/raid1/www/Hosts/bankrupt/TCRAP_Public/201218.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Friday, December 18, 2020, Vol. 23, No. 253
Headlines
A U S T R A L I A
AUSTRALIA: Retail Could Face Insolvency Surge at the Start of 2021
BARRELHOUSE PAYROLL: First Creditors' Meeting Set for Dec. 30
GLOBAL BEVERAGE: Second Creditors' Meeting Set for Dec. 24
C H I N A
BLUEFOCUS INTELLIGENT: Moody's Completes Review, Retains B1 Rating
CBAK ENERGY: Closes $49.2 Million Common Stock Offering
CHINA EVERGRANDE: Moody's Completes Review, Retains B1 CFR
HENGDA REAL: Moody's Completes Review, Retains B1 CFR
LUCKIN COFFEE: To Pay US$180MM to Settle SEC Charges of Fraud
SKYFAME REALTY: Fitch Assigns B- Rating on New USD Unsec. Notes
H O N G K O N G
TIANJI HOLDING: Moody's Completes Review, Retains B2 CFR
I N D I A
A.G. MOTOR: CRISIL Keeps D Debt Ratings in Not Cooperating
AARCOT CERAMIC: ICRA Keeps D Debt Ratings in Not Cooperating
AEROCON BUILDWELL: CRISIL Keeps B- Ratings in Not Cooperating
AMARPARKASH RICE: CRISIL Keeps D Debt Ratings in Not Cooperating
AMPLE TECHNOLOGIES: ICRA Lowers Rating on INR27cr LT Loan to B+
BAFNA GINNING: ICRA Keeps B+ Debt Rating in Not Cooperating
BALAJI ENTERPRISE: ICRA Reaffirms B+ Rating on INR6.50cr Loan
CELIO FUTURE: ICRA Withdraws B+ Rating on INR10cr Loan
CHIRAYU CHARITABLE: ICRA Keeps B+ Debt Ratings in Not Cooperating
CHOUDHARI CONSTRUCTION: CRISIL Keeps D Ratings in Not Cooperating
CITY TILES: ICRA Keeps D Debt Ratings in Not Cooperating
CJ S HARITHA: CRISIL Keeps D Debt Ratings in Not Cooperating
CRAFTS INDIA: CRISIL Keeps B Debt Ratings in Not Cooperating
DARP CONSTRUCTION: CRISIL Keeps D on INR15cr Debt in NonCooperating
DHANLAXMI TMT: CRISIL Keeps D on INR25cr Loans in Not Cooperating
DODHIA TECHNO: CRISIL Keeps D Debt Ratings in Not Cooperating
DUTTA AGRO: CRISIL Keeps D Debt Ratings in Not Cooperating
EDEN CRITICAL: CRISIL Keeps D on INR19.5cr Debt in Not Cooperating
ESQUIRE MACHINES: ICRA Reaffirms B+ Rating on INR7.04cr Loan
GOPINATHJI AGENCIES: ICRA Keeps B+ Ratings in Not Cooperating
GUPTAS GOLD: CRISIL Reaffirms B Ratings on INR7cr Loans
HLL BIOTECH: ICRA Reaffirms D Rating on INR309cr Term Loans
JAI MAA: ICRA Keeps D Debt Ratings in Not Cooperating Category
JHARKHAND INFRA: ICRA Reaffirms B Rating on INR443.20cr Loan
KHAYA SOLAR: ICRA Raises Rating on INR54.20cr LT Loan to C
MUTHOOT FINANCE: Moody's Affirms Ba2 CFR; Alters Outlook to Stable
OCEAN PEARL: ICRA Lowers Rating on INR62cr LT Loan to D
PILOT 2 WHEELER: ICRA Lowers Rating on INR23cr Loan to B+
SHIVAM INFRA-TECH: Ind-Ra Keeps BB Issuer Rating in NonCooperating
SOHAM RENEWABLE: ICRA Keeps B- Debt Ratings in Not Cooperating
SUDHIR AGRO: ICRA Keeps B+ Debt Rating in Not Cooperating
SURYA SRI RICE: ICRA Lowers Rating on INR41cr LT Loan to B+
VALUE PHARMA: ICRA Lowers Rating on INR13cr LT Loan to B+
VENKATESWARA RICE: ICRA Lowers Rating on INR8.25cr LT Loan to D
I N D O N E S I A
AGUNG PODOMORO: Fitch Hikes LongTerm IDR to CCC+
BANK PAN: Fitch Affirms BB LongTerm IDR, Outlook Stable
PAN BROTHERS: Fitch Lowers LongTerm IDR to CCC-
SOECHI LINES: Moody's Affirms B2 CFR; Alters Outlook to Stable
J A P A N
MITSUI OSK: Moody's Completes Review, Retains Ba3 Rating
NIPPON YUSEN: Moody's Completes Review, Retains Ba2 Rating
M A L A Y S I A
PRESS METAL: Moody's Completes Review, Retains Ba3 CFR
N E W Z E A L A N D
NEW ZEALAND: Economy Surges Out of Recession in V-Shaped Recovery
VIJAY HOLDINGS: Creditors Tap Waterstone as New Liquidators
S I N G A P O R E
MIRACH ENERGY: Taking Steps to Wind Up Company
S R I L A N K A
DFCC BANK: S&P Lowers Issuer Credit Ratings to 'CCC+/C'
SRI LANKA: S&P Lowers LongTerm Sovereign Credit Ratings to 'CCC+'
V I E T N A M
STANDARD CHARTERED: Fitch Assigns 'BB' LT Foreign Currency IDR
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A U S T R A L I A
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AUSTRALIA: Retail Could Face Insolvency Surge at the Start of 2021
------------------------------------------------------------------
Dean Blake at Inside Retail reports that spending in the Australian
retail sector has survived the onslaught of Covid-19 remarkably
well, according to Deloitte Access Economics, though the risk of a
large jump in administrations in early 2021 can't be ignored.
Inside Retail, citing DAE's latest retail forecast, relates that
sales volumes across the retail industry surged 6.5 per cent during
the September quarter and are expected to continue into the
December quarter, with sales to grow 2.6 per cent in the 2020
calendar year.
According to Inside Retail, DAE partner and retail forecasts'
principal author David Rumbens said the run into the ever-important
Christmas period is look more positive than was previously
expected.
"There are three key drivers of this stronger outlook: improved
labour market conditions; the extension of JobKeeper for struggling
businesses; and upbeat consumer confidence," Inside Retail quotes
Mr. Rumbens as saying. "Combined with good news on fewer
restrictions, state borders opening up, and vaccines, this has
enabled consumers to feel more at ease with spending heading into
December."
However, while certain sectors are enjoying a spendings boom, such
as food and household goods, other sectors are not seeing an uplift
in spending, Inside Retail says.
Inside Retail relates that Mr. Rumbens said department stores and
cafes are still seeing depressed sales, and could be among the
first insolvencies of the new year after a year which has actually
seen fewer insolvencies than average despite the difficult
conditions.
"In 2019, nearly 500 retailers entered external administration by
October, while in 2020 this dropped to around 300," Mr. Rumbens
said.
"The Christmas period is critical in any year, but for businesses
facing significant disruption to operating conditions who relied on
stimulus measures that are slowly fading and who haven't made
necessary structural adjustments, there is a risk that a poor sales
performance could be the straw that breaks the camel's back."
Deloitte warned that the first half of 2021 may see an increase in
insolvencies, as fiscal stimulus and support measures end and the
specter of Covid-19 remains, Inside Retail adds.
BARRELHOUSE PAYROLL: First Creditors' Meeting Set for Dec. 30
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Barrelhouse
Payroll Pty Ltd will be held on Dec. 30, 2020, at 10:00 a.m. at the
offices of HoganSprowles, Level 9, 60 Pitt Street, in Sydney, NSW.
Michael Hogan and Brendan Copeland of HoganSprowles were appointed
as administrators of Barrelhouse Payroll on Dec. 16, 2020.
GLOBAL BEVERAGE: Second Creditors' Meeting Set for Dec. 24
----------------------------------------------------------
A second meeting of creditors in the proceedings of Global Beverage
Brands Pty Ltd has been set for Dec. 24, 2020, at 10:30 a.m. at
Level 1, 255 Mary Street, in Richmond, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 23, 2020, at 4:00 p.m.
Stephent Dixon of Hamilton Murphy Advisory was appointed as
administrator of Global Beverage on Oct. 12, 2020.
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C H I N A
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BLUEFOCUS INTELLIGENT: Moody's Completes Review, Retains B1 Rating
------------------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of BlueFocus Intelligent Comm Group Co., Ltd. and other
ratings that are associated with the same analytical unit. The
review was conducted through a portfolio review in which Moody's
reassessed the appropriateness of the ratings in the context of the
relevant principal methodology, recent developments, and a
comparison of the financial and operating profile to similarly
rated peers. The review did not involve a rating committee. Since
January 1, 2019, Moody's practice has been to issue a press release
following each periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
BlueFocus Intelligent Comm Group Co., Ltd.'s B1 rating is supported
by the company's long track record of operation and leading
position in China's public relations and advertising industry;
proven capabilities in the high-growth sectors of mobile and
digital advertising; and diversified blue-chip customer base, with
a growing global footprint. It also considers adequate liquidity,
improved capital structure and the positive trend in its cash flow
generation, which is driven by the low working capital cycle and
slower business acquisitions.
The rating is constrained by the intense competition and inherent
cyclicality of the PR and advertising industry, and the company's
expected trend of margin contraction because of its expansion into
digital advertising.
The principal methodology used for this review was Business and
Consumer Service Industry published in October 2016.
CBAK ENERGY: Closes $49.2 Million Common Stock Offering
-------------------------------------------------------
CBAK Energy Technology, Inc. closed the registered direct offering
of approximately $49.2 million of common stock at a price of $5.18
per share on Dec. 10, 2020, as previously announced on Dec. 8,
2020. The Company issued a total of 9,489,800 shares of common
stock to the institutional investors. As part of the transaction,
the Company also issued to the investors warrants for the purchase
of up to 3,795,920 shares of common stock at an exercise price of
$6.46 per share, which Warrants have a term of 36 months from the
date of issuance. The net proceeds from this offering will be used
for general corporate and working capital purposes, including the
repayment of some outstanding debts.
FT Global Capital, Inc. acted as the exclusive placement agent and
The Benchmark Company, LLC acted as co-agent for the transaction.
Bevilacqua PLLC acted as counsel to the Company and Schiff Hardin
LLP acted as counsel to the placement agent in connection with the
offering. PacGate Law Group provided due diligence services to the
placement agent in connection with the offering.
About CBAK Energy
Dalian, China-based CBAK Energy Technology, Inc., formerly China
BAK Battery, Inc. -- http://www.cbak.com.cn/-- is engaged in the
business of developing, manufacturing and selling new energy
highpower lithium batteries, which are mainly used in the following
applications: electric vehicles; light electric vehicles; and
electric tools, energy storage, uninterruptible power supply, and
other high power applications.
CBAK Energy reported a net loss of $10.85 million for the year
ended Dec. 31, 2019, compared to a net loss of $1.96 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had
$102.07 million in total assets, $85.03 million in total
liabilities, and $17.04 million in total equity.
Centurion ZD CPA & Co., in Hong Kong, China, the Company's auditor
since 2016, issued a "going concern" qualification in its report
dated May 14, 2020, citing that the Company has a working capital
deficiency, accumulated deficit from recurring net losses and
significant short-term debt obligations maturing in less than one
year as of Dec. 31, 2019. All these factors raise substantial doubt
about its ability to continue as a going concern.
CHINA EVERGRANDE: Moody's Completes Review, Retains B1 CFR
----------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of China Evergrande Group and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review in which Moody's reassessed the
appropriateness of the ratings in the context of the relevant
principal methodology, recent developments, and a comparison of the
financial and operating profile to similarly rated peers. The
review did not involve a rating committee. Since January 1, 2019,
Moody's practice has been to issue a press release following each
periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
China Evergrande Group's B1 corporate family rating reflects the
company's strong market position as one of the top three property
developers in China (A1) in terms of contracted sales and land bank
size. The rating also reflects the company's nationwide geographic
coverage, strong sales execution and low-cost land bank.
However, the rating is constrained by Evergrande's weak liquidity
and high debt leverage. The company's significant investments in
its non-property businesses also constrain its credit profile.
The principal methodology used for this review was Homebuilding And
Property Development Industry published in January 2018.
HENGDA REAL: Moody's Completes Review, Retains B1 CFR
-----------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Hengda Real Estate Group Company Limited and other
ratings that are associated with the same analytical unit. The
review was conducted through a portfolio review in which Moody's
reassessed the appropriateness of the ratings in the context of the
relevant principal methodology, recent developments, and a
comparison of the financial and operating profile to similarly
rated peers. The review did not involve a rating committee. Since
January 1, 2019, Moody's practice has been to issue a press release
following each periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
Hengda Real Estate Group Company Limited's B1 corporate family
rating reflects the company's strong market position as one of the
top property developers in China (A1) in terms of contracted sales
and size of land bank. The rating also reflects Hengda's nationwide
geographic coverage, strong sales execution and low-cost land
bank.
However, the rating is constrained by the company's weak liquidity
and high debt leverage.
The principal methodology used for this review was Homebuilding And
Property Development Industry published in January 2018.
LUCKIN COFFEE: To Pay US$180MM to Settle SEC Charges of Fraud
-------------------------------------------------------------
Chad Bray at South China Morning Post reports that Luckin Coffee
agreed to pay US$180 million to settle allegations by the US
Securities and Exchange Commission (SEC) that it had engaged in
scam accounting to make its financial performance appear healthier
than it was.
SCMP relates that the start-up based in the Fujian provincial city
of Xiamen, which claimed to be China's answer to Starbucks, was
accused by the SEC of fabricating more than CNY2.12 billion (US$311
million) in retail sales between April 2019 and January 2020, while
understating its net loss by as much as 34 per cent. The company
also inflated its expenses by more than US$190 million to cover up
the fabricated revenues, the SEC said.
The penalty is the biggest meted out to a US-listed Chinese company
since executives of Puda Coal were slapped with a US$250 million
penalty in 2015 for looting the company, SCMP notes.
"Public issuers who access our markets, regardless of where they
are located, must not provide false or misleading information to
investors," the report quotes Stephanie Avakian, director of the
SEC's Division of Enforcement in a statement, as saying. "While
there are challenges in our ability to effectively hold foreign
issuers and their officers and directors accountable to the same
extent as US issuers and persons, we will continue to use all our
available resources to protect investors when foreign issuers
violate the federal securities laws."
SCMP says the accounting scandal led to Luckin delisting from
Nasdaq in July and changes to its board of directors, including the
replacement of co-founder Charles Lu Zhengyao as its chairman.
In a complaint filed in US District Court for the Southern District
of New York, the SEC accused Luckin of violating fraud, reporting,
books and records and control provisions of US securities laws. The
SEC did not announce any settlements with individuals and said its
investigation was ongoing, SCMP relays.
Luckin agreed to settle the case without admitting or denying
wrongdoing, the report notes. The settlement is subject to approval
by court.
"This settlement with the SEC reflects our cooperation and
remediation efforts, and enables the company to continue with the
execution of its business strategy," Luckin's chairman and CEO Guo
Jinyi said in a statement, SCMP relays. "The company's board of
directors and management are committed to a system of strong
internal financial controls, and adhering to best practices for
compliance and corporate governance."
According to SCMP, the SEC said the settlement payment may be
offset by payments Luckin makes to security holders as part of
ongoing provisional liquidation proceedings in the Cayman Islands,
where it was incorporated. The transfer of funds to security
holders will be subject to approval by Chinese authorities, the SEC
said.
About Luckin Coffee
Based in China, Luckin Coffee Inc., provided non-alcoholic
beverages. The Company offered various types of coffee.
In July 2020, Luckin Coffee has called in liquidators to oversee a
corporate restructuring and negotiate with creditors to salvage its
business, less than four months after shocking the market with a
US$300 million accounting fraud, South China Morning Post said.
The start-up company named Alexander Lawson of Alvarez & Marsal
Cayman Islands and Tiffany Wong Wing Sze of Alvarez & Marsal Asia
to act as "light-touch" joint provisional liquidators (JPLs) under
a Cayman Islands court order, it said in a regulatory filing in New
York. The move was in response to a winding-up petition by an
undisclosed creditor, it added.
The appointments will create a stable platform to allow the company
and its advisers to negotiate and restructure its financial
obligations, the Xiamen, Fujian-based coffee chain said in the
filing. It hired Houlihan Lokey as financial advisers to implement
a workout with creditors, SCMP disclosed.
SKYFAME REALTY: Fitch Assigns B- Rating on New USD Unsec. Notes
---------------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Skyfame Realty
(Holdings) Limited's (B-/Stable) proposed US-dollar senior
unsecured notes a 'B-' rating with a Recovery Rating of 'RR4'. The
proposed notes are rated at the same level as Skyfame's senior
unsecured rating because they will constitute its direct and senior
unsecured obligations. The company plans to use the net proceeds
from the proposed issue to refinance existing debt.
Skyfame's ratings reflect Fitch's expectation that leverage will
remain high in the next few years, and that the company's scale
will remain smaller than peers. Nonetheless, the company's ratings
are supported by the adequate liquidity and manageable refinancing
risk.
KEY RATING DRIVERS
High Leverage: Skyfame's leverage - measured by net debt/adjusted
inventory - rose to 55% by end-June 2020, from 54% at end-2019 and
45% at end-2018. We believe leverage could remain high in the next
few years as Skyfame pursues contracted sales growth, but should
remain below our negative trigger of 65%. Skyfame has a landbank
that is sufficient to support around three years of development and
we expect the company to maintain a stable landbank duration.
Scale Remains Small: The company recorded stable total contracted
sales of CNY5.2 billion in 1H20 (1H19: CNY5.3 billion). We expect
Skyfame's total contracted sales to remain stable at around CNY12
billion, but we forecast attributable contracted sales to rise to
CNY9.9 billion in 2020 due to higher attributable interest.
