/raid1/www/Hosts/bankrupt/TCRAP_Public/210120.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, January 20, 2021, Vol. 24, No. 9
Headlines
A U S T R A L I A
DARLING HARBOUR: Second Creditors' Meeting Set for Jan. 28
INTERNATIONAL MONEY: Second Creditors' Meeting Set for Jan. 28
[*] AUSTRALIA: Corporate Administration Jump 23% in December 2020
C H I N A
GUORUI PROPERTIES: Fitch Corrects Jan. 14 Ratings Release
HONGHUA GROUP: Moody's Completes Review, Retains B1 CFR
JIAYUAN INT'L: Fitch Assigns B Rating on Proposed USD Bonds
JIAYUAN INTERNATIONAL: Moody's Gives B3 Rating to New USD Notes
SINIC HOLDINGS: Fitch Assigns B+ Rating to Proposed USD Notes
XINYUAN REAL ESTATE: Fitch Rates Proposed USD Unsec. Notes 'B-'
YONGCHENG COAL: Regulator Criticizes Three Bond Underwriters
[*] CHINA: Braces for Another Record Year of Bond Defaults
[*] CHINA: Nonbank Creditors Granted New Power to Recoup Money
H O N G K O N G
[*] HONG KONG: Bankruptcy Filings Hit Four-Year High Amid Pandemic
I N D I A
ADYAR GATE: ICRA Lowers Rating on INR235.60cr LT Loan to D
BANWARI PAPER: ICRA Lowers Rating on INR15cr Loans to D
BENGAL SHAPOORJI: ICRA Lowers Rating on INR200cr Loan to D
CARONA INDUSTRIES: ICRA Withdraws D Rating on INR36cr Loans
DELHI AIRPORT: Fitch Downgrades LongTerm IDR to 'BB'
DIGITAL MICRON: Insolvency Resolution Process Case Summary
FIBREMARX PAPERS: ICRA Downgrades Rating on INR52cr Loans to D
GANESH CARS: ICRA Keeps B+ Debt Rating in Not Cooperating
GOODWILL THEATRES: Insolvency Resolution Process Case Summary
H.K. AGRO: ICRA Keeps D Debt Ratings in Not Cooperating Category
ICON CABLES: Insolvency Resolution Process Case Summary
INDRADEV GOODS: Insolvency Resolution Process Case Summary
IRE-TEX PREMIER: ICRA Keeps B Ratings in Not Cooperating Category
KANSARA POPATLAL: CRISIL Keeps B Debt Ratings in Not Cooperating
KEYSTONES INFRA-CON: CRISIL Keeps B Rating in Not Cooperating
KRISHNAGIRI CASHEW: CRISIL Keeps B+ Ratings in Not Cooperating
KSK WATER INFRASTRUCTURES: Insolvency Resolution Case Summary
KUNAL COTTON: CRISIL Keeps B- Debt Ratings in Not Cooperating
MALANKARA PLANTATIONS: ICRA Lowers Rating on INR15cr Loan to B+
MVR GAS: ICRA Keeps B+ Debt Ratings in Not Cooperating Category
NAKODA GLOBAL: ICRA Withdraws B Rating on INR1cr Cash Loan
NIKHIL TOBACCOS: ICRA Withdraws B+ Rating on INR20cr Loans
PASUPATI AGROVET: CRISIL Lowers Rating on INR47cr Loans to B
POPPYS KNITWEAR: ICRA Keeps B+ Debt Rating in Not Cooperating
PRAMUK INFRACON: ICRA Keeps B+ Debt Ratings in Not Cooperating
SANDOR LIFESCIENCES: ICRA Lowers Rating on INR35cr NCD to D
SANGAM FORGINGS: CRISIL Keeps B Debt Ratings in Not Cooperating
SHARANAMMA DIGGAVI: ICRA Keeps D Debt Ratings in Not Cooperating
SIDHI VINAYAK: ICRA Lowers Rating on INR10cr Term Loan to D
SUPRAJA DAIRY: CRISIL Keeps B+ Debt Ratings in Not Cooperating
TIRUPATI COLOUR: CRISIL Lowers Rating on INR6cr Cash Loan to B
TRANS VOLT: CRISIL Keeps B Debt Ratings in Not Cooperating
TRIPURA NATURAL: CRISIL Keeps B+ Debt Rating in Not Cooperating
TURQUOISE & GOLD: ICRA Keeps D Debt Ratings in Not Cooperating
VADIVEL PYROTECHS: ICRA Withdraws B+ Rating on INR15cr LT Loan
I N D O N E S I A
CIPUTRA DEVELOPMENT: Fitch Rates Proposed Unsec. Notes 'B+'
