2019. LINKPOINT INFRASTRUCTURE: Ind-Ra Withdraws BB+/NonCoop. Rating -------------------------------------------------------------- India Ratings and Research (Ind-Ra) has migrated Linkpoint Infrastructure Private Limited's (LIPL) Long-Term Issuer Rating of 'IND BB+' to the non-cooperating category and has withdrawn it. The instrument-wise rating actions are: -- INR0.5 mil. Fund-based working capital limits* migrated to non-cooperating category and withdrawn; and -- INR190 mil. Non-fund-based working capital limits** migrated to non-cooperating category and withdrawn. *Migrated to 'IND BB+ (ISSUER NOT COOPERATING)'/'IND A4+ (ISSUER NOT COOPERATING)' before being withdrawn **Migrated to 'IND A4+ (ISSUER NOT COOPERATING)' before being withdrawn KEY RATING DRIVERS LIPL 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 lenders. This is consistent with the Securities and Exchange Board of India's circular dated March 31, 2017 for credit rating agencies. COMPANY PROFILE LIPL was originally incorporated as Taral Vincom Private Limited. The name was changed in 2009. Previously, LIPL was engaged in the execution of civil contracts. However, recently, it has only focused on manufacture, supply, and affixing of high security registration plate on vehicles, as per the Motor Vehicle Act, 1988. M R STEEL: ICRA Withdraws B+/A4 Rating on INR8cr Loan ----------------------------------------------------- ICRA has withdrawn the ratings on certain bank facilities of M R Steel Corporation (MRSC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term/Short 8.00 [ICRA]B+(Stable)/[ICRA]A4; Term–Unallocated ISSUER NOT COOPERATING; Withdrawn Rationale The long-term and short-term ratings assigned to MRSC have been withdrawn at the request of the company and in accordance with ICRA's policy on withdrawal and suspension. ICRA is withdrawing the rating and that it does not have information to suggest that the credit risk has changed since the time the rating was last reviewed. Key rating drivers and their description Key rating drivers have not been captured as the rating is being withdrawn. Liquidity position Not captured as the rating is being withdrawn. Rating sensitivities Not captured as the rating is being withdrawn. MRSC is a trader in iron and steel products and currently operates a JSW Shoppe and an Essar Expressmart outlet. The JSW dealership has been with the firm since the last five years whereas Essar dealership was received by the firm in FY2013. Prior to the dealerships, MRSC operated as a steel trader like the numerous players who operate in the industry. MAD STUDIOS: ICRA Keeps D Debt Ratings in Not Cooperating --------------------------------------------------------- ICRA said ratings for the INR17.50 crore bank facilities of Mad Studios Private Limited continue to remain under Issuer Not Cooperating category. The rating is denoted as '[ICRA]D ISSUER NOT COOPERATING'; Rating continues to remain under 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Fund- 13.00 [ICRA]D; ISSUER NOT COOPERATING; Based Term Loan Rating Continues to remain under the 'Issuer Not Cooperating' category Long-term Fund- 2.50 [ICRA]D; ISSUER NOT COOPERATING; Based Cash Credit Rating Continues to remain under the 'Issuer Not Cooperating' category Long-term Non- 2.00 [ICRA]D; ISSUER NOT COOPERATING; Fund Based Rating Continues to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Mad Studios Private Limited (MSPL) was incorporated on 30th January 2012 and is primarily engaged in the production of television commercials. The company also in the recent past forayed into movie production and end to end production services business that entails leasing of equipment and related services to various directors, film studios, production houses, etc. MSPL is a part of the Mad Group. The flagship company of the Group is Mad Entertainment Limited, promoted by Mr. Sunil Manchanda who has been in the Media Industry for more than two decades. The Group has produced more than 1000 television commercials for various famous brands till date. MURARI PAVAN: ICRA Keeps B+ Debt Rating in Not Cooperating ---------------------------------------------------------- ICRA said rating for the INR9.00-crore bank facilities of Sri Murari Pavan Agrotech continues to remain under 'Issuer Not Cooperating' category'. The ratings are denoted as "[ICRA]B+(Stable) ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 9.00 [ICRA]B+ (Stable); ISSUER NOT Based/CC COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available 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. Sri Murari Pavan Agrotech (SMPA) was incorporated in 2015 as a partnership firm and is based out in Nandyal town of Kurnool district, Andhra Pradesh and is involved in the ginning & pressing of raw cotton to produce cotton lint & seeds. The firm has 24 gins and one pressing unit. The current capacity of the plant is 48000 bales of lint per annum. The operations are currently managed by Mr. B. Srihari and his family members who have more than 20 years of experience in ginning Industry. NEHANI TILES: ICRA Withdraws B+ Rating on INR11.50cr Loan --------------------------------------------------------- ICRA has withdrawn the ratings on certain bank facilities of Nehani Tiles Pvt. Ltd. (NTPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based limits 11.50 [ICRA]B+ (Stable); Rating Withdrawn Non-Fund based limits 1.50 [ICRA]A4; Rating Withdrawn Rationale The ratings assigned to NTPL has been withdrawn at the request of the company and based on the no objection certificate received from the banker, and in accordance with ICRA's policy on withdrawal and suspension. ICRA is withdrawing the rating and it does not have adequate information to suggest that the credit risk has changed since the time the rating was last reviewed. The last rating rationale for NTPL is available at the following link. Key rating drivers The key rating drivers have not been captured as the rated instrument(s) are being withdrawn. Liquidity position Liquidity position has not been captured as the rated instruments are being withdrawn. Rating sensitivities Rating sensitivities have not been captured as the rated instruments are being withdrawn Incorporated in August 2013, Nehani Tiles Private Limited is involved in manufacturing digitally printed ceramic wall tiles along with body clay. The company's manufacturing facility is at Morbi, Gujarat, with an installed production capacity of 27,000 MTPA of wall tiles and 1,20,000 MTPA of body clay. NTPL manufactures wall tiles in sizes of 12"x12", 12x18", 12"x24" and 10 x30". The company is promoted by the Soriya family, which has extensive experience in the ceramic industry, owing to its association with the Group concern, Neha Ceramic Industries and Orinda Granito LLP. In FY2020, the company reported a net profit after tax of INR0.36 crore on an operating income (OI) of INR35.21 crore compared to a net profit after tax of INR0.36 crore on an OI of INR40.21 crore in the previous year. NEW LAXMI: Ind-Ra Gives BB LongTerm Issuer Rating, Outlook Stable ----------------------------------------------------------------- India Ratings and Research (Ind-Ra) has assigned New Laxmi Industries Private Limited (NLIPL) a Long-Term Issuer Rating of 'IND BB'. The Outlook is Stable. The instrument-wise rating actions are: -- INR185.00 mil. Fund-based limit assigned with IND BB/Stable rating; and -- INR107.27 mil. Term loan due on April 2026 assigned with IND BB/Stable rating. Analytical Approach: Ind-Ra has taken a consolidated view of NLIPL and its parent New Laxmi Steel & Power Private Limited (NLSPPL; 'IND BB+ (ISSUER NOT COOPERATING)'); collectively referred to as New Laxmi Group (NLG) as the entities have the same business profile, common management, and strong operational and legal linkages between them. NLIPL, is a 73.73%-owned subsidiary of NLSPPL. Both entities are engaged in the manufacturing business of iron and steel and the bank facility of NLSPPL is guaranteed by NLIPL. The support is likely to continue as the promoter has consistently infused unsecured loans in the past when required. KEY RATING DRIVERS The ratings reflect NLG's medium scale of operation as indicated by revenue of INR2,027 million in FY20 (FY19: INR2,809 million). The revenue declined in FY20 due to the shutdown of the company's operations over May-July 2020 due to the impact of the cyclone Fani. In FY21, due to the COVID-19-led nation-wide lockdown, NLG's factories were closed in April and May 2020; however, in 1HFY21, the group achieved revenue of INR1,331 million, led by stabilization of operations. Ind-Ra expects the revenue to increase on a year-on-year basis in FY21 owing to the full-fledged operation of NLIP's thermo-mechanically treated plant from November 2020. The plant is strategically located in Khurda, Odisha, where raw materials are available in abundance which will reduce the transportation cost.FY20 financials are provisional in nature. The ratings are constrained by NLG's modest operating margins due to intense competition in the iron and steel industry and fluctuations in raw material prices. In FY20, the margins expanded to 5.68% (FY19: 5.22%), owing to reduced raw material prices. The absolute EBITDA, however, declined to INR115 million in FY20 (FY19: INR146 million) due to a fall in the revenue and an addition in the total debt to INR830 million (INR779 million) due to an increase in the debt-funded capex to INR107 million (INR41 million). The return on capital employed also declined to 7.28% in FY20 (FY19: 12.17%). Given that the subsidiaries have attained their early stages of stabilization, the agency expects their operating profit margins to improve further in FY21. The ratings are also constrained by NLG's modest credit metrics in FY20 due to low margins and an increase in the total borrowing. Its net leverage (adjusted net debt/operating EBITDAR) deteriorated to 6.87x in FY20 (FY19: 4.81x) and the interest coverage (operating EBITDAR/gross interest expense + rents) to 1.65x (2.15x). However, Ind-Ra expects the credit metrics to improve in FY21 on improved margins and the likely reduction in the total debt backed by the scheduled repayments of debt-funded capex. Liquidity Indicator - Stretched: In FY20, the cash flow from operations turned negative to INR5.56 million (FY19: INR0.94 million) and fund flow from operation dipped to INR2 million (FY19: INR15.57 million) due to an increase in debtors and a fall in creditors. The company availed the Reserve Bank of