Nonetheless, this remains one of the lowest contracted sales among
'B-' rated peers, which typically have sales of CNY10 billion-20
billion.
Limited diversification: Skyfame had 19 projects in 12 cities
across several regions at end-2019, including the Greater Bay Area,
Guangxi, Yunnan, Chongqing and Jiangsu. Further contracted sales
growth would bring Skyfame's scale more in line with 'B-' rated
peers, while reducing geographical and project concentration risk
would also improve the business profile.
Healthy Margin: Skyfame's gross profit margin remained largely
stable at 30% in 1H20 (29% in 2019). We believe the company's
current level of margin is sustainable, as it can acquire low-cost
land through various channels (such as redevelopments, preferential
auctions for youth-entrepreneurship projects and M&A). In addition,
it targets at least a 25% EBITDA margin when investing in new
projects, even though its small number of projects could lead to
some fluctuations.
DERIVATION SUMMARY
Skyfame's ratings are constrained mainly by its small scale and
high leverage.
Skyfame's leverage of around 55% is comparable with that of 'B-'
rated peers but higher than that of 'B' rated peers. Its
attributable contracted sales of CNY8 billion is one of the lowest
among 'B-' rated peers - Xinyuan Real Estate Co., Ltd. (B-/Stable)
has attributable contracted sales of CNY14 billion, Xinhu Zhongbao
Co., Ltd. (B-/Stable) CNY16 billion and Guorui Properties Limited
(B-/Negative) CNY11 billion.
However, Skyfame has adequate liquidity and manageable refinancing
risk, as it has an available cash to short-term debt ratio of 1.0x
and sufficient time to address maturing capital market debt.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer:
- Attributable contracted sales of CNY9.9 billion in 2020 and
CNY12.4 billion in 2021 (2019: CNY8.3 billion);
- EBITDA margin (excluding capitalised interest) of 27% in 2020
and 2021 (2019: 25%);
- Cash collection rate of 75% for current year sales in 2020 and
2021 (2019: 74%);
- Land purchase cost at 54% of sales proceeds in 2020 and 33% in
2021, to maintain a landbank life of around three years;
- Construction costs at 44% of sales proceeds in 2020 and 36% in
2021.
Key Recovery Rating Assumptions
- The recovery analysis assumes that Skyfame would be liquidated
in bankruptcy.
- We have assumed a 10% administrative claim.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of
balance-sheet assets that can be realised in a sale or liquidation
conducted in a bankruptcy or insolvency proceeding and distributed
to creditors.
- 100% advance rate applied to cash and restricted cash;
- 75% advance rate applied to net inventory given an EBITDA
margin of around 25-30%;
- 70% advance rate applied to trade receivables;
- 60% advance rate applied to property, plant and equipment;
- 50% advance rate applied to financial investment;
- 30% advance rate applied to investment properties, given a 2%
rental yield on the book value of completed investment properties.
Trade payables and secured debt are considered superior to offshore
senior unsecured debts in the waterfall.
The allocation of value in the liability waterfall results in
recovery corresponding to 'RR1' recovery for all secured debts and
'RR3' recovery for offshore unsecured debt. However, the Recovery
Rating for senior unsecured debts is capped at 'RR4' because under
Fitch's Country-Specific Treatment of Recovery Ratings Criteria,
China falls into Group D of creditor friendliness, and instrument
ratings of issuers with assets in this group are subject to a soft
cap at the issuer's Issuer Default Rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Fitch expects no positive rating action in the next 24 months,
unless Skyfame's business profile improves significantly.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Decrease in attributable contracted sales;
- Leverage, measured by net debt/adjusted inventory, sustained at
above 65%;
- EBITDA margin, excluding capitalised interest, sustained at
below 20%;
- Deterioration of the liquidity position.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Skyfame had an available cash/short-term debt
ratio of 1.0x (2019: 0.8x) at end-June 2020. The CNY1.7 billion of
short-term debt consisted mainly of secured bank and other
borrowings, which Fitch expects to be rolled over or repaid with
sales proceeds. Material capital market maturity will come in July
2021 when a USD274 million bond becomes puttable and a USD87.5
million 364-day bond matures. The company has obtained sufficient
US dollar bond quotas and Fitch expects it to refinance such
maturities in the next few months.
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.
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H O N G K O N G
=================
TIANJI HOLDING: Moody's Completes Review, Retains B2 CFR
--------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Tianji Holding Limited and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review in which Moody's reassessed the
appropriateness of the ratings in the context of the relevant
principal methodology, recent developments, and a comparison of the
financial and operating profile to similarly rated peers. The
review did not involve a rating committee. Since January 1, 2019,
Moody's practice has been to issue a press release following each
periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
Tianji Holding Limited's B2 corporate family rating reflects the
company's standalone credit profile and a one-notch rating uplift,
based on our expectation that its parent, Hengda Real Estate Group
Company Limited (Hengda, B1), will provide financial support to
Tianji in times of stress.
The one-notch uplift reflects Hengda's full ownership of Tianji;
Tianji's status as the primary offshore platform to do investment
in property projects and raise offshore funds; and Hengda's track
record of providing financial support to Tianji.
Tianji's standalone credit profile is constrained by its weak
liquidity and expected volatility in its sales performance. Its
standalone credit profile also factors in the operational benefits
arising from the company's background as a subsidiary of Hengda,
such as cost efficiencies and a strong brand name.
The principal methodology used for this review was Homebuilding And
Property Development Industry published in January 2018.
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I N D I A
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A.G. MOTOR: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------
CRISIL said the ratings on bank facilities of A.G. Motor (AGM)
continue to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.75 CRISIL D (ISSUER NOT
COOPERATING)
Standby Line 0.75 CRISIL D (ISSUER NOT
of Credit COOPERATING)
Term Loan 2.70 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AGM for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of AGM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on AGM is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of AGM
continues to be 'CRISIL D Issuer Not Cooperating'.
AGM was established in 2009 as a proprietorship firm by Mr. Mohan
Singh Guleria. The firm is an authorised dealer in all two wheelers
of Honda for Mandi. It has one 3S (sales-service-spares) showroom
in the district.
AARCOT CERAMIC: ICRA Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
ICRA said the ratings for the INR8.05 crore bank facilities of
Aarcot Ceramic Pvt. Ltd. continue to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D/[ICRA]D;
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 4.55 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating continues to remain under
the 'Issuer Not Cooperating'
category
Fund Based 2.50 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain under
the 'Issuer Not Cooperating'
category
Bank Guarantee 1.00 [ICRA]D ISSUER NOT COOPERATING;
Rating continues to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately
reflect the credit risk profile of the entity. The rating action
has been taken in accordance with ICRA's policy in respect of
non-cooperation by a rated entity available at www.icra.in.
Incorporated in November 2013, Aarcot Ceramic Pvt. Ltd. (ACPL/ the
company) is promoted by Mr. Lakhaman Zalariya, Mr. Ramesh Jain and
Mr. Nirmal Gami. It manufactures digital wall tiles in sizes 10"X
15", 10"X 12", 12"X 12" and 12"X 18". Its facility, located at
Morbi in Gujarat, has an installed capacity of producing ~5,500
boxes per day (~18,500 MTPA).
AEROCON BUILDWELL: CRISIL Keeps B- Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Aerocon Buildwell
Private Limited (ABPL) continue to be 'CRISIL B-/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .5 CRISIL A4 (ISSUER NOT
COOPERATING)
Cash Credit 4.0 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
Letter of Credit 0.5 CRISIL A4 (ISSUER NOT
COOPERATING)
Proposed Long Term 6.0 CRISIL B-/Stable (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 8.5 CRISIL B-/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with ABPL for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ABPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on ABPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of ABPL
continues to be 'CRISIL B-/Stable/CRISIL A4 Issuer not
cooperating'.
Set up in April 2012 by Mr. Girish Khemkar, Mr. Anand Goel and Mr.
Anish Khemkar, ABPL manufactures AAC blocks. The facility at
Jalalkhedi, Madhya Pradesh, has a manufacturing capacity of 1.5
lakh cubic meter per annum, and began operations in fiscal 2015.
AMARPARKASH RICE: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Amarparkash Rice
Exports Private Limited (AREPL) continue to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.5 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 9.5 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AREPL for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of AREPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on AREPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of AREPL
continues to be 'CRISIL D Issuer Not Cooperating'.
Punjab-based AREPL, incorporated in 2013, is promoted by Mr.
Rupinder Pal and Mr. Narinder Kumar.
AMPLE TECHNOLOGIES: ICRA Lowers Rating on INR27cr LT Loan to B+
---------------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Ample
Technologies Private Limited (ATPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 27.00 [ICRA]B+ (Stable) ISSUER NOT
Fund Based/CC COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Long Term- 7.60 [ICRA]B+ (Stable) ISSUER NOT
Fund Based TL COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Short Term- 3.00 [ICRA]A4 ISSUER NOT
Fund Based COOPERATING; Rating downgraded
from [ICRA]A4+ and continues
to remain under 'Issuer Not
Cooperating' category
Short Term- 2.00 [ICRA]A4 ISSUER NOT
Non Fund Based COOPERATING; Rating downgraded
from [ICRA]A4+ and continues
to remain under 'Issuer Not
Cooperating' category
Long Term/ 10.40 [ICRA]B+ (Stable)/[ICRA]A4
Short Term- ISSUER NOT COOPERATING;
Unallocated Rating downgraded from
[ICRA]BB+ (Stable)/[ICRA]A4+
and continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating is downgraded because of lack of adequate information
regarding ATPL and hence the uncertainty around its credit risk.
ICRA assesses whether the information available about the entity is
commensurate with its rating and reviews the same as per its
"Policy in respect of non-cooperation by the rated entity". The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Ample Technologies Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in the year 2000, ATPL is a premium Apple reseller and
a solution provider for the clients in the digital imaging, IT,
Print and video industry. Over the years, the company has partnered
with some of the renowned brands such as Apple, EMC, Adobe, Xerox,
EFI, HP & Quark. For FY17, Apple products constituted ~70% of the
sales turnover. Headquartered at Bangalore the operations are
mainly concentrated in the Karnataka region with branches in
Hyderabad, Chennai and Kerala, along with a service location in
Mangalore. ATPL derives more than 80% of sales from retail and
balance from corporate; retail sales are through 59 stores in
Bangalore, Hyderabad, Gurgaon, Mumbai, Pune, Cochin, Chennai,
Delhi, Kerala, Goa, Gwalior etc. while corporate sales is through
its long term relationships with major IT companies such as Wipro,
Infosys, and Cisco among others.
BAFNA GINNING: ICRA Keeps B+ Debt Rating in Not Cooperating
-----------------------------------------------------------
ICRA said the ratings for the INR23.0-crore bank facilities of
Bafna Ginning and Pressing Private Limited continue to be in the
'Issuer Not Cooperating' category. The ratings are denoted as
"[ICRA]B+(Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term 20.00 [ICRA]B+(Stable); ISSUER NOT
Fund Based COOPERATING; Rating continues
Cash Credit to remain under the 'Issuer
Not Cooperating' category
Short-Term 3.00 [ICRA]A4; ISSUER NOT
Non Fund- COOPERATING; Rating continues
Based to remain under the 'Issuer
Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity.
Incorporated in 1999, Bafna Ginning and Pressing Private Limited
(BGPPL) is a part of 'Mahima Group' which is promoted by Doshi
family. BGPPL has a ginning unit in Aurangabad (Maharashtra). In
addition to in-house ginning, the company also trades in cotton
lint and cotton yarn.
BALAJI ENTERPRISE: ICRA Reaffirms B+ Rating on INR6.50cr Loan
-------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Balaji
Enterprise (BE), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 6.50 [ICRA]B+ (Stable) reaffirmed
Rationale
The rating continues to factor in BE's small-scale operations and
its below-average financial risk profile, marked by thin profit
margins, leveraged capital structure and below-average debt
coverage indicators. The rating further remains constrained by the
high working capital intensity emanating from the elongated
receivables. The rating also takes note of the highly fragmented
coal trading industry, which results in intense competition.
The rating, however, continues to positively factor in the adequate
experience of the promoters in the coal trading industry, the
benefits derived from the established relationship of the promoters
with customers and the proximity of BE to raw material sources and
customers by virtue of its presence in Wakaner, Morbi (Gujarat).
The stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that BE will continue to benefit from the extensive experience of
its promoters and the location advantage by virtue of its presence
in Wakaner, Morbi (Gujarat).
Key rating drivers and their description
Credit strengths
* Experience of promoters in coal trading industry: The key
promoter, Mr. Kalyanji Panchotiya, has an experience of more than
five years in the coal trading industry vide his association with
an associate concern in the similar industry. The established
relationship of the promoter with customers ensures revenue
stability for the firm.
* Location-specific advantage: The firm benefits in terms of lower
transportation costs and easy access to customers (tile
manufacturers) and suppliers.
Credit challenges
* Small-scale operation; thin profitability: The firm's revenue
declined by ~27% in FY2020 to INR38.69 crore from INR53.21 crore in
FY2019 owing to a decline in volume off-take of ceramic players
amidst ban on coal-based gasifier. Moreover, moderation in coal
price pressured realisations, which also impacted revenue. Overall,
the scale of operations remained small. The profitability remained
thin, as evident from the operating margin of 2.89% in FY2020, due
to low value-adding trading business. The firm reported revenue of
INR16.39 crore in H1FY2021 and is estimated to achieve annual
revenue of ~INR35 crore by the end of fiscal FY2021.
* Below-average financial risk profile: Presence of debt in capital
structure increased to INR7.34 crore in FY2020 from INR6.90 crore
in FY2019 with the higher utilisation of working capital
facilities. High debt levels and small net-worth base continued to
result in leveraged capital structure, as evident from the gearing
of 1.54 times in FY2020. The debt coverage indicators remained
below average, as evident from Total Debt/OPBDITA of 6.56 times and
NCA/TD of 4% as on March 31, 2020. The firm's financial risk
profile is expected to remain below average in the near to medium
term, with estimated gearing of ~1.3-1.4 times and Total
debt/OPBIDTA of ~6-7 times in FY2021.
* Intense competition in coal trading business: The firm trades in
imported Indonesian coal. The coal trading industry is highly
fragmented, with presence of many organised and unorganised players
due to low-entry barriers. Limited value addition in trading
activities restricts pricing flexibility and hence exerts pressure
on the firm's profit margins.
* Vulnerability of profitability to fluctuations in coal prices:
The firm's sales realisation is primarily affected by the
prevailing price of coal in the international market. Although BE
maintains an inventory of ~30 days, a significant number of
procurement is order backed, which mitigates risk associated with
adverse fluctuations in coal price to some extent.
Liquidity position: Stretched
The firm's liquidity position has remained stretched as evident
from the weak cash flow from operations over the last three fiscal
and the high average working capital utilisation of ~68% over the
past 12 months (October 19 to September 20). The stretch in
liquidity position is attributed to thin profit margins and high
working capital intensity due to elongated receivables. The firm
availed COVID line of INR0.85 crore to support intermittent
liquidity needs.
Rating sensitivities
Positive triggers
- Significant scale up of operations and improvement in profit
margins
- Capital infusion that strengthens capital structure and debt
coverage indicators on a sustained basis
- Efficient working capital management, which improves the firm's
liquidity position
Negative triggers
- Substantial decline in scale of operations than weakens
profitability
- Significant delay in sales receipt that impacts the working
capital management, or any major debt-funded capex or partner's
capital withdrawal that moderates capital structure and key credit
metrics.
Established in September 2016 as a partnership firm, Balaji
Enterprise is in the coal trading and grading business. BE's
warehouse is situated at Wankaner (Gujarat). It procures coal of
0-50-millimetre (mm) dimension, which is then graded into three
different dimensions—0-6 mm, 6-20 mm and 20-50 mm—before being
supplied to customers based on their requirements.
BE reported a profit after tax (PAT) of INR0.27 crore on an
operating income (OI) of INR38.69 crore (provisional figure) in
FY2020, compared to a profit of INR0.38 crore on an OI of INR53.21
crore in FY2019.
CELIO FUTURE: ICRA Withdraws B+ Rating on INR10cr Loan
------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Celio
Future Fashion Private Limited (CFFPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 10.00 [ICRA]B+ (Stable); Rating
limits Withdrawn
Non-Fund 10.00 [ICRA]A4; Rating Withdrawn
based limits
Rationale
The ratings assigned to CFFPL has been withdrawn at the request of
the company and based on the no objection certificate received from
the banker, and in accordance with ICRA's policy on withdrawal and
suspension. ICRA is withdrawing the rating and it does not have
adequate information to suggest that the credit risk has changed
since the time the rating was last reviewed.
The last rating rationale for CFFPL is available at the following
link.
Key rating drivers
The key rating drivers have not been captured as the rated
instrument(s) are being withdrawn.
Liquidity position
Liquidity position has not been captured as the rated instruments
are being withdrawn.
Rating sensitivities
Rating sensitivities have not been captured as the rated
instruments are being withdrawn.
Established in 2008, Celio Future Fashion Private Limited is a
joint venture between Celio Intl SA and Future Group. The former
holds 97.9% share in the company. The company retails its products
under the 'Celio' brand, which includes readyto-wear apparel and
accessories for men. The menswear brand offers wardrobe essentials
like polos, t-shirts, shirts, sweaters, denims, trousers and
accessories, etc.
As per the provisional statement for FY2020, the company reported a
net loss of INR11.41 crore on an operating income of INR166.78
crore, against a net loss of INR18.28 crore on an operating income
of INR143.06 crore as per the audited statement for FY2019.
