/raid1/www/Hosts/bankrupt/TCRAP_Public/201029.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, October 29, 2020, Vol. 23, No. 217
Headlines
A U S T R A L I A
ALLWELD ENGINEERING: Second Creditors' Meeting Set for Nov. 4
LIBERTY SERIES 2020-3: Moody's Gives (P)B2 Rating to Cl. F Notes
PAS GROUP: PE Firm Looks to Acquire Business Out of Administration
RAHME HOLDINGS: First Creditors' Meeting Set for Nov. 4
SLKALT PTY: Online Business Sold Prior to Collapse
C H I N A
CHINA GRAND: Fitch Affirms B+ LT IDRs, Alters Outlook to Stable
CHINA QUANJUDE: Bleeds Cash as Food Scene Leaves It Behind
GCL NEW ENERGY: S&P Withdraws CCC- Long-Term Issuer Credit Rating
HUACHEN AUTOMOTIVE: Defaults on CNY1 Billion Corporate Bond
JIAYUAN INT'L: Moody's Assigns B3 Rating to New USD Notes
I N D I A
AMSAT INDUSTRIES: CARE Keeps C Debt Rating in Not Cooperating
ASHAPURA INTIMATE: CARE Withdraws D Rating on Bank Facilities
DOLPHIN OFFSHORE: CARE Withdraws D Rating on Bank Facilities
DQ ENTERTAINMENT: CARE Keeps D Debt Rating in Not Cooperating
GAYATRI COTTON: CARE Lowers Rating on INR8cr LT Loan to D
GEOXA LOGISTICS: CARE Keeps D Debt Rating in Not Cooperating
GEOXA STEELS: CARE Keeps D Debt Rating in Not Cooperating
ISHITA BUILDCON: CARE Lowers Rating on INR10cr LT Loan to C
JUBILEE INFRASTRUCTURES: CARE Keeps D Rating in Not Cooperating
KGN MOTORS: CARE Keeps D Debt Rating in Not Cooperating
LAXMI ENGINEERING: CARE Keeps D Debt Ratings in Not Cooperating
LAXMI NARASIMHA: CARE Keeps D Debt Rating in Not Cooperating
MADARKHAT TEA: CARE Lowers Rating on INR5.80cr LT Loan to C
MANSAROVAR HOLIDAYS: CARE Keeps D Debt Rating in Not Cooperating
OZONE PROJECTS: CARE Lowers Rating on INR126.30cr NCD to D
PRITI GEMS: CARE Lowers Rating on INR45cr LT Loan to D
RAC PAPERS: CARE Keeps C Debt Rating in Not Cooperating
RELIANCE BIG ENTERTAINMENT: CARE Cuts INR487.50cr Loan Rating to D
RELIANCE BIG: CARE Cuts Rating on INR300cr LT Loan to D
SAFE PARENTERALS: CARE Keeps D Debt Rating in Not Cooperating
SATWIK FEEDS: CARE Lowers Rating on INR6cr LT Loan to C
SHANDAR SNACKS: CARE Keeps D Debt Ratings in Not Cooperating
SHIRPUR GOLD: CARE Reaffirms D Rating on INR75cr LT Loan
SMILAX LABORATORIES: CARE Cuts Rating on INR77.62cr LT Loan to D
SRINIVASA POULTRY: CARE Cuts Rating on INR7.43cr LT Loan to C
TIRUPATI BALAJI: CARE Lowers Rating on INR27.33cr Loan to D
UNITED CAPZ: CARE Keeps D Debt Ratings in Not Cooperating Rating
VATSA AUTOMOBILES: CARE Keeps D Debt Rating in Not Cooperating
I N D O N E S I A
GARUDA INDONESIA: Ends Contract of 700 Workers Amid Low Demand
SAWIT SUMBERMAS: Fitch Withdraws CCC+ IDR on Insufficient Info
J A P A N
ANA HOLDINGS: Forecasts Record JPY505 Billion Loss for FY2020-21
TOKYU DEPARTMENT: To Close Department Store in Bangkok
P A K I S T A N
PAKISTAN WATER: Moody's Assigns B3 CFR, Outlook Stable
S I N G A P O R E
EAGLE HOSPITALITY: To 'Assess Implications' of MAS Notice
EZION HOLDINGS: JV Placed Under Creditors' Voluntary Winding-Up
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A U S T R A L I A
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ALLWELD ENGINEERING: Second Creditors' Meeting Set for Nov. 4
-------------------------------------------------------------
A second meeting of creditors in the proceedings of Allweld
Engineering Pty Ltd has been set for Nov. 4, 2020, at 11:00 a.m. at
the offices of SV Partners, Level 8, 68 St Georges Terrace, in
Perth, WA.
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.
Malcolm Field of SV Partners was appointed as administrator of
Allweld Engineering on Oct. 6, 2020.
LIBERTY SERIES 2020-3: Moody's Gives (P)B2 Rating to Cl. F Notes
----------------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to the notes to be issued by Liberty Funding Pty Limited in
respect of Liberty Series 2020-3.
Issuer: Liberty Funding Pty Limited in respect of Liberty Series
2020-3
AUD600 million Class A1 Notes, Assigned (P)Aaa (sf)
AUD120 million Class A2 Notes, Assigned (P)Aaa (sf)
AUD29.6 million Class B Notes, Assigned (P)Aa2 (sf)
AUD14.4 million Class C Notes, Assigned (P)A2 (sf)
AUD9.6 million Class D Notes, Assigned (P)Baa2 (sf)
AUD10.4 million Class E Notes, Assigned (P)Ba2 (sf)
AUD2.4 million Class F Notes, Assigned (P)B2 (sf)
The AUD13.6 million Class G Notes are not rated by Moody's.
The transaction is a securitisation of a portfolio of Australian
residential mortgages. All mortgages were originated and are
serviced by Liberty Financial Pty Limited (Liberty, unrated).
Liberty is an Australian non-bank lender. It started originating
non-conforming residential mortgages in 1997. It subsequently
expanded into prime residential mortgage origination, as well as,
among others, auto loans, small commercial mortgage loans and
personal loans. Residential mortgages remain Liberty's predominant
business. As of September 2020, it had a portfolio of Australian
mortgage assets over AUD8.31 billion, of which 70% was securitised
in public transactions.
RATINGS RATIONALE
The provisional ratings take into account, among other factors,
evaluation of the underlying receivables, the evaluation of the
capital structure and credit enhancement provided to the notes, the
availability of excess spread over the life of the transaction, the
liquidity reserve in the amount of 2.00% of the notes balance, the
legal structure, and the credit strength and experience of Liberty
as Servicer.
Moody's MILAN credit enhancement (MILAN CE) for the collateral pool
is 9.0%, while the expected loss is 1.60%. MILAN CE represents the
loss Fitch expects the portfolio to suffer in a severe recessionary
scenario, and does not consider structural features of the
transaction. or lenders mortgage insurance (LMI) benefit. The
expected loss represents a stressed, through-the-cycle loss
relative to Australian historical data.
After lenders' mortgage insurance (LMI) benefit, MILAN CE is 8.9%.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of
consumer assets from the current weak Australian economic activity
and a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around its forecasts is unusually high.
Fitch regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
The key transactional features are as follows:
- Class A1 Notes and Class A2 Notes benefit from 25.0% and 10.0%
note subordination respectively.
- The notes will initially be repaid sequentially. Upon
satisfaction of all stepdown conditions which include, among
others, the payment date falling on or after the payment date in
October 2022 and absence of charge offs, all Notes, excluding Class
G Notes, will receive a pro-rata share of principal payments. The
principal pay-down switches back to sequential pay, once the
aggregate loan amount is at 20% or less of the aggregate loan
amount at closing, or on or following the payment date in October
2024.
- The guarantee fee reserve account, which is unfunded at closing
and will build up to a limit of 0.30% of the issued notional from
the bottom of the interest waterfall prior to interest paid to the
Class G Notes noteholders. The reserve account will firstly be
available to meet losses on the loans and charge-offs against the
notes. Secondly, it can be used to cover any required payment
shortfalls that remain after drawing on principal and the liquidity
facility. Any reserve account balance used can be reimbursed to its
limit from future excess income.
The key features of the mortgage loan pool are as follows:
- The portfolio has a scheduled loan-to-value (LTV) ratio of
70.6%, with a relatively high proportion of loans with a scheduled
LTV ratio above 80.0% (19.7%) and above 90% (10.9%).
- Around 26.0% of the loans in the portfolio were extended to
self-employed borrowers.
- 9.0% and 0.1% of the loans in the portfolio were extended on an
alternative documentation and low documentation basis
respectively.
- The portfolio contains 5.5% exposure with respect to borrowers
with prior credit impairment (default, judgment, or bankruptcy).
Moody's assesses these borrowers as having a significantly higher
default probability.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in May
2020.
Factors that would lead to an upgrade or downgrade of the ratings:
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could lead
to an upgrade of the ratings. Moody's current expectations of loss
could be better than its original expectations because of fewer
defaults by underlying obligors or higher recoveries on defaulted
loans. The Australian job market and the housing market are primary
drivers of performance.
A factor that could lead to a downgrade of the notes is
worse-than-expected collateral performance. Other reasons for
performance worse than Moody's expects include poor servicing,
error on the part of transaction parties, a deterioration in credit
quality of transaction counterparties, fraud and lack of
transactional governance.
PAS GROUP: PE Firm Looks to Acquire Business Out of Administration
------------------------------------------------------------------
Dean Blake at Inside Retail reports that fashion house PAS Group
will likely be acquired by private equity firm Queens Lane Capital
by way of a deed of company arrangement.
Inside Retail relates that the deal will need to be voted through
by the business' shareholders, and will see brands such as Review,
Black Pepper, Yarra Trial, Marco Polo and Breakaway continue.
"We are proud to have saved circa 1,000 Australian jobs, and with a
turnover of $200 million there are tremendous opportunities to
further grow the PAS Group," Inside Retail quotes Queens Lane
Capital chairman Larry Kestelmen as saying.
"A major focus will be on building the online presence which has
expanded to 25 per cent during Covid-19 and developing a single
customer view through further marketing and online investment."
According to the report, the private equity firm said it is looking
"closely" at other acquisition opportunities, with a strong focus
on "special situations, turnarounds, corporate carve-outs and
management buyouts of companies with a turnover of AUD50 million
and above."
PAS Group CEO Eric Morris will remain in charge of the business, as
will its current management team, but will be overseen by a new
board that will be formed and led by Mr. Kestelmen, the report
notes.
Inside Retail adds that Mr. Morris said the acquisition would
provide PAS Group with financial strength, and that he is excited
about what opportunities it could open up for the business moving
forward.
PAS Group fell into voluntary administration in May as a last-ditch
effort to restructure the company in a way that will enable it to
operate sustainably into the future, the report says.
About PAS Group
PAS Group employed 1,300 people and operates 225 stores across
Australia and New Zealand. Its retail and wholesale brands include
Review, Black Pepper, Yarra Trail, Jets Swimwear and Designworks,
which supplies Everlast, Mooks and other brands to major retailers,
including Target.
Martin Ford, Stephen Longley and David McEvoy of PwC were appointed
as administrators of PAS Group and related entities on May 29,
2020.
RAHME HOLDINGS: First Creditors' Meeting Set for Nov. 4
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Rahme
Holdings Pty Ltd, trading as Forsite Constructions, will be held on
Nov. 4, 2020, at 3:00 p.m. via teleconference.
Glenn Livingstone and Morgan Kelly of KPMG were appointed as
administrators of Rahme Holdings on Oct. 26, 2020.
SLKALT PTY: Online Business Sold Prior to Collapse
--------------------------------------------------
SmartCompany reports that the liquidator of art supplies retailer
Riot Art & Craft has confirmed the e-commerce arm of the business
was sold to a "related entity" prior to the business collapsing.
Riot Art & Craft closed its 56 stores last week, after entering
liquidation and informing staff members via text message that they
no longer had jobs, SmartCompany says.
SmartCompany relates that a message posted on the Riot Art & Craft
website claims the e-commerce part of the business is continuing to
trade "under new management", however, former employees of the
business have questioned the independence of the new owners.
The online Riot Art & Craft business is now operated by a company
called Riot Stores Pty Ltd, which was registered in early April
2020, according to the Australian Business Register.
Liquidator Nicholas Giasoumi of insolvency firm Dye & Co was
appointed to manage the liquidation of SLKALT Pty Ltd, the company
that operated the Riot Art & Craft business, on October 19.
On Oct. 28, he confirmed to SmartCompany the company entered into a
"sale agreement in April with a related entity to purchase the
e-commerce business being operated by the company".
This related entity has "common directors" with SLKALT Pty Ltd, Mr.
Giasoumi confirmed, although he declined to disclose who those
directors are.
It is believed the intellectual property assets of the company were
part of the sale, including the Riot Art & Craft name, but Mr.
Giasoumi confirmed no bricks-and-mortar stores were sold, according
to SmartCompany.
SmartCompany relates that the details of the sale will now be
reviewed by the liquidator, although he says at this stage it
appears an independent valuation was completed prior to the sale
and it "looks to have been done above board".
"There is nothing to suggest creditors have been disadvantaged,"
SmartCompany quotes Mr. Giasoumi as saying, although a proper
investigation will still be conducted.
SmartCompany contacted SLKALT Pty Ltd director Michael Kurc for
additional comment but he referred all questions back to Mr.
Giasoumi.
=========
C H I N A
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CHINA GRAND: Fitch Affirms B+ LT IDRs, Alters Outlook to Stable
---------------------------------------------------------------
Fitch Ratings has revised the Outlook on China Grand Automotive
Services Group Co., Ltd.'s (CGA) Long-Term Foreign-Currency Issuer
Default Rating (IDR) to Stable from Negative, and has affirmed the
rating at 'B+'.
The Outlook revision to Stable reflects the ongoing recovery in
CGA's business operation and cash generation following the
disruption caused by the COVID-19 outbreak in China earlier this
year. The rating affirmation reflects the company's leading
position in China's competitive auto-dealership market, its high
leverage and reduced financial flexibility.
KEY RATING DRIVERS
Recovery from Coronavirus Pandemic: The COVID-19 outbreak had a
severe impact on CGA's operations in 1Q20, with revenue falling 31%
yoy and the company suffering a net loss of CNY397 million.
However, CGA's operations started to recover in 2Q20, when the
revenue decline narrowed to -7%. Fitch expects CGA's business
recovery to accelerate in 2H20 as passenger vehicle sales in China
pick up and CGA's new business initiatives, such as long-term
warranty products and cost control measures, have a more noticeable
impact on margins and cash generation.
Viable Deleveraging Plan: CGA's deleveraging plan has been affected
by the coronavirus outbreak but remains viable. Management is
focusing on improving its auto after-sales service business
segment, which consists of the maintenance and repair of vehicles,
and reiterated its commitment to prioritise deleveraging over
expansion. Fitch believes a more profitable and stable
auto-servicing business will underpin CGA's deleveraging effort in
the medium term. Fitch expects CGA's FFO adjusted net leverage to
rise above 6x in 2020 but return swiftly to 5.4x by 2021.
Market-Leading Position in Competitive Industry: CGA has retained
its market-leading position despite a difficult market environment
and further expanded into the premium auto segment. However,
China's auto-dealership industry remains highly fragmented and
competitive. Chinese auto dealers generally have mid-single-digit
EBITDA margins, comparable with US peers, and Fitch believes the
industry's low margins will persist in the medium term.