India-prescribed moratorium for interest payment of working capital facility during March to August 2020. NLIPL has scheduled repayment of INR24.76 million in FY21 which it is likely to pay through its internal accrual. According to the management, the company had free cash and bank balance of INR1.25 million at FYE20 as against the total borrowing of INR236 million (FY19: INR152 million). NLIPL's average utilization of fund-bases working capital limits was 6.96% over the 12 months ended September 2020. The ratings, however, are supported by the promoters' over two decades of experience in manufacturing of thermo-mechanically treated bars. RATING SENSITIVITIES Positive: An increase in the revenue, along with an improvement in the credit metrics and the liquidity, all on a sustained basis, could be positive for the ratings. Negative: A further decline in the revenue along with sustained deterioration in the credit metrics with the interest coverage falling below 1.4x, or further deterioration in the liquidity, all on a sustained basis could be negative for the ratings. COMPANY PROFILE Incorporated in 2003, NLIPL manufactures galvanized steel structure such as angles, channels and so on. The manufacturing plant is situated in Khurda, Odisha with a total production capacity of 29,000mtpa. NIGO BEST: Insolvency Resolution Process Case Summary ----------------------------------------------------- Debtor: Nigo Best Packs Private Limited 801, Avdhesh House Opp. Guru Govind Gurudwara S.G. Highway, Thaltej Ahmedabad GJ 380054 IN Insolvency Commencement Date: October 8, 2020 Court: National Company Law Tribunal, Ahmedabad Bench Estimated date of closure of insolvency resolution process: April 6, 2021 Insolvency professional: Mr. Bhavan Trivedi Interim Resolution Professional: Mr. Bhavan Trivedi 55, 6th Floor Shri Krishna Centre Nr. Mithakhali Six Roads Navrangpura, Ahmedabad Gujarat 380009 E-mail: bhavant@yahoo.com Last date for submission of claims: October 28, 2020 PRABHU AGARWALLA: ICRA Reaffirms D Rating on INR33cr Cash Loan -------------------------------------------------------------- ICRA has reaffirmed ratings on certain bank facilities of Prabhu Agarwalla Construction Private Limited (PACPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund Based– 33.00 [ICRA]D; Reaffirmed and rating Cash Credit removed from ISSUER NOT COOPERATING category Non-Fund Based– 40.00 [ICRA]D/[ICRA]D; Reaffirmed Bank Guarantee# and ratings removed from ISSUER NOT COOPERATING Category # Previously this facility was rated on short-term scale only, however, it has been rated on both long-term and short-term scale for the current exercise Rationale The reaffirmation of the ratings primarily factors in the recurrence of irregularity in debt servicing by PACPL in the recent past owing to its poor liquidity position. The ratings also take into account the company's exposure to high sectoral and geographical concentration risks as it is mainly involved in the construction of roads, bridges and buildings in Assam only. ICRA also considers the fragmented and intensely competitive nature of the civil construction industry, which keeps margins of all the players, including PACPL, under check. Moreover, absence of price variation clause in most of the contracts is likely to exert pressure on PACPL's margins. However, ICRA considers the established track record of PACPL in the civil construction business as well as its comfortable order book position at present. Nevertheless, PACPL's revenue visibility in the medium to long term would depend on its ability to fetch further orders, going forward. Key rating drivers and their description Credit strengths * Established track record in the civil construction business: Incorporated in 2003, PACPL is primarily involved in the construction of roads, bridges and buildings. The company has an established track record in the civil construction business. It executes projects for both Central and State government departments in Assam. * Comfortable order book position, however, ability to fetch further orders would remain important for revenue visibility, going forward: The company had an outstanding order book of INR233.51 crore as on March 31, 2020, which was 1.78 times of its operating income in FY2020 (provisional). In addition, it received fresh orders worth INR21.26 crore in Q1 FY2021. However, PACPL's ability to fetch further orders, going forward, will remain important for the company's revenue visibility in the medium to long term. Credit challenges * Irregularity in debt servicing in recent months due to poor liquidity position: The company availed moratorium for the fund-based working capital facilities due to the Covid-19 pandemic. However, for one of the fund-based facilities, the moratorium ended in May 2020 and the facility remained overutilised for around two months consecutively post the moratorium. ICRA notes that frequent overutilisation in the company's fund-based working capital limits in the recent months was due to its poor liquidity position. * High sectoral and geographical concentration risks: The company executes civil construction contracts for the Central and the State Government departments, which mitigate counterparty risks. However, PACPL remains exposed to high sectoral and geographical concentration risks as it is primarily involved in construction of roads, bridges and buildings in Assam only. * Fragmented and intensely competitive nature of the industry: The civil construction industry is intensely competitive on account of its fragmented nature with presence of a large number of players. This coupled with the lowest bid (L1)-based order awarding system keeps the margins of all the players, including PACPL, under check. * Absence of price escalation clause in most of the contracts is likely to keep the margins under pressure: The company receives the major portion of its contracts from the Assam Government. Most of such contracts lack price escalation clause. This exposes PACPL to the risk of any major variation in input costs, which may adversely impact the margins of the company. Liquidity position: Poor PACPL's liquidity position remains poor. Its stretched working capital cycle, blockage of a significant amount of fund due to deduction of retention money from running bills and deposit of margin money for the bank guarantee exerted pressure on its liquidity position. The average utilisation of the fund-based working capital limits of the company remained high at 97.70% of the total sanctioned limits during June 2019 to July 2020. Moreover, the fund-based working capital facility of the company remained over-utilised for around two months consecutively in the recent past (after the moratorium availed in the facility ended in May 2020). Moreover, a sizeable long-term debt repayment obligation in the near to medium term is likely to keep the company's liquidity under pressure. Rating sensitivities Positive triggers - ICRA may upgrade PACPL's ratings if its debt servicing remains regular for at least 90 days consecutively, aided by an improved liquidity position. Negative triggers - Not applicable Incorporated in 2003, PACPL is primarily involved in the civil construction (roads, bridges and buildings) business in Assam. It executes contracts for various Central and State Government departments in the state. With effect from March 31, 2013, PACPL took over the entire business of its Group entity, M/s. Prabhu Agarwalla (PA), a partnership firm, which was previously involved in the civil construction business in Assam. RAYBAN FOODS: ICRA Lowers Rating on INR30cr LT Loan to D -------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of Rayban Foods Private Limited (RFPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 30.00 [ICRA]D ISSUER NOT COOPERATING; Based Working Rating downgraded from [ICRA]B Capital (Stable) ISSUER NOT COOPERATING and continues to remain under Issuer Not Cooperating' Category Long Term-Fund 2.69 [ICRA]D ISSUER NOT COOPERATING; Based Term Loan Rating downgraded from [ICRA]B (Stable) ISSUER NOT COOPERATING and continues to remain under Issuer Not Cooperating' Category Short Term-Non 7.50 [ICRA]D ISSUER NOT COOPERATING; Fund Based Rating downgraded from [ICRA]A4 ISSUER NOT COOPERATING and continues to remain under Issuer Not Cooperating' Category Long Term/Short 9.81 [ICRA]D/D ISSUER NOT Term Unallocated COOPERATING; Rating downgraded from [ICRA]B (Stable)/A4 ISSUER NOT COOPERATING and continues to remain under Issuer Not Cooperating' category Rationale The rating downgrade reflects delays in Debt Servicing. The rating is based on limited information on the entity's performance since the time it was last rated in July 2019. 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 Rayban Foods Private Limited, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's Rating Committee has taken a rating view based on the best available information. RFPL commenced operations in FY2010 and is involved in the business buffalo meat processing. The company operates from its meat processing plant located at Hapur, Uttar Pradesh. RISE ON: ICRA Keeps C Debt Rating in Not Cooperating Category ------------------------------------------------------------- ICRA said rating for the INR27.60 crore bank facilities of Rise On Group continue to remain under 'Issuer Not Cooperating' category'. The ratings are denoted as "[ICRA]C ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund based– 27.60 [ICRA]C; ISSUER NOT COOPERATING; Term Loan Rating Continues to remain under Issuer not cooperating category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Established in February 2013, Rise on Group is a Surat-based real estate firm. The firm has been established for the construction of a residential project, 'Melaanio Residency', and a commercial complex, 'Leonard Square'. RG is promoted by the Maniya and Kheni families, who have been engaged in real estate development for more than three decades through the Rise On Group and M. K. Group, respectively. The construction work of both the projects commenced from April 2014. Project completion was scheduled for December 2015 for Leonard Square, and August 2016 for Melaanio Residency. The firm is a part of the Rise On Group, which has been engaged in the real estate business for over three decades in Surat and Ahmadabad. The firm also has two group concerns, Vama Infra {rated [ICRA]BB(Stable) 'Issuer Not Cooperating' in May 2019} and Hindva Builders {rated [ICRA]BB-(Stable) in June 2018}. SAI