CHIRAYU CHARITABLE: ICRA Keeps B+ Debt Ratings in Not Cooperating
-----------------------------------------------------------------
ICRA said the ratings for the INR105.00 crore bank facilities of
Chirayu Charitable Foundation continue to remain in the 'Issuer Not
Cooperating' category. The ratings are denoted as "[ICRA]B+
(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 95.50 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Non-Fund based 9.50 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
CCF was established in 2001 and is a registered society, operating
a medical college, a nursing college and a hospital at Bhopal in
Madhya Pradesh, under the names of 'Chirayu Medical College &
Hospital' and 'Chirayu College of Nursing'. The trust is managed by
Dr. Ajay Goenka, who is the managing trustee and dean of the
college. The society started with a 200- bed multi-speciality
hospital, which increased to 990 beds in FY2017. It started out as
the 'Chirayu Medical College & Hospital (CMCH)' in Bhopal in 2011,
with Oncology and Cardiac as the only two super speciality
departments; and subsequently diversified into various other
specialities. In August 2016, the trust started its new cancer unit
with 60 dedicated beds at CMCH. The trust currently has 196
in-house consultants in different specialties such as oncology,
cardiac, radiology and pathology. The trust also operates an
institute for diploma in general nursing and midwifery courses. CCF
started its school of nursing in 2013. The colleges have close to
3,418 students enrolled in all its different courses.
CHOUDHARI CONSTRUCTION: CRISIL Keeps D Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Choudhari
Construction Co. (CCC) continue to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.8 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 5.0 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 1.2 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with CCC for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of CCC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on CCC is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of CCC
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
CCC was set up as a partnership firm in 1983 by Mr. Hamiram
Choudhari and his wife, Mrs. Ratanben Choudhari. It undertakes
various infrastructure-related construction activities, comprising
construction and repair of roads, buildings, and sewerage systems
in Mumbai and Pune. The firm participates in tenders floated by the
Brihanmumbai Municipal Corporation, Mumbai Metropolitan Regional
Development Authority, and Public Works Department.
CITY TILES: ICRA Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------
ICRA said the ratings for the INR84.00 crore bank facilities of
City Tiles Limited continue to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D/[ICRA]D;
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 22.52 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating continues to remain under
the 'Issuer Not Cooperating'
category
Fund Based 35.00 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain under
the 'Issuer Not Cooperating'
category
Unallocated 12.48 [ICRA]D ISSUER NOT COOPERATING;
Limits Rating continues to remain under
the 'Issuer Not Cooperating'
category
Non Fund 14.00 [ICRA]D ISSUER NOT COOPERATING;
Based Limit Rating continues to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
City Tiles Limited was incorporated in 2002 as a manufacturer of
ceramic tiles, by Mr. R. D. Patel. Since then the company has
extended production capacities as well as the product range. CTL is
currently engaged in the business of manufacturing and outsourcing
of vitrified tiles. The manufacturing facility of the company is
located near Himmatnagar in Gujarat having an installed capacity of
about 14,000 square meters per day of vitrified tiles. CTL markets
its tiles under a single brand name "City Tiles".
CJ S HARITHA: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of with CJ S Haritha
Homes (CJ) continue to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 13.22 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
Term Loan 17.08 CRISIL D (ISSUER NOT
COOPERATING)
Working Capital 4.70 CRISIL D (ISSUER NOT
Term Loan COOPERATING)
CRISIL has been consistently following up with CJ for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of CJ, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on CJ is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of CJ
continues to be 'CRISIL D Issuer Not Cooperating'.
Established in 2010, CJS is a Kottayam-based residential real
estate developer, promoted by Mr. D Kumar and his wife Mrs Sreeja
Kumar. Prior to setting up of CJS, the promoters were engaged in
civil construction, primarily commercial buildings and shopping
malls, under their group firm, CJS Constructions.
CRAFTS INDIA: CRISIL Keeps B Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of Crafts India
Industries (CII) continue to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.25 CRISIL B/Stable (ISSUER NOT
COOPERATING)
Long Term Loan 4.21 CRISIL B/Stable (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with CII for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of CII, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on CII is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of CII
continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
CII is a partnership firm set up in 2016 by Mr. Nitin Jain and his
brother, Mr. Anuj Jain. The firm is setting up a corrugated box
facility at SIDCO Complex, Bari Brahmana, Jammu. Commercial
operations are expected to start from April 2017.
DARP CONSTRUCTION: CRISIL Keeps D on INR15cr Debt in NonCooperating
-------------------------------------------------------------------
CRISIL said the rating on bank facilities of DARP Construction
(J.V.) (DARP) continues to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 15 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with DARP for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DARP, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on DARP is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of DARP
continues to be 'CRISIL D Issuer Not Cooperating'.
DARP, set up in August 2009, is a joint venture of Mr. Anant Kumar
Singh, his affiliates Ms. Ranjana Kumari and Ms. Pratima Devi, his
sister-in-law Ms. Dehuti Sinha, M/s Shivanar Constructions Pvt Ltd
(SCPL; promoted by Ms. Ranjana Kumari) and M/s Rajnandani Projects
Pvt Ltd (RPPL; promoted by Mr. Anant Kumar's wife). DARP was formed
to construct a commercial complex, THE MALL, at Frazer Road in
Patna.
DHANLAXMI TMT: CRISIL Keeps D on INR25cr Loans in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Dhanlaxmi TMT Bars
Private Limited (Dhanlaxmi: part of the Dhanlaxmi group) continue
to be 'CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 24 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with Dhanlaxmi for
obtaining information through letters and emails dated May 23, 2020
and November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Dhanlaxmi, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes that rating action on Dhanlaxmi is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the ratings on bank facilities of
Dhanlaxmi continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of Dhanlaxmi and Nilesh Steel and Alloys
Pvt Ltd (NSAPL). This is because, the two entities, together
referred to as the Dhanlaxmi group, are part of a value chain and
under a common management, and have significant sale/purchase
transactions and financial linkages with each other.
Dhanlaxmi, incorporated in 2001 by Mr. Sanjay Mantri, manufactures
thermo-mechanically treated (TMT) bars. In 2002, Mr. Sanjay Mantri
and Mr. Nilesh Chechani incorporated NSAPL, which manufactures mild
steel ingots/billets for consumption by Dhanlaxmi. The group's
manufacturing facility is located at Jalna (Maharashtra).
DODHIA TECHNO: CRISIL Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Dodhia Techno
Engineering Private Limited (DTEPL) continue to be 'CRISIL D/CRISIL
D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee .1 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 6.0 CRISIL D (ISSUER NOT
COOPERATING)
Letter of Credit 0.4 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 1.0 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with DTEPL for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DTEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on DTEPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of DTEPL
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
DTEPL, established in 1996 by the Mumbai-based Dodhia family, is a
100-per-cent export-oriented unit. It undertakes turnkey projects
in Africa for various industries including plastics, food and
beverages, chemicals, packaging, and sugar. Mr. Bipin Dodhia
oversees the company's operations.
DUTTA AGRO: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------
CRISIL said the ratings on bank facilities of Dutta Agro
Plantations Private Limited (DAPPL) continue to be 'CRISIL D Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.65 CRISIL D (ISSUER NOT
COOPERATING)
Long Term Loan 5.50 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 0.35 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with DAPPL for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of DAPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on DAPPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of DAPPL
continues to be 'CRISIL D Issuer Not Cooperating'.
Incorporated in October 1988, DAPPL is engaged in tea manufacturing
business. The company, till October 2015 was engaged in the trading
of tea leaves through its owned three estates covering in
Jalpaiguri, West Bengal.
EDEN CRITICAL: CRISIL Keeps D on INR19.5cr Debt in Not Cooperating
------------------------------------------------------------------
CRISIL said the rating on bank facilities of Eden Critical Care
Hospital Private Limited (ECCHPL) continues to be 'CRISIL D Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 19.5 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with ECCHPL for obtaining
information through letters and emails dated May 23, 2020 and
November 14, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of ECCHPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on ECCHPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of ECCHPL
continues to be 'CRISIL D Issuer Not Cooperating'.
Set up in 2011 by Dr. Sanjay Bansal and his family members, ECCHPL
operates a 100-bed multi-specialty hospital in Chandigarh. The
hospital began operations in July 2014.
ESQUIRE MACHINES: ICRA Reaffirms B+ Rating on INR7.04cr Loan
------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Esquire
Machines Private Limited's (EMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based
Limits 7.04 [ICRA]B+(Stable); reaffirmed
Non-fund-
based Limits 1.00 [ICRA]A4; reaffirmed
Unallocated
Limits 1.96 [ICRA]B+(Stable)/A4;
Reaffirmed
Rationale
The rating reaffirmation remains constrained by EMPL's weak
financial risk profile, characterised by small-scale operations,
leveraged capital structure and weak debt coverage metrics. The
overall liquidity position is poor because of elongated working
capital cycle and impending debt repayments. The ratings further
take into account the intense competition from organised and
unorganised players in the domestic market, amid the exposure of
the company's business to the cyclicality associated with the real
estate and infrastructure sector. The ratings also reflect the
vulnerability of the entity's profitability to adverse fluctuations
in raw material prices and forex movements, coupled with its
limited ability to pass on the same to its customers.
The rating, however, continues to favorably factor in the extensive
experience of the promoters in the construction equipment industry,
besides its reputed and geographically diversified client base.
The Stable outlook on the [ICRA]B rating reflects ICRA's opinion
that EMPL will continue to maintain its position in the
construction equipment industry.
Key rating drivers
Credit strengths
* Extensive experience of promoters in construction equipment
manufacturing business: EMPL was established in 1975 as a
proprietorship concern and has an established track record of
almost four decades in the construction equipment industry.
Further, its promoters were involved in the construction equipment
industry before establishing the company.
* Established relationship with reputed clientele; diversified
geographical presence: EMPL's domestic customer profile includes
some of the leading players from the construction and
infrastructure industry with a history of repeat orders from them.
Moreover, the company caters to the export market, mainly to
trading houses in the Middle East, Africa and Sri Lanka.
Credit challenges
* Weak financial risk profile: The company's scale of operations is
relatively small, with an operating income of INR18.53 crore in
FY2020 (Prov). The operating margin increased to 13.24% in FY2020
from 11.72% in FY2019 with increase in efficiency, though, the net
margin remained low at 2.16% in FY2020 (Prov.) because of high
interest expense. The capital structure remained leveraged, with a
gearing at 2.28 times as on March 31, 2020. The debt coverage
indicators also remained weak, owing to low profitability and high
debt levels, with the Total Debt/OPBDITA at 6.96 times, TOL/TNW of
3.03 times and interest coverage at 1.57 times as on FY2020-end
(Prov.). The working capital intensity remained high, with NWC/OI
at 81% as on FY2020-end, due to high inventory and receivables
days. The creditors were also stretched to support the liquidity
position.
* Profitability exposed to volatility in raw material prices and
adverse foreign exchange fluctuations: EMPL's major raw materials
predominantly include metals and steel components and cast-iron
castings and constitute almost ~60% of the OI. Thus, its ability to
procure raw materials at competitive costs and pass on any adverse
fluctuations in the same to its customers continues to be a key
determinant of profitability. Further, in FY2020, the
company derived ~53% of its revenue from the export market,
exposing its profitability to fluctuation in foreign
exchange rates.
* Intense competition; exposure to cyclicality associated with real
estate and infrastructure sector: The construction equipment
industry is characterised by intense competition both from
unorganised players and multinational manufacturers. Moreover, the
demand for construction equipment and machinery depends primarily
on the fortunes of the real estate, construction and infrastructure
development activity, which is cyclical in nature.
Liquidity position: Poor
The overall liquidity position of the company is poor because of
high debt repayments, which are tightly matched with the accruals,
and the high working capital requirements. The credit risk is
further compounded by the absence of cushion in the cash credit
limits. Hence, timely support from the promoters through equity
infusion/unsecured loans remains crucial in case of any cash flow
mismatch.
Rating sensitivities
Positive triggers - ICRA could upgrade EMPL's rating if the company
demonstrates substantial growth in revenue and profitability, which
along with a comfortable capital structure and efficient working
capital management improves the liquidity position and the overall
financial risk profile.
Negative triggers - Negative pressure on EMPL's rating could arise
if any further decline in revenues and profitability along with any
major debt-funded capital expenditure, or further stretch in
working capital cycle, weakens the company's liquidity profile and
delays the debt servicing.
EMPL was started in 1975 as a proprietorship concern promoted by
Mr. Mahesh Gohil and has been a corporate entity since 1996. The
company is based out of Por (near Vadodara) and manufactures a wide
range of equipment and machines for the construction industry, with
primary focus on concrete mixture machines and tower hoist. It has
an indigenous R&D and designing department, a team of experienced
employees and contract labours. The company entered into a joint
venture with Ideation Private Limited and Stros Sedlcanske
Strojirny to form Esquire Ideation Private Limited and Stros
Esquire Elevators and Hoists Private Limited, respectively. Both
Stros Esquire Elevators and Hoists Private Limited develop premium
segment hoist, with higher speed and load pulling capacities.
In FY2019, the company reported a net profit of INR0.67 crore on an
operating income (OI) of INR20.68 crore compared to a PAT of
INR0.64 crore on an OI of INR19.27 crore in FY2018. The company
reported an OI of INR18.53 crore in FY2020 with PBT of INR0.40
crore (provisional financial statement).
GOPINATHJI AGENCIES: ICRA Keeps B+ Ratings in Not Cooperating
-------------------------------------------------------------
ICRA said the ratings for the INR34.00 crore bank facilities of
Shree Gopinathji Agencies continue to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as [ICRA]B+(Stable);
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 15.00 [ICRA]B+(Stable); ISSUER NOT
EDFS/Cash COOPERATING; Rating continues
Credit to remain under 'Issuer Not
Cooperating' category
Fund based– 19.00 [ICRA]B+(Stable); ISSUER NOT
Term Loans/ COOPERATING; Rating continues
Asset backed to remain under 'Issuer Not
Loans Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately
reflect the credit risk profile of the entity. The rating action
has been taken in accordance with ICRA's policy in respect of
non-cooperation by a rated entity available at www.icra.in.
Incorporated in 1988, Shree Gopinathji Agencies commenced
operations as an Exide battery dealer, subsequently it was
appointed as an authorized service outlet ancillary dealer of
General Motors India Private Limited (GMIPL). Later, in the year
2000 it was awarded the authorized dealership of automobiles for
GMIPL. With the closure of GMIPL operations in 2 India, the firm
commenced operations as an authorised dealer of Renault India
Private Limited (RIPL) in FY2017. However, from H2FY2018 the
company discontinued the RIPL operations with its revenues
currently being derived from lease rentals and sales of after sale
services. SGA was promoted and is currently headed by Mr. Mayur C
Gandhi, who has an extensive experience in the auto dealership
business.
GUPTAS GOLD: CRISIL Reaffirms B Ratings on INR7cr Loans
-------------------------------------------------------
CRISIL has removed its rating on the bank facilities of Guptas Gold
House (GGH) from 'Rating Watch with Negative Implications' and
reaffirmed the rating at 'CRISIL B' and assigning a 'Stable'
outlook to the long-term rating.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B/Stable (Removed from
'Rating Watch with Negative
Implications'; Rating
Reaffirmed)
Long Term Loan 4 CRISIL B/Stable (Removed from
'Rating Watch with Negative
Implications'; Rating
Reaffirmed)
CRISIL had placed its rating on the long term bank facilities of
GGH on watch on November 25, 2020 following the imposition of a 30
day moratorium on deposits and facilities with Lakshmi Vilas Bank
(LVB). GGH is dependent on LVB, for its entire working capital
limits. Subsequently the moratorium was lifted on November 27, 2020
and the firm has been accessing its deposits and facilities since
then. There has been no major impact on the operations of the firm
during the moratorium period.
CRISIL's rating continues to reflect modest scale of operations
amidst intense competition, working capital-intensive nature of
operations and below-average financial risk profile. These
weaknesses are partially offset by extensive experience of the
partners, and their funding support.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations amidst intense competition: Turnover
of around INR9.51 crore reported in fiscal 2019, reflects GGH's
small scale of operations, relative to size of the jewelry
industry, comprising several retail players.
* Working capital-intensive operations: Gross current assets stood
at 387 days as on March 31, 2019, driven by inventory and
receivables of 435 and 4 days, respectively.
* Below average financial risk profile: Financial risk profile is
average, with networth and total outside liabilities to tangible
networth ratio, at INR3.88 crore and 1.81 times, respectively, as
on March 31, 2019. Debt protection metrics were weak, with net cash
accrual to adjusted debt and interest coverage ratios of 0.06 time
and 1.69 times, respectively, for fiscal 2019.
Strength:
* Extensive experience of the partners, and their funding support:
The two-decade-long experience of the partners, in the gold jewelry
industry, and their timely funding support, will continue to
support the business risk profile.
Liquidity Poor
Liquidity is marked by high bank limit utilization and sufficient
cash accruals to meet repayments.
Outlook: Stable
CRISIL believes GGH will continue to benefit from the extensive
experience of its partners.
Rating Sensitivity Factors
Upward Factors
* Revenue above Rs. 20 Cr while profitability is sustained above
12 %
* Improvement in working capital cycle
Downward Factors
* Decline in interest coverage to below 1.2 times
* Large debt funded capital expenditure that weakens the financial
risk profile.
Formed as a partnership firm of Mr. Raj Kumar and his family
members, GGH is engaged in retailing of gold jewelry, and has one
showroom in Ongole, Andhra Pradesh. Operations are managed by Mr.
Raj Kumar and his family.
HLL BIOTECH: ICRA Reaffirms D Rating on INR309cr Term Loans
-----------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of HLL
Biotech Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term,
Term Loans 309.00 [ICRA]D; reaffirmed
Short-term
(Non-fund based) (175.00) [ICRA]D; reaffirmed
Rationale
The rating reaffirmation factors in the continued delays in debt
servicing by HLL Biotech Limited. In October 2019, the company
delayed its interest obligations (interest during construction) for
the first time when the lenders stopped disbursing the pending loan
tranche citing substantial delays in project execution. While the
lenders had subsequently disbursed the remaining tranches, the
project has continued to witness delays and remains inoperable,
though major infrastructure development is complete. The company
failed to make the project operational as it was beset by delays in
technology tie-up and delays in validation of products, which
increased pre-operative expenses, necessitating additional funding.