Reliant on Short-Term Financing: CGA redeemed and repaid multiple
offshore US-dollar bonds and loans over the past 12 months via its
cash balance and onshore borrowings. This has negatively affected
CGA's financial structure as its reliance on short-term financing
has increased. Fitch believes ample onshore credit facilities
remain available due to CGA's strong market position and solid
banking relationships. The company completed an issuance of CNY3.4
billion of A-share convertible bonds in August 2020.
Leasing Subsidiary Deconsolidated: CGA provides auto-finance
services via its subsidiary, Huitong Xincheng. Fitch continues to
deconsolidate Huitong Xincheng in its analysis in accordance with
its Corporate Rating Criteria. Fitch assumes a capital structure
for the finance services operation that is strong enough to
indicate that its activities are unlikely to be a cash drain for
the parent over the rating horizon. The target capital structure
considers the relative quality of the financing entity's assets and
its funding and liquidity. For Huitong Xincheng, a target gross
debt/tangible equity ratio of 1x was applied.
DERIVATION SUMMARY
CGA's ratings are supported by its leading market position and
large operating scale, but are constrained by high leverage. Peers
include Zhongsheng Group holdings Limited (BBB-/Stable), the
second-largest auto dealership in China and AutoNation, Inc.
(BBB-/Stable), the largest automotive retailer in the US. CGA has
similar scale as its direct peers, but has weaker profitability,
higher leverage and lower financial flexibility and other metrics.
eHi Car Services Limited (B/Negative), China's second-largest
car-rental company, has a financial structure similar to CGA's, but
CGA has a much larger operating scale, lower capex requirements and
a more stable competitive environment. CGA has a better market
position than Golden Eagle Retail Group Limited (BB/Stable), a
Chinese department-store operator, but weaker leverage ratio, lower
margins and smaller FCF generation.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- CGA's revenue to decline by 8.5% in 2020 and rise by a CAGR of
4.6% from 2020-2023 (2019: 2.7%)
- CGA's EBITDA margin to fall to 4.8% in 2020 and recover to 5.6%
by 2023 (2019: 5.6%)
- Capex (inclusive of M&A) to drop to CNY1.5 billion in 2020 and
rise to CNY3 billion by 2023 (2019: CNY2.5 billion)
- Dividend payout ratio stays at 15% for FY20 and rise to 30% for
FY22 (FY19: 15%)
Recovery Rating Assumptions:
Its recovery analysis assumes that CGA would be reorganised as a
going-concern rather than liquidated. The going-concern value is
based on Fitch's view of a sustainable, post-reorganisation EBITDA
level upon which Fitch applies a 5x enterprise-value multiple to
calculate a post-reorganisation valuation. Fitch also assumed a 10%
administrative claim. The Recovery Rating assigned to CGA's senior
unsecured debt is 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade: - FFO adjusted net leverage (adjusted for
leasing) below 5.0x for a sustained period (2019: 5.6x) - FFO
fixed-charge cover (adjusted for leasing) above 2.5x for a
sustained period (2019: 2.5x) - Material improvement in its debt
maturity profile Factors that could, individually or collectively,
lead to negative rating action/downgrade: - FFO adjusted net
leverage (adjusted for leasing) above 6.0x for a sustained period -
FFO fixed-charge cover (adjusted for leasing) below 1.5x for a
sustained period - Sustained deterioration in market share
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: The company had unrestricted cash of CNY10.8
billion against CNY36.3 billion in short-term borrowings as of the
end of June 2020. The company has received strong support from
domestic banks and financial institutions due to its strong market
position and solid banking relationships. In August 2020, CGA
issued CNY3.4 billion of convertible bonds.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
CHINA QUANJUDE: Bleeds Cash as Food Scene Leaves It Behind
----------------------------------------------------------
Bo Xue and Timmy Shen at Caixin Global report that Peking duck
chain China Quanjude (Group) Co. Ltd., which has served local
diners, tourists and visiting heads of state for over 100 years,
continued to lose money in the third quarter as the brand struggles
to find a place in today's food scene.
The Shenzhen-listed company booked a net loss of nearly CNY53.8
million ($8 million), compared to a net profit of CNY20.3 million
in the same period last year, Caixin discloses citing Quanjude's
third-quarter report. Revenue shrank 53% year-on-year to CNY203
million, according to the report.
"The coronavirus epidemic has had a significant impact on the
company's operation," Quanjude said in the report, Caixin relays.
However, it said that it has "enhanced the quality of its food and
adjusted its services for online and offline markets" and that
third quarter revenue was up 53.4% from the previous quarter, adds
Caixin.
GCL NEW ENERGY: S&P Withdraws CCC- Long-Term Issuer Credit Rating
-----------------------------------------------------------------
S&P Global Ratings withdrew its 'CCC-' long-term issuer credit
rating on GCL New Energy Holdings Ltd. and the 'CCC-' long-term
issue rating on the company's senior unsecured notes. The ratings
were withdrawn at the China-based solar farm operator's request.
At the time of withdrawal, the ratings were on CreditWatch with
negative implications because of the company's lack of a feasible
plan to refinance its US$500 million bond due on Jan. 30, 2021.
HUACHEN AUTOMOTIVE: Defaults on CNY1 Billion Corporate Bond
-----------------------------------------------------------
Daniel Ren at South China Morning Post reports that Huachen
Automotive Group Holding, the state-owned parent of BMW's main
Chinese joint-venture partner, has defaulted on a bond payment,
heightening fears about the debt-ridden carmaker's fate.
According to the Post, the company was not able to repay a CNY1
billion (US$149.1 million) corporate bond paying 5.3 per cent in
annual coupon, which it sold via a private placement three years
ago. The group is "working hard to raise money and discussing with
investors to iron out the issue," according to a Shanghai Stock
Exchange filing, the Post relays.
Huachen is the parent of Hong Kong-listed Brilliance China
Automotive Holdings, which owns 25 per cent of a venture with BMW,
making Series 1, 3 and 5 passenger sedans in the Liaoning
provincial capital of Shenyang in north-eastern China, the report
discloses.
Its default is the latest in a long list of missed payments by
China's private sector and state-owned borrowers, as the slowest
economic growth pace in decades cause earnings to dwindle and make
it harder to meet payment schedules in the US$15 trillion onshore
bond market, the Post states.
"Default by a state-owned carmaker could affect bond market
sentiment," the Post quotes Gu Weiyong, the chief investment
officer at Shanghai-based asset manager Ucon Investment, as saying.
"The grim reality is that many Chinese companies have yet to
entirely emerge out of the Covid-19 pandemic."
China's automotive industry, which surpassed the United States in
2009 as the world's largest automotive market, has been saddled
with almost two years of declining sales, as the slowest economic
growth pace in decades deterred households form big ticket
purchases, according to the Post. Sales began to recover in the
second half, but not enough to avert 2020 being the third
consecutive year of declining sales.
When the coronavirus pandemic was first reported in China during
the first quarter, production was severely curtailed, as assemblies
and parts makers were shut throughout the country, with their
impact reverberating far and wide across the global industry, the
Post says.
Founded in 2003, BMW-Brilliance was a 50-50 venture between the two
companies until BMW paid EUR3.6 billion (US$4.26 billion) two years
ago to buy a 25 per cent share from its Chinese partner while
boosting its holding to 75 per cent. Huachen had
CNY17.2 billion in outstanding bonds as of October 23, the Post
discloses.
Brilliance China's first-half net profit rose 25.2 per cent from
last year to CNY4.05 billion. Factoring out the net income
contributed by BMW brand, the Hong Kong-listed company posted a
first-half loss of CNY340 million, the Post discloses.
The Liaoning provincial government is considering taking Brilliance
China private, the Post relays citing local media reports.
The Post says local authorities and China's financial regulators
are particularly wary of defaults or any financial misadventure
that could potentially set off civic unrest, in a nation faced with
a dearth of investible options.
They tend to step in to inject much-needed cash, or extend payment
holidays, to help defaulting borrowers survive. It was not until
March 2014 that the market saw its first default, when Shanghai
Chaori Solar Energy Science & Technology failed to make an interest
payment, the report notes.
JIAYUAN INT'L: Moody's Assigns B3 Rating to New USD Notes
---------------------------------------------------------
Moody's Investors Service has assigned a B3 senior unsecured rating
to the proposed USD notes to be issued by Jiayuan International
Group Limited (B2 stable).
The rating outlook is stable.
Jiayuan will use the proceeds from the note issuance to refinance
existing debt.
RATINGS RATIONALE
"Jiayuan's B2 corporate family rating (CFR) reflects (1) the
company's track record in its core markets in the Yangtze River
Delta, underpinned by its strong sales execution; and (2) its low
cost and quality land bank," says Danny Chan, a Moody's Assistant
Vice President and Analyst.
"On the other hand, the B2 CFR is constrained by (1) Jiayuan's
small operating scale, (2) moderate geographic diversification, and
(3) the financial risks associated with its debt-funded business
growth," adds Chan.
The proposed notes will improve Jiayuan's liquidity and debt
maturity profile without substantially impacting its credit
metrics, because it will mainly use the proceeds to refinance
existing debt.
Moody's expects Jiayuan's revenue/adjusted debt will weaken
slightly to 83%-87% over the next 12-18 months from 91.4% for the
12 months ended June 30, 2020, as revenue growth from strong
pre-sales in the past two years will be offset by debt growth to
replenish its land bank. Such a level of leverage still solidly
positions the company at its B2 rating.
Meanwhile, the company's adjusted EBIT/interest will also weaken
slightly to 2.9x-3.3x from 3.4x over the same period, driven by the
rising interest expenses on the back of rising debt.
Moody's expects that Jiayuan's contracted sales will grow to RMB35
billion-RMB40 billion over the next 12-18 months from RMB32 billion
for the 12 months ended June 30, 2020, considering its sufficient
salable resources and the solid housing demand in its core markets.
In the first nine months of 2020, the company's contracted sales
grew 9% to RMB19.8 billion.
Jiayuan's senior unsecured rating of B3 is one notch below its B2
CFR, reflecting legal and structural subordination risk. This risk
reflects the fact that most of the claims are at the operating
subsidiaries and have priority over claims at the holding company
in a bankruptcy scenario. In addition, the holding company lacks
significant mitigating factors for structural subordination. As a
result, the expected recovery rate for claims at the holding
company will be lower.
In terms of environmental, social, and governance (ESG) factors,
Moody's has considered the risks associated with the concentration
of the company's ownership in Mr. Shum Tin Ching, who held a 69.7%
stake in Jiayuan as of July 31, 2020, and Mr. Shum's share pledge
financing.
Given the company's listed status, Jiayuan is subject to the Hong
Kong Listing Rules and Securities and Future Ordinance. In
addition, Mr. Shum has demonstrated his commitment to the company
by injecting assets to strengthen Jiayuan's operations and equity
base, and reducing his share pledge loan to lower the risk of a
change in control.
Jiayuan's liquidity is adequate. Its cash holdings of RMB9.1
billion at the end of June 2020 covered 114% of its short-term
debt. Moody's expects the company's cash holdings, together with
its contracted sales proceeds after deducting basic operating cash
flow items, will enable the company to meet its refinancing needs
over the next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's expectation that (1) the
company's liquidity will remain adequate, with continued access to
the onshore and offshore loan and debt capital markets; and (2) the
company will grow its contracted sales and maintain cash
collections as planned over the next 12-18 months.
Moody's could upgrade the ratings if Jiayuan (1) grows its business
while improving its credit metrics, with adjusted revenue/debt
above 70% and EBIT/interest above 3.0x on a sustained basis; (2)
maintains adequate liquidity, with cash/short-term debt
consistently above 1.5x; and (3) keeps the risk of a change of
control at a low level.
Moody's could downgrade the ratings if Jiayuan's (1) liquidity
profile weakens; (2) risk of a change in control increases; or (3)
contracted sales or revenue prove weaker than Moody's had expected,
leading to a deterioration in the company's credit metrics.
Credit metrics indicative of a downgrade include adjusted
revenue/debt below 55%, EBIT/interest below 2.0x, or
cash/short-term debt below 1.0x, all on a sustained basis.
The principal methodology used in this rating was Homebuilding and
Property Development Industry published in January 2018.
Jiayuan International Group Limited develops mass-market
residential properties mainly in Jiangsu and Anhui provinces. The
company had a total land bank of around 17 million square meters at
the end of June 2020. It also develops and operates commercial
properties alongside its residential property projects.
=========
I N D I A
=========
AMSAT INDUSTRIES: CARE Keeps C Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Amsat
Industries Private Limited (AIP) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.20 CARE C; Stable; Issuer not
Facilities cooperating; Based on best
available information
Short Term Bank 0.50 CARE A4; Issuer not
Facilities cooperating
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 9, 2019, has placed
the rating(s) of AIP under the 'issuer non-cooperating' category as
AIP had failed to provide information for monitoring of the rating.
CARE has been seeking information from the company to monitor the
rating(s) vide e-mail communications/ letters dated July 31, 2020,
August 31, 2020, September 30, 2020, Oct. 1, 2020, Oct. 5, 2020,
Oct. 6, 2020 and numerous phone calls. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. Further, banker could not be
contacted. The rating on the company's bank facilities will now be
denoted as CARE C; Stable; ISSUER NOT COOPERATING/ CARE A4; ISSUER
NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings takes into account non-availability of information and
no due-diligence conducted due to non-cooperation by AIP with
CARE'S efforts to undertake a review of the rating outstanding.
CARE views information availability risk as a key factor in its
assessment of credit risk. Further the rating is constrained on
account of small scale of operations; weak financial risk profile
coupled with intense competition in the industry due to low entry
barriers. The rating is further constrained on account of raw
material price fluctuation risk. The rating, however, derives
strength from experienced promoters with established track record
of operations.
Detailed description of the key rating drivers
At the time of last rating on August 9, 2019, following were the
rating strengths and weaknesses:
Key Rating Weaknesses
* Small and fluctuating scale of operations: The scale of
operations has remained small which limits the company's financial
flexibility in times of stress and deprives it from scale benefits.
The TOI of the company stood at INR17.96 cr in FY19 from INR9.12
crore in FY18.
* Weak financial risk profile: The PBILDT increased to INR1.49 cr
in FY19 as against INR0.54 cr in FY18. The capital structure of the
company leveraged marked by overall gearing ratio of 7.10x in FY19
as against 7.25x for as on March 31, 2018. Coverage indicators also
continued to remain weak marked by interest coverage ratio of 1.72x
(PY: 0.78x).
* Raw material price fluctuation risk: The main raw material of the
company is aluminium and iron. Raw material costs has always been a
major contributor to total operating cost constituting around 85%
in past three financial years (FY16-FY18). The company is exposed
to the raw material price volatility risk due to volatility
experienced in the prices of iron and aluminium. Being a small
player in the market the company is not able to pass on the
increase in input cost to its customers at a large extent.
* Intense competition in the industry due to low entry barriers:
AIP operates in a highly fragmented industry marked by the presence
of a large number of players in the unorganized sector. The
industry is characterized by low entry barriers due to low
technological inputs and easy availability of standardized
machinery for the production. Since the company's client base
consists of established players, AIP's pricing power is restricted
with limited ability to pass on any increase in input cost due to
intense competition.