BABA ENTERPRISES: ICRA Withdraws B+ Rating on INR18cr Loans --------------------------------------------------------------- ICRA has withdrawn the ratings on certain bank facilities of Sri Sai Baba Enterprises (SSBE), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 12.00 [ICRA]B+ (Stable); ISSUER NOT Based-Cash Credit COOPERATING; Withdrawn Long Term-Fund 1.74 [ICRA]B+ (Stable); ISSUER NOT Based-Term Loan COOPERATING; Withdrawn Long Term- 4.26 [ICRA]B+ (Stable); ISSUER NOT Unallocated COOPERATING; Withdrawn Rationale The long-term rating assigned to SSBE have been withdrawn at the request of the company and based on the No Objection Certificate received from the banker, and in accordance with ICRA's policy on withdrawal and suspension. ICRA is withdrawing the rating and that it does not have information to suggest that the credit risk has changed since the time the rating was last reviewed. Key rating drivers and their description Key rating drivers have not been captured as the rating is being withdrawn. Sri Sai Baba Enterprises (SSBE) was established in June 2016 and began operations from November 2016. The firm was set up as a cotton ginning and pressing unit with an installed capacity of 48 ginning machines or capacity to process 250 MT of cotton per day. The unit is a partnership firm and Mr. Santosh Goyal is the Managing Partner. The partners have vast experience of over 40 years in this field. SAI BABA: ICRA Withdraws B+ Rating on INR12cr Loans --------------------------------------------------- ICRA has withdrawn the ratings on certain bank facilities of Sri Sai Baba Agro Tech (SSBAT), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 10.00 [ICRA]B+ (Stable); ISSUER NOT Based-Cash Credit COOPERATING; Withdrawn Long Term-Fund 1.30 [ICRA]B+ (Stable); ISSUER NOT Based-Term Loan COOPERATING; Withdrawn Long Term- 0.70 [ICRA]B+ (Stable); ISSUER NOT Unallocated COOPERATING; Withdrawn Rationale The long-term rating assigned to SSBAT have been withdrawn at the request of the company and based on the No Objection Certificate received from the banker, and in accordance with ICRA's policy on withdrawal and suspension. ICRA is withdrawing the rating and that it does not have information to suggest that the credit risk has changed since the time the rating was last reviewed. Key rating drivers and their description Key rating drivers have not been captured as the rating is being withdrawn. Sri Sai Baba Agro Tech (SSBAT) was established in October 2015 and is engaged in the business of cotton ginning & pressing and trading in cotton related products. The firm has installed 60 ginning machines with ginning capacity of 250 MTPA. The unit is a partnership firm and Sri Raghunath Mittal is the Managing Partner. The partners have got vast experience of over 40 years in this field. SAI LEELA: ICRA Keeps B+ Debt Ratings in Not Cooperating -------------------------------------------------------- ICRA said ratings for the INR12.00 crore bank facilities of Sri Sai Leela Electrical Projects continue to remain under Issuer Not Cooperating category. The rating is denoted as [ICRA]B+ (Stable) ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 3.50 [ICRA]B+ (Stable); ISSUER NOT Based/CC COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category Long Term–Non 8.50 [ICRA]B+ (Stable); ISSUER NOT Fund Based COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Sri Sai Leela Electrical Projects (SSLEP) was set up in the year 2007 as a partnership firm by Mr. Ravi Gummadi. The firm is a class-I electrical and civil contractor in Telangana, Andhra Pradesh, and Maharashtra & Karnataka executing projects 2 involved in construction of EHT, HT & LT substations, transmission lines, internal & external electrification and underground cabling works for private and government clients. SARGAM METALS: ICRA Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------- ICRA said ratings for the INR41.00-crore bank facilities of Sargam Metals Private Limited (SMPL) continue to remain under Issuer Not Cooperating' category'. The Long term ratings & Short term ratings are denoted as "[ICRA]D/D ISSUER NOT COOPERATING." Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term–Fund 30.00 [ICRA]D; ISSUER NOT COOPERATING; Based-Cash Rating Continues to remain under Credit Issuer Not Cooperating' category Long Term–Fund 2.50 [ICRA]D; ISSUER NOT COOPERATING; Based-Term Rating Continues to remain under Loan Issuer Not Cooperating' category Short Term–Non 8.50 [ICRA]D; ISSUER NOT COOPERATING; Fund Based 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/dated/ limited information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Incorporated in 1970, Sargam Metals Private Limited is primarily engaged in manufacture of aluminium, zinc and manganese ingots (contributes to ~85% of total revenues), which are used as raw materials in foundries for producing cast products. SMPL is also engaged in manufacture of cathode protection products, which are used in ships, off-shore structures such as platforms, sub-sea pipelines and structures such as jetty, wharves and barges. The company has an alloy production facility with an installed capacity of 7800 MT in SIPCOT Industrial estate in Cheyyar (Tamil Nadu) recently shifted from Manapakkam, Chennai. The company is managed by Mr. S Arun and is closely held by the promoter group. SAVIDHA MEDICAL: ICRA Keeps B Debt Ratings in Not Cooperating ------------------------------------------------------------- ICRA said ratings for the INR10.00-crore bank facilities of Savidha Medical Center and Hospital (SMCH) Continues to remain under Issuer Not Cooperating' category'. The Long term ratings are denoted as "[ICRA]B (Stable) ISSUER NOT COOPERATING". Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term–Fund 5.00 [ICRA]B (Stable); ISSUER NOT Based-Term Loan COOPERATING; Rating Continues to remain under Issuer Not Cooperating' category Long Term-Fund 5.00 [ICRA]B (Stable); ISSUER NOT Based-Term Loan COOPERATING; Rating Continues to remain under Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis best available/dated/ limited information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Savidha Medical Center and Hospital has been established by Dr. Sasithra and Mr. Dhamod haran as a partnership firm in the year 2015. The firm had proposed establish a multi-speciality hospital under the name Savidha Medical Center and Hospital in Mettupalayam, Coimbatore with specialties including Paediatrics, Orthopaedics, Dermatology, Obstetrics, Gynaecology and General medicine. SIDDAPUR DISTILLERIES: Ind-Ra Affirms BB+ Rating, Outlook Negative ------------------------------------------------------------------ India Rating and Research (Ind-Ra) has revised Siddapur Distilleries Limited's (SDL) Outlook to Negative from Stable while affirming its Long-Term Issuer Rating at 'IND BB+'. The instrument-wise rating actions are: -- INR 168.4 mil. (increased from INR44.4 mil.) Term loan due on March 2022 affirmed; Outlook revised to Negative from Stable with IND BB+/Negative rating; -- INR 171.6 mil. (increased from INR100.6 mil.) Fund-based facilities affirmed; Outlook revised to Negative from Stable with IND BB+/Negative/IND A4+; and -- INR60.0 mil. (increased from INR40.0 mil.) Non-fund-based facilities affirmed with IND A4+ rating. The Outlook revision reflects the likely deterioration in SDL's credit metrics in FY21 due to a debt-led capex of INR582.8 million for capacity expansion. KEY RATING DRIVERS SDL has undertaken the capex to expand its capacity to 140 kilo liters per day from 70 kilo liters per day. Of the total capex, 30% is being funded through internal accruals and equity infusion, and the balance 70% through bank debt (INR408.0 million), which is yet to be sanctioned. The company had already infused INR100 million by mid-October 2020. The construction will be completed in December 2020 and the installation of machineries will be done in February 2020. The project is likely to start in April 2021. The ratings reflect SDL's continued small scale of operations, as indicated by revenue of INR962.37 million in FY20 (FY19: INR662.33 million). The revenue increased in FY20 because of an increase in the realizations to INR49 per liter from INR42 per liter earlier. The company recorded revenue of INR470.0 million in 1HFY21. Ind-Ra expects the revenue to decline in FY21 due to the continued COVID-19-led economic disruptions. The ratings reflect SDL's modest credit metrics due to the high debt levels (FY20: INR332.23 million; FY19: INR223.8 million). The gross interest coverage (operating EBITDA/gross interest expense) deteriorated to 4.31x in FY20 (FY19: 7.37x) on account of a decrease in the absolute EBDITA to INR133.81 million (INR189.02 million) and an increase in interest costs, resulting from the rise in debt. The net leverage (adjusted net debt/operating EBITDAR) weakened to 2.47x in FY20 (FY19: 1.18x) due to the increase in the debt. The metrics are likely to deteriorate in FY21 owing to due to the debt-led capex undertaken by the company. Liquidity Indicator – Stretched: SDL's average maximum utilization of the fund-based limits was 88% for the 12 months ended September 2020. The working capital cycle improved to 118 days in FY20 (FY19: 168 days) owing to an improvement in the receivables cycle and depleted inventory levels at year-end, as the production had come to a halt due to COVID-19-led disruptions over March 2020- April 2020. The cash flow from operations increased to INR104.3 million in FY20 (FY19: INR73.0 million) due to the improvement in the working capital cycle and the timely realization of payments from the government. The company had availed the Reserve Bank of India-prescribed debt moratorium over March-August 2020 from the State Bank of India ('IND AAA'/Stable) The ratings factor in SDL's average operating margins due to the agro-based industry it operates in. The margin declined to 13.9% in FY20 (FY19: 28.54%) due to an increase in raw material costs. The return on capital employed stood at 14% in FY20 (FY19: 23.8%). Ind-Ra expects the margins to decrease slightly in FY21 due to a likely increase in the raw material costs. The ratings are also supported by the promoter's experience of three decades in the sugar industry. RATING SENSITIVITIES Negative: Any deterioration in the liquidity position, along with a decline in the revenue or EBITDA margin, resulting in sustained deterioration in the credit metrics, with the interest coverage falling below 2.5x, and