In March 2020, the company submitted a revised project plan to the
Government of India (the GoI) for additional funding (including
funds to close existing loans) and requested for changes in product
mix and technology tieup; the approval has not yet been received.
At present, the company is exploring other options such as
management contract/public private partnership to bring in
additional funds and commence operations.
ICRA notes that the company is currently meeting its expenses and
debt servicing obligations from the loans extended by the parent,
HLL Lifecare Limited (HLL). However, additional support from the
parent is not certain and hence it will be crucial for HBL to get
funding from the Government as per the revised project plan or
through private partnership to be able to commence operations at
the earliest. The lenders have extended the COD again by two years
to FY2021 from FY2019. However, ICRA notes that even if the revised
project plan is accepted and the Government infuses adequate funds,
the project may need additional funding support during the
stabilisation phase. The condition might be exacerbated by further
delays in approvals/product validation process.
Though the project has assured offtake by the GoI for its Universal
immunization programme (UIP, (capped at the lower of either 75% of
HBL's installed capacity or 75% of the GoI's requirement under
UIP), it remains susceptible to pricing pressure, which might
impact margin. Additionally, changes in the captive status of HBL
under any revised project plan/private partnership may also expose
the company to offtake risk. ICRA also notes the GoI's strategic
stake sale process in the parent HLL, whereby it is looking at
divesting its entire stake in HLL and hiving off HBL as a separate
GoI entity. The process has witnessed delays and is a key
monitorable.
Key rating drivers and their description
Credit strengths
* Wholly-owned subsidiary of HLL Lifecare Limited: HBL is a
wholly-owned subsidiary of HLL, a 100% GoI-owned public sector
entity with experienced management. HBL has a considerable track
record of nearly five decades in the contraceptive and medical
consumables space. The project is being promoted by the GoI through
HLL. However, the GoI is in the process of divesting its stake in
HLL and hiving off HBL as a separate GoI entity before divestment.
The disinvestment of HLL and the demerger of HBL have witnessed
delays and the developments will be monitored.
* Assured offtake of 75% of production by the GoI for the UIP:
Assured offtake by the GoI for its UIP (capped at the lower of
either 75% of HBL's installed capacity or 75% of the GoI's
requirement under UIP) would mitigate the demand and marketability
risks during its initial years. The project has also been deemed to
be of national importance by the GoI.
Credit challenges
* Delays in repayment of interest payments and continued delays in
project execution: Due to continued delays in project execution,
the lenders had earlier stopped the disbursement of pending loan
tranche, leading to liquidity constraints and delays in interest
servicing. Subsequently, while the lenders had disbursed the
remaining tranches, the project had witnessed further delays in
tying-up the technology partner as per initial plans, delays in
product validation and subsequent increase in pre-operative
expenses, necessitating additional funding of the project.
Currently, the company is exploring other options like management
contract/private partnership etc, which may bring in additional
funds and allow the unit to commence operations. Currently, HBL
has been receiving moderate financial support from its parent –
HLL Lifecare Limited to support its pre-operative expenses and also
part-fund its interest payments. However, additional support from
the parent is not certain and hence it will be crucial for HBL to
get funding from the Government as per the revised project plan or
through private partnership to be able to commence operations at
the
earliest.
* Susceptibility of profitability to procurement rates of vaccine
formulations, once project commences operations: Under the UIP
procurement by the GoI, pricing would be discovered through a
transparent mechanism, whereby HBL would be reimbursed at the same
rate as quoted by the L1 bidder. Hence, once the project commences
operations, the margins will be susceptive to procurement rate of
vaccines, which may be on L1 basis.
Liquidity position - Poor
The project was delayed by pending approvals and cost overruns.
Additionally, the company will need to change its product mix and
procure additional funding to commence operations. At present,
several options are being considered including additional funding
support from the GoI or tie up with investors. Hence, the company's
liquidity position is expected to remain poor till the plans are
finalised and additional funding is tied up. The liquidity will
also remain vulnerable to project commencement timeline and during
the subsequent stabilisation period. Though the company has been
receiving moderate funding support from HLL, it has continued to
delay in its interest servicing. The principle repayments will
commence from FY2023.
Rating sensitivities
Positive triggers – Regularisation of debt servicing on a
sustained basis (at least three months) backed by funding support
from the GoI or a new investor; incremental funding tie-up from
lenders; completion of project at the earliest and stabilisation of
operations may lead to improvement in ratings.
HBL was incorporated in 2012 as a wholly owned subsidiary of HLL
(HLL Lifecare Limited) to manufacture and market vaccines primarily
for the GoI's Universal Immunisation Programme (UIP). HBL is
setting up an integrated vaccine complex in Chengalpattu district
of Tamil Nadu, with initial plans to manufacture UIP vaccines for
BCG (tuberculosis), measles, hepatitis-B apart from pentavalent
combination vaccines (DTP-HepB-Hib) and other new generation
vaccines such as Japanese encephalitis and anti-rabies.
The original project cost was estimated at INR594.0 crore, to be
funded through an equity of ~INR285 crore and the rest through a
bank debt of INR309 crore (53:47 funding ratio). The project
witnessed delays; and as against the initial expected COD of
December 2017, the COD was extended to December 2018 and then to
December 2019. However, on account of time and cost overrun
witnessed by the project due to delays in getting approvals,
technical tie ups with suitable partners and underestimation of
costs related to required trials/tests and validation of the
products; the project witnessed shortage of funds and could not be
completed.
While the management had submitted a revised DPR in January 2020 to
the Government's authorities, wherein the project cost has been
revised to INR879.02 crore considering the cost overruns, the
approval has not yet been received. At present, the company is
exploring other options such as management contract/public private
partnership to bring in additional funds and commence operations.
JAI MAA: ICRA Keeps D Debt Ratings in Not Cooperating Category
--------------------------------------------------------------
ICRA said the rating for the INR31.00 crore bank facilities of Jai
Maa Savitri Educational Society has continued to 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
LT-Fund 28.00 [ICRA]D ISSUER NOT COOPERATING;
Based/TL Rating continues to remain in
the 'Issuer Not Cooperating'
category
LT-Fund 3.00 [ICRA]D ISSUER NOT COOPERATING;
Based/CC Rating continues to remain in
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Established in 2010, Jai Maa Savitri Educatioanal Society is a
single asset society, which runs and operates a college by the name
of JMS group of Institutions. This institute offers courses in
Engineering, (including B. Tech courses in 5 disciplines as well as
diploma courses ), management (BBA, MBA, PGDM), computer
applications (BCA) and architecture (B. Arch and) All the courses
are approved by AICTE and the institute is affiliated to UPTU for
technical courses (B.Tech, MBA, B. Arch and Ch. Charan Singh
University (Meerut) for BBA and BCA courses and Board of technical
education (UP) for diploma courses. The campus is located on NH-24,
Ghaziabad (Uttar Pradesh) on a land parcel of 15 acres.
JHARKHAND INFRA: ICRA Reaffirms B Rating on INR443.20cr Loan
------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Jharkhand
Infrastructure Implementation Company Limited (JIICL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 443.20 [ICRA]B (Stable) reaffirmed;
term loan rating removed from 'issuer
not cooperating' category
Rationale
The rating re-affirmation of JIICL's bank facilities favorably
factors in the successful completion of the project, receipt of the
final completion certificate on May 16, 2019 and commencement of
the receipt of semi-annual annuities. The achievement of final
completion certificate and the commencement of project cash flows
reflect a change in the project's risk profile. Further, the
availability of tail period of three years (6 semi-annuities)
provides financial flexibility.
The rating, however, remains constrained on account of high counter
party credit risk with JIICL witnessing significant delays in
receipt of its annuities from Government of Jharkhand (GoJ). The
first and second semi-annuities were received with a delay of 63
days and 36 days respectively, whereas the third and fourth
semi-annuities, due in May 2020 and November 2020 respectively, are
yet to be received. The company availed moratorium initially for 3
months under the Covid-19 Regulatory Package of the RBI for its
debt servicing obligations to address the timing mismatch in
cashflows owing to delay in receipt of annuities. ICRA notes that
the external lenders have approved adjusting the debt repayments
made during the moratorium period towards the obligations falling
due during November 2020 to January 2021. The company would also be
availing moratorium for its sub-debt from promoter for the
obligations falling due in December 2020 by adjusting sub-debt
obligations against payments made during the moratorium period.
Given the delay in annuity payments from the authority, the lenders
have dipped into the DSRA to meet debt servicing obligations of the
current fiscal and have also approved the non-maintenance of MMR.
Timely receipt of annuities on a sustained basis remains critical
and would remain a key rating monitorable.
The rating also remains constrained on account of non-maintenance
of debt service reserve account (DSRA) and major maintenance
reserve (MMR) as per the sanctioned terms owing to prevailing
delays in receipt of the annuities. The rating also remains
sensitive to JIICL's ability to ensure satisfactory maintenance of
the road within the budgeted costs, in terms of regular as well as
periodic maintenance, both of which are critical in order to
minimize lane closures and consequently, annuity deductions. The
estimated cost for the first major maintenance cycle, falling due
in FY2024-25, stands at INR34.3 crore. Timely build-up of the MMR
would remain important from credit perspective. The profitability
and cash flows of the project remains exposed to interest rate risk
owing to the floating nature of interest rate. ICRA notes that
JIICL is expected to be divested as part of the IL&FS debt
resolution process. ICRA will closely monitor these developments
and will revisit the profile post change in the sponsor.
Key rating drivers
Credit strengths
* Operational status of project: JIICL is an annuity project with
operational track record of more than two years. The annuity nature
of the project eliminates traffic risk. It is contractually
entitled to receive semi-annuity of INR55.82 crore in May and
November each year till the end of the concession. Till date, JIICL
has received two semi-annuities with no deductions.
* Tail period of three years: The availability of tail period of
three years (6 semi-annuities) provides financial flexibility.
Credit challenges
* High counter party credit risk: JIICL has witnessed significant
delays in the receipt of its annuities from GoJ. The first and
second semi-annuities were received with a delay of 63 days and 36
days respectively, whereas the third and fourth semiannuities, due
in May 2020 and November 2020 respectively, are yet to be received.
The company availed moratorium initially for 3 months under the
Covid-19 Regulatory Package of the RBI for its debt servicing
obligations to address the timing mismatch in cashflows owing to
delay in receipt of annuities. ICRA notes that the external lenders
have approved adjusting the debt repayments made during the
moratorium period towards the obligations falling due during
November 2020 to January 2021. The company would also be availing
moratorium for its sub-debt from promoter for the obligations
falling due in December 2020 by adjusting sub-debt obligations
against payments made during the moratorium period. Given the delay
in annuity payments from the authority, the lenders have dipped
into the DSRA to meet debt servicing obligations of the current
fiscal and have also approved the non-maintenance of MMR. Timely
receipt of annuities on a sustained basis remains critical and
would remain a key rating monitorable.
* Non-maintenance of debt service reserve account and major
maintenance reserve account: As per the sanctioned terms, JIICL is
required to maintain DSRA equivalent to ensuing six months debt
servicing obligations. The rating remains constrained on account of
non-maintenance of DSRA and MMR as per the sanctioned terms owing
to prevailing delays in receipt of the annuities.
* Ensuring regular and periodic maintenance expenditure within
budgeted levels: Poor maintenance of the road could result in lane
closures leading to potential deductions from annuity by NHAI.
Ability of the company to undertake routine and periodic
maintenance expenditure within budgeted costs remains important.
* Exposed to interest rate risk: The projects cash flows and
profitability remains exposed to interest rate risk given the
floating nature of the interest rate.
Liquidity Position: Stretched
The liquidity position of the company is stretched. While the
annuity receipts are adequate to meet the debt obligations, any
delay in the receipts of annuity could result in timing mismatches.
Further, existing cash balances of INR3.38 crore as on November 30,
2020 remain inadequate to meet the debt obligations due in the
remainder period of FY2021 (principal repayment of INR17.6 crore
due between December 2020 to March 2021).
Rating sensitivities
Positive trigger - The crystallisation of scenarios for rating
upgrade are unlikely in the medium term. However, ICRA could
upgrade the rating on successful demonstration of timely payment
track record on a sustained basis and maintenance of debt service
reserve and major maintenance reserve as per the sanctioned terms.
Negative trigger - Downward pressure on the rating could emerge if
there is significant delay in receipt of annuity leading to
cashflow mismatch and/or any deterioration in the credit profile of
the annuity provider. Downward pressure on the rating could also
emerge if poor maintenance of the project stretch leads to
deduction from annuities.
Jharkhand Infrastructure Implementation Company Limited (JIICL), a
wholly-owned subsidiary of IL&FS Transportation Networks Limited
(ITNL), was incorporated in 2015 to implement the project for
improvement of balance works of Ranchi Ring Road (section VII) on
Build, Operate and Transfer (BOT) annuity basis. The project
stretch starts from design chainage Km 0.000 near Kathitar Junction
with NH-75 via Sukurhuttu Pithora to design chainage Km. 23.575 at
Vikas with NH-33 in the State of Jharkhand having a length of
23.575 kms, to be developed into a 6-lane divided carriageway with
paved shoulders. The total project cost of INR636 crore was funded
by way of equity infusion of INR80 crore, promoter sub-debt of
INR80 crore and INR476 crore of bank debt. The project achieved
provisional completion certificate on November 21, 2018 and final
completion certificate on May 16, 2019. JIICL is expected to be
divested as part of the IL&FS debt resolution process; single bid
has been received which has been accepted by the Board subject to
requisite approvals.
KHAYA SOLAR: ICRA Raises Rating on INR54.20cr LT Loan to C
----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Khaya
Solar Projects Private Limited (KSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term– 54.20 [ICRA]C; rating upgraded from
Fund-based– [ICRA]D and removed from
Term Loan 'Issuer Not Cooperating'
Category
Rationale
The rating upgrades factors in KSPL track record of timely debt
servicing in the last six months. The rating continues to derive
comfort from long-term power purchase agreement (PPA) at an
attractive tariff of INR11.50/unit with NTPC Vidyut Vyapar Nigam
Ltd (NVVN), which is a strong counterparty. ICRA also notes that
the payments have been received in a timely manner thus far,
leading to a low receivables cycle.
The rating, however, is constrained by the weak financial profile
of the Lanco Group. Moreover, the rating is constrained by the
sharp decline in generation in FY2019 and FY2020, leading to
inadequate cash accruals in relation to the debt servicing
requirement. ICRA further notes the company's leveraged capital
structure and weak coverage indicators. The rating also factors in
the seasonality and possible variance in solar irradiance over
years, which may impact year-on-year returns as revenues are linked
to actual generation.
Key rating drivers and their description
Credit strengths
* Strong counterparty and PPA tied-up at attractive tariff: The
company has tied-up a PPA with NVVN at an attractive tariff of
INR11.50/unit for a period of 25 years, which assures project
viability and timely debt servicing. Further, presence of NVVN
mitigates counterparty-related concerns. It may, however, be noted
that despite the 1:1 bundling by NVVN, tariff remains uncompetitive
vis-à-vis other conventional power sources and also vis-à-vis the
more recent renewable installations.
* Timely collections leading to a low receivables cycle:
Receivables have remained low thus far as NVVN is prompt in making
payments to the company.
Credit challenges
* Weak financial profile of Group remains major rating overhang:
The Lanco Group is in financial distress. The weak liquidity
profile of the Group remains a key credit challenge and creates an
overhang on the company's credit rating.
* Sharp decline in generation in FY2019 and FY2020: The plant
witnessed sharp decline in PLFs in FY2019 and FY2020 (owing to
lower solar irradiation, panel degradation, normal wear and tear at
the plant and a few defections in modules and inverters, as per the
management) leading to inadequate cash accruals in relation to the
debt servicing requirement. Revenues are linked to plant
generation, given the one-part tariff structure.
* Leveraged capital structure and weak coverage indicators: The
company's credit profile has been leveraged with a gearing of 2.24
times (provisional) as on March 31, 2020 against 2.06 times
(audited) as on March 31, 2019. The leveraged gearing was primarily
a result of high amount debt and low net worth. Owing to continuous
negative PAT, the net worth of the company has been declining
continuously, which further impacted the gearing position. Owing to
its elevated debt and negative net profitability, the debt
protection metrics remained weak with interest coverage at 1.43
times (previous year: 1.53 times), NCA/TD at 5.83% (previous year:
7.06%) and DSCR at 0.83 times (previous year: 0.95 times) as on
March 31, 2020.
* Single asset nature of operations; cash flows remain vulnerable
to variability in solar irradiation: KSPL is entirely dependent on
power generation from the solar power project for its revenues and
cash accruals. Given the single tariff nature of the tariff, the
company may lose revenues and profits in case of non-generation of
power. The single location and single-asset nature of its
operations further increase this risk.
Liquidity position: Adequate
The company's liquidity position is stretched. The company had
unencumbered cash and bank balance of ~INR0.1 crore as of March
2020 (as per the management) and does not possess any fund-based
limit. ICRA expects that the collection profile of the company will
remain satisfactory with NVVN being the offtaker. However, with
expected thin net profitability and high annual term debt
repayments in the medium term, KSPL's liquidity is likely to remain
stretched.
Rating sensitivities
Positive triggers - ICRA could upgrade the above long-term rating
if the company demonstrates a healthy and sustained improvement in
its generation, leading to an improvement in coverage metrics and
liquidity position.
Negative triggers - Continued under-performance in generation,
leading to inadequate cash flows in relation to debt servicing
requirement or delays in receiving payments from NVVN would be
negative triggers for the rating.