MEDCO ENERGI: Moody's Completes Review, Retains B1 Rating
PAN BROTHERS: Moody's Lowers CFR to Ca on Debt Restructuring Risk
SAKA ENERGI: Moody's Completes Review, Retains B2 CFR
J A P A N
MONTEROZA INC: Pub Chain Shuts 20% of its Locations Due to Virus
M A C A U
SJM HOLDINGS: Fitch Gives First-Time 'BB+' LT Foreign-Currency IDR
N E W Z E A L A N D
AIR NEW ZEALAND: Posts NZD454MM Net Loss for Year Ended June 30
S I N G A P O R E
ENRON CAPITAL: Creditors' Proofs of Debt Due January 22
S R I L A N K A
HATTON NATIONAL: Moody's Withdraws Caa1 Long Term Deposit Ratings
SAMPATH BANK: Moody's Withdraws Caa1 Long Term Deposit Ratings
- - - - -
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A U S T R A L I A
=================
DARLING HARBOUR: Second Creditors' Meeting Set for Jan. 28
----------------------------------------------------------
A second meeting of creditors in the proceedings of:
- Darling Harbour Pty. Ltd.
- St Wells Pty. Ltd.
- Surfers Paradise Pty Ltd
has been set for Jan. 28, 2021, at 10:00 a.m. via virtual meeting.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 27, 2021, at 4:00 p.m.
Patrick Loi and John Chand of Greengate Advisory NSW Pty Ltd were
appointed as administrators of Darling Harbour on Dec. 11, 2020.
INTERNATIONAL MONEY: Second Creditors' Meeting Set for Jan. 28
--------------------------------------------------------------
A second meeting of creditors in the proceedings of International
Money Management Pty. Ltd. has been set for Jan. 28, 2021, at 3:00
p.m. via virtual meeting.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 27, 2021, at 4:00 p.m.
Michael Gregory Jones and Daniel Robert Soire of Jones Partners
were appointed as administrators of International Money on Dec. 14,
2020.
[*] AUSTRALIA: Corporate Administration Jump 23% in December 2020
-----------------------------------------------------------------
Steven Deare at Perth Now reports that the number of administrators
being called to save battling businesses rose by more than 23% in
December, ahead of special pandemic protections lapsing.
There were 376 instances of administrators being called, which
included creditors and courts winding up businesses, and others
entering receivership, the report discloses citing ASIC data.
Perth Now relates that the federal government relieved directors of
personal liability for trading while insolvent and raised
thresholds for creditor demands for six months to December 31 last
year.
It said it wanted to reduce the chance of these threats
unnecessarily forcing businesses to wind up.
According to the report, CreditorWatch chief executive Patrick
Coghlan said most of the businesses having administrators called
were in retail, hospitality, tourism and education.
He said there would be a steady increase in administrators being
called.
"We expect the number to grow as more directors get back from
holidays to their desk and say 'we have to do this now'," the
report quotes Mr. Coghlan as saying. "There will be more
creditor-initiated windups and administrators being called going
forward."
The removal of government support programs such as JobKeeper could
add to stress for business, the report states.