an inability to tie up bank loans for the proposed capex could lead to a negative rating action. Positive: The ability to tie up funds and an improvement in the liquidity position, along with substantial growth in the revenue and EBITDA margin, leading to an improvement in the credit metrics, with the interest coverage remaining above 3.5x could lead to a positive rating action. COMPANY PROFILE SDL is a public limited company that was incorporated in 2003. It is based in the Siddapur village, Bagalkot District, Karnataka. SDL is involved in production and sale of rectified spirit, ethanol and neutral spirit, as well as by-products such as biogas and organic manure. Jagadeesh S Gudaganti is the chairman/managing director of the company. SKS POWER: ICRA Lowers Rating on INR1,600cr Term Loan to C+ ----------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of SKS Power Generation (Chhattisgarh) Limited's (SKS), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-based 1,600.0 [ICRA]C+, downgraded from Term Loan [ICRA]BB(CE)(Stable); placed on watch with developing implications Fund-based 330.0 [ICRA]C+, downgraded from Cash Credit [ICRA]BB(CE)(Stable); placed on watch with developing implications Non-fund based 535.0 [ICRA]C+, downgraded from [ICRA]BB(CE)(Stable); placed on watch with developing implications Rationale The rating revision takes into account the adverse impact of the ongoing Covid-19 pandemic on SKS business and financial risk profile as evident from the decline in off-take by the power purchase agreement (PPA) counterparties for the tied-up capacity, in turn significantly affecting the company's cash flows and debt servicing ability. The rating revision also considers the weakened financial risk profile of SKS's promoter, Agritrade Resources Limited (ARL), which has recently been admitted for the provisional liquidation proceedings in Bermuda. Given this development, ICRA has revised its rating approach. While the earlier rating for SKS's rated facilities was based on the credit enhancement approach due to the presence of the corporate guarantee from ARL, the current rating is based on SKS's standalone and financial risk profile. The company has availed both the moratorium periods from its lenders (March 1, 2020 to August 31, 2020) as per the COVID19 - Regulatory Package announced by the Reserve Bank of India (RBI). After the completion of the moratorium period, it has further requested the term lender for restructuring of loans in September 2020, prior to the scheduled due date for repayment citing the continuing stress on its cash flows. SKS has subsequently missed its repayment obligations including the interest and principal repayment on the term loans. However, ICRA has not recognised the missed payment as default in accordance with the rating approach published recently on ICRA's website. ICRA notes that the detailed restructuring/resolution plan is under preparation and will be submitted to the lender for further evaluation in the due course of time. The rating has been placed on watch with developing implications to reflect the uncertainty around whether the resolution plan would be invoked or not, and if invoked what would be the terms of the resolution plan. Timely invocation and implementation of the resolution plan within the regulatory timelines, with favorable terms easing the burden on the cash flows resulting in improvement of coverage metrics, remains critical and would be a key rating monitorable. Resolution under this framework may be invoked not later than December 31, 2020 and must be implemented within 180 days from the date of invocation. Inter Creditor Agreement has to be signed by all the lending institutions within 30 days from the date of invocation. Further, the rating continues to remain constrained by the lack of long-term PPAs for almost 500 MW capacity and the counter-party credit risk associated for much of the balance capacity with exposure to ultimate offtakers which are stateowned distribution utilities and have weak financial profile. The company has entered into medium-term PPAs with NPCL and PTC India Ltd (PTC) for a capacity totaling 400 MW. The PPAs with PTC have a tenure of three years and constitute 50% of the total capacity, with ultimate offtakers as Bihar Discoms and Haryana Discoms. While the tariff of INR4.24/unit has been adopted by SERCs in Haryana and Bihar, the PPA with Bihar discoms is under dispute (whether discom should schedule 100% of the power or minimum of 55% with the condition that they could offtake power beyond 55% in case of need and at a lower tariff). The APTEL has given an interim order asking Bihar discoms to offtake 55% of the contracted capacity till the dispute between the company and discoms is resolved. Further, the company is yet to tie up the PPA for the remaining 100-MW capacity and the timeliness of the same remains critical from the credit perspective. The PPA with NPCL has a tenure of 16 moths and the remaining medium-term PPAs are signed for a three-year period, consequently, the ability of the company to renew existing PPAs or enter into fresh medium-term PPAs during expiry of current PPAs in a timely manner at cost reflective tariff remains highly critical. The rating further takes into account the on-going legal proceedings and the regulatory uncertainty over the long-term PPA signed with Rajasthan discoms, wherein, discoms have not yet adopted the tariff citing that the same is higher than the market rate. The matter which was earlier with the Supreme Court, was referred to the Appellate Tribunal for Electricity (APTEL), which in its order dated February 3,2020 directed the Rajasthan Rajya Vidyut Prasaran Nigam Ltd (RVPN, on discoms' behalf) to adopt the tariff offered by SKS in its bid and directed that the PPA dated February 4,2019 between both the parties be revived. RVPN challenged this order in the Supreme Court. The Supreme Court, in its order dated September 28,2020, has directed that the PPA between both the parties should be revived and power supply should start at the interim tariff of INR2.88/unit till the final outcome of the appeal. While this offers some relief, the subsequent commencement of offtake of power at interim tariff by Rajasthan discoms remains to be seen. The rating also factors the exposure to interest rate risk as well as the cash flow sensitivity to variation in short-term power tariff levels and off-take over the debt tenure, given the significant share of untied capacity. The company's revenues and cash flows have severely been impacted in the current fiscal because of much lower offtake of power by the key counterparties due to the reduced demand upon implementation of lockdown measures by the government to contain the spread of Covid-19. The company's plant was shut for several days between March 24,2020 to May 3, 2020 as two of its offtakers, Haryana discom (for 225 MW capacity) and Noida Power Company Limited (NPCL) had declared force majeure in this period (till May 3, 2020 by Haryana discom and till March 31, 2020 by NPCL) and were not drawing any power. Post May 3, 2020, the power offtake has been much lower than the total contracted capacity, which has impacted the company's revenues and cash flows. Nonetheless, the rating takes into account the operational nature of the 600-MW coal-based thermal power project of the company, with presence of a fuel supply agreement (FSA) with South Eastern Coalfields Limited (SECL, a subsidiary of Coal India Limited), with the fuel supply under linkage sufficient to meet 66% of the plant's fuel requirement at 85% PLF. Key rating drivers: Credit strengths * FSA with CIL subsidiary adequate for 66% of fuel requirement at 85% PLF: The company achieved commercial operations date (CoD) of the two units under phase I in October 2017 and April 2018. It signed the FSA with SECL in 2013 for supply of 2.6 MTPA coal for the power plant for coal grades of G10 to G12 (3701-4600 Cal/Kg). Most of the coal requirement in H1FY2020 was met from linkage sources. Assuming the supply rate at 75% of the contracted quantity, the linkage quantity (adjusted for GCV values) would be sufficient for meeting about 66% of the fuel requirement of the operational units at 85% PLF. Credit challenges * Debt servicing ability impacted in current fiscal as evident from request for loan structuring to term-lender; parent facing liquidation proceedings: The company's revenues and cash flows have been adversely impacted in the current fiscal because of lower offtake of power from the key counterparties as a result of the reduced demand following the implementation of lockdown measures by the government to contain the spread of Covid-19. The company availed both the moratorium periods from its lenders as per the COVID19 - Regulatory Package announced by the Reserve Bank of India (RBI). However, post the completion of the moratorium period on August 31, 2020, the company could not fully service its scheduled repayment obligations for the month of September 2020. ICRA notes that the company had requested its term lender for restructuring of loans in September 2020, prior to the scheduled due date for repayment (which has been missed), citing the stress on its cash flows. Further, it is in the process of preparing the detailed restructuring proposal and will be submitting the same to the lender shortly. ICRA will continue to monitor the developments in this regard. ICRA further notes that the parent, ARL, which has provided corporate guarantee to the borrowings of SKS, is also under financial distress and is facing provisional liquidation proceedings. Given this, the likelihood of receiving any funding support from the parent remains low. * Regulatory issue pertaining to implementation of long-term PPA for 100 MW capacity with Rajasthan utilities: The company entered into a long-term PPA of 25 years with Rajasthan discoms for the 100 MW capacity on February 4, 2019. However, citing high tariff rate (Rs 5.30/unit) as the reason, RVPN (on discoms' behalf) has not adopted the tariff rate yet. After the company approached Supreme Court (SC), the issue was referred to APTEL which in its order dated February 3, 2020 directed RVPN to adopt the tariff offered by SKS Power in its bid and directed that the PPA dated February 4, 2019 between both the parties be revived. RVPN challenged this order in the Supreme Court. The Honourable Supreme Court, in its order dated September 28, 2020, has mentioned that the PPA between both the parties should be