Key Rating Strengths
* Experienced promoter: The operation of the AIP is being managed
by Mr. Kuldeep Singh Dalal. The promoter has an experience of more
than three decades in manufacturing of heat sink through his
association with AIP and its associate concern KNI (established in
1985).
Amsat Industries Private Limited (AIP) was incorporated in 2009 by
Mr. Kuldip Singh Dalal and Ms. Cornolia Dalal and started its
commercial operations in 2012. The company is being managed by Mr.
Kuldip Singh Dalal. The company is engaged in manufacturing of heat
sink and metal cabin. A heat sink is a component used in electrical
machine to lower the temperature of an electronic device by
dissipating heat into the surrounding air. The manufacturing
facility of AIP is located at Jhajhar, Haryana. K. N. Interplast
Private Limited (KNI) is an associate concern engaged in similar
industry i.e. manufacturing of heat sinks.
ASHAPURA INTIMATE: CARE Withdraws D Rating on Bank Facilities
-------------------------------------------------------------
CARE has withdrawn the outstanding ratings of 'CARE D ISSUER NOT
COOPERATING' assigned to the bank facilities of Ashapura Intimate
Fashion Limited with immediate effect. The above action has been
taken as per CARE's policy on withdrawal and NCLT order dated
October 05, 2020 stating that the Court has initiated liquidation
process of the company and the Liquidator has been assigned.
Therefore, it may no longer be useful or necessary for CARE to
maintain a rating on the rated entity's obligations.
Incorporated in 2006, Ashapura Intimates Fashion Limited is engaged
in the business of designing, branding, marketing and retailing of
intimate garments under established brands (viz. Valentine, N-Line,
Night & Day, Valentine Sports etc) and undertakes sales through
organized retail chains and own outlets. All its products are being
manufactured by its subsidiary, Momai Apparels Ltd at its
manufacturing facility in Vapi, Gujarat. However MAL has been
merged with the company with appointed date of April 1, 2016.
The company was admitted into Corporate Insolvency Resolution
Process as per NCLT Order dated June 28, 2019. However, Committee
of Creditors and IRP were unable to approve insolvency resolution
plan for the company within stipulated timeline given by Hon'ble
Court. Following the same, Hon'ble Court has ordered for
liquidation of the company as per Order dated October 5, 2020 and
the Liquidator has been assigned to carry out the process.
DOLPHIN OFFSHORE: CARE Withdraws D Rating on Bank Facilities
------------------------------------------------------------
CARE has withdrawn the outstanding ratings of 'CARE D; Issuer Not
Co-operating assigned to the bank facilities and CARE D (FD);
Stable ISSUER NOT COOPERATING Outlook: Stable; ISSUER NOT
COOPERATING* assigned to fixed deposit programme of Dolphin
Offshore Enterprises (India) Limited (DOEIL) with immediate effect.
The above action has been taken as Corporate Insolvency Resolution
Process (CIRP) has been initiated against the company under
Insolvency & Bankruptcy Code, 2016. Further, Interim Resolution
Professional has also been appointed under the Code and liquidation
order has been passed.
Dolphin Offshore Enterprises (India) Ltd. (DOEIL) is the flagship
company of the Dolphin Group and is listed on BSE and NSE. It is in
the business of providing a complete range of offshore support
services to the oil and gas industry. Since inception, the company
has been catering, mainly to the requirements of Oil & Natural Gas
Corporation Limited (ONGC) and approximately 95% of the company's
revenues are either directly or indirectly (i.e. subcontracting or
from other companies who in turn are executing ONGC contracts)
arising from ONGC.DOEIL has two wholly owned subsidiaries Dolphin
Offshore Shipping Ltd (DOSL) and Dolphin Offshore Enterprises
(Mauritius) Private Limited (DOEMPL). Both the companies are into
ship owning and chartering activity. DEOIL also owns 59.96% stake
in Global Dolphin Drilling Company Ltd (GDDCL).
DQ ENTERTAINMENT: CARE Keeps D Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of DQ
Entertainment (International) Limited (DQE) continues to remain in
the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 155.58 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 12, 2019, placed the
rating(s) of DQE under the 'Issuer Non-Cooperating' category as DQE
had failed to provide information for monitoring of the rating. DQE
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and an email
dated July 10, 2020. In line with the extant SEBI guidelines, CARE
has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on August 12, 2019, the following were
the rating strengths and weaknesses (updated for the information
available from stock exchange filings from National Stock Exchange
(NSE):
Key Rating Weaknesses
* Stretched liquidity with delays in debt servicing: The company
has been facing stretched liquidity due to cashflow mismatch
resulting in delays in debt servicing.
* Subdued financial performance with continuing losses: During
FY20, the total operating income of the company declined by 47.53%
to INR48.53 crore as against INR92.49 crore during FY19. The
company continues to report net loss of INR58.11 crore for FY20
vis-à-vis loss of INR40.90 crore for FY19. The company reported
cash loss of INR42.75 crore for FY20 as against cash loss of INR
26.39 crore for FY19.
Key Rating Strengths
* Experienced promoters with long track record of operations in
business: The promoters Mr. Tapaas Chakravarti has more than a
decade of experience in the animation and gaming industry. Mr.
Tapaas has held senior positions in Sales and Projects at Coats of
India, (a British multinational). He was Head of Special Projects
for Sriram Group where he developed countrywide contract
manufacturing activities.
DQE was incorporated in April 2007 as Animation and Multimedia Pvt
Ltd in Hyderabad and is in the business of animation, gaming, live
action content production, licensing and distribution. The company
is based in Hyderabad and has 1,732 associates globally with
facilities for content creation and production in 2D, CGI,
3D-Stereoscopic, visual effects (VFX), Game Art. DQE is publicly
listed in BSE and NSE in India. The Company's three main products
and services are animation production services, co-owned content
development and intellectual property development & distribution.
It also provides training services for the production of animated
television series and movies as well as licenses programmed
distribution rights to broadcasters, television channels, and home
video distributors.
GAYATRI COTTON: CARE Lowers Rating on INR8cr LT Loan to D
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Gayatri Cotton Mills (GCM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 8.00 CARE D; Issuer not cooperating;
Facilities Revised from CARE B+; ISSUER
NOT COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 16, 2019, placed the
ratings of GCM under the 'issuer non-cooperating' category as
company had failed to provide information for monitoring of the
rating. The firm continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and email dated January 2020 to October 14, 2020. In line with the
extant SEBI guidelines, CARE has reviewed the rating on the basis
of the best available information which however, in CARE's opinion
is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating assigned to the bank facilities of
Gayatri Cotton Mills on account of poor liquidity position of the
firm.
Detailed description of the key rating drivers
The liquidity position of the firm was poor which constrain the
ability of the company to repay its debt obligations on a timely
basis.
At the time of last rating dated August 16, 2019 the following were
the Strengths and Weaknesses.
Key Rating Weakness
* Relatively short track record with small scale of operation: GCM
has been in the textile industry for the last three years only and
is a relatively small sized player with sales of INR3.0-36.0 crore
in the last three years and a small net worth base of INR3.26 crore
as on March 31, 2015 (prov.). The firm has been operating at
capacity utilization of about 65% (as stated by the management) in
the last three year. While the scale of operation continues to
remain small; during FY15 (prov.), the total operating income
increased substantially (2.8 times) driven by increased volume sale
of both cotton lint and seeds.
* Low profit level and cash accrual: The total operating income of
the firm has been increasing y-o-y for the last three financial
year ended FY15 (prov.). The total operating income has increased
from INR3.43 crore in FY13 to INR36.05 crore in FY15 (prov.)
representing CAGR of 224.2%. The firm commenced operation from FY13
and hence the sales were low during the initial years of business.
With expansion of client base and commencement of sales outside
A.P., the sales volume and value has increased significantly during
FY15. The PBILDT level also increased at a CAGR of about 69% during
FY13-FY15. However, the PBILDT margin has been witnessing
continuous decline due to low value additive nature of business and
increased overhead expenses y-o-y basis. Low PBILDT margin along
with high interest cost (on high working capital borrowings) has
resulted in low PAT margin also. As per provisional financials for
Q1FY16, the firm has reported sales of INR7.7 crore and PAT of
INR0.04 crore.
* Working capital intensive nature of operation with moderate
operating cycle: GCM operates in a working capital intensive
industry with associated high working capital requirements. The
operating cycle of the firm was extended in FY14 led by high
inventory days. The finished goods inventory was high during the
year as the firm processed kappa's in anticipation of higher sales
and also as the clients postponed off-take and the same was
materialized in FY15. Consequently, the finished goods inventory
and inventory days reduced in FY15. The firm mainly sells in the
domestic market on cash basis and the average credit period is
about a month. The creditor days has also been on the lower side
and further reduced in FY15 as the firm has been procuring majorly
from the domestic market where major payments are in advance. The
average working capital utilization has been high at about 95% in
the last 12 months ended September 2015.
* Highly regulated industry with Government fixing the Minimum
Support price of Cotton: The textile industry is highly regulated
in nature. There is excessive government regulation in textile
sector starting from Minimum Support Price (MSP) of cotton given to
farmers, quantitative export restrictions imposed cotton ginning,
pressing spinning units for export of cotton bales and change in
policy related to Duty Entitlement Pass Book (DEPB)/ duty drawback
benefits on cotton and cotton yarn which is not very favorable for
the industry to earn higher margins. However the overall demand
outlook for the textile industry is expected to remain positive,
though volatility in cotton prices, government policies towards
this sector and exchange rate is concern areas.
Key Rating Strengths
* Satisfactory experience of partners: The partners; Mr. Innamuri
Basavaiah (aged 43 years) and Mr. Innamuri Subramanyam (aged 44
years) have been associated with the cotton industry since the last
two decades. Besides GCM, the partners are associated with several
other businesses with presence in the Guntur region of A.P. They
also run another cotton ginning firm in the name of Sankar Cotton
Traders. The profit loss sharing ratio between the aforementioned
two partners is 75:25.
* Adequate availability of raw material due to presence of facility
in cotton growing area of Andhra Pradesh: GCM is located in Guntur
District which is one the major cotton growing areas in Andhra
Pradesh. Availability of raw material is not expected to be an
issue as the firm procures major portion of its raw materials
(Kappa's) from the registered dealers in and around Guntur. The
basic raw material; cotton is a seasonal crop and available only
during the period of October to April. Prices of raw cotton are
highly volatile in nature and depend upon the factors like area
under cultivation, crop yield, international demand supply
scenario, export quota decided by the Government and inventory
carry forward of the previous year. The ginning players procure raw
materials in bulk quantity to avail discount from suppliers and
mitigate the seasonality associated with availability of cotton.
The raw material consumption prices have been volatile for GCM.
* Growth in total operating income during the last three years: The
total operating income of the firm has been increasing y-o-y for
the last three financial year ended FY15 (prov.). The total
operating income has increased from INR3.43 crore in FY13 to
INR36.05 crore in FY15 (prov.) representing CAGR of 224.2%. The
firm commenced operation from FY13 and hence the sales were low
during the initial years of business. With expansion of client base
and commencement of sales outside A.P., the sales volume and value
has increased significantly during FY15.
Gayatri Cotton Mills (GCM) was established in June 2012 as a
partnership firm by Mr. Innamuri Basavaiahand Mr.Innamuri
Subrahmanyam. The firm is engaged in manufacturing and processing
of Kappas into cotton lint. The firm has its facilities (14 ginners
and 1 cotton baling press) located at Guntur District of Andhra
Pradesh. The firm acquires cotton directly from the farmers and
after ginning, sells the same in the domestic market.
GEOXA LOGISTICS: CARE Keeps D Debt Rating in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Geoxa
Logistics (GL) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.60 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated July 18, 2019, placed the
rating of GL under the 'issuer noncooperating' category as GL had
failed to provide information for monitoring of the rating. GL
continues to be noncooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated October 13, 2020. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on July 18, 2019 the following was the
rating weakness.
Key Rating Weakness
* Ongoing delays in the debt servicing: There were ongoing delays
in the servicing of the term debt obligation. The cash credit limit
availed by the firm also remained overdrawn for more than 30 days.
GL is a proprietorship firm established in October-2015 by Mr
Amanpreet Singh Sondhi. The commercial operations of the firm
started in first week of April-2016. GL offers logistic services
(on rental basis) to construction, infrastructure, hosiery, auto
component industries, etc. throughout India. It owns a fleet of 4
excavators, 10 hydra machines, 10 tippers and 2 backhoe loaders, as
on March 31, 2016. GL has a group concern by the name- Geoxa Steel
Private Limited (GSPL; rated 'CARE D; Issuer Not Cooperating')
which was established in 2012 and is engaged in the manufacturing
of stainless steel pipes.
GEOXA STEELS: CARE Keeps D Debt Rating in Not Cooperating
---------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Geoxa
Steels Private Limited (GSPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 5.00 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated July 18, 2019, placed the
rating of GSPL under the 'issuer non-cooperating' category as GSPL
failed to provide information for monitoring of the rating. GSPL
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a letter
dated October 13, 2020. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of the last rating on July 18, 2019, following were the
rating weaknesses.
Key Rating Weaknesses
* Ongoing delays in debt servicing: There were ongoing delays in
the servicing of the debt obligation for the working capital limits
availed by the company. The cash credit limit had remained
overdrawn for more than 30 days.
Incorporated in 2012, GSPL is engaged in the manufacturing of
stainless steel pipes at its manufacturing facility located at
Ludhiana, Punjab with an installed capacity of manufacturing 15
Tonnes Per Day (TPD), as on March 31, 2016. The company started its
operations in Aug-2013. The products manufactured by the company
are sold under the brand name “Geoxa” to dealers and
wholesalers situated in Punjab. GSPL has a group concern by the
name- Geoxa Logistics (GL; rated 'CARE D; Issuer not cooperating')
which was established in 2015 and is engaged in the logistic
services for construction, infrastructure, auto component
industries, etc.
ISHITA BUILDCON: CARE Lowers Rating on INR10cr LT Loan to C
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Ishita Buildcon Private Limited (IBPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 10.00 CARE C; Issuer not cooperating;
Facilities Revised from CARE B-; ISSUER
NOT COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 2, 2019 placed the
ratings of IBPL under the 'issuer non-cooperating' category as IBPL
had failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. IBPL continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated June 18, 2020,
June 19, 2020 and June 23, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating done on August 2, 2019 the following
were the rating strengths and weaknesses (updated for publically
available information). The revision in rating takes into account
of small scale of operations, decrease in profitability during FY19
(FY; refers to the period April 1 to March 31), risk associated
with Government regulations and operations in a seasonal and
fragmented industry. The ratings, however, continues to derive
strength from experienced promoters, comfortable capital Structure,
moderate debt coverage indicators and proximity to paddy growing
areas.
Key Rating Weaknesses
* Risk associated with Government regulations and operations in a
seasonal and fragmented industry: IBPL generates its revenue mainly
from trading of rice and is exposed to inherent risks associated
with agro-climatic conditions and seasonality of agro products. The
high fragmentation and competitive nature of cereal trade industry
due to low entry barriers and presence of a large number of players
in the organized and unorganized sector puts pressure on the
profitability margins. Government regulations as regards the
Minimum Support Prices (MSP) for various agricultural commodities
including paddy/rice acts as a benchmark for procurement price
limit the pricing flexibility.