Yet Mr. Coghlan said the figures were much lower than industry
expectations early in the pandemic, adds Perth Now.
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C H I N A
=========
GUORUI PROPERTIES: Fitch Corrects Jan. 14 Ratings Release
---------------------------------------------------------
Fitch Ratings issued a correction of a release published on 14
January 2021. It corrects the ESG sub-factor:
Fitch Ratings has assigned Guorui Properties Limited's (B-/Rating
Watch Negative (RWN)) proposed US dollar senior notes a 'B-(EXP)'
expected rating and a Recovery Rating of 'RR4' on RWN.
The proposed notes to be issued by Guorui are rated at the same
level as the company's senior unsecured rating because they
represent direct and senior unsecured obligations of the company.
The final rating on the proposed notes is subject to adequate
acceptance of an exchange offer for the company's USD455 million
puttable notes and receipt of final documentation conforming to
information already received.
Guorui's ratings were placed on RWN in January 2020 to reflect the
uncertainty over the refinancing arrangements for the China-based
homebuilder's puttable notes. Successful issuance of the proposed
notes, raising a sufficient amount, may alleviate the refinancing
risk and lead to the resolution of the RWN.
Guorui's credit profile is underpinned by a quality land bank that
is large enough to support sustained development in the next
nine-to-10 years, and a moderate leverage of 50%-55%.
KEY RATING DRIVERS
Puttable Bonds: The put option on Guorui's USD455 million senior
unsecured notes due February 2022 may be exercised on 27 February
2021. Guorui had limited cash at end-2020, which means the company
will need to rely on refinancing to address its maturing debt.
Exchange Offer and New Notes: Guorui announced its refinancing plan
on 12 January 2021, which included issuing exchange bonds and new
offshore debt. The company is seeking to reach a minimum acceptance
amount of USD300 million out of the outstanding USD455 million, as
well as solicit the consent of existing bondholders on amending
certain provisions on the US dollar bonds for additional financial
flexibility.
Fitch does not consider the proposed exchange offer to be a
distressed debt exchange because it does not impose a material
reduction in terms compared with the original contractual terms. In
addition, the company has alternative funding available to redeem
the bond, if needed.
Alternative Funding: Guorui also has the option to use onshore
funding to address the offshore debt. It secured CNY11 billion in
unused bank facilities at end-November 2020, a significant increase
from the CNY1.4 billion at end-2019, mainly from the four largest
state banks in China. Fitch believes Guorui's large net
unencumbered assets of CNY27 billion at end-1H20 provide the
company sufficient room for refinancing onshore. Guorui has a quota
for remitting onshore funds offshore, although the amount is not
sufficient to cover the USD455 million in maturing debt.
Solid Sales: Guorui had CNY12.9 billion in attributable sales in
11M20, already meeting its internal target of CNY12.4 billion for
the full year. Its sales recovered strongly in 2H20 after a weak
performance in 1H20, supported by sufficient saleable resources and
stimulated by the company's promotions. The 11M20 cash collection
rate was satisfactory at 85%, in line with the industry average.
Land Acquisitions Halted: Guorui continued its 2020 strategy of not
budgeting for land acquisitions to date. Fitch believes Guorui's
large land bank can support its sustained business development
without land replenishment exerting additional pressure on
liquidity. Guorui had 9 million sq m on an attributable basis at
end-June 2020, which can sustain nine-10 years of development.
The majority of Guorui's land bank is located in Tier 1-2 or Tier 3
cities that benefit from the spillover from core cities, where
demand remains robust. Fitch estimates Guorui had leverage of
50%-55% at end-2020 (end-2019: 55.5%), supported by the
stabilisation in sales and limited cash outflows in construction
and land acquisition.