revived and power supply should start at the interim tariff of INR2.88/unit till the final outcome of the appeal. While this offers some relief, the subsequent commencement of offtake of power at the interim tariff by Rajasthan discoms remains to be seen. * ~67% of total capacity relies on medium-term PPAs; PPA for remaining 100 MW capacity yet to be signed: The company has entered into medium-term PPAs with Noida Power Company Limited (NPCL) and PTC India Ltd (PTC) for a capacity totaling to 400 MW. The PPAs with PTC have a tenure of three years and constitute 50% of the total capacity, with ultimate offtakers as Bihar Discoms and Haryana discoms. The company has not yet signed a PPA for the remaining 100 MW capacity and the timeliness of the same remains a key monitorable. * Counterparty credit risks from indirect exposure to state discoms: The counterparty credit risk of the company remains high, given the weak financial position of the state distribution utilities (which are the ultimate offtakers of power generated by the project); high distribution loss levels; and inadequate tariffs and subsidy in relation to the supply cost. The company has predominantly sold power through short-term and medium-term PPAs (with PTC as aggregator) or through power exchanges so far. * Exposure to volatility in short-term tariff rates: The company's cash flows will remain sensitive to variation in shortterm power tariff levels and off-take over the debt tenure, given the significant share of untied-up capacity. The power exchange tariffs have remained low in the recent months, given the slowdown in demand growth and the increase in supply from hydro and renewable sources. The spot power tariffs are likely to remain subdued in the near term, in view of the demand growth slowdown, significant overcapacity in the thermal segment, and growth in the share of renewable generation in the overall generation mix. Nonetheless, the tariff would remain sensitive to any sharp demand growth or any supply-side constraints such as coal availability, hydro and renewable generation. * Exposure to price risk: The company will remain exposed to volatility in coal prices and interest rate risk, owing to singlepart tariff structure in medium-term PPAs. Liquidity position: Poor SKS Power's liquidity position is poor. Its revenues and cash flows have been impacted in the current fiscal because of lower offtake of power by the counterparties due to the reduced demand as a result of Covid-19 lockdown. The same impacted the company's debt servicing ability in September 2020, following which it has requested the lender for restructuring of the term loans. The parent which has provided corporate guarantee to the borrowings of SKS Power, is also under financial stress and is facing provisional liquidation proceedings, given which likelihood of receiving any funding support from the parent remains low. Rating Sensitivities: Positive triggers – The rating is unlikely to be upgraded in the near term, given that the company has requested its lenders for the debt restructuring. Post successful implementation of the resolution plan, the rating could be upgraded in case of sustained improvement in PLF levels and timely collection of receivables from off takers, favorable final outcome of the regulatory issue with regards to implementation of Rajasthan-based PPA and timely implementation of the same by the Rajasthan discoms, and signing of PPA for the un-tied capacity in a timely manner. Negative triggers – Failure to successfully implement the resolution plan will lead to a rating downgrade. SKS was originally promoted by SKS Ispat and Power Ltd for development of a 1200-MW (4 x 300 MW) thermal power project, in two phases of 600 MW (2 X 300 MW) capacity each, in the Raigarh district of Chhattisgarh (CG). The company achieved CoD of the two units under phase I in October 2017 and April 2018. Due to delayed execution and significant escalation in project cost, the company was unable to service its debt obligations in a timely manner. Consequently, in accordance with the RBI circular on resolution of stressed assets, the lenders opted for a change in management through an open bidding process. Accordingly, the proposal of ARL, a company listed on Hong Kong stock exchange, was accepted that comprised payment of INR2,170 crore towards purchase of shares, assignment of loan, and top-up of the outstanding BGs with 100% cash margins. Subsequently, the management control of SKS was passed to ARL through its step-down wholly owned subsidiary, Entwickeln India Energy Pvt Ltd (EIPL) on March 18, 2019. EIPL had financed the acquisition amount of INR2,170 crore through INR1,600 crore of rupee term loan and the rest through equity and compulsory convertible debentures (CCDs). ARL has provided an unconditional and irrevocable corporate guarantee to all the borrowings of SKS. In FY2019, the company reported a net loss of INR2381.6 crore on an operating income of INR511.2 crore as against a net loss of INR295.1 crore on an operating income of INR212.5 crore in FY2018. TRADCO DEESAN: ICRA Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------- ICRA said ratings for the INR169.25 crore bank facilities of Shri Tradco Deesan Private Limited (STDPL) continue to remain under Issuer Not Cooperating category. The rating is denoted as "[ICRA]D/[ICRA]D; ISSUER NOT COOPERATING"; Rating continues to remain under 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-Based- 66.75 [ICRA]D; ISSUER NOT COOPERATING; Term Loan Rating Continues to remain under the 'Issuer Not Cooperating' category Fund-Based- 97.50 [ICRA]D; ISSUER NOT COOPERATING; Working Capital Rating Continues to remain under Facilities the 'Issuer Not Cooperating' category Short-Term- 5.00 [ICRA]D; ISSUER NOT COOPERATING; Non Fund Based Rating Continues to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Consolidation/Standalone For arriving at the ratings, ICRA has consolidated the financials of Shri Tradco India Private Limited (STIPL), Shri Tradco Deesan Private Limited (STDPL) and Honest Derivatives Private Limited (HDPL) given the close business, financial and managerial linkages among them. The Tradco Group comprises three companies - STIPL, HDPL and STDPL - and is primarily involved in maize trading and manufacturing of starch and derivatives. Maize trading contributed ~76.8% to the Group's revenues in FY2019, with starch and derivative manufacturing comprising ~21.1%. In addition, it generates revenue from chemical trading and windmill business (13.5 MW capacity). The Tradco Group is promoted by Mr. Rajratan Agarwal, who manages its operations, growing his business by a CAGR of ~12.5% from FY2014 to FY2019. STIPL, the Group's flagship company, was incorporated in 2006. The Group has two maize processing facilities, one each at Dhule (for STDPL) and Jalgaon (for HDPL), with a processing capacity of 1,05,000 metric tonne per annum (MTPA) each. TRADCO INDIA: ICRA Keeps D Debt Ratings in Not Cooperating ---------------------------------------------------------- ICRA said ratings for the INR170.75 crore bank facilities of Shri Tradco India Private Limited (STIPL) continue to remain under Issuer Not Cooperating category. The rating is denoted as '[ICRA]D ISSUER NOT COOPERATING'; Rating continues to remain under 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Fund-Based- 15.00 [ICRA]D; ISSUER NOT COOPERATING; Term Loan Rating Continues to remain under the 'Issuer Not Cooperating' category Fund-Based- 155.75 [ICRA]D; ISSUER NOT COOPERATING; Working Capital Rating Continues to remain under Facilities the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Consolidation/Standalone For arriving at the ratings, ICRA has consolidated the financials of Shri Tradco India Private Limited (STIPL), Shri Tradco Deesan Private Limited (STDPL) and Honest Derivatives Private Limited (HDPL) given the close business, financial and managerial linkages among them. The Tradco Group comprises three companies - STIPL, HDPL and STDPL - and is primarily involved in maize trading and manufacturing of starch and derivatives. Maize trading contributed ~76.8% to the Group's revenues in FY2019, with starch and derivative manufacturing comprising ~21.1%. In addition, it generates revenue from chemical trading and windmill business (13.5 MW capacity). The Tradco Group is promoted by Mr. Rajratan Agarwal, who manages its operations, growing his business by a CAGR of ~12.5% from FY2014 to FY2019. STIPL, the Group's flagship company, was incorporated in 2006. The Group has two maize processing facilities, one each at Dhule (for STDPL) and Jalgaon (for HDPL), with a processing capacity of 1,05,000 metric tonne per annum (MTPA) each. VANSHIKA CONSTRUCTION: ICRA Cuts Rating on INR5cr Loan to B+ ------------------------------------------------------------ ICRA has revised the ratings on certain bank facilities of Vanshika Construction, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Cash Credit 5.00 [ICRA]B+ (Stable) ISSUER NOT COOPERATING; Rating downgraded from [ICRA]BB(Stable) and moved 'Issuer Not Cooperating' category Bank Guarantee 5.00 [ICRA]B+ (Stable) ISSUER NOT COOPERATING; Rating downgraded from [ICRA]BB(Stable) and moved 'Issuer Not Cooperating' category Rationale The ratings downgrade is because of lack of adequate information regarding Vanshika Construction's performance and hence the uncertainty around its credit risk. ICRA assesses whether the information available about the entity is commensurate with its rating and reviews the same as per its "Policy in respect of non-cooperation by the rated entity". The lenders, investors and other market participants are thus advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity, despite the downgrade. As part of its process and in accordance with its rating agreement with Vanshika Construction, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's Rating Committee has taken a rating view based on the best available information. Vanshika Group of companies comprises of 16 companies with the major focus segments being sugar, liquor, sand mining and construction business. The group owns around 40 liquor shops in Madhya Pradesh. Also, a significant proportion of sand mines in MP is owned by Vanshika Group. Vanshika Sugar & Power Industries Limited (VSPIL) is the only company engaged in sugar business whereas Vanshika Construction (VCC), which is a partnership firm has liquor and construction segments. The company has completed several road projects in M.P. The firm has a track record of executing the projects awarded by Madhya Pradesh Rural Road Development Authority (MPRRDA) & Madhya Pradesh Public Works Department (MPPWD) in a timely manner. The contract values range between INR0.5-20 crore. The firm deals with entire government orders for constructing roads and buildings. There are total eight partners in the firm. However, the day-to-day activities of the firm is looked after partners Mr Ram Lal Jharia and Ms. Nisha Sharma. VARDHAMAN PRESSURE: ICRA Keeps B+ Debt Ratings in Not Cooperating ----------------------------------------------------------------- ICRA said ratings for the INR6.00 crore bank facilities of Vardhaman Pressure Die Casting continue to remain under Issuer Not Cooperating category. The rating is denoted as [ICRA]B+ (Stable) ISSUER NOT COOPERATING. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 1.50 [ICRA]B+ (Stable); ISSUER NOT Based/CC COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category Long Term-Fund 4.50 [ICRA]B+ (Stable); ISSUER NOT Based/TL COOPERATING; Rating continue to remain under the 'Issuer Not Cooperating' category ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. The current rating action has been taken by ICRA basis dated information on the issuers' performance. Accordingly, the lenders, investors and other market participants are advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity. Vardhaman Pressure Die Casting is engaged in the manufacturing of aluminium castings which largely find use in various industries like automobiles, home appliances, electrical, electronics and many more. Incorporated in the year 2006 as a proprietorship firm, the firm has its manufacturing facility at Bommasandra Industrial Area, Bangalore with current capacity of 3.5 MT per day. Mr. Vikram Kumar, the promoter of the firm has wide experience in the die casting industry. VARUN ENTERPRISES: ICRA Lowers Rating on INR15.50cr Loan to B+ -------------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of Varun Enterprises (VE), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 15.50 [ICRA]B+ (Stable) ISSUER NOT Based/CC COOPERATING; Rating downgraded from [ICRA]BB- (Stable) and Moved to the 'Issuer Not Cooperating' category Rationale The ratings are downgrade because of lack of adequate information regarding VE performance and hence the uncertainty around its credit risk. ICRA assesses whether the information available about the entity is commensurate with its rating and reviews the same as per its "Policy in respect of non-cooperation by the rated entity". The lenders, investors and other market participants are thus advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity, despite the downgrade. As part of its process and in accordance with its rating agreement with Varun Enterprises (VE), ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's Rating Committee has taken a rating view based on the best available information. Incorporated in 2009, Varun Enterprises is a proprietorship concern, managed by Mr. Karthik K, who has experience of more than a decade in the trading business. The firm trades in cables, wires and other electrical products and is an authorised distributor of KEI Industries Limited, Hager Electro Private Limited, Jaquar & Company Private Limited and Indo Asian Switchgear Private Limited in Karnataka. Its customers primarily include electrical contractors and property developers based in Bengaluru. ZAVERI EXPORTS: ICRA Lowers Rating on INR13cr LT Loan to D ---------------------------------------------------------- ICRA has revised the ratings on certain bank facilities of Zaveri Exports Private Limited (formerly Zaveri Jewellers, ZEPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long Term-Fund 13.00 [ICRA]D ISSUER NOT COOPERATING; Based/CC Rating downgraded from [ICRA]B- (Stable) ISSUER NOT COOPERATING Rationale The rating downgrade reflects delays in Debt Servicing. The rating is based on limited information on the entity's performance since the time it was last rated in July 2020. 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 Zaveri Exports Private Limited, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity's management has remained non-cooperative. In the absence of requisite information and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's Rating Committee has taken a rating view based on the best available information. Key rating drivers and their description Credit strengths: NA Credit challenges * Delays in debt servicing: There have been delays in debt servicing as mentioned the account been classified as 'Special Mention Account or SMA' during the past one month. The reason was delays in repayment of principal and/or interest on any fund based bank facility which has a clear mention of due date like term loan/ working capital demand loan etc. and Excess drawing for more than 30 days without the bank's concurrence on fund-based working capital facilities like cash credit, overdraft etc Zaveri Exports Private Limited (formerly Zaveri Jewellers, ZEPL) was incorporated as a private limited company in 2001 and is promoted by Mr. Sunil Tayal. The company manufactures, and exports studded and plain gold, silver and platinum jewellery. The company's jewellery collection ranges from 22 karat gold jewellery to 18 karat jewellery studded with diamonds, gemstones like rubies, emeralds, sapphires, semi-precious stones. ZEPL sells all forms of jewellery including earrings, necklaces, bangles, rings, anklets, pendants, bracelets, brooches, pins and silverwares. The company has 1 retail show room at Abids, Hyderabad. =============== M A L A Y S I A =============== AIRASIA GROUP: MAHB Pursues Legal Rights to Recover Debt -------------------------------------------------------- The Star reports that Malaysia Airports Holdings Bhd (MAHB) said its filing of a MYR78 million lawsuit against AirAsia X (AAX) will not derail the latter's debt restructuring scheme. "Malaysia Airports is pursuing its legal rights to recover the debt from AAX which is critical for the upkeep and maintenance of the airports," it said. The Star relates that the outstanding aeronautical charges comprise regulated charges by the government including passenger service charges (PSC), passenger service security charges, aircraft parking and landing charges, as well as aerobridge charges, check-in counter charges, and late payment charges. "These monies are to be ploughed back into the business to sustain the operation of the airport and ensuring the service levels continue to be delivered to the passengers," MAHB said. "Furthermore, the debt owing to us is less than 0.01% from the total debt owed in the scheme," it said in a statement. According to The Star, the airport operator noted that AAX has filed an application for a proposed debt restructuring scheme with its unsecured creditors pursuant to section 366 of the Companies Act 2016. "Malaysia Airports (Sepang) Sdn Bhd (MASSB) takes the view that it is a secured creditor and thus has applied to be excluded from this scheme. MAHB acknowledged that the aviation industry is facing very challenging and difficult times due to the pandemic. "All airline companies and airports are facing the same prospect in terms of traffic contraction and loss of revenue. While some airline companies have inevitably collapsed due to the extreme business conditions, airports are facing the same extreme conditions. "However, closing down the airports is not a conceivable option for the nation. "Airports are strategic and critical national infrastructure and it has remained operational throughout the pandemic and will have to continue to survive to the best of its ability to serve the public and to ensure the country is not crippled in terms of connectivity," it said, The Star relays. The board of Malaysia Airports has the responsibility to act in the best interest of the company to protect its shareholders, the country's air transport infrastructure and more than 10,000 people nationwide under the company's employment, it added. "We have always treated all our airline partners equally and fairly. Agreeing to any haircut to one airline will set a precedent for the rest. Nevertheless, we acknowledge the importance of AirAsia as a key partner and we shall continue engaging them to find the best solution forward," it added. The Star relates that AAX said in a statement on Oct. 25 that the alleged MYR78 million outstanding amount was largely made up of the MYR23 difference per passenger in PSC which was never collected by the airline. It added that MYR9.2 million of the alleged amount owing is for late payment interest "unilaterally and egregiously" imposed on AAX for the uncollected PSC. The airline said the MYR23 was not collected from passengers based on an announcement by the Transport Ministry that the PSC will be reduced to MYR50. "Furthermore, the increased charges could not be justified for substandard facilities and services which we strongly believe should not be imposed on passengers with higher fares. "We also like to point out that MAHB has yet to pay agreed incentives owed to AAX estimated at MYR7.9 million for 2018 and MYR6.9 million for 2019. "As all travel-related industries are the worst-hit sectors due to these unprecedented challenges, we strongly believe that airlines, airports and other travel-related businesses should work closely together to weather these extremely difficult times, come back stronger and make Malaysia the biggest travel hub in the region, " said AAX. About AirAsia AirAsia Berhad provides low-cost air carrier service. The company provides services on short-haul, point-to-point domestic and international routes. AirAsia, headquartered in Malaysia, operates from hubs in Malaysia, Thailand, Indonesia, Philippines and India. As reported in the Troubled Company Reporter-Asia Pacific on July 9, 2020, auditor Ernst & Young said the carrier's ability to continue as a going concern may be in "significant doubt." In a statement to the Kuala Lumpur stock exchange, Ernst & Young said AirAsia's current liabilities already exceeded its current assets by MYR1.84 billion at the end of 2019, a year when it posted a MYR283 million net loss, Bloomberg News disclosed. That was before the coronavirus crisis, which has further hit the carrier's financial performance and cash flow. AIRASIA GROUP: Unit Confirms BOC Intervention Application --------------------------------------------------------- Ahmad Naqib Idris at