* Small scale of operations coupled with decrease in profitability:
TOI of the company remained small at INR3.98 Crore during FY19 as
against INR 2.55 crore in FY18. Its operating profitability as
marked by PBILDT margin also declined and remained at 3.70% during
FY19 from 9.08% in FY18. PAT remained at INR0.04 crore in FY19 from
INR0.06 crore in FY18.
Key Rating Strengths
* Experienced Promoters: IBPL is promoted by Mr Ashok Anand along
with his two sons Mr Raman Anand and Mr Gagan Anand. Mr Ashok Anand
has more than 30 years of experience in the same line of business
and Mr Raman Anand and Mr Gagan Anand is having more
than 12 years of experience in the same line of business.
* Proximity to paddy-growing areas: IBPL is situated in Madhya
Pradesh where rice is cultivated in 41 out of 50 districts, whereas
districts like Sagar, Jabalpur and Sehore located near Bhopal are
having the concentrated rice cultivation. IBPL purchases rice
directly from farmers as well as brokers/agents and local market.
* Comfortable Capital Structure with moderate debt coverage
indicators: The capital structure as marked by overall gearing
ratio remained at 0.24 times as on 31 March, 2019 as against 0.62
times as on March 31, 2018 on account of decrease in total debt.
Debt coverage Indicators as marked by Total debt to Gross Cash
Accruals (TDGCA) of 8.50 Years as on March 31, 2019 as against
15.13 times as on March 31, 2018. Interest coverage ratios remained
at 2.72 times in FY19 from 2.87 times in FY18.
Ishita Buildcon Private Limited (IBPL) was incorporated on
September 08, 2010 at Bhopal, Madhya Pradesh and is promoted by Mr
Ashok Anand along with his sons Mr Gagan Anand and Mr Raman Anand.
IBPL is engaged in the trading of cereals primarily rice (both
basmati and non-basmati). IBPL is located in Bhopal, Madhya Pradesh
and procures cereals from the farmer and local market and sells the
same to rice milling units directly as well as through agents. The
promoters have also promoted Anand Warehousing and Anand & Anand
Associates. The former operates a warehouse on lease rental basis
and has 2 lakh sq.ft of own warehousing space which is also used by
IBPL while latter is engaged in investing in real estate assets.
There are no such group transactions done among the group
companies.
JUBILEE INFRASTRUCTURES: CARE Keeps D Rating in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Jubilee
Infrastructures (JI) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated July 19, 2019, placed the
ratings of JI under the 'issuer noncooperating' category as company
had failed to provide information for monitoring of the rating. The
firm continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated January 2020 to September 28, 2020. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating dated July 19, 2019 the following were
the Strengths and Weaknesses.
Key rating Weaknesses
* Ongoing delays in meeting of debt obligations: Jubilee
Infrastructures (JI) has been facing liquidity issues due to which
there are ongoing delays in interest serving and overdrawing's in
cash credit account.
* Constitution of the entity as proprietor firm with inherent risk
of withdrawal of capital: The sole proprietor typically makes all
the decisions and runs the entire business operation. If he becomes
ill or disabled, there may be nobody else who can step in and keep
the business going. Running a business single-handedly can also
pose a risk due to heavy burden. Constitution as a proprietorship
has the inherent risk of possibility of withdrawal of the capital
at the time of personal contingency which can adversely affect its
capital structure.
Key Rating Strengths
* Experience of promoter for around fifteen years in the
construction industry: Ms. Vinaya Sri Talla, the proprietor of the
firm is qualified post graduate and has around fifteen years of
experience in the construction industry. She is supported by her
husband, Mr.Niranjan Talla, who has more than 25 years of
experience in the construction industry.
Telangana based, Jubilee Infrastructures (JI) was established in
August 2017 as a proprietorship firm by Mrs. Vinaya Sri Talla. The
firm is engaged in providing construction services like
construction of buildings, canals and roads relating to government
department.
KGN MOTORS: CARE Keeps D Debt Rating in Not Cooperating
-------------------------------------------------------
CARE Ratings said the rating for the bank facilities of KGN Motors
Private Limited (KMPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 14.89 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 6, 2018, placed the
rating of KMPL under the 'issuer not-cooperating' category as KMPL
had failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. KMPL continues to be
non-cooperative despite repeated requests for submission of
information through email letter dated June 18, 2020, September 2,
2020, and October 7, 2020. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on July 17, 2019 the following were the
rating weaknesses
Key Rating Weaknesses
* Delay in servicing of debt obligations: As per the interaction
with the banker during last review, there were continuous delay
in repayment of debt obligation and the account was classified as
NPA.
Incorporated in 2007 in Pune, Maharashtra, KGN Motors Private
Limited (KMPL) is a private limited company promoted by Ms.Hasina
Riyaz Inamdar and Mr.Mubin Riyaz Inamdar and is a flagship company
of KGN Group. The company is an authorized dealer for trucks and
buses of Ashok Leyland Limited (ALL). The company was initially
into spares and services business for ALL and subsequently ventured
into sales business [3S (sales, spares and services)] for ALL in
2014.
LAXMI ENGINEERING: CARE Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Laxmi
Engineering Industries (Bhopal) Private Limited (LEIPL) continues
to remain in the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 28.25 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Long-Term/Short 10.0 CARE D; Issuer not cooperating;
Term Bank Based on best available
Facilities information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 7, 2019 placed the
ratings of under the 'issuer non-cooperating' category as LEIPL had
failed to provide information for monitoring of the ratings as
agreed to in its Rating Agreement. PKI continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and emails dated June 18, 2020,
June 19, 2020 and June 23, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating done on August 7, 2019, the following
were the rating strengths and weaknesses
Detailed description of key rating drivers
Key Rating Weakness
* On-going delays in debt servicing: The company is delaying on its
term debt repayments and over utilization in cash credit limit due
to stretched liquidity position, while the account has turned NPA.
Laxmi Engineering Industries (Bhopal) Pvt. Ltd (LEIPL), an ISO
9001-2001 certified company, was initially set-up as a partnership
firm in 1987. It was later reconstituted as a private limited
company in July, 2007, under the leadership of Mr K.K. Gurjar (MD)
who has an experience of more than three decades in the heat
transfer equipment industry. LEIPL is engaged in the designing and
manufacturing of custom built heat transfer equipment such as heat
exchangers, industrial coolers, desuper heaters which are used in
power plants based on thermal, hydro and wind, refineries, chemical
industries, fertilizer plants, as a part of their energy recovery
system.
LAXMI NARASIMHA: CARE Keeps D Debt Rating in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sri Laxmi
Narasimha Rice Industry (SLNRI) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated August 12, 2019, placed the
rating(s) of SLNRI under the 'issuer not cooperating' category as
SLNRI had failed to provide information for monitoring of the
rating. Sri Laxmi Narasimha Rice Industry continues to be
non-cooperative despite repeated requests for submission of
information through phone calls and e-mails dated September 14,
2020 to September 21, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last press release dated August 12, 2019 the
following were the rating strengths and weaknesses:
Key Rating Weakness
* Delay in debt servicing obligations: There were ongoing delaysin
debt servicing of the client due to stretched liquidity position
and hence, the account of the SLNRI is categorized into
Non-performing Asset (NPA) with the bank.
Sri Laxmi Narasimha Rice Industry (SLN) is a partnership firm
established in April 2015. The firm started with its commercial
operations from April 2016 onwards. The partners of the firm are
Mr. K. Janardhana Reddy, Mr. P. Ramalinga Reddy, Ms. K. Sesha
Redd.y and Mr. S. Ramesh. The mill is located in Sriguppa in
Bellary district of Karnataka.
MADARKHAT TEA: CARE Lowers Rating on INR5.80cr LT Loan to C
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Madarkhat Tea Company Private Limited (MKTC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 5.80 CARE C; Stable; Issuer not
Facilities cooperating; Revised from
CARE B-; Stable; ISSUER NOT
COOPERATING on the basis of
Best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from MKTC to monitor the rating
vide email communications/letters dated September 16, 2020,
September 18, 2020, September 21, 2020 and numerous phone calls.
However, despite CARE's repeated requests, the Entity has not
provided the requisite information for monitoring the rating. In
line with the extant SEBI guidelines, CARE has reviewed the rating
on the basis of the publicly available information which, however,
in CARE's opinion is not sufficient to arrive at a fair rating.
Further, Madarkhat Tea Company Private Limited has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on MTCPL's bank facilities will now be
denoted as CARE C; Stable; ISSUER NOT COOPERATING. Further, the
banker could not be contacted.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the non- availability
of requisite information and no due diligence conducted due to
non-cooperation by MKTC's with CARE's efforts to undertake a review
of the outstanding ratings.
Detailed description of the key rating drivers
At the time of last rating on July 19, 2019 the following were the
rating strengths and weaknesses.
(Updated the information available from Ministry of Corporate
Affairs)
Key Rating Weaknesses
* Small scale of operations: MKTC is a relatively small player in
tea cultivation and manufacturing industry with revenue of INR14.54
crore and net loss of INR0.66 crore in FY16. The small scale
restricts the financial flexibility of the company in times of
stress. The company has achieved a gross turnover of about INR9.74
crore in FY17 (provisional) with a y-o-y decline in turnover on
account of lower production of First Flush tea leaf due to erratic
weather condition.
* Susceptibility to vagaries of nature and moderate exposure to raw
material price fluctuation risk: All tea gardens from which MKTC
procures green leaves are concentrated in the state of Assam.
However, the region is prone to erratic weather conditions.
Therefore adverse natural events have negative bearing on the
productivity of tea gardens in the region and accordingly MKTC is
exposed to vagaries of nature. However, MKTC owns three tea estates
at Madarkhat, Lahoalbari and Parbatipur in Dibrugarh. They
cultivate green tea leaf feeds entirely for captive consumption
providing partial integration of production resulting in partial
insulation from raw material price volatility risk. Although, the
company has backward integration for major requirements, for the
balance, it remains exposed as the procurement rates are linked to
market prices.
* Labour intensive nature of business: The perennial nature of the
tea industry has been highly labour intensive, entailing sizeable
expenditure on employees (by way of salaries & wages, various
employee welfare facilities, etc.). Though MKTC has not experienced
any labour problem, it remains a key factor in the smooth running
of the business (as the location of the plant as well as the tea
estate has history of labour unrest in the past).
* Weak financial risk profile marked by negative net worth and weak
liquidity position: Financial risk profile of the company is weak
marked by negative net worth of the company during account closing
date on last three financial years. This apart, interest coverage
ratio has been below unity during FY15 and FY16 on account of lower
operating profit with respect to interest expense. The company
served the interest expense from cash credit. The current ratio of
the company remained below unity as on the last date of last three
accounting period. Average CC utilisation during last 12 months
ending on April 2017, was 98%.
Key Rating Strengths
* Experienced promoters with long and satisfactory track record of
the company: MKTC has been engaged in tea cultivation and
processing of tea since 1954. Mr Chittaranjan Chakravarty, Managing
Director, is having about four decades experience in tea industry.
He looks after day to day operation of the company with other six
directors and a team of experienced personals.
* Moderate capacity utilisation with reasonable recovery rate: The
capacity utilisation and recovery rate of tea leaf production
remained moderate. During last three financial years it's hovering
around 22% which is close to industry average.
Madarkhat Tea Company Pvt Ltd (MKTC) was incorporated during 1954
at Dibrugarh in Assam. The company is primarily involved in
cultivation of green tea leaves and processing them into different
types of black tea with an aggregate tea processing capacity of
12.0 lakh kg per annum. MKTC owns three tea estate at Madarkhat,
Lahoalbari and Parbatipur in Dibrugarh, Assam. The aggregate area
under cultivation is 487.24 hectares, having yielding capacity of
4.44, 2.08 and 3.17 lakh kg per annum of green leaf, respectively,
from 3 gardens. It mainly sells products through auctions.
MANSAROVAR HOLIDAYS: CARE Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Mansarovar
Holidays (MHS) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.37 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 10, 2019, placed
the rating of MHS under the 'issuer non-cooperating' category as
MHS had failed to provide information for monitoring of the rating.
MHS continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and email
dated October 5, 2020, September 30, 2020 and September 29, 2020.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on September 10, 2019, the following was
the rating weakness:
* Delays in debt servicing: The rating takes into account the
delays in the debt servicing due to tight liquidity position.
Stretched liquidity position: The liquidity position remains
stretched marked by current and quick ratio of 0.59x and 0.57x
respectively as on March 31, 2018 leading to delays in debt
servicing. The capital structure stood leveraged marked by overall
gearing ratio of 4.10x as on March 31, 2018.
Nainital based, Mansarovar Holidays (MHS) was established in 2012
as a proprietorship firm and is managed by Mr. Punit Kumar Goel.
MHS is engaged in managing a hotel namely "Mansarovar" at Nainital.
The hotel is spread over an area admeasuring 1 acre. It offers
facilities such as banquet hall, lawn, restaurant, bar and others
along with lodging facility. The hotel currently has 16 rooms for
stay purpose with an average occupancy rate of 70-75%.
OZONE PROJECTS: CARE Lowers Rating on INR126.30cr NCD to D
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Ozone Projects Private Limited (OPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 126.30 CARE D Revised from CARE C;
Debenture Issue ISSUER NOT COOPERATING and
removed from INC
Detailed Rationale & Key Rating Drivers
The rating of NCD issue of OPPL was earlier placed under Issuer Non
Cooperating as the Company had not provided confirmation on
redemption status of above NCD which fell due on June 30, 2020.
CARE is now in receipt of information on redemption status and
therefore rating is removed from Issuer Non Cooperation. The
Company has submitted Amended Debenture Trustee Deed dated July 29,
2020 to CARE where the redemption date has been revised to June 30,
2021 along with revision in coupon payment dates. Based on the
revised schedule, the coupon payments fell due on July 31, 2020 and
August 10, 2020 while the payment for both was paid with delay on
August 13, 2020 and hence the revision in rating.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Delay free track record in payment of principal and coupon of
rated bonds consecutively for 3 months alongwith improvement in
liquidity position.
Negative Factors - Factors that could lead to negative rating
action/downgrade: Not Applicable
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in NCD interest payment: Earlier, the redemption date of
NCDs fell due on June 30, 2020, regarding which CARE was not in
receipt of payment confirmation. Subsequently, CARE received
amended DTD, where the investor had given consent for extension of
redemption by 1 year to June 30, 2021 along with revised coupon
payment schedule. Based on the revised schedule, the coupon
payments which fell due on July 31, 2020 and August 10, 2020 were
serviced with delay on August 13, 2020 as per email confirmation
from the Company received on October 13, 2020.
Liquidity: Poor
Liquidity position is poor as the company is not able to generate
enough cash flows for servicing its debt obligations due to subdued
sales and collection from the project and hence has been deferring
redemption date of NCDs with approval from the
investor.
Incorporated in 2005, Ozone Projects Pvt. Ltd. (OPPL) is promoted
by the Bengaluru based Ozone group and is currently developing a
township at Anna Nagar, Chennai called 'Ozone Metrozone'.