KSPL is a special purpose vehicle (SPV), promoted by Lanco Solar
Energy Private Limited (LSEPL; subsidiary of Lanco Infratech
Limited) and Lanco Infratech Limited for setting up 5-MW solar
power plant in the Jaisalmer district of Rajasthan. The project has
been set up under the Centre's Jawaharlal Nehru National Solar
(JNNSM) policy with NTPC Vidyut Vyapar Nigam Limited (NVVN) being
the designated nodal agency to implement the policy framework. The
SPV has entered into a 25-year PPA with NVVN. The feed-in tariff is
INR11.50 per unit for the entire term of the agreement (i.e. 25
years). The total project cost was INR82.2 crore, which was funded
in a debt-equity ratio of 2:1.
MUTHOOT FINANCE: Moody's Affirms Ba2 CFR; Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service affirmed Muthoot Finance Limited's Ba2
CFR and changed its outlook to stable from negative.
RATINGS RATIONALE
The affirmation and change in outlook to stable reflect Muthoot's
steady credit profile despite the economic contraction caused by
the coronavirus pandemic. In addition, the rating action reflects
Moody's expectation that Muthoot's financial performance will
remain stable over the next 12-18 months, supported by its leading
franchise and track record of providing loans against gold jewelry,
superior profitability and strong capitalization.
Over the past 6 months, a surge in gold price -- which backs about
90% of the company's loans -- helped improve loan collections and
disbursements, with both exceeding their five-year averages in the
quarter ended September 2020. Similarly, higher gold prices helped
lower Muthoot's gross nonperforming loan (NPL) ratio for the gold
portfolio to 1.3% at the end of September 2020 from 3.4% a year
earlier.
Nevertheless, the asset quality of Muthoot's non-gold loan
segments, which includes home, vehicle and micro finance loans, is
susceptible to the challenging operating environment.
While loans against gold jewelry are also susceptible to a sharp
and sudden decline in gold prices, this risk is mitigated by the
short-duration and collateralized nature of the company's loan
book, the maximum loan-to-value restriction under the central
bank's norms, and the ability of the company to quickly liquidate
the collateral if the borrower is unable to service the loan.
Muthoot's profitability has somewhat moderated, with its return on
assets down to 5.8% for first half of fiscal year ending March 2021
(fiscal 2021) from 6.6% a year ago as asset growth outpaced net
profit growth. Nevertheless, Muthoot remains the most profitable
amongst Moody's rated banks and non-bank finance companies in
India. Its superior profitability supports internal capitalization,
as reflected by its strong Tier 1 ratio of 24.6% at the end of
September 2020.
Muthoot's funding also remains steady as the secured and highly
liquid nature of its loans enables it to obtain funding from banks
and debt investors. Over the past year, the company has diversified
its funding sources to more stable, long-term funding sources -- a
credit positive.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Muthoot's rating could be upgraded if the company achieves a
meaningful improvement in its funding and liquidity.
Muthoot's rating could be downgraded if there is a meaningful
increase in NPLs couple with a material deterioration in its
loss-absorbing buffers. A deterioration in the company's funding
and liquidity, as demonstrated by its inability to rollover
maturing liabilities, would also strain its rating.
The principal methodology used in this rating was Finance Companies
Methodology published in Novmeber 2019.
Headquartered in Kochi, Muthoot Finance Limited reported total
assets of INR 620 billion at September 30, 2020.
LIST OF AFFECTED RATINGS:
Outlook Action:
Issuer: Muthoot Finance Limited
Outlook, changed to Stable from Negative
Affirmation:
Issuer: Muthoot Finance Limited
Corporate Family Rating, Affirmed at Ba2
OCEAN PEARL: ICRA Lowers Rating on INR62cr LT Loan to D
-------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Ocean
Pearl Hotels Private Limited (OPHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term 62.00 [ICRA]D ISSUER NOT COOPERATING;
Fund based Rating downgraded from [ICRA]B+
(Stable) and continues to remain
under 'Issuer Not Cooperating'
category
Long-term/ 1.00 [ICRA]D/[ICRA]D ISSUER NOT
Short term COOPERATING; Rating downgraded
Unallocated from [ICRA]B+ (Stable)/A4
and continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating downgrade reflects delays in Debt Servicing The rating
is based on limited information on the entity's performance since
the time it was last rated in February 2020. The lenders, investors
and other market participants are thus advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity, despite
the downgrade.
As part of its process and in accordance with its rating agreement
with Ocean Pearl Hotels Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Key rating drivers and their description
Credit strengths: NA
Credit challenges
Delays in debt servicing: The banker has given negative feedback
stating that the account has been overdrawn for past 53 days for
CMTCC. And A/C overdue for past 44 days for FITL
Mr. Jayaram Banan commenced operations of OPHPL in 1986 with a
restaurant in Defence Colony called Sagar Ratna. In 2010, the
company opened an 84-room, four-star luxury hotel in Mangalore,
Karnataka. In FY2012, the company hived off its restaurant
business. Furthermore, OPHPL started banqueting activities in
Chattarpur, Delhi at a leased farmhouse in 2012 and named it Ocean
Retreat. At present, OPHPL operates an 84-room hotel at Mangalore,
a banquet at Delhi, two restaurants at Ashoka Hotel, Delhi and a
newly commenced 45-room hotel at Udupi, Karnataka, with an adjacent
banquet that has a capacity to fit 300 people. The company has also
taken on lease a convention centre in Mangalore and another banquet
at Chattarpur, Delhi.
PILOT 2 WHEELER: ICRA Lowers Rating on INR23cr Loan to B+
---------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Pilot
2 Wheeler Pvt Ltd, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based– 23.00 [ICRA]B+ (Stable) ISSUER NOT
Working Capital COOPERATING; Rating downgraded
Facilities from [ICRA]BB (Stable) and
continues to be in the 'Issuer
Not Cooperating' category
Unallocated 2.00 [ICRA]B+ (Stable) ISSUER NOT
Limits COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to be in the 'Issuer
Not Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding Pilot 2 Wheeler Pvt Ltd's performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by a rated entity" available at www.icra.in. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Pilot 2 Wheeler Pvt Ltd, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with the aforesaid policy of ICRA, a rating view has
been taken on the entity based on the best available information.
Incorporated in 2001 by Mr. Jagjeet Singh, PWPL is an authorised
dealer for Honda's two-wheelers in Chembur, Mumbai. The company is
a family-run business whose daily operations are managed by Mr.
Jagjeet Singh and his son, Mr. Karanjiv Singh. Prior to the Honda
dealership, the promoters were engaged in spare parts trading and
were also the authorised dealers for Daewoo Motors until 2001. PWPL
currently operates three showroom-cumworkshops at Chembur, Bhandup
and Byculla in Mumbai.
Status of non-cooperation with previous CRA India Ratings and
Research (Ind-Ra) has migrated Pilot 2 Wheelers Private Limited's
Long-Term Issuer Rating to the non-cooperating category. The issuer
did not participate in the rating exercise despite continuous
requests and follow-ups by the agency. Therefore, investors and
other users are advised to take appropriate caution while using the
rating. The rating will now appear as 'IND BB+ (ISSUER NOT
COOPERATING)' on the agency's website.
SHIVAM INFRA-TECH: Ind-Ra Keeps BB Issuer Rating in NonCooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Shivam
Infra-Tech Private Limited's Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND BB (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating actions are:
-- INR20 mil. Fund-based working capital limit maintained in non-
cooperating category with IND BB (ISSUER NOT COOPERATING)/IND
A4+ (ISSUER NOT COOPERATING) rating;
-- INR100 mil. Non-fund-based working capital limit maintained in
non-cooperating category with IND A4+ (ISSUER NOT
COOPERATING) rating;
-- INR50 mil. Proposed fund-based working capital limit withdrawn
(the company did not proceed with the instrument as
envisaged); and
-- INR50 mil. Proposed non-fund-based working capital limit
withdrawn (the company did not proceed with the instrument as
envisaged).
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
December 6, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in March 2011, Shivam Infra-Tech executes engineering,
procurement, and construction contracts for civil, drinking water,
road, constructions, canal development, and other infrastructure
projects.
SOHAM RENEWABLE: ICRA Keeps B- Debt Ratings in Not Cooperating
--------------------------------------------------------------
ICRA said the ratings for the INR38.70 crore bank facilities of
Shree Gopinathji Agencies continue to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as [ICRA]B-(Stable);
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 38.70 [ICRA]B-(Stable) ISSUER NOT
COOPERATING; rating continues
to remain in the 'Issuer Not
Cooperating' category
Rationale
The rating is based on limited cooperation from the entity since
the time it was last rated in September 2019. As a part of its
process and in accordance with its rating agreement with Soham
Renewable Energy India Private Limited (SREIPL), ICRA has been
sending repeated reminders to the entity for payment of
surveillance fee that became due. Despite multiple requests by
ICRA, the entity's management has remained non-cooperative. In the
absence of requisite cooperation and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating continues to be in the
Issuer Not Cooperating category on fee. Further, the rating remains
in the Issuer Not Cooperating category on account of non-submission
of No Default Statement (NDS) since September 2019.
ICRA, however, takes note of the moderate improvement in
operational performance of the 6-MW hydro power project under
SPREPL, evident from the improvement in generation levels to 7.46
MU in 7MFY2021 from 6.56 MU in 7MFY2020. However, the generations
remain below breakeven levels, thus mandating support from other
entities in the Soham group to meet debt repayment requirements.
Further, the offtake from long-term customers under the third-party
route has reduced because of the Covid-19 pandemic in H1FY2021. The
company, however, has been able to sell power to other registered
customers during the period. Thus, revival of offtake from the
long-term PPA customers will be a key rating monitorable. Further,
the entity has currently replenished its Debt Service Reserve
Account (DSRA) as per mandated levels (equivalent to debt repayment
obligations covering the ensuing three months) as confirmed by the
lender.
The rating, however, continues to be constrained by the exposure of
the company's cash flows to hydrology risks, given the absence of a
deemed generation clause in case of shortage in water availability.
The company's cashflows also remain exposed to counterparty credit
risks. In addition, the rating also remains exposed to interest
rate risk owing to the single part nature of tariff.
ICRA has also taken note of the ongoing dispute between the
promoters of the Soham group and the investors with regards
to exit of investment from the group. The matter is currently
subjudice and will be closely monitored by ICRA.
Credit strengths
* Holding company of the Soham Group: SREIPL is the holding company
of the Soham group, which operates 53.5 MW of hydro power projects
in Karnataka. Under SREIPL, the Group has been able to raise INR210
crore funds from financial investors since FY2012.
* DSRA provides liquidity cushion: The company has a cash debt
service reserve account (DSRA) equivalent to three months of debt
repayment obligations, which provides comfort from the liquidity
perspective.
Credit challenges
* Operations remain exposed to hydrological risks: The company's
operations remain exposed to hydrological risks given that it is
not covered under any deemed generation clause in case of loss of
generation due to water shortage. The generation thus far has been
suboptimal, and hence the company has needed external support to
meet debt servicing requirements.
* Counterparty credit risks of offtakers: The cashflows of the
company remain exposed to the financial risk profiles of its
offtakers, which primarily constitute commercial and industrial
establishments.
* Tariffs to third-party customers likely to remain under pressure
due to increase in open-access charges: As per the terms of its
PPA, fixed discount is offered to grid energy tariff with the
applicable banking and wheeling charges borne by the company and
the remaining charges such as cross-subsidy surcharge, demand
charges and electricity tax being borne by the consumer. As a
result, the tariff competitiveness in the third-party sale through
the open-access route and the
company's net tariff remain exposed to regulatory risk of an
increase in open-access charges (both in loss and kind).
* Exposure to interest rate risk: The project remains exposed to
interest rate risk, given the single part nature of tariff under
the open access route.
Liquidity position: Stretched
The company's liquidity profile is stretched as the generation
levels remain sub-optimal to meet the debt servicing requirements.
However, ICRA notes the presence of DSRA, equivalent to ensuing
three quarters of debt repayment obligations.
Rating sensitivities
Positive triggers – SREIPL's rating could be upgraded in case of
[a] improvement in operational performance with timely payments
received from the offtaker at relatively healthy tariffs and [b]
when the entity begins to cooperate with ICRA.
Negative triggers – Negative pressure on SREIPL's rating could
arise in case of [a] significant deterioration in generation levels
or [b] pricing pressure on tariffs in the open access route or [b]
delays in receipt of payments from the offtakers
which would impact the company's liquidity position.
Incorporated in November 1991, Soham Renewable Energy India Private
Limited (SREIPL) is the holding company of Soham group, which
operates hydro power projects with a cumulative capacity of 53.5 MW
in Karnataka. SREIPL operates a mini hydro power project of 6 MW
capacity in Mandya District, Karnataka. The project is a gated
diversion weir built across the river Cauvery and commenced full
scale commercial operations in September 2015.
In FY2020(provisional), the company reported a net loss of INR3.16
crore on an operating income (OI) of INR4.82 crore compared with a
net loss of INR4.78 crore on an OI of INR2.45 crore in the previous
year.
SUDHIR AGRO: ICRA Keeps B+ Debt Rating in Not Cooperating
---------------------------------------------------------
ICRA said the ratings for the INR20.00 crore bank facilities of
Sudhir Agro Oils Private Limited continue to remain in the 'Issuer
Not Cooperating' category. The ratings are denoted as "[ICRA]B+
(Stable)/A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
LT-Fund 4.00 [ICRA]B+ (Stable) ISSUER NOT
Based/CC COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ST-Non Fund 16.00 [ICRA]A4 ISSUER NOT
Based COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Incorporated in 1993, SAOPL is engaged in the trading of edible
oils. It trades primarily in Crude Palm Oil, Mustard Oil, Cotton
Seed Oil, Sunflower Oil and Soya Oil. The company does not have any
warehousing facility for storage of traded products. The promoter
Mr. Prem Kumar's family has been involved in the edible oil trading
business for three generations.
SURYA SRI RICE: ICRA Lowers Rating on INR41cr LT Loan to B+
-----------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Surya
Sri Rice Mill (SSRM), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 41.00 [ICRA]B+(Stable) ISSUER NOT
Fund Based/CC COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Long Term- 6.51 [ICRA]B+(Stable) ISSUER NOT
Fund Based TL COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Long Term– 1.15 [ICRA]B+(Stable) ISSUER NOT
Non-Fund Based COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Long Term– 0.34 [ICRA]B+(Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding SSRM performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by a rated entity"
available at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Surya Sri Rice Mill, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with the aforesaid policy of ICRA, a rating view has been
taken on the entity based on the best available information.
Surya Sri Rice Mill (SSRM) was established in the year 2005 and is
engaged in the milling of paddy and produces raw and boiled rice.
It was promoted by Mr. Vishwanadha Reddy. The firm has a milling
unit in Koppavaram-East Godavari district of Andhra Pradesh with an
installed capacity of 108,000 MTPA.
VALUE PHARMA: ICRA Lowers Rating on INR13cr LT Loan to B+
---------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Value
Pharma Retail (Hyd) Pvt. Ltd (VPRIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 13.00 [ICRA]B+(Stable) ISSUER NOT
Fund Based/CC COOPERATING; Rating downgraded
from [ICRA]BB(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Long Term- 2.50 [ICRA]B+(Stable) ISSUER NOT
Fund Based TL COOPERATING; Rating downgraded
from [ICRA]BB(Stable) ISSUER
NOT COOPERATING and continues
to remain in the 'Issuer Not
Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding VPRIPL performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by a rated entity"
available at www.icra.in. The lenders, investors and other market
participants are thus advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Value Pharma Retail (Hyd) Pvt. Ltd, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with the aforesaid policy of ICRA, a rating view has
been taken on the entity based on the best available information.
Value Pharma Retail (Hyd) Pvt. Ltd was incorporated in 2010 and
started operations in 2011. VPRIPL currently operates 50 stores in
Hyderabad and Bangalore. It has two divisions in the retail segment
namely Value Pharmacy and Value Vision dealing in pharma and
optometric segments respectively. The company is promoted by Mr. D.
Byra who has an experience of more than a decade in pharma retail
business owing to VPRIPL's sister concerns, Medipure Healthcare
Services Private Limited, Value Pharma Holistic Remedies Private
Limited, and Value Vision Opticals Private Limited.
VENKATESWARA RICE: ICRA Lowers Rating on INR8.25cr LT Loan to D
---------------------------------------------------------------
ICRA has downgraded the ratings on certain bank facilities of Sri
Venkateswara Rice Mill, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 8.25 [ICRA]D ISSUER NOT COOPERATING;
Fund Based/CC Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING
Long Term- 0.08 [ICRA]D ISSUER NOT COOPERATING;
Fund Based TL Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING
Long Term- 0.67 [ICRA]D ISSUER NOT COOPERATING;
Unallocated Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING
Rationale
The rating downgrade reflects delays in Debt Servicing
The rating is based on limited information on the entity's
performance since the time it was last rated in September 2019. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sri Venkateswara Rice Mill, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Key rating drivers and their description
Credit strengths: NA
Credit challenges
* Delays in debt servicing: There have been delays in debt
servicing as mentioned There have been delays in debt servicing as
mentioned in publicly available sources.
Sri Venkateswara Rice Mill is a partnership firm established in
1999 and is involved in the milling of paddy for production of
non-basmati rice products (raw rice and boiled rice). The milling
unit is located in East Godavari district, Andhra Pradesh with an
installed capacity of 8TPH.
=================
I N D O N E S I A
=================
AGUNG PODOMORO: Fitch Hikes LongTerm IDR to CCC+
------------------------------------------------
Fitch Ratings has upgraded PT Agung Podomoro Land Tbk's (APLN)
Long-Term Issuer Default Rating (IDR) to 'CCC+', from 'CCC'. The
company's USD300 million notes due 2024, issued by its wholly owned
subsidiary, APL Realty Holdings Pte. Ltd. and guaranteed by APLN,
have also been upgraded to 'CCC+', from 'CCC', with the Recovery
Rating remaining at 'RR4'.