ESG - Governance: Guorui has an ESG Relevance Score of '5' for
Management Strategy - a level indicating that the company's rating
is affected by this environmental, social and governance (ESG)
sub-factor - in light of its weak liquidity management. Fitch
believes management needs to establish a clearer and longer record
in consistently improving liquidity conditions before the rating
constraint is removed.
DERIVATION SUMMARY
Guorui's ratings are supported by its quality land bank, which is
enough for nine-10 years of development, longer than that of peers
in the 'B' rating category, which have land-bank life of three to
five years. Its cheap land cost supports good profitability of
above 30%, which is better than that of peers such as Modern Land
(China) Co., Limited (B/Stable).
Guorui's leverage of 50%-55% falls in the mid-range for 'B'
category peers, and is comparable with that of Beijing Hongkun
Weiye Real Estate Development Co., Ltd. (B/Stable) in Fitch’s
forecast. Guorui also enjoys stable rental income from its quality
investment properties, which generate more than CNY600 million in
rental income annually. Guorui's recurring EBITDA to interest
coverage of 0.2x is larger than that of most peers in the 'B'
rating category.
However, Guorui's ratings are constrained by its liquidity, which
is weak compared with that of 'B' category peers, as they typically
have cash-to-short-term debt ratios of above 50%.
Hongkun is Guorui's most comparable peer. Both have similar sales
of above CNY11 billion and regional focus in the Bohai area.
Hongkun is more geographically concentrated in the Bohai area,
which accounted for around 80% of its land bank. Hongkun's
land-bank life, at three-four years, is shorter than Guorui's
nine-10 years. Guorui's investment-property assets are better than
Hongkun's, which are valued at CNY8 billion and generate annual
income of CNY200 million. However, Guorui is subject to higher
liquidity risk due to its opportunistic liquidity management, with
a cash-to-short-term debt ratio sustained at around 20%, lower than
Hongkun's above 1x. As a result, Guorui is rated one notch lower
than Hongkun.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Attributable contracted sales rising by 15%-20% yoy in 2020
and followed by single-digit growth of 0%-5% from 2021, with a
cash collection rate of 85%
-- 30% of contracted sales proceeds to be spent on land
acquisitions in 2021
-- EBITDA margin, excluding capitalised interest from cost of
sales, at around 25%-30% in 2020-2021
-- Rental income from investment properties at CNY670 million-770
million in 2020-2021
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that Guorui would be reorganized
rather than liquidated in a bankruptcy
-- Fitch has assumed a 10% administrative claim.
Liquidation Approach
-- The liquidation estimate reflects Fitch's view of the value of
balance-sheet assets that can be realised in a sale or
liquidation processes conducted during a bankruptcy or
insolvency proceedings and distributed to creditors.
-- Advance rate of 100% applied to cash and restricted cash
-- The 75% inventory advance rate is supported by a quality asset
base, which can generate an EBITDA margin of 25%-30%
-- Advance rate of 60% applied to property, plant and equipment
-- Advance rate of 45% on investment property is supported by
Guorui's investment-property portfolio located in Beijing and
four Tier-2 cities, together generating rental yield of above
3%
-- Trade payables and onshore borrowings are superior to offshore
senior unsecured debt in the waterfall.
-- The allocation of value in the liability waterfall results in
recovery corresponding to an 'RR1' Recovery Rating for secured
loans and a recovery corresponding to an 'RR1' Recovery Rating
for the senior unsecured debt. However, the Recovery Rating
for the senior unsecured debt is at 'RR4' because under
Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, China falls into Group D of creditor friendliness,
and the Recovery Ratings on instruments of issuers with assets
in this group are subject to a cap of 'RR4'.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful refinancing of the offshore debt puttable in
February 2021 and demonstrated improvement in the debt
maturity profile and liquidity management.