PRITI GEMS: CARE Lowers Rating on INR45cr LT Loan to D
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Priti Gems Export Private Limited (PGEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 45.00 CARE D; Issuer not cooperating;
Facilities Revised from CARE BB; ISSUER
NOT COOPERATING on the basis of
best available information
Proposed Long 10.00 CARE D; Issuer not cooperating;
term Bank Revised from CARE BB; ISSUER
Facilities NOT COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 6, 2018, placed
rating of PGEPL under the 'issuer non-cooperating' category as
PGEPL had failed to provide information for monitoring of the
rating and had not paid the surveillance fees for the rating
exercise as agreed to in its Rating Agreement. PGEPL continues to
be non-cooperative despite repeated requests for submission of
information through phone calls and e-mails dated April 13, 2020,
October 1, 2020, October 5, 2020 and October 6, 2020. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings have been revised on account of delays in debt
servicing as verified from an external credit information
database.
Detailed description of the key rating drivers
The ratings have been revised on account of delays in debt
servicing as verified from an external credit information
database.
Established in 1995, Priti Gems Exports Private Limited (PGEPL-
converted from partnership firm into private limited company in
2010), a group concern of K. Chandrakant & Co. International Pvt.
Ltd., is engaged in the manufacturing of cut & polished dark brown
diamonds ranging from 0.01 carat to 20 carats in round as well as
other shapes like Princess, Oval, Emerald, Marquise, Pears, Heart,
etc. The company has its own manufacturing set-up in Dahisar and
Surat. PGEPL imports rough diamonds from Belgium and supplies
polished diamonds to jewellery manufacturers based in Australia,
Belgium, Germany, Hong Kong, Israel, Japan, Korea, Thailand, UAE,
UK and USA.
RAC PAPERS: CARE Keeps C Debt Rating in Not Cooperating
-------------------------------------------------------
CARE Ratings said the rating for the bank facilities of RAC Papers
Limited (RAC) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 13.30 CARE C; Issuer not cooperating;
Facilities Based on best available
information
Short Term Bank 0.33 CARE A4; Issuer not
Facilities cooperating; Based on best
available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 27, 2019, placed
the ratings of RAC under the 'issuer non-cooperating' category as
RAC had failed to provide information for monitoring of the rating.
RAC continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and an email
dated September 24, 2020, October 05, 2020. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account non-availability of requisite
information and no due-diligence conducted due to noncooperation by
RAC Papers Limited with CARE'S efforts to undertake a review of the
rating outstanding. CARE views information availability risk as a
key factor in its assessment of credit risk. The rating is
constrained on account of Modest and fluctuating scale of
operations, Low profitability margins coupled with leveraged
capital structure, Working capital intensive nature of operations
and Weak Liquidity Position and Competitive industry along with
susceptibility to volatility in prices of raw material. The
ratings, however, derives strength from experienced promoters and
long track record of operations.
Detailed description of the key rating drivers
At the time of last rating on September 27, 2019, the following
were the rating strengths and weaknesses:
Key Rating Weaknesses
* Modest and fluctuating scale of operations: The scale of
operations continues to remain modest as marked by total operating
income and gross cash accruals of INR 90.10 crore and 2.53 crore
respectively in FY19 (FY refers to April 01 to March 31). The
modest scale limits the company's financial flexibility in times of
stress and deprives it from scale benefits. Furthermore, the
company's net worth base was modest at INR 14.37 crore as on March
31, 2019.
* Low profitability margins coupled with leveraged capital
structure: The company's profitability margins continue to remain
low owing to competitive nature of industry. Furthermore, being a
small player in the industry restricted the bargaining power of the
company. This restricted the profitability margins of the company
as marked by PBILDT and PAT margin which stood at 5.00% and 1.00%
respectively in FY19. The capital structure of the company
continues to remain leveraged for the past three financial years
(FY17-FY19) on account of high dependence on external borrowings to
meet the working capital requirements. The overall gearing ratio
stood above 1.40x as on the balance sheet date of last three
financial years i.e. FY17-FY19 (FY refers to period April 01 to
March 31).
* Working capital intensive nature of operations: Operations of the
company are working capital intensive marked by an average
operating cycle of around 68 days for FY19 mainly on account of
high collection period. Being a highly competitive business, the
average collection period remained high at around 72 days during
FY19. The company has to hold inventory of around a month in form
of raw material for the smooth running of business process and
finished goods to meet the immediate demand from its customers.
Combining all entails high working capital requirement.
* Weak Liquidity Position: The liquidity position of the company
stood weak as marked by current and quick ratio of 0.95x and 0.71x
as on March 31, 2019.The cash and bank balance stood at INR 0.27
crore as on March 31, 2019.
* Competitive industry along with susceptibility to volatility in
prices of raw material: RAC operates in competitive segments of the
industry due to low entry barriers. There are numerous players in
the unorganized sector which increases the level of competition.
Moreover, raw material cost normally constitutes approximately 80%
of the total cost of production. Thus, margins are vulnerable to
fluctuation in raw material cost. Hence, the profitability of the
company is based on the ability of the company to absorb the
increase in raw material prices which will have an impact on the
profitability margins and sales realization.
Key Rating Strengths
* Experienced Promoters and long track record of operations: RAC is
being managed by directors namely Mr. Sanjay Mittal, Mr. Ajay Kumar
Mittal, Mr.Kailash Chand Gupta, Manoj Gupta, Ramit Kumar Mam. All
of the directors are graduates by qualification and hold experience
of more than two decades in Paper Industry through their
association with this entity. All of them have been associated with
the company and managing the operations with their expertise that
they have earned while in the industry.
Delhi based, RAC Paper Limited (Formerly known as Nav Bharat Duplex
Limited) was established in 1985, promoted by Mr. Dayanand Gupta
and Mr. Raj Bala Gupta. The company is engaged into manufacturing
of Kraft paper, newsprint paper, duplex board etc. The company has
its manufacturing unit at Hapur, Ghaziabad.
RELIANCE BIG ENTERTAINMENT: CARE Cuts INR487.50cr Loan Rating to D
------------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Reliance Big Entertainment (US) (RBEUS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 487.50 CARE D; Issuer not cooperating;
Facilities Revised from CARE C; ISSUER
NOT COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from RBEUS to monitor the
rating(s) vide e-mail communications dated October 12, 2020,
October 7, 2020, October 6, 2020, October 5, 2020, October 1, 2020,
September 30, 2020, September 16, 2020, September 4, 2020,
September 2, 2020, August 31, 2020, August 14, 2020, August 7,
2020, August 5, 2020, August 3, 2020, July 31, 2020, July 16, 2020,
July 7, 2020, July 3, 2020, July 1, 2020, June 30, 2020, June 15,
2020, June 5, 2020, June 3, 2020, May 30, 2020, May 14, 2020, May
8, 2020, May 6, 2020, May 4, 2020, May 1, 2020, April 16, 2020,
April 7, 2020, April 3, 2020 and April 1, 2020 and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the ratings.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. Further, RBEUS has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. The rating on
RBEUS' bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings have been revised on account of ongoing delay in
servicing debt obligations owing to stretched liquidity position of
RBEUS.
Detailed description of the key rating drivers
At the time of last rating on September 30, 2019, the following
were the rating strengths and weaknesses:
Key Rating Weakness
* Weakening of the credit profile of the credit enhancement
provider: RCL's credit profile had weakened on account of delays in
debt servicing. Accordingly the ratings assigned to
REBEUS had been revised.
Reliance Big Entertainment (US) (RBEUS) is a Delaware Corporation
incorporated in 2008. It is owned by Reliance Interactive Advisors
P Ltd (33%) and Reliance Big Entertainment Pvt. Ltd (67%). This
company is a SPV engaged in the development, production, sales and
distribution of motion pictures in North America through its
subsidiaries and affiliates. It operates mainly through its
subsidiaries and associates like DreamWorks and Tang Media
Partners.
RELIANCE BIG: CARE Cuts Rating on INR300cr LT Loan to D
-------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Reliance
Big Entertainment Pvt. Ltd. (RBEPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Bank Facilities- 80.00 CARE D; Issuer not cooperating;
Fund Based–LT- Based on best available
Cash Credit Information
Long Term Bank 50.00 CARE D; Issuer not cooperating;
Facilities- Revised from CARE C; Stable;
Working Capital ISSUER NOT COOPERATING on the
Loan basis of best available
information
Long term Bank 300.00 CARE D; Issuer not cooperating;
Facilities Revised from CARE C; Stable;
ISSUER NOT COOPERATING on the
basis of best available
information
Short Term Bank 100.00 CARE D; Issuer not cooperating;
Facilities–1 Revised from CARE A4; ISSUER
NOT COOPERATING on the basis of
best available information
Short Term Bank 50.00 CARE D; Issuer not cooperating;
Facilities–2 Revised from CARE A4; ISSUER
NOT COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from RBEPL to monitor the
rating(s) vide e-mail communications dated October 12, 2020,
October 7, 2020, October 6, 2020, October 5, 2020, October 1, 2020,
September 30, 2020, September 16, 2020, September 4, 2020,
September 2, 2020, August 31, 2020, August 14, 2020, August 7,
2020, August 5, 2020, August 3, 2020, July 31, 2020, July 16, 2020,
July 7, 2020, July 3, 2020, July 1, 2020, June 30, 2020, June 15,
2020, June 5, 2020, June 3, 2020, May 30, 2020, May 14, 2020, May
8, 2020, May 6, 2020, May 4, 2020, May 1, 2020, April 16, 2020,
April 7, 2020, April 3, 2020 and April 1, 2020 and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the ratings.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. Further, RBEPL has not paid the surveillance fees for the
rating exercise as agreed to in its Rating Agreement. The rating on
RBEPL' bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings have been revised on account of ongoing delay in
servicing debt obligations owing to stretched liquidity position of
RBEPL.
Detailed description of the key rating drivers
At the time of last rating on September 30, 2019, the following
were the rating strengths and weaknesses:
Key Rating Weakness
* Weakening of the credit profile of the credit enhancement
provider: RCL's credit profile had weakened on account of delays in
debt servicing. Accordingly the ratings assigned to RBEPL had been
revised.
Reliance Big Entertainment Pvt. Ltd. (RBEPL), incorporated in 2006,
is one of the media and entertainment companies of the Reliance
Anil Dhirubhai Ambani Group (R-ADAG). R-ADAG has interests in
telecommunications, energy, financial services, infrastructure and
media and entertainment. In media and entertainment industry, the
R-ADAG has presence in various verticals through following main
companies such as Reliance Media works, Reliance Broadcast Networks
Ltd. etc. and their subsidiaries/joint ventures (JVs).
SAFE PARENTERALS: CARE Keeps D Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Safe
Parenterals Limited (SPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 14.00 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated July 12, 2019, placed the
ratings of SPL under the 'issuer noncooperating' category as
company had failed to provide information for monitoring of the
rating. The company continues to be non-cooperative despite
repeated requests for submission of information through e-mails,
phone calls and email dated January 31, 2020 to September 8, 2020.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating dated July 12, 2019 the following were
the Strengths and Weaknesses:
Key rating Weaknesses
* Ongoing delays in meeting of debt obligations: Safe Parenterals
Limited has been facing liquidity issues from past few months, due
to which the firm is unable to service the interest and installment
obligation on term loan facility and cash credit. There are ongoing
delays in servicing the interest and installment in term loan
facility and cash credit.
Key Rating Strengths
* Long track record of the company and experience of the directors
for more than two decade in manufacturing of drugs: Safe
Parenterals Limited was incorporated in December 21, 1993 and has
long presence in the pharmaceutical industry. The current directors
of the company are Mr. P. Vijaya Lakshmi, Mrs. K. Sasikala, Mr. Y.
Nageshwararao, Mr. G. Sambasivarao, and Mr. L. Siva Rama Krishna
have around two decades in the industry. The day to day activities
are monitored by the directors and handled by experienced
departmental heads who are associated with the company for around
10-12 years.
Safe Parenterals Limited (SPL) was incorporated in December 1993.
The current directors of the company are Mr. P. Vijaya Lakshmi,
Mrs. K. Sasikala, Mr. Y. Nageshwararao, Mr. G. Sambasivarao, and
Mr. L. Siva Rama Krishna. The company is engaged in manufacturing
of animal related pharma drugs like Sancalvet, Sulphadimidine,
Roflox, etc. The company has its manufacturing unit located at
Narasaraopet, Guntur district (Andhra Pradesh) with an installed
capacity of 10,000 bottles per day. Currently, the company is
implementing an expansion project for increasing its total capacity
to 25,000 bottles per day. The total cost of the project is
estimated to around INR16.00 crores which is to be funded through a
bank term loan of INR12 crores and rest of INR4.00 crores by a way
of share capital and unsecured loans.
SATWIK FEEDS: CARE Lowers Rating on INR6cr LT Loan to C
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Satwik Feeds (SFE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE C; Stable; Issuer not
Facilities cooperating; Revised from
CARE B+; Stable; ISSUER NOT
COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 30, 2019 placed
the ratings of Satwik Feeds (SFE) under the 'issuer noncooperating'
category as Satwik Feeds had failed to provide information for
monitoring of the rating. Satwik Feeds continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
October 5, 2020, October 6, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. Further banker could not be
contacted.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The rating has been revised by taking into account non-availability
of information and no due-diligence conducted due to
non-cooperation by Satwik Feeds with CARE'S efforts to undertake a
review of the rating outstanding. CARE views information
availability risk as a key factor in its assessment of credit risk.
Further, the ratings continue to remain constrained owing to its
small scale of operations with low net-worth base & profitability
margin and leveraged capital structure and risk associated with raw
material price volatility. The ratings, however, continue to take
comfort from experienced partners and moderate operating cycle.
Detailed description of the key rating drivers
At the time of last rating on September 30, 2019 the following were
the rating weaknesses and strengths:
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small scale of operations with low net worth base and
profitability margins: The scale of operations of the company
continues to remain small as marked by total operating income of
INR34.41 crores and gross cash accruals of INR0.82 crores for FY18
( refers to the period April 01 to March 31). The small scale
limits the firm's financial flexibility in times of stress and
deprives it from scale benefits. Though the risk is partially
mitigated by the fact that the scale of operations is growing
continuously for the past three financial years i.e. FY16-FY18 at a
CAGR of 134%. Furthermore, the profitability margins of the firm
continues to remain low as reflected by PBILDT and PAT margin of
4.56% and 0.91% respectively in FY18.
* Leveraged capital structure: The capital structure of the firm
continues to remain leveraged account of firm's reliance upon
external borrowings to fund various requirements of business
coupled with low net worth base of INR1.77 crores as marked by
overall gearing ratio of above 3.50x as on the balance sheet date
of the past two financial years i.e. FY17-FY18.
* Partnership nature of constitution: SFE's constitution as a
partnership firm has the inherent risk of possibility of withdrawal
of the partners' capital at the time of personal contingency and
firm being dissolved upon the death/retirement/insolvency of
partner(s). Moreover, partnership firms have restricted access to
external borrowing as credit worthiness of partners would be the
key factors affecting credit decision of the lenders.
* Risk associated with raw material availability: SFE's business is
highly raw material intensive with the raw material cost
constituting major portion of the total cost. The key raw materials
of the firm are agro products like Bajra, maize, soya (De oiled
cake), de oiled rice bran, and other poultry supplements, etc. The
prices of these commodities are affected by factors such as changes
in weather conditions, monsoon, production levels, etc., exposing
the firm to raw material price volatility risk.