The upgrade follows APLN's announcement that it has sold a small
stake in Central Park mall, and agreed to sell 105 hectares of
industrial land to an unrelated developer. Fitch believes the
inflows from these disposals, together with a cash balance of
IDR388 billion at the holding company at end-September 2020, will
be sufficient to meet APLN's consolidated debt maturities and
holding-company interest costs in the next 12 months.
APLN's 'CCC+' IDR also reflects its expectation of weak annual
presales in the next 12-18 months given its mostly high-rise
projects, for which Fitch thinks demand will remain soft and
construction costs are inflexible. This will result in weak cash
flow from operations (CFFO).
KEY RATING DRIVERS
Weak Presales, Structural Subordination: Fitch expects APLN's
presales to remain low at IDR1 trillion-1.2 trillion in the next
one to two years, versus a historical average of around IDR1.7
trillion. This is because APLN's projects are mostly high-rise
homes that cater to investors and upgraders. Fitch believes demand
from such buyers will remain soft in 2021 and will be highly
dependent on the speed at which the coronavirus pandemic is
resolved.
The company jointly owns a number of its key projects and,
consequently, cash flow fungibility between them and the holding
company, which houses significant debt, is limited. Fitch
proportionately consolidates the financials of key subsidiaries,
and separately consider the holding company's own liquidity
position to assess these risks. Fitch believes that APLN will only
support its share of project-debt.
Inflexible Construction Costs: APLN's two large mixed-use projects
in Medan and Balikpapan, which accounted for 20% of presales in
2019, require higher working capital than its landed homes. The two
projects' aggregate construction costs exceeded their presales at
end-September 2020. The projects target the mid-to-upper segment,
where buyers appear to be delaying purchases. APLN has shifted its
focus to landed homes in some of its projects to ease its working
capital burden and spur sales, but has limited ability to offset
the outflows from its larger portfolio of high-rise projects.
Fitch estimates that APLN will generate positive CFFO in 2020 of
around IDR1 trillion net of minority shares, driven by proceeds
from bulk industrial-land sales in September and December totalling
around IDR840 billion on an attributable basis. Lower construction
outflows and an around 20% cut in employee salaries also helped
APLN to temporarily conserve cash. However, Fitch expects CFFO to
turn negative in 2021 in the absence of bulk sales and increasing
construction pace in its mixed-use projects.
Asset Sale Pending: APLN's plan to sell an investment property has
been delayed, as the buyer was unable to secure financing,
according to the company. However, APLN says the buyer remains keen
and is working on alternative options to complete the transaction
in 2021. Fitch has not factored in the cash proceeds in its
forecast, as the transaction has not been completed.
Weak Links with Parent: Fitch assesses APLN as stronger entity than
its 80% parent, PT Indofica, a closely held business of the sponsor
family. APLN is Indofica's largest investment, but Fitch believes
overall linkages between the companies are weak, as protection in
bond documents and local regulatory oversight of related-party
transactions limits Indofica's access to APLN's cash and assets.
Fitch therefore rates APLN on a standalone basis.
ESG - Management Strategy and Governance Structure: APLN has ESG
Relevance Scores of 4 for Management Strategy and Governance
Structure due to multiple restructurings, revealing that the
company's ability to implement its strategy has been hindered by
the constrained financial flexibility and impending risk of default
of key stakeholders. These have a negative impact on the credit
profile and are relevant to the rating in conjunction with other
factors.
DERIVATION SUMMARY
APLN's rating is comparable with that of PT Alam Sutera Realty Tbk
(ASRI, CCC+), PT Lippo Karawaci TBK (B-/Negative) and PT Kawasan
Industri Jababeka Tbk (KIJA, B-/Stable).
ASRI's business profile is stronger than that of APLN, with higher
presales supported by more affordable landed homes in its sales
mix, and consequently stronger operating cash flows given more
flexible construction costs and higher profit margins. However,
ASRI is rated at the same level as APLN because it has yet to
demonstrate its ability to regain access to domestic banks and debt
markets to refinance its cross-border notes due in April 2022,
while APLN's earliest significant maturity is in December 2022.
Lippo is rated a notch higher than APLN, given its stronger
presales and better liquidity profile, with sufficient cash on hand
to meet interest and operating costs beyond 2021. Lippo's stronger
presales are supported by its renewed focus on affordable landed
homes, for which demand remains healthy during the current
downturn. The Negative Outlook on Lippo's IDR reflects the risk
that it may face challenges in disposing of assets to boost
liquidity beyond 2021.
KIJA is rated higher than APLN because it has a stronger business
risk profile than APLN. While KIJA's presales scale is similar to
APLN's, KIJA has strong non-development EBITDA mainly from its
power plant and dry port, which cover substantially all of its
interest costs. KIJA also has limited construction costs because
around half of its presales are from industrial land, with the
other half from landed residential products, versus mostly
high-rise properties at APLN. Consequently, KIJA has neutral to
positive CFFO.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable presales of IDR1.0 trillion in 2020 and IDR1.1
trillion in 2021 (2019: IDR1.6 trillion)
- Positive operating cashflows net of share attributable to
minorities of IDR1.2 trillion in 2020 and negative IDR340 billion
in 2021.
- No major asset or bulk land sales in 2021 (2020: IDR1.3
trillion)
Recovery Rating Assumptions
The recovery rate estimate reflects Fitch's assessment of the value
of trade receivables under a liquidation scenario at a 75% advance
rate, inventory at a 75% advance rate, fixed assets and investment
properties at a 60% advance rate and investments in associates at a
100% advance rate.
Fitch assumes high inventory recovery because land is recognised at
the historical acquisition cost and the current market value is
considerably higher. Fitch deducts advances from customers and the
balance of reclaimed islets from inventory due to uncertain
development prospects.
Fitch has added committed undrawn construction facilities of IDR1
trillion to secured debt and inventory, and the net of accounts
payable and cash to secured debt.
The above assumptions result in a recovery rate corresponding to an
'RR1' Recovery Rating for APLN's unsecured notes. Nevertheless,
Fitch rates the senior notes at 'CCC+' with a Recovery Rating of
'RR4', because under Fitch's Country-Specific Treatment of Recovery
Ratings Rating Criteria, Indonesia falls into Group D of creditor
friendliness. Instrument ratings of issuers with assets in this
group are subject to a soft cap at the issuer's IDR and a Recovery
Rating at 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Attributable presales of IDR2 trillion on a sustained basis
Ability to maintain free cash flow / gross debt above -10% on a
sustained basis
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Unable to maintain sufficient liquidity over a rolling 12-month
basis
LIQUIDITY AND DEBT STRUCTURE
Weak Liquidity: The company has sufficient liquidity to tide over
2021, but may face rising refinancing risks over the medium term if
it does not complete the sale of the investment property as
planned, or is unable to meaningfully improve presales and CFFO.
The company's next significant maturity is IDR1.8 trillion of debt
due in December 2022 from a private fund to refinance a loan from
another private equity fund, SSG Capital Management, in December
2020. The company intends to repay this loan from the proceeds of
the planned asset sale.
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
APLN has an ESG Relevance Score of '4' for Management Strategy due
to multiple restructurings, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
APLN has an ESG Relevance Score of '4' for Governance Structure due
to multiple restructurings, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
BANK PAN: Fitch Affirms BB LongTerm IDR, Outlook Stable
-------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of Indonesia-based P.T. Bank Pan Indonesia Tbk (Panin) at
'BB'. The Outlook is Stable.
KEY RATING DRIVERS
IDRS AND VIABILITY RATING
Panin's Long-Term IDR is at the same level as it Support Rating
Floor (SRF) and its Viability Rating (VR). The latter reflects
Fitch's view of its standalone risk profile, as characterised by
its moderate franchise, adequate funding and earnings, and
weaker-than-peer asset quality and profitability that is
counterbalanced by a satisfactory capital position.
Fitch has maintained the 'bb+' operating environment score for
Indonesian banks with a stable outlook. Fitch expects a relatively
healthy economic recovery - as reflected in Fitch's forecast for
real GDP to return to growth of 6.3% in 2021 from contraction 2.2%
in 2020 - to result in gradually improving business prospects for
Indonesia's banks in 2021. Fitch believes that the largest banks -
including Panin - are well placed to take advantage of improving
conditions as their financial profiles should remain resilient -
helped by an extension of regulatory forbearance on loan
classifications to end-1Q22, extended from end-1Q21. Nonetheless,
operating conditions for banks will remain relatively sluggish in
1H21 - this will delay improvement in banks' financial profiles,
which will not recover to pre-pandemic levels in 2021.
Challenges faced by borrowers in repayment and slower credit growth
due to the pandemic have resulted in an increase in non-performing,
"special-mention" and restructured loans at Indonesian banks. Fitch
believes that Panin's asset quality is more vulnerable to
deteriorating economic conditions than peers' due to its larger
risk appetite compared to higher-rated banks. Its non-performing
loan (NPL) ratio was stable at 3.0% by end-9M20 and was in line
with the industry's 3.1%. However, pressure on credit quality is
reflected in the bank's restructured loans ratio of 25.7% - one of
the highest among its peers - of which around 88% of these loans
were classified as "current" under the relaxed regulation. Its loan
loss allowance coverage ratio of 138% was below the sector's 166%.
Fitch has maintained the asset quality midpoint at 'bb-' with a
negative outlook, reflecting the risk posed by its high proportion
of restructured loans.
Profitability will continue to suffer from weaker revenue and
higher credit costs due to its weakened loan quality, which led us
to lower the profitability and earnings mid-point to 'bb-' from
'bb'. Fitch has assigned a stable outlook on the factor, reflecting
its belief that its four-year average operating
profit/risk-weighted assets ratio (end-9M20: 2.4%; peer average:
2.6%) will be maintained within the range for a 'bb' category score
of between 1.25% to 4.75%. Fitch believes that profitability will
continue to lag the larger Indonesian banks because Panin's weaker
deposit franchise results in a higher cost of funds than peers.
Fitch believes Panin's capital buffers will be adequate in the near
term to withstand higher risk-weighted assets and weaker earnings
due to the coronavirus and Fitch has maintained its capitalisation
and leverage mid-point at 'bbb-'. The bank's moderate loan growth
and policy of not paying dividends should continue to support its
capitalisation. Panin's common equity Tier 1 capital ratio of 24.7%
at end-9M20 (2019: 20.8%) was significantly above the industry
average of 21.8% and its peer average of 19.9%.
Fitch believes that Panin's liquidity is potentially more
vulnerable under stressed conditions versus its larger peers.
However, Fitch believes that the bank's funding and liquidity has
benefited from its status as a domestic systemically important bank
since the outbreak of the coronavirus - as reflected in improvement
in most funding and liquidity metrics by end-9M20. Fitch has
maintained its funding and liquidity mid-point at 'bb' and revised
the factor outlook to stable, from negative, reflecting its revised
view of lower downside risk to this factor stemming from the
pandemic. Its liquidity coverage and net stable funding ratios of
264% and 149%, respectively, were considerably higher than its
minimum requirement of 85%. Its loans-to-deposits ratio fell to 91%
(2019: 116%) but it remained higher than the industry's 83%. Fitch
expects that Panin's greater reliance on higher-cost time deposit
funding than peers (9M20: 62% of total deposits, industry: 42%)
will continue into the medium term due to strong deposit
competition from larger banks.
Panin is a family-controlled, mid-sized bank that provides loans to
corporate (around 39% of total loans), commercial (primarily to
SMEs, 33%), retail (22%) and sharia borrowers (6%). Australia and
New Zealand Banking Group Limited (ANZ; A+/Negative/a+) holds
38.82% of Panin's shares, but has a passive role in the bank.
SUPPORT RATING AND SUPPORT RATING FLOOR
Panin's Support Rating and Support Rating Floor reflect Fitch's
view of a moderate probability of extraordinary state support being
made available, if needed. Fitch believes Panin has systemic
importance to Indonesia, as it is the country's seventh-largest
bank with a share of around 2.4% of industry assets. Its view of
support also takes into account Panin's customer deposit-dominated
funding profile and majority ownership by domestic shareholders.
RATING SENSITIVITIES
IDRS AND VIABILITY RATING
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Negative rating action could be triggered by a more prolonged and
severe economic disruption from the coronavirus pandemic than Fitch
currently expects. Such a scenario could lead to a lowering of the
operating environment score for Indonesia's banks to 'bb', which
would pressure the bank's Viability Rating (VR).
A downgrade of the VR could also stem from a greater deterioration
in Panin's financial position than Fitch expects, but Fitch
believes this would only occur if there were downward revisions to
multiple factors based on its view of buffers at the current rating
level. This would likely depend on a combination of non-performing,
"special-mention" and restructured loan ratios deteriorating by
more than Fitch expects under its base case, the bank's four-year
average operating profit/risk-weighted assets ratio falling below
1.25% on a sustained basis, and a persistent weakening of the
bank's funding and liquidity position, as likely reflected in a
sustained increase in the proportion of higher-cost sources of
funding and tight liquidity buffers above its minimum
requirements.
However, as Panin's IDR is at the same level as its SRF, the IDR
would not be affected by a downgrade of its VR unless it is
accompanied by a downgrade of its SRF.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Sustained improvements in its deposit franchise, asset quality and
profitability, such that its core ratios were more in line with
that of higher-rated peers', could be positive for its VR, although
Fitch believes such a prospect is unlikely under current operating
conditions. This would involve the bank's proportion of lower-cost
sources of funding rising above the industry average, while
maintaining its non-performing, "special-mention" and restructured
loan ratios in line with those of higher-rated peers, and its
four-year average operating profit/risk weighted assets ratio at
the higher end of the 1.25% to 4.75% range. Rating upside may also
result if the bank's franchise grows to be more comparable to that
of larger Indonesian banks, although Fitch sees this as unlikely to
happen in the near- to medium-term.
SUPPORT RATING AND SUPPORT RATING FLOOR
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
A downgrade of Indonesia's sovereign rating or a perceived
weakening of support propensity from the government could lead to a
downgrade of Panin's SRF. However, its IDR would only be affected
if, at the same time, Fitch also downgraded the bank's VR. A
two-notch downgrade of Panin's SRF would lead to a downgrade of its
Support Rating.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
An upgrade of Indonesia's sovereign rating or its view of an
increased support propensity from the government could lead to an
upgrade of Panin's SRF. This would also lead to an upgrade of its
Long-Term IDR, which would then be support-driven. An upgrade of
Panin's Support Rating would be dependent on a two-notch upgrade of
its SRF.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Panin's Support Rating and Support Rating Floor are credit-linked
to the Indonesian sovereign (BBB/Stable) based on its view of
potential extraordinary support, if needed.
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.
PAN BROTHERS: Fitch Lowers LongTerm IDR to CCC-
-----------------------------------------------
Fitch Rating has downgraded Indonesian-based garment manufacturer
PT Pan Brothers Tbk's (PB) Long-Term Issuer Default Rating (IDR) to
'CCC-' from 'B-'. Fitch has also downgraded PB's USD171 million
unsecured notes due January 2022 to 'CCC-' from 'B-' with the
Recovery Rating of the notes remaining at 'RR4'. At the same time,
Fitch Ratings Indonesia has downgraded PB's National Long-Term
Rating to 'CCC-(idn)' from 'BBB-(idn)'. The ratings were removed
from Rating Watch Negative (RWN), on which they were placed on 23
October 2020.
The downgrade reflects PB's heightened refinancing risk relating to
the USD138.5 million syndication revolving credit facility maturing
on 1 February 2021. The company had made progress on the extension
of the syndicated loan and considered alternative funding options,
including a government guaranteed scheme for working capital, but
the revision of its refinancing plans has led to delays in its
completion such that it is outside the timeline that was reflected
in PB's sensitivities to resolve the RWN.
The company's decision to change its refinancing options, which
could ultimately improve its debt maturity profile, has meant that
the timing of the completion is highly uncertain as the approval
process has been elongated. The downgrade reflects the high
execution risk given the market uncertainty and ability to complete
the transactions in a very tight timeframe ahead of the February
2021 maturity.
'CCC' National Ratings denote a very high level of default risk
relative to other issuers or obligations in the same country or
monetary union.
KEY RATING DRIVERS
Refinancing Risk; Delayed Extension: The downgrade reflects PB's
higher refinancing risk because of ongoing discussions, albeit a
revised refinancing strategy, with the banking syndicate. The
change in refinancing strategy has resulted in a very tight
timeline to complete the extension before maturity on 1 February
2021.
Extension Proposal: PB is now proposing a new "one-plus-one"
extension, which could extend the maturity of the syndication loan
by two years to end-January 2023, where the extension of the second
year from end-January 2022 to end-January 2023 is subject to the
refinance or restructure of its USD171 million bond due January
2022 into a longer tenor. The company plans to tap capital markets
in 1Q21, to repay mainly the syndication loan and the USD171
million bond.
This refinancing plan will significantly improve PB's debt maturity
profile. However, there is execution risk on completing the bank
refinancing on time and the inherent risks associated with a
capital market issuance.
Resilient Profitability amid Pandemic: PB's business has performed
soundly, especially in the context of the coronavirus. PB has
benefited from industry consolidation and brand owners diversifying
their manufacturing away from Vietnam, Bangladesh and China. This
has enabled PB, together with its position as Indonesia's
largest-listed garment manufacturer and its technical expertise, to
attract new customers across various segments.
The new customer acquisition will improve customer segmentation and
expand the order book. The pivot to medical-grade personal
protective equipment is testament to PB's production capabilities,
with revenue rising by 7% in 9M20 and EBITDA 5%.
Strong Global Brands Portfolio: We believe PB's increasing
importance in its customers' supply chains, established record,
wide product range and longstanding relationships with global
brands, including Uniqlo, Adidas and North Face, improve customer
loyalty and PB's bargaining power with clients. The company's
rating also reflects its base in Indonesia, one of the world's most
cost-competitive locations for garment manufacturing.