Factor that could, individually or collectively, lead to negative
rating action/downgrade, potentially a multiple-notch downgrade:
-- Failure to progress towards refinancing offshore debt
according to plans communicated to Fitch
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Tight Liquidity: Guorui's unrestricted cash on hand at end-2020 was
not sufficient to cover its short-term debt in Fitch's estimate,
considering the large maturities due and turning puttable, despite
stronger internal liquidity generation in 2020. Guorui's ratio of
unrestricted cash to short-term debt has been consistently low at
20% and below since 2017 (end-1H20: 18%), which reflects poor
liquidity management, in Fitch's view.
ESG Considerations
Guorui has an ESG Relevance Score of '5' for Management Strategy
due to its weak liquidity management, which has a negative impact
on the credit profile, and is highly relevant to the rating.
Except for the matters discussed above, the highest level of ESG
credit relevance, if present, is a score of '3'. This means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or to the way in which they
are being managed by the entity.
HONGHUA GROUP: Moody's Completes Review, Retains B1 CFR
-------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Honghua Group Limited and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on January 12, 2021 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.
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.
Honghua Group Limited's (Honghua) B1 corporate family rating
reflects its standalone credit strength and a one-notch uplift,
based on Moody's expectation that the company will receive
extraordinary support from its largest shareholder, China Aerospace
Science and Industry Corporation (CASIC), in times of financial
distress.
Honghua's standalone credit strength reflects the operational
benefits from CASIC, Honghua's strong market position and
competitive edge in its land-drilling rigs and equipment business,
and its geographically diversified business portfolio.
Honghua's standalone credit strength is constrained by its exposure
to oil price volatility and high customer concentration. The
company is also exposed to emerging market risks. In addition, the
company shows high but improving debt leverage and weak liquidity.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
JIAYUAN INT'L: Fitch Assigns B Rating on Proposed USD Bonds
-----------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Jiayuan
International Group Limited's (B/Positive) proposed US dollar bonds
a rating of 'B', with a Recovery Rating of 'RR4'. The proposed
notes are rated at the same level as Jiayuan's senior unsecured
rating because they will constitute its direct and senior unsecured
obligations.
Jiayuan's ratings are supported by the company's strong presence in
the Yangtze River Delta and high profitability. The ratings are
constrained by the company's limited history of operating outside
the Yangtze River Delta, significant related-party transactions and
tight liquidity.
The Positive Outlook reflects Jiayuan's commitment to be
disciplined about future asset acquisitions from sister company
Jiayuan Chuangsheng Holding Group Co., Ltd, as well as the
company's efforts to address upcoming debt maturities and improve
its debt maturity profile.
KEY RATING DRIVERS
Yangtze River Delta Focus: Jiayuan has operated for more than 15
years in the Yangtze River Delta, especially in Jiangsu Province.
The injection in 2018-2019 of property development projects from
its largest shareholder, which were previously held by Jiayuan
Chuangsheng, accelerated Jiayuan's expansion into Shanghai and
Anhui Province. Aside from the injections, Jiayuan has also been
gradually expanding into certain Tier 2 and 3 cities in southern
and western China, such as Huizhou in Guangdong, and Urumqi in
Xinjiang, from 2016.
Fitch expects the Yangtze River Delta to continue to account for
the majority of sales in the next year or two, as nearly half of
Jiayuan's land bank was in the region at end-1H20 and demand there
remains robust. Three provinces in the Yangtze River Delta,
Jiangsu, Anhui and Shanghai, together contributed more than 85% of
Jiayuan's attributable sales in 2019 and 2020; Jiangsu alone
contributed 63% in 2019 and 52% in 2020.
Strong Profitability: Jiayuan's EBITDA margin (excluding
capitalised interest) has been high at above 30%, thanks to deep
penetration in the Yangtze River Delta and cheap land acquired
years ago. Its average land cost was low at around CNY1,850 per
square metre (sqm) at end-1H20, less than 20% of average selling
price of its contracted sales of around CNY11,000/sqm. Unrecognised
contracted sales of CNY19.5 billion at end-1H20 had a high gross
profit margin of 30% on average, ensuring Jiayuan's profitability
for next one to two years.