* High competition from local players: Low capital intensity and
low entry barriers facilitate easy entry of unorganized players,
leading to high competition and fragmentation. The poultry industry
is also vulnerable to outbreaks of diseases, which may lead to
reduction in demand, thus affecting the poultry feed manufacturers
adversely.
Key Rating Strengths
* Experienced partners: SFE is engaged in the business of
manufacturing of poultry and cattle feed. The firm is currently
being managed by Mr. Krishan Pal and Mr. Ramesh Chander Khatri. The
partners have an industry experience of four decades in the poultry
business which they have gained through their association with SFE
and other group concerns and previously through other entities
engaged in similar business. The partners have adequate acumen
about various aspects of business which is likely to benefit SFE in
the long run.
* Moderate operating cycle: The average operating cycle of the firm
continues to remain at moderate 53 days for FY18. The firm has to
offer reasonable credit period to its customers owing to its
presence in a highly competitive industry which resulted in average
collection period of 72 days for FY18. Furthermore, the firm
maintains inventory in the form of raw materials to ensure smooth
production process which has led to average inventory period of 27
days for FY18. On the supplier side, the firm gets a credit period
of 45 days due to established relation with them. The working
capital limits remained 80% utilized for the 12 months ending
December 31, 2018.
Satwik Feeds (SFE) was established in 2014 as a partnership firm.
The operations however, started in January 2016. It is currently
being managed by Mr. Krishan Pal and Mr. Ramesh Chander Khatri
sharing profits and losses in equal proportions. SFE is engaged in
manufacturing of poultry and cattle feed at its manufacturing
facility located in Shamli, Uttar Pradesh with total installed
capacity of 72000 tonnes per annum as on December 31, 2018. Apart
from SFE, the directors are associated with three group concerns
namely, Bhagwati Farms, Bhagwati Feeds Pvt. Ltd., and Vikas Poultry
Farms. Bhagwati Farms and Vikas Poultry Farms are engaged in
poultry farming business since 2012 and 2016 respectively and
Bhagwati Feeds Pvt. Ltd. is into manufacturing of poultry feeds
since 2004.
SHANDAR SNACKS: CARE Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sri Shandar
Snacks Private Limited (SSPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.62 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Short Term Bank 0.38 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated September 13, 2019, placed
the ratings of SSPL under the 'issuer non-cooperating' category as
SSPL had failed to provide information for monitoring of the
rating. SSPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter dated October 6, 2020, September 30, 2020 and
September 29, 2020. In line with the extant SEBI guidelines, CARE
has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on September 13, 2019, the following was
the rating weakness:
* Delays in debt servicing and weak financial risk profile of the
entity: At the time of last rating, there have been delays in
servicing of interest and principal of the term loan availed by the
entity. The same was mainly on account of delays in achieving COD
(Commercial Operations Date) and receipt of subsidy. Furthermore,
the financial risk profile is characterised by subdued growth in
total operating income, suppression at PBILDT levels on account of
increase in cost of major raw materials and advertising expenses,
leveraged capital structure with erosion of net-worth due to losses
registered during the last three financial years ended FY19.
* Stretched liquidity position: The liquidity position of the
company remained stretched marked by current and quick ratio of
0.29x and 0.15x respectively as on March 31, 2019 coupled with
negative net-worth base due to losses incurred by the company for
FY19.
Kashipur, (Uttarakhand) based Sri Shandar Snacks Private Limited
(SSPL) was established in the year 2013 by Mr. Kamal Agarwal and
Mr. Banwarilal Agarwal. The company is currently promoted by Mr.
Kamal Kumar Agarwal, Mr. Banwarilal Agarwal, Mr. Bimal Poddar and
Mr. Tarun Omprakash Khemka. The company is engaged in the
manufacturing and processing of nachos in various flavours and
sells the same under the brand name 'Tastilo'. The manufacturing
facility of the firm is located at IDBE Industrial Estate,
Mahuvakhera Ganj, Kashipur.
SHIRPUR GOLD: CARE Reaffirms D Rating on INR75cr LT Loan
--------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Shirpur Gold DMCC (SGD; Erstwhile Zee Gold DMCC, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 75.00 CARE D Reaffirmed
Facilities
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of SGD continues to
factors in delay in interest payment of working capital demand
loan. The rating also factors in the weakening of the credit
profile of the parent company, namely Shirpur Gold Refinery Limited
(SGRL; rated CARE D; Issuer not cooperating), SGD's weak debt
protection metrics and liquidity position, its low profitability
margins, high leverage, exposure to volatility in gold prices,
working capital intensive nature of operations and highly regulated
industry structure.
The rating continues to derive strength from its experienced
promoter group and management, and established position of SGRL in
gold refining business. Further it derives comfort from the
acquisition of gold mines which would result in captive sourcing of
raw material at competitive rates.
Rating Sensitivities
Key Positives
* Timely repayment of interest and principal on sustained basis
* Improvement in the profitability margins of more than 5% on a
sustained basis
* Overall gearing of less than unity on a sustained basis
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in debt servicing by the company: As a part of CARE's due
diligence process, CARE had interacted with SGD's banker and CARE
had received banker feedback via email dated September 11, 2020
stating delay in interest payment of WCDL which however, has been
regularized as on September 11, 2020.
* Weak credit profile of the parent company, i.e. SGRL: SGD is a
wholly owned subsidiary of SGRL rated CARE D; Issuer not
co-operating. The accounts of SGRL continue to remain classified as
Non-performing assets (NPA). This was on account of low business
performance combined with elongated working capital cycle has
resulted in weak liquidity position of SGRL.
* Working capital intensive nature of operations: The operations
of the company is working capital intensive as dore suppliers
insist on advance payment or provide credit of upto fifteen days,
whereas the company provides credit period of around 25-30 days to
its customers. Although, the average working capital cycle of the
company remained stable at 21 days in FY20. However, the overall
utilization stood around 100% for past 12 month period ending July
2020. Going forward, the company plans to increase its focus on
refining gold and strengthen its procurement of dore by backward
integration with acquisition of gold mines; however the mines are
not yet operational and the impact of the acquisition remains to be
seen.
* Growth in trading activity amidst low profitability margins TOI
of the company increased by 35% to INR3,215crore in FY20. In AED
terms TOI grew by 26% to AED1,566 million in FY20 from AED1,248
million in FY19. However, the PBILDT margin declined to 0.65% in
FY20 (PY: 1.13%) and continues to be very low given the trading
nature of business and are also susceptible to fluctuation in the
commodity prices. The decline in PBILDT margins during FY20 was due
to the impact of Covid-19 as well as substantial increase price of
gold in Q4FY20.
* High gearing level and weak debt protection metrics: The
operations of the company being working capital intensive, the
reliance on external borrowings have increased. Increasing debt
levels and low networth base have resulted in high gearing levels
which stood at 2.78x as on March 31, 2020. Further the business
generates low cash accruals being trading nature, thus the debt
protection metrics stands weak with total debt to GCA at 24.37x and
moderate interest coverage ratio of 1.57x in FY20.
* Exposure to commodity price risks: With the global outbreak of
Covid-19 and rising fears of recession, this precious metal, with
its safe-haven appeal, continued to shine. Prices rose by nearly
31% in FY20 and 28% in CY20. Such high volatility in gold prices
continues to have bearing on the PBILDT margins of the company.
Key Rating Strengths
* Experienced management: SGD is a part of Essel group, which has
its presence in diversified sectors such as television
broadcasting, cable distribution, direct-to-home satellite service
and digital media amongst others. The company is supported by
professionals who have vast experience in the gold business.
* Acquisition for gold mine in FY18: SGD acquired 70% shareholding
rights of MEAM for gold mines located at Bamako, Mali during FY18.
MEAM holds the exploration permit over an area of 23.2 km located
at Kangaba, Koulikoro region, Mali, and has obtained Small Scale
Mining License from Ministry of Environment. The said acquisition
would lead to captive sourcing of raw materials at competitive
rates. However, the subsidiary is yet to commence operations and
thus the impact of the acquisition remains to be seen.
Liquidity: Weak
Liquidity of the company remains weak marked by fully utilized bank
facilities, low cash & bank balance of INR0.75crore as on March 31,
2020. Further, the cash accruals for FY20 remained low at INR7.66
crore.
SGD is a part of Essel group with 100% holding of Shirpur Gold
Refnery Limited. The company is engaged in processing and trading
of gold bars. SGD procures raw material (dore) from Latin America
and sells in the domestic markets. SGD has tied up with mining
companies from gold producing countries in Latin America,
Australia, Africa etc. in order to ensure proper and regular supply
of gold dore. Post procurement, refining is done through Dubai's
gold refiners like Al Etihad Gold Refinery DMCC, Dubai. After
getting the refined bars of 99.5% purity the same are sold to
bullion banks like Standard Bank of London, RAK Bank Dubai and
other wholesale traders in Dubai. SGD acquired 70% stake in Metalli
Exploration and Mining (MEAM) in Mali, Bodoko. This company is yet
to commence operations.
SMILAX LABORATORIES: CARE Cuts Rating on INR77.62cr LT Loan to D
----------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Smilax laboratories Limited (SLL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 77.62 CARE D Revised from CARE BB-;
Facilities Stable
Long Term/Short 5.00 CARE D Revised from CARE BB-;
Term Bank Stable/CARE A4
Facilities
Short Term Bank 18.79 CARE D Revised from CARE A4
Facilities
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of SLL are tempered by
delays in meeting debt obligations on time due to stressed
liquidity position.
Rating Sensitivities
Positive Factors
* Improvement in the liquidity profile & regularization of debt
servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delays is meeting debt obligations: The liquidity profile of SLL
deteriorated on account of cash flow mismatches and the same has
resulted in delays with respect to debt servicing of the company.
Key Rating Strengths
* Experienced promoters and management team: SLL was incorporated
in December 2004 and belongs to Ramky group of companies based in
Hyderabad. The main promoter of the group; Mr. Alla Ayodhya Rami
Reddy (70.27% shareholding in SLL) has over a decade of experience
in the waste management, real estate, infrastructure etc. The group
has set up large infrastructure space at Ramky Pharma City, Vizag
and thus has association with large number of pharma companies. Mr.
S. Murali Krishna Reddy, the Managing Director of SLL has been
associated with pharmaceutical industry for more than two decades
and has work experience in several pharma companies. The promoters
are assisted by team of experienced and qualified professionals.
Liquidity: Stretched
The liquidity profile of the company is stretched marked by net
losses incurred by the company from FY18 to FY20. Further, the
company has high average working capital utilization at 90%. The
company has availed moratorium for the bank facilities for a period
of 3 months from March to May 2020. Further due to cash flow
mismatches the company has delayed in meeting its term debt
obligations post to the moratorium.
Smilax Laboratories Ltd (SLL), incorporated in the year December
2004 is a pharmaceutical company engaged in manufacturing of
advanced Intermediates, Active Pharmaceutical Ingredients (APIs)
and Pellets at its manufacturing facilities located at Jeedimetla
in Telangana and Vishakhapatnam in Andhra Pradesh. The company also
undertakes contract manufacturing and contract research activities,
besides sale of own API/Intermediates. The facilities and products
of SLL are approved by WHOGMP, Slovenian Regulatory agency –JAZMP
and European approval CEP (Certificate European Pharmacopoeia i.e
having a COS (Certificate of Suitability) for Omeprozole. SLL
started operations in 2005-06 at its first unit i.e. at Jeedimetla,
Telangana which was acquired from Hiranaya Chemicals Limited (an
API manufacturing facility). The total build up area for Unit I is
50000 sft with installed capacity of 60Kl. Further, in 2009-10, the
company set up a new manufacturing facility (Unit – II) located
at Ramky Pharma city in Vishakhapatnam. The total build up area of
Unite II is 300000 sft with installed capacity of 400Kl. Mr. Alla
Ayodhya Rami Reddy of Ramky Group, promoter of SLL is the major
shareholder of the company and he has a diversified business
interests with presence in infrastructure, real estate, waste
management etc.
SRINIVASA POULTRY: CARE Cuts Rating on INR7.43cr LT Loan to C
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Srinivasa Poultry Farm (SPF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 7.43 CARE C; Stable; Issuer not
Facilities cooperating; Revised from
CARE B; Stable' ISSUER NOT
COOPERATING on the basis of
best available information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated July 29, 2019, placed the
rating(s) of Srinivasa Poultry Farm (SPF) under the 'issuer
noncooperating' category as SPF had failed to provide information
for monitoring of the rating. SPF continues to be noncooperative
despite repeated requests for submission of information through
e-mails, phone calls and an e-mail communications/letters dated
from January 2020 to September 28, 2020. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The revision in the rating takes into account the non-availability
of requisite information due to non-cooperation by Srinivasa
Poultry Farm with CARE's efforts to undertake a review of the
outstanding ratings as CARE views information availability risk as
key factor in its assessment of credit risk profile.
Detailed description of the key rating drivers
At the time of last rating on July 29, 2019 the following were the
rating strengths and weaknesses
Key Rating Weaknesses
* Small scale of operations: The scale of operations of the firm
remained small marked by total operating income of INR15.25 crore
in FY18 coupled with low net worth of INR4.28 crore as on March 31,
2018 as compared to other peers in the industry.
* Working capital intensive nature of operations: The operating
cycle of the firm elongated from 93 days in FY17 to 103 days in
FY18 due to higher inventory levels days at 163 due to its nature
of business operations where in the firm is required to keep high
inventory level of parent bird and raw material stock to feed the
birds in different growing stages and to mitigate fluctuation in
raw material prices. The firm receives payment from its customers
within a week and sometimes, payments stretch upto 10 days and
makes payment to its suppliers within 30-60 days due to long term
relationship with the suppliers. The average utilization of working
capital facility is 90% during past twelve months ended with
November 30, 2018.
* Declining PBILDT margin and PAT margin during review period:
The PBILDT margin of the firm has declining during the review
period. The PBILDT margin decreased from 9.66% in FY17 to 8.74% in
FY18 due to increase in raw material expenses (Birds feed and
medicines) and employees cost. The PAT margin of the firm increased
from 0.91% in FY17 to 1.01% in FY18 due to decrease in interest
cost due to repayment of term loan.
* Profitability margins are vulnerable to volatility in raw
material prices: Maize is relatively a small scale crop in India
and being a rain-fed crop, any monsoon failure will affect its
harvest. The Poultry industry consumes more than 50% of the
domestic maize production and its demand is expected to exceed the
overall supply in the future. As the poultry industry is virtually
a buyers' market, any sharp increase in raw material prices may not
be fully passed on to the consumers thereby affecting the profit
margin of the company.
* Financial risk profile marked by weak debt coverage indicators
The entity has weak debt coverage indicators during review period.
Total debt/GCA deteriorated from 10.84x in FY17 to 12.56x in FY18
due to increase in total debt on account of enhancement in working
capital facilities for supporting business operations coupled with
gross cash accruals. The PBILDT interest coverage ratio improved
from 1.85x in FY17 to 1.87x in FY18 due to decrease in interest
expense, on account of repayment of term loan.
* Highly fragmented industry with intense competition from large
number of players: SPF faces stiff competition in the poultry
business from large number of established and unorganized players
in the market. Competition gets strong with the presence of
unorganized players leading to pricing pressures.