Negative Cash Flow: PB experiences continued negative cash flow
from operations because of the heavy working-capital nature of its
business. New customer acquisitions have stretched the working
capital cycle. In response, PB plans to shorten the working capital
cycle with technology and automation, together with a review of its
supplies with a preference for local supplies. However, the
unwinding of working capital will take time and therefore PB
remains reliant on external funding. We expect leverage -
calculated by seasonality adjusted net debt/EBITDA - to be around
4.0x-4.5x in 2020-2022.
ESG - Governance: Fitch has revised PB's ESG Relevance Score for
Management Strategy under our environmental, social, and covernance
(ESG) framework to '4' from '3', as management's inability to
complete the syndication loan extension and the change of the
refinancing plan near the loan maturity have resulted in higher
refinancing risk.
DERIVATION SUMMARY
PB's 'CCC-' and 'CCC-(idn)' ratings reflect the high refinancing
risks surrounding its ability to repay or extend the USD138.5
million syndication loan due 1 February 2021. The timing of the
completion of its refinancing is uncertain.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer:
- Net sales growth of 5% in 2020, 3% in 2021 and between 9%-10%
in 2022-2023 (2019: 9%);
- EBITDA margin of between 9%-10% in 2020-2023 (2019: 9%);
- Capex of around 2% of revenue in 2020-2023 (2019: 2%).
Key Recovery Rating Assumptions
The recovery analysis assumes that PB would be reorganised as a
going-concern in bankruptcy rather than liquidated. We assume a 10%
administrative claim.
Going-Concern Approach
The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level upon which we base
the enterprise valuation.
Fitch estimates EBITDA at USD64 million; this is 5% lower than the
last 12 months end-3Q20 EBITDA to reflect the industry's mid-cycle
conditions and competitive dynamics.
An enterprise value multiple of 5x EBITDA is applied to the
going-concern EBITDA to calculate a post-reorganisation enterprise
value. The multiple reflects a discount from the median global
multiple of 9x for completed M&A in the textile industry over the
past decade, based on Bloomberg data. The 5x multiple also reflects
PB's smaller size compared with global manufacturers.
Fitch also assumes fully drawn syndicated and short-term loan
facilities - which have priority over senior unsecured debt - to
the extent allowed by the bond indenture.
The going-concern enterprise value covers 71%-90% of PB's unsecured
debt, corresponding to a 'RR2' Recovery Rating for the senior
unsecured notes after adjusting for administrative claims.
Nevertheless, Fitch has rated the senior unsecured bonds
'CCC-'/'RR4' because Indonesia, under our Country-Specific
Treatment of Recovery Ratings Rating Criteria, is classified in
Group D of countries, in terms of creditor friendliness and the
instrument ratings of issuers. Assets located in this group are
subject to a soft cap at the issuer's IDR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Successfully extending the USD138.5 million syndication loan
and terming out the USD171 million bond that matures in January
2022.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch may take further negative rating action if the company
fails to extend the USD138.5 million syndication loan.
LIQUIDITY AND DEBT STRUCTURE
Impending Maturity: The upcoming USD138.5 million syndication loan
maturity by February 2021 and ongoing negotiations with banks -
with a revised refinancing strategy - has elevated the risk of
timely execution as the deadline draws nearer.
SUMMARY OF FINANCIAL ADJUSTMENTS
- Fitch includes advance payments, which are mostly for raw
materials, as part of the working-capital calculation.
- Fitch assumed USD25 million of year-end cash to be restricted,
reflecting cash set aside for seasonal working-capital purposes.
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
PB has an ESG Relevance Score of '4' for Management Strategy due to
management's inability to complete the syndication loan extension,
and the change of the refinancing plan near the loan maturity,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
SOECHI LINES: Moody's Affirms B2 CFR; Alters Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service has affirmed Soechi Lines Tbk. (P.T.)'s
B2 corporate family rating (CFR).
At the same time, Moody's has downgraded to B3 from B2 the senior
unsecured rating on the $200 million notes issued by Soechi Capital
Pte. Ltd., a wholly owned subsidiary of Soechi.
The outlook has been changed to stable from negative.
The rating actions follow Soechi's announcement on December 9, 2020
that it will buy back $123 million of its $200 million US dollar
notes due January 2023 at a price of $700 per $1,000 principal
issued. The buyback will be funded by a new $180 million 7-year
amortizing secured term loan, which will also be used to fully
repay its $77 million term loan due August 2021.
"The rating affirmation reflects Soechi's improved liquidity
profile and slightly lower debt levels following its successful
refinancing exercise, as well as the earnings stability provided by
its shipping business thanks to the use of time charters," says
Stephanie Cheong, a Moody's Analyst.
"The downgrade of the bond rating to B3 reflects the subordination
of the remaining $78 million of its unsecured 2023 bonds relative
to around $220 million of secured debt in Soechi's capital
structure," adds Cheong, who is also Moody's Lead Analyst for
Soechi.
RATINGS RATIONALE
Soechi's bond tender will reduce its overall debt levels by $37
million, thereby improving leverage, as measured by debt/EBITDA, to
5.1x from 5.7x as at September 30, 2020. Moody's expects Soechi's
leverage will be elevated at 4.8x-5.3x over the next 12-18 months
due to weaker earnings, but remain within its B2 rating threshold.
Moody's expects Soechi's shipyard business to continue generating
operating losses through 2020-21, weighing on overall
profitability, as the company struggles to replenish its order book
with profitable orders amid the coronavirus outbreak. However,
Moody's does not expect operating losses to widen beyond 2020 as
the company continues to execute cost cutting measures at its
shipyard.
Soechi Lines's B2 rating is underpinned by its relatively high
degree of revenue visibility, with around 90% of shipping revenue
supported by time charter contracts, the majority of which are with
Indonesia's state-owned oil and gas company, Pertamina (Persero)
(P.T.) (Baa2 stable). The rating also reflects the high barriers to
entry created by cabotage laws in Indonesia, which mandate the use
of Indonesian-flagged vessels for domestic sea freight
transportation.
Moody's expects shipping revenues to remain muted over the next
12-18 months, as higher dry-docking days will reduce revenues
slightly in 2020 and poor domestic demand for fuel could
potentially hinder the timely renewal of Soechi's time charter
contracts.
The rating also remains constrained by the relatively small scale
of Soechi's operations compared to its global peers, and by its
significant reliance on two very large crude carriers (VLCC), which
account for 40% of the fleet's dead weight tonnage.
Moody's expects the company's liquidity to be adequate over the
next 12-18 months, with its cash balance and estimated positive
free cash flows sufficient to cover its debt amortization payments.
Soechi's successful refinancing has extended its debt maturity
profile and alleviated near-term refinancing risk, with the next
major maturity being the remaining $78 million bonds in January
2023. However, Soechi's financial flexibility will henceforth be
limited as its entire vessel fleet will become encumbered under its
secured bank loans.
The remaining $78 million of Soechi's unsecured 2023 bonds are
rated one notch below the CFR because they will make up around 25%
of Soechi's new capital structure and will have to contend with
secured bank debt, which has a priority claim and ranks ahead of
the bonds, thereby reducing recoveries in the event of a potential
default.
The stable outlook reflects Moody's expectation that Soechi will
maintain its longstanding relationship with Pertamina and preserve
its good revenue visibility through its continued use of time
charter contracts. The outlook also takes into account the risks
arising from the formative stage of its shipbuilding business and
expectations that operating losses will not widen materially beyond
2020.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered the governance risk stemming from Soechi's
concentrated ownership by the Utomo family, who own around 85% of
the company. These governance concerns are partially balanced by
Soechi's listed status and improving financial policies, including
a reduction in debt-funded growth since last year.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if management continues to
successfully grow the shipping business and increase the profit
contribution from its shipyard business while lowering leverage.
Given Soechi's small scale and customer and vessel concentration,
Moody's would expect leverage, as measured by debt-to-EBITDA, to be
around 4.0x on a sustained basis and interest coverage above
2.25x.
Furthermore, an upgrade is unlikely before its shipyard business
develops a track record of executing orders in a timely and
profitable manner while sustaining a modest order backlog.
The rating could be downgraded if (1) industry fundamentals weaken,
resulting in lower charter rates or an inability to renew expiring
charter contracts; (2) operating losses at Soechi's shipyard do not
moderate as expected over the next 12-18 months; (3) Moody's
believes that Soechi does not have ample liquidity to fund its
operations and meet debt amortization payments; (4) there are
adverse changes in cabotage laws; (5) Pertamina shifts management
of its fleet, such that it materially reduces its exposure to
Soechi; or (6) Soechi undertakes material debt-funded capital
spending or shareholder returns.
Specific indicators Moody's would consider for a downgrade include
adjusted debt/EBITDA above 5.5x or adjusted (FFO + interest
expense)/interest expense below 2.0x.
The principal methodology used in these ratings was Shipping
Methodology published in December 2020.
Headquartered in Jakarta, Indonesia, Soechi Lines Tbk. (P.T.)
provides shipping services primarily to oil and gas companies,
including Pertamina (Persero) (P.T.) and its associates. Soechi
also operates a ship-building and maintenance business through its
99.99% subsidiary PT Multi Ocean Shipyard.
=========
J A P A N
=========
MITSUI OSK: Moody's Completes Review, Retains Ba3 Rating
--------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Mitsui O.S.K. Lines, Ltd. and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review in which Moody's reassessed the
appropriateness of the ratings in the context of the relevant
principal methodology, recent developments, and a comparison of the
financial and operating profile to similarly rated peers. The
review did not involve a rating committee. Since January 1, 2019,
Moody's practice has been to issue a press release following each
periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
Mitsui O.S.K. Lines, Ltd.'s Ba3 rating incorporates the company's
elevated leverage, contraction of earnings due to the coronavirus
outbreak, the industrywide overcapacity and volatile freight rates,
and high investments in growth areas leading to high debt
balances.
However, the rating is supported by its long standing presence
among Japanese shipping companies and its large scale with a
diversified shipping portfolio, and financing flexibility afforded
by its unencumbered balance sheet.
The principal methodology used for this review was Shipping
Industry (Japanese) published in January 2018.
NIPPON YUSEN: Moody's Completes Review, Retains Ba2 Rating
----------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Nippon Yusen Kabushiki Kaisha and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review in which Moody's reassessed the
appropriateness of the ratings in the context of the relevant
principal methodology, recent developments, and a comparison of the
financial and operating profile to similarly rated peers. The
review did not involve a rating committee. Since January 1, 2019,
Moody's practice has been to issue a press release following each
periodic review to announce its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
KEY RATING CONSIDERATIONS
Nippon Yusen Kabushiki Kaisha's Ba2 rating incorporates the
company's weak financial profile, including an elevated leverage,
the uncertainty in its earnings and cash flow due to the
coronavirus outbreak, and the industrywide overcapacity and
volatile freight rates.
However, the rating is also supported by the company's strong
banking relationships that mitigate refinancing risk, large scale
and diversified shipping portfolio, and financing flexibility
afforded by its unencumbered balance sheet.
The principal methodology used for this review was Shipping
Industry (Japanese) published in January 2018.
===============
M A L A Y S I A
===============
PRESS METAL: Moody's Completes Review, Retains Ba3 CFR
------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Press Metal Aluminium Holdings Berhad and other ratings
that are associated with the same analytical unit. The review was
conducted through a portfolio review in which Moody's reassessed
the appropriateness of the ratings in the context of the relevant
principal methodology(ies), recent developments, and a comparison
of the financial and operating profile to similarly rated peers.
The review did not involve a rating committee. Since January 1,
2019, Moody's practice has been to issue a press release following
each periodic review to announce its completion.
The publication does not announce a credit rating action and is not
an indication of whether or not a credit rating action is likely in
the near future. Credit ratings and outlook/review status cannot be
changed in a portfolio review and hence are not impacted by this
announcement.
Key rating considerations
Press Metal Aluminium Holdings Berhad's Ba3 corporate family rating
considers its low-cost aluminium smelting capabilities, supported
by a long-term power purchase agreement with Sarawak Energy; the
company's low employee and logistics costs leading to strong EBITDA
margins; and a supportive shareholder and customer in Sumitomo
Corporation (Sumitomo, Baa1).
The CFR is constrained by small scale compared with the global
competition in the aluminium market; exposure to geographic and
operational concentration risks because all of its smelting
operations are located in the State of Sarawak (A3) in Malaysia
(A3); and single-commodity business, with exposure to the cyclical
aluminium sector.
The principal methodology used for this review was Steel Industry
published in September 2017.
=====================
N E W Z E A L A N D
=====================
NEW ZEALAND: Economy Surges Out of Recession in V-Shaped Recovery
-----------------------------------------------------------------
Tracy Withers at Bloomberg News reports that New Zealand's economy
bounced back strongly from recession in the third quarter,
achieving a so-called V-shaped recovery as massive fiscal and
monetary stimulus fueled consumer spending.
Gross domestic product surged 14% from the second quarter, when it
contracted a revised 11%, Statistics New Zealand said Dec. 17 in
Wellington, Bloomberg relays. Economists forecast a 12.9% gain.
From a year earlier, the economy grew 0.4%, confounding the
consensus forecast for a 1.8% decline.
According to Bloomberg, New Zealanders have gone on a spending
spree since the nation eliminated community transmission of
Covid-19 in May and then successfully contained sporadic outbreaks.
However, the border remains closed to foreigners, crippling the
tourism industry, and many businesses have put investment and
hiring plans on hold, which is projected to push the jobless rate
higher in 2021, the report notes.
The V-shaped economic rebound is "vindication of the Covid-19
'elimination' strategy New Zealand has pursued, as it has
underpinned a strong economic recovery from what has been an
unprecedented shock," Bloomberg quotes Paul Bloxham, chief
Australia and New Zealand economist at HSBC in Sydney, as saying.
Still, "closed international borders to people movement are
weighing on tourism and other services exports, and are set to
continue to do so for some time."
The currency has gained 5.5% the past three months, and was
appreciating ahead of the release after Prime Minister Jacinda
Ardern announced plans to offer Covid-19 vaccines to the entire
population in the second half of 2021, Bloomberg relates.
The economy's quick rebound to pre-Covid levels was a rare feat,
said Stephen Toplis, head of research at Bank of New Zealand in
Wellington.
"We can only identify three other countries that have achieved the
'full recovery': Taiwan, China and Ireland," the report quotes Mr.
Toplis as saying. "New Zealand is definitely in a very small
minority."
Bloomberg says the government's determination to eliminate the
virus saw it impose one of the strictest lockdowns in the world but
allowed a quicker resumption of economic activity once it was
stamped out. New Zealand has recorded 1,744 confirmed cases of
Covid-19 and just 25 deaths.
A fresh community outbreak in mid-August required a second,
six-week lockdown in largest city Auckland, but the country has
fared better than many of its peers. U.K. GDP fell 9.6% in the
third quarter from a year earlier, while Australia's fell 3.8%.
According to Bloomberg, the government pledged NZD62 billion ($44
billion) of fiscal support to help revive domestic demand and
protect jobs, while the central bank has slashed interest rates and
embarked on quantitative easing and term lending programs to
further drive down borrowing costs.
That's put a rocket under the housing market, with prices soaring
to fresh records, Bloomberg says.
Still, the Reserve Bank and some economists have cautioned the
economy may contract in the fourth quarter and even face a
double-dip recession early next year, citing slower global growth
and the possibility that the border will remain closed to most
visitors until at least the second half of 2021, Bloomberg relays.
The third-quarter expansion was driven by construction and services
industries -- in particular retailing, accommodation and
restaurants, the statistics agency, as cited by Bloomberg, said.
* Manufacturing output rose 17% from the second quarter
* Construction jumped 52%
* Household consumption increased 14.8% led by cars, televisions
and domestic air travel
* Investment surged 27% led by residential building
* Exports rose 4.9%, while imports gained 10.6%
* GDP per capita climbed 13.8%
VIJAY HOLDINGS: Creditors Tap Waterstone as New Liquidators
-----------------------------------------------------------
Catherine Harris at Stuff.co.nz reports that creditors have
replaced the liquidator for Vijay Holdings, the building company
behind Auckland furniture superstore store, Nido.
Vijay went into liquidation in November owing NZD2.6 million, and
Magsons Hardware, which traded as Nido, went into receivership this
month, Stuff notes. Both share a common sole director, Nido
co-founder Vinod Kumar.
At a creditors' meeting on Dec. 17, Vijay's liquidators Heiko Draht
and Daran Nair of Greenlane Chartered Accountants were voted out
and replaced with Greg Sherriff of Waterstone Insolvency, Stuff
discloses.
Brent Norling, a lawyer representing three creditors owed about
NZD600,000, hoped it would make a difference to the returns
creditors might receive.
According to Stuff, Mr. Norling said Waterstone had a record of
litigating claims if needed, and there were a number of matters to
be investigated, including whether there were inter-company
payments or reckless trading.
Meanwhile, Nido's receivers Kare Johnstone and Conor McElhinney
said the store was still trading and stock had been discounted
while the search for a buyer was underway, Stuff relays. About 100
staff were waiting to hear about their future.
The next update on Nido could be the six-monthly receivers' report,
Stuff notes.
Vijay was the construction company tasked with building Nido, a
NZD60 million, 27,000 square metre project which was aspired to be
New Zealand's biggest retail outlet.
It opened incomplete in June shortly after the lifting of the Level
4 lockdown and the first liquidators' report said Vijay's director
was unable to raise more funding to finish the work, Stuff
relates.
=================
S I N G A P O R E
=================
MIRACH ENERGY: Taking Steps to Wind Up Company
----------------------------------------------
The Business Times reports that mainboard-listed Mirach Energy on
Dec. 16 said it is taking steps to wind up the company, as
uncertainty has risen over whether an exit offer will proceed.
Certain shareholders had previously expressed their intention to
collectively make an exit offer to all the other shareholders of
the company, after Mirach Energy, failing to exit the Singapore
Exchange's (SGX) watch-list, was notified by the bourse in
September to delist, BT recalls. Mirach Energy was later given a
three-month extension in October to submit an exit-offer proposal
to SGX.