theedgemarkets.com reports that AirAsia X Bhd (AAX) said BOC Aviation Ltd has applied to intervene in the airline's application to the High Court in respect of its proposed MYR63.49 billion debt restructuring scheme, confirming a report by The Edge. In a filing with the bourse, AAX said it is making the clarification in reference to an article by The Edge dated Oct 26 entitled "More hurdles loom over AirAsia X's debt restructuring plan," theedgemarkets.com relays. Quoting people familiar with the matter, The Edge reported that BOC -- one of the 1,200 unsecured creditors that are being asked to write down their dues by AAX -- had applied to intervene to voice its objections to the proposed restructuring scheme. According to theedgemarkets.com, AAX also confirmed that Malaysia Airports Holdings Bhd's subsidiary, Malaysia Airports (Sepang) Sdn Bhd, had filed an application to intervene in the airline's application to be excluded from the proposed debt restructuring scheme. theedgemarkets.com relates that the group further said that it is planning to raise up to MYR500 million to restart the company post-restructuring, although the proposed debt restructuring scheme will have to be completed and successful before it can carry out any fundraising exercise. On AirAsia X Indonesia, AAX said that no liquidation proceedings have commenced despite ceasing operation of scheduled services in January 2019. Meanwhile, its investment in Thai AirAsia X has been fully impaired based on AAX's audited financial statements for the financial year ended Dec. 31, 2019. AAX is currently seeking to get at least 75% of its unsecured creditors to agree to the plan to restructure MYR2 billion of current debts and another MYR61 billion in future liabilities, which are mainly linked to purchases and leasing of planes. About AirAsia AirAsia Berhad provides low-cost air carrier service. The company provides services on short-haul, point-to-point domestic and international routes. AirAsia, headquartered in Malaysia, operates from hubs in Malaysia, Thailand, Indonesia, Philippines and India. As reported in the Troubled Company Reporter-Asia Pacific on July 9, 2020, auditor Ernst & Young said the carrier's ability to continue as a going concern may be in "significant doubt." In a statement to the Kuala Lumpur stock exchange, Ernst & Young said AirAsia's current liabilities already exceeded its current assets by MYR1.84 billion at the end of 2019, a year when it posted a MYR283 million net loss, Bloomberg News disclosed. That was before the coronavirus crisis, which has further hit the carrier's financial performance and cash flow. ========= N E P A L ========= MAHILA LAGHUBITTA: ICRA NEPAL Assigns BB Issuer Rating ------------------------------------------------------ ICRA Nepal has assigned the issuer rating of [ICRANP-IR] BB to Mahila Laghubitta Bittiya Sanstha Limited (MLBSL). Issuers with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations. The rating is only an opinion on the general creditworthiness of the rated entity and not specific to any particular debt instrument. Rationale The assigned rating factors in MLBSL's strong promoter profile of the regulated institutional promoter, Machhapuchhare Bank Limited (MBL, rated A- by ICRA Nepal), and the Center for Women Right and Development (CWRD), with ~23% and ~9% stake, respectively, and with one director representation in board of MLBSL by each. The rating also factors in the promoter's (CWRD NGO since April 2002) long track record in microcredit activities and MLBSL's ability to scale-up its business and client base after takeover from CWRD. MLBSL's portfolio base grew to NPR 1,782 million as of mid-July 2020 from NPR 872 million as on October 2018 (date of takeover from CWRD), while maintaining a healthy asset quality profile (gross NPLs of 0.78% as of mid-July 2020). Additionally, an adequate network base for its scale of operations (53 branches in 29 districts as of mid-July 2020), along with a branch expansion plan encompassing new geographies, and a large belowthe-poverty-line population in Nepal, the target group for microfinance institutions (MFIs), spell positives from a growth perspective. The current capitalisation of MLBSL (~11% as of mid-July 2020) remains adequate against the regulatory minimum of 8%, which is expected to improve after the proposed capital injection. Nonetheless, the rating is constrained by the regulatory changes introducing cap on lending rate at 15% and fees at 1.5% from FY2021. This could impair the company's profitability profile, going forward, as its current lending rate and fee stood at 17.49% (average yield) and 2%, respectively. It also notes the low share of deposits in the funding mix (~39% as of midJuly 2020 against ~50% for the industry) and the recent regulatory restriction to collect recurring deposits. Funding sources for MFIs may also witness some constriction, going forward, as the banking sector is comfortably above its deprived sector lending target (6.61% as of mid-July 2020 against 5% target). The rating also remains constrained by the high-ticket sizes permitted by regulations, the large numbers of players in the industry (including comparatively weak regulated cooperatives) and the starting phase of the credit information bureau with low penetration of credit information for MFIs, which raise concerns of overleveraging by borrowers and asset quality. Going forward, MLBSL's ability to maintain asset quality indicators, while increasing its scale of operations and generating stable and adequate profitability over an increasing capital base as well as economies of scale will have a bearing on its overall financial profile. Rating strengths * Adequate track record of operations: MLBSL started operations from October 2018 by taking over the existing microcredit operation of CWRD. CWRD started MFI activities from April 2002 as a financial intermediary with a portfolio base of ~NPR 872 million and deposit base of ~NPR 319 million on the date of transfer (October 2018). Similarly, the member base was ~25,500, distributed across its 34 branches in 18 districts on the transfer date. * Regulated institutional promoter along with experienced management team: The company is promoted by two institutions namely, the class-A commercial bank, MBL, and the NGO, CWRD, with stake of ~23% and ~9%, respectively, with one director representation from each. The rest of the shares are held by 18 individuals with experience in the microfinance business. Following the proposed IPO, the promoter holding is expected to dilute to 60%. The company derived funding as well as operational support from the promoter bank. Also, adequate quality of management with experienced senior management provides comfort. * Healthy portfolio growth supported by expansion in franchise: On the acquired portfolio base of ~NPR 872 million, MLBSL reported growth of ~79% in FY2019 within nine months of operation as a class-D MFI. Its growth pace moderated thereafter due to the impact of the Covid-19 pandemic over the last four months of FY2020, with YoY growth of ~32% reflecting a portfolio base of ~NPR 1,782 million as of mid-July 2020. Despite its adequate track record of operations, its ticket sizes remain comparable with its new age peers with outstanding loans of around NPR 61K per borrower and much lower compared to the regulatory ceiling of NPR 3 lakh for fresh borrowers. In terms of portfolio mix, group backed noncollateral loans make up ~90% of the company's portfolio base, while the rest are high ticket collateral lending. However, recent restrictions by the regulator to not allow MFIs to extend both collateral and non-collateral loans to a same borrower might hinder the growth, going forward. The company's ability to scale-up operation while maintaining healthy asset quality would remain critical. * Adequate presence in target geography: The company has presence in 29 districts with 53 branches and a member base of approximately 44,000 as of mid-July 2020. Adequate penetration in the target geography of the company has aided it in gaining operational efficiency. * Adequate capitalisation profile: The company's CRAR of ~11% as of mid-July 2020 remains adequate against the 8% regulatory minimum. Incoming capital from the proposed issue will further comfort the capitalisation profile. The gearing of ~8.9 times remains slightly higher among its peers, albeit much lower against the regulatory maximum of 30.0 times. Gearing is expected to improve and remain comparable with similar tier peers with capitalisation of the proposed IPO along with retention of internal accruals. * Fair asset quality: MLBSL's portfolio quality remains healthy, with gross NPLs of 0.78% as of mid-July 2020. However, increased ticket size of the collateral lending by the regulator and the management's plans to increase collateral lending could impair the company's asset quality indicators, going forward. The company's ability to maintain sound asset quality indicators controlling fresh slippage while increasing its scale of operations would remain a key monitorable. Rating Challenges * Changed regulation could impact future profitability profile: The regulator has capped the lending rate of MFIs at 15% and fees at 1.5%, scrapping the interest rate spread cap of 9%. This is expected to strain the profitability, going forward, amid a base rate plus lending regime. However, the current liquidity flush situation in the Nepalese banking industry is expected to provide comfort to MFIs in the near term. Profitability so far has remained healthy with PAT of NPR 35 million in FY2020, which is RoNW of ~20%. It was mainly supported by healthy fee-based income of ~3% and low credit costs (1.4%) with moderating operating costs (~6%). A high fee-based income (although the regulatory cap for FY2020 was at 2%) was mainly on account of prepayment of loans prior to the maturity date and disbursal of fresh loans to the same borrowers by deducting fees at 2%. * Low penetration of credit bureau in Nepalese MFI sector: A large number of MFI players and micro lending by some class-A and class-B banks as well as cooperatives in the same geography lead to high competition and risk of multiple loans availed by borrowers. To tackle this, the Centralized Credit Information Bureau was established for MFIs, but its fullfledged operations is yet to begin, and its coverage of borrowers' profile is low at present. Coupled with a high regulatory lending celling, this raises concerns of overleveraging and