* Constitution of the entity as Proprietorship firm with inherent
risk of withdrawal of capital: Constitution as a proprietorship
firm has the inherent risk of possibility of withdrawal of the
capital at the time of personal contingency which can adversely
affect its capital structure. Furthermore, proprietorship firms
have restricted access to external borrowings as credit worthiness
of the proprietor would be key factors affecting credit decision
for the lenders.
Key Rating Strengths
* Experienced promoters with long track record of the entity:
SPF was established in the year 1990 and promoted by Mr. Mekala
Siva Rama Krishnaiah he has more than two decades of experience in
the poultry business. Due to long term presence in the market, Mr.
Mekala Siva Rama Krishnaiah has good relations with suppliers and
customers resulting into established customer base and helps to
seek regular orders from existing customers.
* Growth in total operating income during review period: The total
operating income of the firm increased from INR14.54 crore in FY17
to INR15.25 crore in FY18 representing marginal growth of 4.88% by
the increased sales in eggs and cull birds on account of y-o-y
increase in market price of eggs to an extent of 5%-10% when
compared to previous year. During 8MFY19, the firm achieved total
sales of INR10.60 crore.
* Stable outlook demand of poultry products: Poultry products like
eggs have large consumption across the country in the form of
bakery products, cakes, biscuits and different types of food dishes
in home and restaurants. The demand has been driven by the rapidly
changing food habits of the average Indian consumer, dictated by
the lifestyle changes in the urban and semi-urban regions of the
country. The demands for poultry products are sustainable and
accordingly, the kind of industry is relatively insulated from the
economic cycle.
* Comfortable capital structure: SPF has leveraged capital
structure during review period. SPF's debt profile is dominated by
the working capital borrowings to fund the working capital
requirements (i.e.,to purchase of birds feed, chicks and
medicines). The long-term debt-equity ratio and overall gearing
ratio of the firm is improved from 0.52 x and 1.78x respectively as
on March 31, 2017 to 0.34x and 1.70x respectively as on March 31,
2018 due to repayment of term loan coupled with increase in
tangible net worth on accretion of profit to reserves.
Srinivasa Poultry Farm (SPF) was established in the year 1990 by
Mr. Mekala Siva Rama Krishnaiah. The firm is engaged in farming of
egg, laying poultry birds (chickens) and trading of eggs, cull
birds and their Manure. The firm sells its total products like eggs
and cull birds to SSS Traders located in Vijayawada. The firm buys
chicks (small chickens) from Srinivasa Hatcheries Private Limited,
Vijayawada and raw materials for feeding of birds like rice
brokens, maize, sun flower oil cake, shell grit, minerals and soya
from local suppliers.
TIRUPATI BALAJI: CARE Lowers Rating on INR27.33cr Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Tirupati Balaji Fbres Ltd (TBFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 27.33 CARE D Revised from CARE BB+;
Facilities Stable; ISSUER NOT COOPERATING
and removed from INC
Short Term Bank 2.55 CARE D Revised from CARE A4+;
Facilities ISSUER NOT COOPERATING
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of TBFL factors in
instances of delays in servicing of debt obligations by the company
attributable to its stretched liquidity position due to slower
realization from debtors. The rating is further constrained by the
working capital intensive nature of operation, small scale of
operations, and susceptibility of its margins to volatility in raw
materials prices, and presence in a highly competitive nature of
the industry.
Rating Sensitivities
Positive Factors
* Improvement in cash flow from operations leading to better
liquidity position
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delays in debt servicing: Tirupati Balaji Fbres Ltd has delayed
on term loan installment due on August 15, 2020 and the amount
remains unpaid as on date. The company availed the first moratorium
but it neither availed the second moratorium nor it has requested
banks for any rescheduling or one-time restructuring and the same
has been considered as overdue by the lenders. However, the company
has duly paid the installment due on September 15, 2020. The reason
for default can be attributed to slower debtors realization as a
result of business disruption caused by the outbreak of Covid-19
which led to cash flow mismatches. The company has taken Covid loan
of INR5.25 cr during June, 2020 out of which around. INR0.80 cr was
utilized towards debt servicing upto July 2020 and payment of
INR1.50 crore to the creditors and INR2.75 crore towards stock
clearance which was lying at port since Mar 2020 to Apr 2020 in
order to save demurrage charges.
* Small scale of operations and moderate profitability margins:
Despite being operational for more than a decade, the scale of
operations has remained small and the total operating income of the
company declined by 18.74 % to INR56.38 cr during FY20 (refers to
the period from April 1 to March 31) (PY: INR69.38 cr) owing to
muted demand from company's end user segment. The small scale
limits the company's financial flexibility and deprives it from
benefits of economies of scale. The PBILDT margin increased to
9.02% in FY20 (PY: 6.61%) mainly due to lower cost of the raw
material consumed. The PAT margin, however declined to 1.27% (PY:
1.80 %) on account of an increase in the interest cost.
* Highly competitive industry: The paper and pulp industry is
highly fragmented with the presence of many organized and
unorganized players leading to stiff competition amongst them.
There is dependence of the industry to improved activity from
service, advertising, education, FMCG, retail, consumer durables
and pharmaceutical sector. The highly fragmented and competitive
nature of the industry has a bearing on overall profitability of
the players.
* Susceptibility of margins to volatility in prices of raw
material: The main raw material used by the company is waste paper
constituting 45.05 % of total cost of sales in FY20 (PY: 52.27%).
Around 48.93% (PY: 33.12 %) of the raw material is imported and the
rest is procured domestically and the company remains exposed to
the volatility in raw material prices and foreign exchange
fluctuation risk which adversely impacts the profitability
margins.
* Debt-funded expansion project: The company had envisaged to
expand its capacity of 13,200 MTPA as on March 31, 2018 to 33,000
MTPA by the end of March 2020. Also, due to the increased
competition from the nearby manufacturers and digitalization, the
company has discontinued the manufacturing of NPP and WPP. Though,
the plant was set up FY19, however change in process took time and
the plant became fully operational in March 2020. The new process
involves usage of starch and chemicals which is expected to improve
the quality even with less thickness. The total cost incurred by
the company towards the project as on March 31, 2020 is approx.
INR29 cr. The project cost is funded through term loan of INR19.00
crore and the rest through internal accruals. The company has
received the sanction of INR19.00 crore from State Bank of India,
however only INR14.57 cr. has been availed by the company.
* Working-capital intensive operations: The working capital cycle
of the company increased to 73 days in FY20 (PY: 64 days) mainly
because of increase in collection period to 72 days as on March 31,
2020 (PY: 59 days). The average inventory period increased to 73
days as on March 31, 2020 (PY: 40 days) and creditors period is
increased to 72 days during FY20 (PY: 35 days). The increase in the
inventory period can be attributed to delays in the shipment of raw
material owing to the pandemic.
* Industry outlook and prospects: The demand-supply situation of
paper and paper products industry has been hit hard due to
imposition of lockdown to prevent the spread of Covid-19. The
supplies of paper and paper products industry were affected as the
industry operations were shut in the initial phase of lockdown.
While operations resumed with reduced capacities as restrictions
eased, challenges remain in terms of logistics disruption,
migration of labor, and subdued demand from consumers.
Nevertheless, demand from packaging segment gives some respite to
the industry players as resumption of economic activities
subsequent to partial lifting of lockdown prompted online purchases
of non-essential items in addition to essential items thereby
supporting the demand for packaging. This segment accounts for the
highest share (~54%) in paper industry's demand followed by
printing & writing segment (~35%).
Liquidity: Poor
The temporary closure of business operations due to lockdown has
affected the liquidity of TBFL. The company has availed moratorium
on both interest and principal for three months i.e. from March
2020 to May 2020 on working capital limits and term loans. The
company had also taken covid term loan of INR5.25 crore during
June, 2020 which was mainly utilized towards debt servicing,
payment to creditors and payment towards stock clearance lying at
Indian ports. The disruption caused by outbreak of Covid-19 led to
delayed realization from debtors, increase in stock holding which
led to temporary cash flow mismatches and the delay in term loan
repayment in August 2020. The free cash and bank balance as on
March 31, 2020 stood at INR0.51 Cr and the company's ability to
improve liquidity through healthy cash flow from operations remains
crucial going forward.
TBFL was originally incorporated in 1995 as Balaji Cellulose
Products Limited by Mr Salekchand Agarwal. Subsequently in 2007,
the company was taken over by the members of 'Garg' family post
which name of the company was changed to its current name TBFL on
April 17, 2007. Later on, in August 2011, Mr Naveen Agarwal, Mr
Pankaj Agarwal and Mr Prashant Agarwal took over the management of
the company who are also the present shareholders of TBFL. The
company has changed its name from Tirupati Balaji Fibres Limited to
Tirupati Balaji Fbres Limited on April 26, 2018. TBFL is engaged in
manufacturing and trading of writing & print paper (WPP), news
print paper (NPP) and kraft paper using recyclable waste paper. Due
to the increased competition from the nearby manufacturers and
digitalization, the company has discontinued manufacturing of NPP
and WPP. It has its manufacturing facilities at Muzzafarnagar,
Uttar Pradesh with an installed capacity of producing 33,000 MT of
kraft paper per annum as on March 31, 2020.
UNITED CAPZ: CARE Keeps D Debt Ratings in Not Cooperating Rating
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of United Capz
Private Limited (UCPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 23.30 CARE D; Issuer not cooperating;
Facilities Based on best available
Information and rating put
under INC
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from UCPL to monitor the ratings
vide e-mail communications/letters dated June 8, 2020, June 12,
2020, June 15, 2020, June 19, 2020, July 3, 2020, July 14, 2020,
July 27, 2020, August 11, 2020, August 28, 2020, September 11,
2020, September 24, 2020 and numerous phone calls. However, despite
our repeated requests, the company has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the ratings on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The ratings on UCPL's bank
facilities will now be denoted as CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The rating assigned to the bank facilities of UCPL factor in
on-going delays in servicing of its long term debt obligations.
Detailed description of the key rating drivers
At the time of last rating on September 30, 2019 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
* On-going delays in debt servicing: As per banker interaction,
there are on-going delays in debt servicing for its term loan by
UCPL.
Thane-based (Maharashtra) UCPL was incorporated in October, 2015 as
a private limited company by Mr. Dahyabhai Patel and Mr. Rakesh
Dahanuwala for manufacturing of Empty Hard Gelatin Capsule (EHGC)
shells operates from new plant in Valsad (Gujarat) with an
installed capacity of manufacturing 32,659 lakh Capsule shells per
annum.
VATSA AUTOMOBILES: CARE Keeps D Debt Rating in Not Cooperating
--------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Vatsa
Automobiles Pvt Ltd (VAPL) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 12.04 CARE D; Issuer not cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from VAPL to monitor the rating
vide letters/e-mails communications dated September 16, 2020,
September 18, 2020, September 23, 2020 and numerous phone calls.
However, despite our repeated requests, the entity has not provided
the requisite information for monitoring the rating. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the publicly available information which, however, in
CARE's opinion is not sufficient to arrive at fair rating. Further,
Vatsa Automobiles Private Limited has not paid the surveillance
fees for the rating exercise as agreed to in its Rating Agreement.
The rating on Vatsa Automobiles Private Limited's bank facilities
will now be denoted as CARE D; ISSUER NOT COOPERATING. Further, the
banker could not be contacted.
Detailed description of Key Ratings Driver
During the time of last Rating done on July 17, 2019 following were
rating strength and weakness.
Key Ratings Weakness
* Delays in debt servicing: The rating takes into account ongoing
delay in the servicing of the bank debt obligations on account of
the stretched liquidity position of the company.
Incorporated on April 10, 2012, Bhagalpur (Bihar) based Vatsa
Automobiles Pvt Ltd (VAPL) was promoted by Mr. Shailesh Singh with
his wife Mrs. Kiran Singh and son Mr. Chandra Prakash Singh. VAPL
is an authorized dealer of Mahindra & Mahindra Ltd (M&M: Rated CARE
AAA/A1+) for its commercial and passenger vehicle segment. It also
offers spare parts, accessories, lubricants& aftersales services
(repair and refurbishment) for its vehicle sold. The commercial
operation of VAPL was started since September 13, 2013. VAPL has
one showroom at Bhagalpur (Bihar) equipped with 3-S facilities
(Sales, Service and Spare-parts) which covers Munger, Naogachia and
Bhagalpur area of Bihar.
=================
I N D O N E S I A
=================
GARUDA INDONESIA: Ends Contract of 700 Workers Amid Low Demand
--------------------------------------------------------------
The Jakarta Post reports that national flag carrier Garuda
Indonesia announced on Oct. 27 that it would terminate the
contracts of at least its 700 employees by Nov. 1 as the airline
struggles with low travel demand during the COVID-19 outbreak.
The workers being laid off have been taking unpaid leave since May,
according to Garuda president director Irfan Setiaputra, The
Jakarta Post relays.
The airline revealed earlier this year that it would furlough
around 800 contract workers starting May 14.
"We are forced to take the difficult decision in order to ensure
our company's survival during these challenging times," the report
quotes Irfan as saying in a statement.
The company turned in a loss of US$712.7 million in the first half
of this year, a stark difference from last year's net profit of
$24.11 million during the same period, as travel restriction and
border closures batter the airline industry, The Jakarta Post
discloses.
According to the report, the COVID-19 global health crisis has
continued to pressure the aviation industry in Indonesia amid
border closures that have prompted people to cancel travel plans.
"The pandemic has had unpredictable long-term effects on our
company's performance, as we still haven't seen any significant
improvements as of today," Irfan said.
Garuda's total revenue in the first six months of the year
nosedived by 58.2 percent year-on-year (yoy) to $917.28 million,
according to the company's financial report cited by the Jakarta
Post.
Meanwhile, the number of passengers who flew with Garuda between
January and August dropped 70.1 percent yoy to 3.83 million, the
report discloses.
Irfan added that Garuda aimed to fulfill all of the affected
employees' rights in accordance with the law, the report adds.
In early June, the airline also terminated the contracts of 180
non-permanent pilots, which consisted of senior and outsourced
pilots working on a contract basis, the Jakarta Post notes.
The report relates that Garuda has also taken several measures to
maintain its cash flow amid plummeting demand for air travel,
including by cutting employee and executive salaries, cutting
production costs for efficiency and renegotiating obligations to
partners and aircraft lessors.
Besides Garuda, privately owned Lion Air Group laid off 2,600
contract employees from its subsidiaries low-cost carrier Lion Air,
Wings Air and full-service carrier Batik Air in July amid declining
flight traffic, the report adds.
Headquartered in Jakarta, Indonesia, government-owned airline PT
Garuda Indonesia -- http://www.garuda-indonesia.com/-- currently
has a fleet of about 77 aircraft offering service to some 27
domestic and 33 international destinations. Under its Citilink
brand, it serves 10 other domestic routes. Garuda also ships about
200,000 tons of cargo a month and operates a computerized tracking
system.
SAWIT SUMBERMAS: Fitch Withdraws CCC+ IDR on Insufficient Info
--------------------------------------------------------------
Fitch Ratings has withdrawn Indonesia-based palm oil company PT
Sawit Sumbermas Sarana Tbk's (SSMS) Long-Term Foreign-Currency
Issuer Default Rating of 'CCC+' and the 'CCC+'/'RR4' rating on the
USD300 million 7.75% senior notes due 2023 issued by its
subsidiary, SSMS Plantation Holdings Pte. Ltd. Fitch Ratings
Indonesia has also simultaneously withdrawn SSMS's National
Long-Term Rating of 'BB-(idn)'/Stable.