Fitch expects Jiaiyuan's profitability to deteriorate as it expands
outside Jiangsu and the Yangtze River Delta, because it will have
to buy more land via public auctions, where competition is fierce.
Fitch forecasts EBITDA margin to gradually narrow to around 30% in
the medium term, from the current 35% and above.
Related-Party Land Acquisitions: Jiayuan acquired some property
development projects from its largest shareholder, Mr Shum Tin
Ching, and Jiayuan Chuangsheng in 2018- 2019 for total enterprise
value of CNY5.5 billion. The acquisitions accounted for 13% and 59%
of land acquisitions by Jiayuan in 2018 and 2019 by value,
respectively. Jiayuan announced it would acquire more assets from
Mr Shum and Jiayuan Chuangsheng in January 2021. Fitch generally
views large related-party transactions as credit constraints,
although the risks for Jiayuan are mitigated by the checks and
balances in the rules for Hong Kong-listed companies.
Sales Growth to Slow: Jiayuan's annual attributable sales of CNY25
billion-30 billion is at the low end for 'B+' rated peers, most of
which have annual attributable sales of CNY40 billion or more.
Fitch expects Jiayuan's sales to be supported by robust demand in
Tier 2-3 and satellite cities in the Yangtze River Delta in the
next two to three years. However, sales growth will slow as it
expands into lower-tier cities and less-developed regions, where
housing demand is less resilient. Land bank outside of the Yangtze
River Delta made up more than one third of its land bank at
end-1H20, compared to nil at end-2016.
Sister Company's Credit Profile: Fitch takes into consideration
Jiayuan Chuangsheng's credit profile and assesses the combined
leverage of Jiayuan and its sister company, to reflect the moderate
linkages between the two entities and Jiayuan Chuangsheng's weaker
financial profile and liquidity than Jiayuan.
Moderate Leverage: Leverage, as measured by net debt/adjusted
inventory, for the combined Jianyuan and Jiayuan Chuangsheng was
around 47% at end-2019 and 44% at end-1H20, comparable with the
median level of 50% for Fitch-rated developers in the 'B' rating
category. Jiayuan Chuangsheng is more leveraged than Jiayuan, with
its leverage at 50%-55% over the past one to two years, compared
with Jiayuan's 35% at end-2019 and end-June 2020. Jiayuan
Chuangsheng's liquidity position, as measured by available cash to
short-term debt, was only at 0.5x at end-June 20, compared with
Jiayuan's 1x.
ESG - Group and Governance Structure: Jiayuan has an ESG Relevance
Score of 4 for Group Structure - which reflects the large
related-party transactions, which has a negative impact on the
credit profile, and is relevant to the rating in conjunction with
other factors. Jiayuan also has an ESG Relevance Score of 4 for
Governance Structure as its shareholding is highly concentrated in
its single largest shareholder, who owns a 69.74% equity stake.
This has a negative impact on the credit profile, and is relevant
to the rating in conjunction with other factors.
DERIVATION SUMMARY
Jiayuan's business and financial profile is comparable with that of
Chinese property developers rated 'B' and 'B+'. Jiayuan's
attributable contracted sales of CNY25 billion-30 billion are
smaller than most peers rated at 'B+', which have sales of CNY40
billion-50 billion, except for Hong Yang Group Company Limited
(B+/Stable), which had sales of CNY30 billion, and Fantasia
Holdings Group Co., Limited (B+/Stable), with sales of CNY27
billion.
Jiayuan's business profile is supported by its good-quality land
bank in the Yangtze River Delta that was acquired years ago, which
supports a healthy margin and its operational scale of above CNY20
billion. Fitch forecasts its standalone leverage at 40%-45% for
2020-2021, which is similar to the 40%-50% of most 'B+' peers, such
as Helenbergh China Holdings Limited (B+/Stable). Jiayuan's
profitability is among the highest of its peers, which averaged at
20%-25%, and supports its ratings.