assets quality. However, NRB has mandated all MFIs to send credit information to the bureau along with the mandatory assessment of loans from other institutions prior to loan disbursal. While this could reduce duplication and overleveraging risks, going forward, there may be risks to asset quality during the transition period. * Low share of deposits in funding mix: Funding mix remains moderate, given the recent commencement of operations, with bank borrowing accounting for a relatively high share (~61% in total interest-bearing liabilities as of mid-July 2020) and the remaining 39% from member deposits (against ~50% for the industry). Voluntary deposits comprise ~83% share of the total deposits, of which ~54% is recurring deposits carrying a slightly higher rate of interest, and the rest being compulsory deposits. Recent regulatory restrictions on collecting recurring deposits from members might also impact the growth of deposits, going forward, while cost is expected to decline with the gradual reduction in share of high cost recurring deposits. The company has availed loans from 14 BFIs, including 10 class-A banks, with a sound fund mobilisation ratio (credit/ total available fund of 96% as of mid-July 2020). * Regulatory environment: Regulatory risks remain high for the sector as any changes in the regulations impact funding sources and interest spreads. Also, a high loan ceiling for MFI lending by NRB (NPR 300K for new borrowers) might lead to aggressive growth and affect the industry's asset quality. Low regulatory capital requirements (8%) and higher permissible gearing levels (30 times), despite lending to risky segments, remains a concern from the standpoint of the company's ability to absorb credit shocks. Further, the marginal profile of borrowers, who are prone to income shocks and have limited ability to repay overdue amounts in case of missed instalments, and the high loss in case of default, given the unsecured nature of credit, are credit negatives. About Mahila Laghubitta Incorporated in June 2018, Mahila Laghubitta Bittiya Sanstha Limited started its operations from October 2018 as a licenced national level class-D microfinance institution. Thereafter, MLBSL took over the microfinance business conducted by the Center for Women Right and Development (CWRD), an NGO established in August 1993 and operating as a financial intermediary since April 2002. As of mid-July 2020, MLBSL operated through 53 branches from 29 districts. The current shareholding structure of MLBSL, hence, consists of CWRD as a promoter (~9%) along with Machhapuchhare Bank Limited (~23%), with the rest of its shares held by 18 individuals with experience in the microfinance sector. Mr. Krishna Prasad Neupane is the chief executive officer of the company. The registered and corporate office of MLBSL is located at Sanga, Kavre, Bagmati Province, Nepal. MLBSL reported a net profit of ~NPR 35 million during FY2020, over an asset base of ~NPR 1,893 million as of mid-July 2020 against a net profit of ~NPR 24 million during FY2019, over an asset base of ~NPR 1,427 million as of mid-July 2019. MLBSL's gross NPLs stood at 0.78% and CRAR at 10.86% as of mid-July 2020. On the technology front, MLBSL uses the "Synergy" software, which is centralised across all its branches. ================= S I N G A P O R E ================= BM MOBILITY: Interim Liquidators Appointed for Subsidiary --------------------------------------------------------- The Judicial Managers of BM Mobility Ltd. said that an interim liquidator had been appointed for Uniride Ecotour Sdn. Bhd. Uniride is an indirectly held subsidiary of the Company. The Company holds 65% of Estar Investments Pte Ltd (under liquidation) and Estar in turn holds 100% of BM Mobility Sdn. Bhd., while BM Mobility Sdn. Bhd. holds 100% of Wanted Marketing Communications Sdn Bhd, and Wanted Marketing holds 75% of Uniride. Estar remains under liquidation as at the date hereof. Further announcements will be made as and when there are material developments. Shareholders are advised to read this announcement and any further announcements by the Company carefully. Shareholders are also advised to refrain from taking any action in respect of their securities in the Company which may be prejudicial to their interests, and to exercise caution when dealing in the securities of the Company. In the event of any doubt, shareholders should consult their stockbrokers, bank managers, solicitors, accountants or other professional advisors. 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. EAGLE HOSPITALITY: MAS Issues Notice to Remove Manager ------------------------------------------------------ Olivia Po at The Business Times reports that the Monetary Authority of Singapore (MAS) on Oct. 26 issued a Notice of Intention (NOI) to remove the manager of Eagle Hospitality Reit (EH-Reit), and to appoint a new manager. This is in view of numerous breaches of the Securities and Futures Act (SFA) by its manager EH-Reit Management, and serious concerns over the manager's ability to comply with rules and regulations, said MAS, BT relates. Since it was licensed in May 2019, EH-Reit Management has committed multiple breaches of the SFA, including breaches of the minimum base capital and financial resources requirements, said MAS. According to BT, the central bank added that it has serious concerns about the management's ability and commitment to comply with its rules and regulations. It thus deems it necessary to direct EH-Reit's trustee DBS Trustee Limited, to remove the management. EH-Reit Management had breached these financial requirements for the first time in the fourth quarter of 2019 but only informed MAS in April this year, BT relays. BT says the management again breached the same base capital requirement for a second and third time on Aug 31 and Sept 30 respectively, MAS said, despite direction for it to rectify breaches and take steps to enhance the monitoring of financials. Other breaches include not seeking MAS's approval before providing financial assistance to a subsidiary, late submissions of regulatory returns and the failure to present to unitholders audited financial statements of EH-Reit within the stipulated timeframe. MAS will announce its final decision after reviewing any written submissions from DBS Trustee Limited and EH-Reit Management, which will be given 10 business days to respond upon receipt of the NOI, BT adds. Eagle Hospitality Trust (Eagle HT) is a Singapore-based hospitality stapled trust. The Trust comprises of Eagle Hospitality Real Estate Investment Trust (Eagle H-REIT) and Eagle Hospitality Business Trust (Eagle H-BT). Eagle HT's portfolio comprises 18 full service hotel properties consisting of nine Upper Upscale hotels, five Upscale hotels and four Upper Midscale hotels located in the United States, with a total of 5,420 rooms. ===================== S O U T H K O R E A ===================== SOUTH KOREA: Rebounds from Recession as Exports Jump ---------------------------------------------------- Sam Kim at Bloomberg News reports that South Korea's fastest exports growth in decades led a stronger-than-expected rebound from its pandemic-triggered recession, signaling a pickup in global trade amid rising virus waves in key markets. Gross domestic product increased 1.9% in the three months through September from the prior quarter, the Bank of Korea reported Oct. 27. Economists had forecast 1.3% growth, following two quarters of contraction. Bloomberg relates that the biggest jump in exports since 1986 led the rebound after a sharp decline in shipments the prior period as demand for memory chips and electronics increased from China and other major economies amid a shift to more work-and-study from home. The gains fueled investment in machines and transportation equipment needed to support manufacturing. "This speaks to the resilience of a manufacturing powerhouse," Bloomberg quotes economist Oh Jae-young at KB Securities as saying. "South Korea's manufacturing has remained unscathed from the pandemic, and now as developed economies themselves restart production, South Korea's getting a boost." According to the report, the better-than-expected GDP result may have helped limit the decline of the South Korean won to 0.1% against the dollar on Oct. 27 amid global risk-off sentiment and an attempt by authorities to warn against the currency's recent rally. The nation's 10-year bond yield rose 1 basis-point to 1.5%. South Korea is recovering from recession in a stronger position than most developed nations, aided by its exports recovery, stimulus measures and its relatively successful containment of the coronavirus, Bloomberg says. A late summer resurgence of the virus in South Korea that led to tighter social distancing rules has eased. The government resumed the distribution of discount coupons -- halted during the second virus wave -- to encourage spending, and is promoting an annual shopping event in early November to accelerate the recovery. According to Bloomberg, Finance Minister Hong Nam-ki, in a statement Oct. 27 after the GDP report, said the country has entered a recovery phase thanks to exports to major economies such as China and stronger demand for its tech products. He said the economy might have expanded in the mid- 2% range last quarter if not for the resurgence of the virus in August. Exports increased 16% from the previous quarter, but the recovery remains vulnerable to disruptions in the U.S. and Europe, where the epidemic is worsening, Bloomberg discloses. Growing U.S.-China tensions and the outcome of the U.S. presidential election also add to uncertainties for South Korea. "The rising second wave outbreak in developed-market economies is concerning," economist Rory Green, at research firm TS Lombard said before the GDP announcement, Bloomberg relays. He said South Korea could still benefit from a "Zoom boom" even if a new rounds of lockdowns took place. Bloomberg adds that private sector analysts see GDP shrinking for the full-year for the first time since the late 1990s Asian financial crisis, despite a second-half recovery. Construction investment weighed on the economy heavily in the third quarter, falling 7.8%, while private spending remained sluggish with a 0.1% slide. Compared with the same period last year, the economy shrank 1.3%, Bloomberg discloses. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2020. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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 ***