The ratings were withdrawn for the following reason: insufficient
information provided.
'BB' National Ratings denote an elevated default risk relative to
other issuers or obligations in the same country or monetary
union.
Fitch has withdrawn the ratings as the issuer has chosen to stop
participating in the rating process. Therefore, Fitch will no
longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage for SSMS.
KEY RATING DRIVERS
ESG - Group Structure: At the time of withdrawal, SSMS had an ESG
Relevance Score of '4' for Group Structure. Parent PT Citra Borneo
Indah's (CBI) complex group structure and extensive related-party
transactions increased cash flow volatility and hurt SSMS's credit
profile. A sharp increase in receivables from CBI's related parties
contributed to the jump in leverage in 2018. These receivables
eased in 2019.
RATING SENSITIVITIES
Not relevant as ratings have been withdrawn.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
SSMS has an ESG Relevance Score of '4' for Group Structure due to
the presence of significant related-party transactions and
inadequate transparency, which have a negative impact on the credit
profile and are relevant to the ratings in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Following the withdrawal of ratings for SSMS, Fitch will no longer
be providing the associated ESG Relevance Scores.
=========
J A P A N
=========
ANA HOLDINGS: Forecasts Record JPY505 Billion Loss for FY2020-21
----------------------------------------------------------------
Bloomberg News reports that ANA Holdings Inc. forecast its
biggest-ever operating loss of JPY505 billion ($4.8 billion) for
the fiscal year through March 2021, the latest airline to face an
existential threat to its business due to the pandemic.
According to Bloomberg, the Japanese carrier unveiled a
restructuring plan that calls for:
- a newly branded low-cost carrier in addition to Peach, the
budget airline already operated by ANA.
- JPY150 billion in cost reductions this year and JPY250 billion
the following fiscal period, by cutting procurement, office rents
and other activities.
- the temporary transfer of hundreds of employees to other
companies; 100 by the end of this year, and 400 by spring.
- retiring or halting orders on a total of 33 aircraft, to bring
the group's fleet down to 276 planes.
- JPY400 billion in subordinated loans to bolster finances.
The outlook issued by ANA calls for a wider full-year loss than the
JPY376 billion analysts were projecting on average, according to
estimates compiled by Bloomberg. ANA also forecast JPY740 billion
in revenue for the fiscal year through March, compared with
analysts' average prediction for JPY926 billion.
Bloomberg says the $838 billion global airline industry is set to
see revenue slashed by half this year, with carriers cutting jobs
and securing funding to ride out the crisis. ANA, Japan's largest
carrier, as well as rival Japan Airlines Co. are suffering from a
steep drop in domestic and international passenger traffic,
Bloomberg notes. Overseas visitors to Japan fell 99.4% in September
from a year earlier as the country largely kept its borders shut.
Bloomberg Intelligence analyst James Teo said the cost management
plan, especially the downsizing of the group's fleet of aircraft,
was a positive step.
"This is the main driver that will help ANA save 250 billion yen in
fiscal 2021 alone based on their guidance," Bloomberg quotes Mr.
Teo as saying. "I am less optimistic about their third brand and
proposed platform business, as these could require investment and
thus now may not be the best time to do these, although they could
be good plans to have for the longer term."
ANA shares fell 3.2% before the results and restructuring plan were
released. The stock is down 37% this year. Japan Airlines is set to
report results on Oct. 30, Bloomberg notes.
According to Bloomberg, ANA is set to receive subordinated loans
from five lenders, including Sumitomo Mitsui Financial Group,
Mizuho Financial Group and the government-backed Development Bank
of Japan. Nikkei reported last month that ANA was considering
raising JPY200 billion via a public share offering. Separately,
Japan Airlines is seeking to raise about JPY200 billion to JPY300
billion in subordinated loans, the Kyodo news agency reported
earlier this week.
Subordinated loans are usually given to debt-heavy or financially
weak borrowers to bolster their financial health, because credit
rating companies count part of such loans as capital, helping the
businesses enhance their credit status. For lenders, they are
riskier than straight loans but typically carry higher interest
rates, Bloomberg notes.
"Both JAL and ANA hold enough liquidity to last at least through
this fiscal year," Mr. Teo said.
For the latest quarter, ANA reported an operating loss of JPY122
billion, compared with the average estimate for a JPY115 billion
loss, on revenue of JPY170 billion, Bloomberg discloses.
"The results in the first half of the year were very severe," ANA
President Shinya Katanozaka said at a news conference, Bloomberg
relays. He vowed to return the airline to profitability in the next
fiscal year.
About ANA Holdings
Headquartered in Tokyo, Japan, Ana Holdings Incorporated provides a
variety of air transportation-related services.
As reported in the Troubled Company Reporter-Asia Pacific on Aug.
17, 2020, Egan-Jones Ratings Company, on August 7, 2020, downgraded
the foreign currency and local currency senior unsecured ratings on
debt issued by ANA Holdings Incorporated to BB- from BBB+.
TOKYU DEPARTMENT: To Close Department Store in Bangkok
------------------------------------------------------
Nikkei Asian Review reports that Japan's Tokyu Department Store
plans to close its Bangkok location after a string of difficulties,
with a lack of tourist traffic the last straw.
Nikkei says the store at the MBK Center shopping mall will shut its
doors forever in late January. Following the 2019 closing of
another Thai location, this essentially means that the retailer is
leaving the country.
According to Nikkei, Tokyu Department Store, part of the
Tokyo-listed Tokyu group, becomes the latest Japanese retailer to
pull out of Thailand. Isetan Mitsukoshi Holdings shut down its
Bangkok department store this August. Convenience store chain
FamilyMart mounted a retreat in all but name this year.
Tokyu's Bangkok store opened in 1985, later overcoming the Asian
financial crisis and repeated political turmoil, Nikkei discloses.
But a strong baht last year weighed on tourism from nearby
countries. Meanwhile, competition has mounted in Bangkok from a
series of shopping center developments, the report says.
The final nail in the coffin came from COVID-19 and Thailand's
resulting entry restrictions, Nikkei notes.
Tokyu's departure will leave Takashimaya, which arrived in 2018, as
the only Japanese department store operator left in Thailand, the
report says.
===============
P A K I S T A N
===============
PAKISTAN WATER: Moody's Assigns B3 CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service has assigned a first-time corporate
family rating (CFR) of B3 to Pakistan Water and Power Development
Authority (WAPDA).
The rating outlook is stable.
RATINGS RATIONALE
WAPDA's B3 CFR is primarily driven by its baseline credit
assessment (BCA) of b3, and Moody's expectation of a very high
likelihood of support from, and a very high level of dependence on,
the Government of Pakistan (B3 stable) in times of need, under
Moody's joint-default analysis approach for government-related
issuers.
"WAPDA's b3 BCA reflects its dominant position in supplying
hydropower services and developing water infrastructure in
Pakistan, as well as the recurring financial support it receives
from the Pakistani government," says Boris Kan, a Moody's Vice
President and Senior Credit Officer.
"At the same time, the BCA is constrained by the company's weak
financial profile due to its sizable hydropower capacity expansion
spending, and the delays in collecting hydropower generation
tariffs," adds Kan.
Moody's expectation of a very high likelihood of government support
is since the Pakistani government fully owns and directly
supervises the company. It also reflects the company's strategic
importance to the government, as its sole platform to (1) construct
and operate hydropower assets to supply affordable electricity, and
(2) build water storage facilities to help address the country's
acute water challenges.
Although there is no explicit uplift incorporated in the rating,
the very high likelihood of extraordinary support indicates the
resilience of WAPDA's B3 rating, even if the company's BCA is
lowered, assuming no material change in the underlying credit
worthiness of WAPDA.
The company's delays in collecting hydropower tariffs is mainly
driven by the significant cash shortfall in the Central Power
Purchasing Agency (CPPA), which is the state-owned agency that
purchases power from the company on behalf of the nation's
distribution companies. This shortfall mainly stems from (1) the
gap between the low-end user electricity tariffs and high-power
generation costs, (2) high transmission losses, and (3) low
recovery from end users on electricity tariff payments, which
increases CPPA's leverage and constrains its repayment
capabilities.
As a result, Moody's expects WAPDA's financial metrics to remain
weak over the next one to two years, driven by (1) the company's
sizable capital spending plans to expand its hydropower capacity,
and (2) the delays in collecting hydropower tariffs, which puts
pressure on the company's working capital.
Moody's projects that the company's FFO to debt ratio will remain
weak at about 3.0%-4.5% over the course of the 2020 to 2022 fiscal
years, and its FFO interest coverage will remain at about 1.6-1.7x
over the same period. Such credit metrics support WAPDA's BCA of
b3.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook primarily reflects (1) the current stable
outlook on Pakistan's sovereign rating, (2) Moody's expectation
that the company's BCA will remain appropriately positioned at b3,
and (3) its strategic importance will not be materially affected by
regulatory changes.
Moody's could upgrade WAPDA's rating if the Pakistani government's
ability to provide support strengthens, which would be illustrated
by an upgrade of the sovereign rating.
On the other hand, Moody's could downgrade WAPDA's rating if the
Pakistani government's ability to provide support weakens, which
would be illustrated by, but not limited to, a downgrade of the
sovereign rating, or a demand for repayment by WAPDA on loan
principle or interest owed to the Pakistani government.
The company's BCA could be downgraded if (1) there are changes in
Pakistan's regulatory environment that adversely affect the
company's profitability, or (2) WAPDA' financial position weakens,
such as due to aggressive debt-funded investments or further delays
in the collection of electricity tariffs.
Financial metrics indicative of a BCA downgrade includes the
company's FFO/debt falling below 2.0% and FFO interest coverage
staying below 1.2x over a prolonged period.
However, a moderate weakening in the company's BCA is unlikely to
immediately lead to a downgrade of its CFR, given the very high
likelihood of extraordinary support from the Pakistani government.
The rating also considers the following environmental, social and
governance (ESG) factors.
WAPDA's governance risk is moderate. While WAPDA is wholly owned
and under the administrative control of the Pakistani government,
its financial policy is characterized by high capital spending and
leverage. The absence of independently audited financial statements
for the company's water segment is another important consideration.
However, such risk is currently manageable at the current rating
level.
WAPDA's environmental risk is also moderate. While the company's
carbon transition risks are low given that the relatively low
carbon intensity of its hydropower units, WAPDA may need to make
additional investments to secure more water resources for the
population and alleviate Pakistan's water scarcity problem.
WAPDA faces moderate social risks overall in terms of health and
safety conditions, especially with regards to the construction and
operation of its hydropower and water projects and is exposed to an
acceleration in COVID-19 related conditions in Pakistan which could
affect its workforce.
The methodologies used in these ratings were Regulated Electric and
Gas Utilities published in June 2017, and Government-Related
Issuers Methodology published in February 2020.
WAPDA was established through an Act of Parliament in 1958. It is
an autonomous and statutory body under the administrative control
of, and 100% ownership by the Federal Government of Pakistan.
WAPDA constructs and operates hydropower generation assets to
generate affordable and clean electricity to relieve end user
burden. The company also builds water storage and related
facilities to help address the country's acute water challenges.
As of June 2020, WAPDA's total installed hydropower capacity
amounted to about 9.4 gigawatts, comprising 22 hydropower units,
and representing 95% of the country's hydro power.
=================
S I N G A P O R E
=================
EAGLE HOSPITALITY: To 'Assess Implications' of MAS Notice
---------------------------------------------------------
Olivia Poh at The Business Times reports that the manager of Eagle
Hospitality Reit (EH-Reit) said that it is working with
professional advisers to "assess the implications" of the Notice of
Intention (NOI) it received from the Monetary Authority of
Singapore (MAS).
BT relates that the MAS on Oct. 26 issued a NOI to the trustee of
EH-Reit to remove its manager and appoint a new one. The notice
comes following numerous breaches of the Securities and Futures Act
(SFA) by EH-Reit Management, and serious concerns over its ability
to comply with rules and regulations, said MAS.
According to BT, the Reit manager said that these breaches occurred
"despite enhanced monitoring as well as repeated and best efforts"
by the special committee of the managers to remind its shareholder
of the need to comply with regulatory capital requirements.
The NOI by MAS stated that such breaches had occurred despite a
letter of assurance from the Reit manager's shareholder to MAS.
And given the Reit manager's multiple failures to comply with the
SFA, the MAS said it had serious concerns about the manager's
ability and commitment to comply with its rules and regulations at
all times, BT relates.
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.
EZION HOLDINGS: JV Placed Under Creditors' Voluntary Winding-Up
---------------------------------------------------------------
Olivia Poh at The Business Times reports that Terasea, a joint
venture in which offshore and marine group Ezion Holdings has a 50
per cent interest, was placed under creditors' voluntary winding-up
from Oct. 27.
This follows a resolution passed at Terasea's extraordinary general
meeting, and confirmation by its creditors, BT says.
BDO Advisory has been appointed the joint and several liquidators
of Terasea for the purposes of winding-up its affairs, said Ezion
Holdings in a statement on Oct. 27, BT discloses.
BT relates that the winding-up of Terasea is not expected to have a
material impact on Ezion Holdings' net tangible assets or earnings
per share for the financial year ending Dec. 31.
Last year, POSH Terasea Pte Ltd (PTPL), a 50:50 joint venture
formed by PACC Offshore Services Holdings (POSH) and Terasea,
defaulted on a debt, pegged at US$27.6 million as at Sept. 17, BT
recalls. This triggered a cross default under a second loan
facility by another lender to the joint venture.
PTPL is managed by POSH, and Ezion's effective interest in PTPL is
25 per cent. Ezion Holdings also said that the default had "no
material impact" on the group, the report relays.
Based in Singapore, Ezion Holdings Limited
--http://www.ezionholdings.com/-- an investment holding company,
develops, owns, and charters offshore assets to support the
offshore energy markets in Singapore, India, Brunei, Thailand, the
Middle East, Nigeria, and internationally. The company operates
through Liftboats, Jack-Up Rigs, Offshore Support Logistics
Services, and Others segments. It owns, charters, and manages rigs
and vessels involved in the production, maintenance, and
exploration phases of the oil and gas, and offshore windfarm
industries. The company also provides shipping agency and
management services, as well as undertakes engineering works;
financing services; and cargo transportation services. In addition,
it holds assets or investments involved in renewable energy, and
other oil and gas related industries.
As reported in the Troubled Company Reporter-Asia Pacific on Oct.
21, 2020, Ezion Holdings on Oct. 19 announced its restructuring
plan to refocus its business on the provision of vessel-management
services, following a strategic review of its options in
consultation with major lenders. According to The Business Times,
the company said that it will take steps to realise value by
disposing of its vessels in an orderly manner over a period of
time; this will enable it to better manage its cashflow constraints
by reducing the holding costs of the vessels as well as the amount
of liabilities. It will also implement further cost-cutting
measures in line with business requirements and continue the search
for potential investors to recapitalise the group and realise the
value of the listed status of the company, on the basis of a
vessel-management company.
The company has appointed RSM Corporate Advisory as corporate
restructuring advisor to oversee the implementation of the
restructuring plan over the course of the next year and will in
due course hold an informal meeting for securities holders.
*********
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,
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