Now, Mirach Energy said it is obtaining quotes from legal advisers
and liquidators for the costs as well as steps involved in the
process of winding up, according to the report.
BT relates that the company also noted that it may face cash flow
difficulties before the end of Q1 2021, due to expenses related to
the exit offer and professional fees, on top of its usual operating
expenses.
As at Nov. 30, Mirach Energy had only US$333,000 in cash and cash
equivalents, BT discloses.
In addition, a subsidiary, RCL Kelstar Sdn Bhd, has received an
email request from one customer to terminate a cooperation
agreement. Another unit, CPHL (HK) Limited, has received a notice
of payment of MYR4.5 million (SGD1.5 million) from the RCL
vendors.
According to BT, Mirach Energy said it is implementing various
cost-cutting measures including not renewing the office lease and
cutting executives' salaries. "The company is also in ongoing
discussions with its subsidiaries on whether the subsidiaries are
in a financial position to repatriate dividends," it added.
Mirach Energy Ltd. explores for oil and natural gas, and offers
technical oilfield advice, enhanced oil recovery, project
management, and mud logging services.
=================
S R I L A N K A
=================
DFCC BANK: S&P Lowers Issuer Credit Ratings to 'CCC+/C'
-------------------------------------------------------
S&P Global Ratings today lowered its long-term and short-term
issuer credit ratings on Sri Lanka-based DFCC Bank to 'CCC+/C' from
'B-/B'. The outlook on the long-term rating is stable.
S&P said, "We downgraded DFCC to reflect the bank's high exposure
to Sri Lanka's deteriorating economic and fiscal conditions. Our
actions follow the lowering of our sovereign rating on Sri Lanka
because of the rising fiscal and external imbalances in the
country.
"DFCC--like other banks in Sri Lanka--is highly exposed to the
country's economic conditions and sovereign creditworthiness. About
95% of DFCC's loans are in Sri Lanka, with the central government
accounting for 20%-25% of the bank's total credit risk exposures.
"We expect operating conditions for Sri Lankan financial
institutions to remain tough amid subdued economic activity
globally post the COVID-19 pandemic. The sovereign's weakening
external and fiscal performance is adding to the challenge. Sri
Lankan financial institutions are unlikely to be immune to
increasing credit pressures on the sovereign. This could hit the
banking sector. We expect the sector's nonperforming loans to rise
to about 8.5% of total loans in 2021, from 5.3% as on Sept. 30,
2020, and 4.7% at end-2019.
"The cost of external funding is rising for Sri Lankan banks. That
said, they have limited reliance on external funding compared to
the sovereign. Customer deposits remain the main source of funding
for banks. In our base case, we expect domestic deposit holders'
trust and confidence in the banking system to remain intact.
Deposit growth remained strong in the first nine months of 2020 at
an annualized rate of 20%. With the sovereign's deteriorating
external financing conditions, investor confidence may weaken and
the risk of funding or liquidity stress for banks may increase.
Currently, we expect banks, especially the large ones, to continue
to benefit from flight to quality.
"Similar to other banks in the country, DFCC has grown its loan
book, maintained regulatory capitalization, and increased liquidity
as a result of stimulus measures. But earnings and asset quality
remain under pressure. While COVID-related moratorium on loans and
other regulatory policies have supported borrowers, we believe
underlying economic conditions remain weak.
"We lowered our risk-adjusted capital ratio forecast for DFCC to
around 2.5% by Dec. 31, 2021, from 3.0% previously, to reflect the
heightened risks from the bank's exposure to the sovereign. The
bank is vulnerable to and reliant on favorable operating
conditions. Economic conditions and the sovereign's ability to
continue to service its debts are vital for DFCC's
creditworthiness. We revised the bank's stand-alone credit profile
to 'ccc+' from 'b-'.
"Our 'CCC+' transfer and convertibility assessment on Sri Lanka is
a key factor in our analysis of the country's banking industry. The
T&C assessment reflects our view of the likelihood of the sovereign
restricting domestic entities' access to foreign exchange needed to
meet debt service obligations, including capital controls. So far,
the government has restricted imports to reduce foreign currency
outflows and used interest rate incentives for deposits to support
foreign currency inflows. We believe any government actions to
restrict foreign currency outflows could hurt banks' ability to
meet their obligations. For example, in a severe stress scenario,
the government could implement deposit withdrawal limits and other
capital controls if market sentiment turned more cautious.
"Our stable outlook on DFCC mirrors that on Sri Lanka and reflects
our view that the bank will remain vulnerable and dependent upon
favorable business, financial, and economic conditions to meet its
financial commitments. In our view, COVID-19 has heightened key
vulnerabilities at the sovereign level and across the banking
system. We believe these systemic pressures will continue to
undermine the bank's creditworthiness, but don't expect an
immediate credit or payment crisis over the next 12 months.
"We could lower our ratings on DFCC if we take a similar action on
Sri Lanka. The sovereign rating could be lowered if external
buffers decline substantially more than we currently forecast, or
access to external financing proves extremely difficult.
"An upgrade of DFCC would rely on an improvement in the sovereign
rating over the next 12 months, without idiosyncratic issues at the
bank. We could revise DFCC's SACP upward to 'b-' if its
risk-adjusted capital improves to above 3%, which could happen if
the bank raises further capital. We note that DFCC has financial
flexibility to enhance its capitalization by selling its 13% stake
in Commercial Bank of Ceylon. But DFCC may not monetize the stake
till the operating environment stabilizes and the valuation
improves."
SRI LANKA: S&P Lowers LongTerm Sovereign Credit Ratings to 'CCC+'
-----------------------------------------------------------------
S&P Global Ratings related that with the implementation of
expansionary budget measures in Sri Lanka, it expects the country's
fiscal position to deteriorate materially over the next few years
in the absence of favorable economic and financial conditions.
Existing funding support from official sources do not appear
sufficient to cover financing needs. This means that Sri Lanka may
need external commercial funding, which can be difficult and
costly.
As a result, S&P is lowering its long-term foreign and local
currency sovereign credit ratings on Sri Lanka to 'CCC+' from 'B-'.
S&P also lowered its short-term foreign and local currency credit
ratings to 'C' from 'B'. The transfer and convertibility assessment
is revised to 'CCC+' from 'B-'. The outlook is stable.
Outlook
The stable outlook reflects that, at this lower rating level, risks
to Sri Lanka are relatively balanced over the next 12 months. Risk
of external deterioration is partially offset by accommodative
policies that are likely to boost domestic demand recovery.
Downside scenario
S&P could lower our ratings if external buffers decline
substantially more than S&P currently forecast, or access to
external financing proves extremely difficult. This would hurt Sri
Lanka's debt servicing capacity.
Upside scenario
S&P would raise the rating if external buffers can be significantly
boosted, or if the economic recovery is much stronger than S&P
expected, thus helping to improve government revenues and
stabilizing debt levels.
Rationale
S&P, "We lowered our ratings on Sri Lanka based on our assessment
that risks to debt servicing capacity have risen, as the
government's access to external financing has become increasingly
dependent on favorable business, economic, and financial
conditions. The downgrade stems in part from the impact of
COVID-19, which has significantly narrowed the government's fiscal
space and its capacity to generate earnings through sectors such as
tourism. The latest expansionary budget measures are likely to
further weaken the government's fiscal position. High fiscal
deficits and excessive domestic liquidity will put downward
pressure on the exchange rate and worsen the risks associated with
the government's already-high debt burden.
"Our ratings on Sri Lanka reflect the country's relatively modest
income levels, weak external profile, sizable fiscal deficits,
heavy government indebtedness, and hefty interest payment
burdens."
Institutional and economic profile:
Economy expected to contract sharply in 2020
-- S&P expects a severe economic contraction this year as COVID-19
has devastated external demand and constrained domestic activity.
-- A fresh wave of infections in October underscored the fragility
of any economic revival prior to widespread availability of a
vaccine.
-- While parliamentary elections produced a more unified
government, recent changes to the constitution will likely further
concentrate powers in the president, weakening checks and
balances.
Sri Lanka's economy is suffering another major blow in 2020.
Tourism and export activities declined due to COVID-19, and the
recovery has been taking longer than expected. The economy entered
the pandemic on a weak footing, with growth consistently
languishing below potential in recent years, due to a confluence of
exogenous shocks and intractable political difficulties.
S&P, "We forecast the economy will contract sharply by 5.3% in 2020
largely due to the COVID-19 pandemic. Although the negative
economic impact likely peaked in the second quarter of 2020, the
nascent recovery was derailed by another wave of infections in
early October. While the country has not reimposed stringent
lockdown measures, leading indicators, including the Purchasing
Managers Index, showed a sharp pullback in activity. Given that
COVID-19 developments could be unpredictable, with many neighboring
countries experiencing repeated waves of infections, any economic
recovery before widespread availability of a vaccine is likely to
be muted and prone to reversals.
"Nevertheless, we believe Sri Lanka's economy will recover in 2021,
boosted by a stabilization in domestic activity and expansionary
monetary and fiscal settings. External demand should also recover
more strongly, particularly if tourism flows could restart.
"We expect real GDP growth to accelerate to 4.3% in 2021, albeit
from a low base, and average 4.5% in 2021-2023. Our estimate for
real per capita income is about US$3,900 in 2021. This translates
to real GDP per capita growth of 1.8% on a 10-year weighted average
basis. Although this growth is in line with peers at a similar
income level, it is substantially below Sri Lanka's growth
potential."
Sri Lanka's institutional setting has been a persistent credit
weakness over the past few years. Frequent political infighting and
at-times unpredictable developments have hindered policy
predictability and weighed on business confidence, in our view.
While the current administration's clear victory in August's
parliamentary election is likely to ease such uncertainty over
policy direction, further consolidation of power in the executive
may increase institutional risks. This could affect the stability
of the legislature or the judiciary system, and in turn, hit policy
predictability and business confidence. Social stability could also
be undermined, if divisions along religious or ethnic lines
persist.
S&P Global Ratings believes evolution of the coronavirus pandemic
remains highly uncertain. Reports of vaccines that are highly
effective gaining approval in more countries are promising, but
this is merely the first step toward a return to social and
economic normality; equally critical is the widespread availability
of effective immunization, which could come by the middle of next
year.
Flexibility and performance profile:
Fiscal position has deteriorated further and risk over debt
sustainability has increased
-- Sri Lanka's fiscal deficit is likely to remain elevated due to
medium-term measures announced in the budget.
-- This will likely worsen the government's heavy indebtedness and
add to repayment burden.
-- The external profile remains weak, given that the high share of
dollar-denominated debt exposes the government to shifts in risk
sentiments.
Persistent deficits in Sri Lanka's fiscal and external positions
remain rating constraints. The government's heavy debt limits its
ability to accumulate policy buffers, which are crucial in times of
stress.
COVID-19 has further devastated government finances by dampening
domestic economic activity and lowering excise duty earnings.
Instead of one-off measures to counter the economic impact of
COVID-19, the expansionary measures introduced in the Sri Lanka's
2021 budget are likely to increase the deficit for an extended
perio.
In the latest budget, the government has committed to keeping the
wide-ranging tax cuts, including a lower value-added tax rate,
increasing the VAT turnover threshold and removing the 2% Nation
Building Tax, for five years. In addition, the government also
plans to provide various tax exemptions and incentives to boost
domestic production and encourage import substitution. In the
absence of extremely favorable economic and financial conditions,
these measures are expected to constrain revenue growth and could
only be partially offset by new revenue measures, such as the
Special Goods and Services Tax.
On the expenditure front, the government is planning to
significantly ramp up infrastructure spending over the next few
years. While recurrent expenditure will be relatively contained,
room for further cuts is limited due to the high interest burden.
Healthcare and security-related spending may also increase fiscal
pressure.
S&P stated, "We expect the fiscal deficit to remain elevated at
10.2% of GDP in 2021 and narrow gradually to 8.4% in 2023. A high
portion of Sri Lanka's government debt is denominated in foreign
currency, and the country's exchange rate may weaken further.
Higher fiscal deficits over a longer period will add to the
government's extremely high debt stock. For those reasons, we
expect the increase in net general government debt to average 11%
over 2020-2023. By our estimate, net general government debt will
exceed 100% of GDP in 2021 and remain elevated over the next five
years.
"The government intends to increase the share of domestic financing
to fund the fiscal deficit. At the same time, domestic interest
rates have been kept extremely low through massive liquidity
injection by the central bank. This has reduced the effective
interest rate on the government's domestic debt. We estimate
interest payments to reach 60% of government revenues in 2020,
slightly lower than what we expected previously. Nevertheless, this
is one of the highest ratios among the sovereigns we rate.
"We assess the government's contingent liabilities from state-owned
enterprises and its relatively small financial system as limited.
However, risks continue to rise due to sustained losses at the
Ceylon Petroleum Corp., Ceylon Electricity Board, and the Sri
Lankan Airlines. Although CPC and CEB have improved their financial
positions as a result of the drastic decline in global oil prices,
SLA is likely to continue accumulating losses due to the impact on
air travel. Also, Sri Lanka's financial sector has a limited
capacity to lend more to the government without possibly crowding
out private-sector borrowing, owing to its large exposure to the
government sector of more than 20%.
"The country's external position has deteriorated compared with our
last review due to current account receipts declining more than we
had expected. However, lower oil prices and wide-ranging import
restrictions imposed by the government have also kept the import
bill under control. We estimate the current account deficit will
widen marginally to 2.7% of GDP in 2020.
"Sri Lanka's external liquidity, as measured by gross external
financing needs as a percentage of current account receipts plus
usable reserves, is projected to average 117% over 2020-2023. We
also forecast that Sri Lanka's external debt net of official
reserves and financial sector external assets will rise sharply to
206% in 2020, partly due to poor export earnings.
"The government's external financing conditions have become more
challenging, and uncertainty over access to official creditors has
increased, in our view. The government has received US$500 million
in official loans for budgetary support so far this year. Credit
lines with other central banks have also helped to augment foreign
exchange reserves to some extent.
"However, we see increasing indications that funding from
multilateral or bilateral partners will not be sufficient to cover
external financing needs over the next 12 months. The government
has had to repeatedly draw on reserves to meet its external debt
obligations. As of end-October 2020, foreign exchange reserves
stood at US$5.9 billion, down from US$7.6 billion at the start of
the year. This might be enough to cover maturities over the next 12
months, but it would bring reserves down to a dangerously low
level. If economic and financial conditions turn even more
negative, we believe the government's external debt-servicing
capacity could be severely impaired.
"Sri Lanka's monetary settings remain a credit weakness, although
it has seen some structural improvements in recent years. The
Central Bank of Sri Lanka is preparing to transition to a flexible
inflation-targeting regime under the proposed Monetary Law Act. The
passage of this act, which enshrines the central bank's autonomy
and capacity, will be crucial to improving the quality and
effectiveness of monetary policy, in our view."
=============
V I E T N A M
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STANDARD CHARTERED: Fitch Assigns 'BB' LT Foreign Currency IDR
--------------------------------------------------------------
Fitch Ratings has assigned Standard Chartered Bank (Vietnam)
Limited (SCBVL) a first-time Long-Term Foreign-Currency Issuer
Default Rating (IDR) of 'BB' and Long-Term Local-Currency IDR of
'BBB-'. The Outlook is Stable.
KEY RATING DRIVERS
IDRS AND SUPPORT RATING
SCBVL's ratings are driven by its expectation of support from its
parent, Standard Chartered Bank (SCB, A+/Negative/a), in times of
need. SCB owns 100% of its Vietnam subsidiary, whose management and
operations are highly integrated with its parent. Vietnam is a
high-growth market that the group considers to be strategically
important to its emerging market network. Fitch expects SCBVL to
retain an important role in the group given Vietnam's increasing
integration into regional and global supply chains. Fitch believes
SCB has a strong ability to support SCBVL, whose assets accounted
for only about 0.4% of the parent's assets as at end-2019.
The factors reinforcing the likelihood of the parent's support for
SCBVL are counterbalanced by its view of heightened transfer and
convertibility risks in Vietnam, which could impose significant
constraint on SCBVL's ability to receive support from its UK-based
parent, and are reflected in Vietnam's Country Ceiling of 'BB'.
SCBVL's Long-Term Foreign-Currency IDR is thus capped by the
Country Ceiling and its Support Rating of '3' indicates a moderate
probability of support from the parent for the subsidiary. Fitch
uses the parent's Viability Rating (VR) instead of its IDR as the
anchor rating for institutional support due to the uncertainty over
whether SCBVL would benefit from a significant buffer of qualifying
junior debt that raises the parent's Long-Term IDR above its VR.
Fitch views the risk of sovereign restrictions on local-currency
repayments as lower than that of foreign-currency restrictions.
Hence, SCBVL's Long-Term Local-Currency IDR is rated two notches
above Vietnam's sovereign rating, reflecting the parent's robust
ability to support SCBVL.
Fitch has not assigned a VR to SCBVL given the high operational
linkages with its parent that would render standalone assessment
not meaningful. SCBVL's market share in Vietnam is modest at around
0.5% of banking system assets at end-2019. It has, however, been
growing its loan book rapidly in recent years, driven by its retail
segment - a trend which Fitch expects to continue in the near to
medium term as the bank capitalises on the country's young
demographics and growing income.
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
IDRS AND SUPPORT RATING
The bank's ratings are currently constrained by the country's
sovereign rating and Country Ceiling. An upward revision in the
sovereign rating and Country Ceiling would be likely to lead to a
corresponding revision in the bank's IDRs, assuming that the
parent's ability and propensity to support the bank remain intact.
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
Any downgrade in Vietnam's sovereign rating will likely lead to a
lower IDR for SCBVL.
SCB's VR is six notches above Vietnam's Country Ceiling. There will
need to be a very substantial reduction in its assessment of SCB's
ability or propensity to support SCBVL before the subsidiary's
support-driven rating is affected. Fitch sees this as unlikely in
the rating horizon.
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.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
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