Jiayuan's ratings are constrained by the presence of large
related-party transactions and its tight liquidity and large
upcoming debt maturities.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Attributable sales to grow by 5%-10% per year in 2021-2022;
-- Cash collection rate at 80% during 2020-2023;
-- Land premium to represent 40%-45% of sales receipts during
2020-2022 to maintain a land bank life of around three years;
-- Construction expenditure equivalent to 40%-45% of sales
receipts during 2020-2022
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that Jiayuan would be liquidated
in bankruptcy because it is an asset-trading company.
-- Fitch has assumed a 10% administrative claim.
Liquidation Approach
-- The liquidation estimate reflects Fitch's view of the value of
balance sheet assets that can be realised in sale or
liquidation processes conducted during a bankruptcy or
insolvency proceeding and distributed to creditors.
-- The 80% advance rate applied to adjusted inventory is
supported by Jiayuan's high-profit products, which generate an
EBITDA margin of above 30%.
-- Advance rate of 70% applied to trade receivables.
-- Advance rate of 60% applied to property, plant and equipment.
-- Advance rate of 45% applied to the investment property
portfolio, considering the limited rental income of around
CNY200 million and low rental yield of 3%.
-- Advance rate of 60% applied to excess cash, which is defined
as available cash (CNY7,889m at end-1H20) after deducting by
three months of contracted sales of around CNY6 billion.
-- Advance rate of 100% applied to restricted cash.
-- The allocation of value in the liability waterfall results in
recovery corresponding to an 'RR1' Recovery Rating for secured
loans and a recovery corresponding to an 'RR1' Recovery Rating
for the senior unsecured debt. However, the Recovery Rating
for the senior unsecured debt is at 'RR4' because under
Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, China falls into Group D of creditor friendliness,
and the Recovery Ratings on instruments of issuers with assets
in this group are subject to a cap of 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A longer track record of strong corporate governance
practices;
-- Successful refinancing of upcoming bond maturities and an
improvement in overall debt maturity profile;
-- Combined leverage of Jiayuan and Jiayuan Chuangsheng sustained
below 50%.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to reach Fitch’s Positive Outlook guidelines in the
next 18-24 months would lead to the Outlook reverting to
Stable.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Large Debt Maturities in 2021: Fitch expects liquidity to weaken by
end-2020 in face of a large amount of debt maturing in 2021. There
will be more than USD1 billion (CNY6.6 billion) of bonds due or
puttable in 2021, comprising USD322.5 million of bonds that turn
puttable in March 2021, USD250 million of bonds puttable in May
2021, USD120 million of bonds due in June 2021, and USD327.5
million of bonds puttable in October 2021.
The tight liquidity is mitigated by the company's refinancing
abilities, sufficient lead time to address the maturities, and its
strong sales in the year to-date. Jiayuan in September and November
2020 issued USD500 million of senior notes with tenors of 2-2.5
years to refinance its short-term capital market maturities.
Jiayuan had CNY7.9 billion of unrestricted cash and CNY3.4 billion
of unused bank facilities at end-1H20, sufficient to cover CNY7.9
billion of short-term debt.
ESG CONSIDERATIONS
Jiayuan has an ESG Relevance Score of 4 for Group Structure, which
reflects the large related-party transactions, which has a negative
impact on the credit profile, and is relevant to the rating in
conjunction with other factors. Jiayuan also has an ESG Relevance
Score of 4 for Governance Structure as its shareholding is highly
concentrated in its single largest shareholder, who owns a 69.74%
equity stake. This has a negative impact on the credit profile, and
is relevant to the rating in conjunction with other factors.
Except for the matters discussed above, the highest level of ESG
credit relevance, if present, is a score of 3 - ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
JIAYUAN INTERNATIONAL: Moody's Gives B3 Rating to New USD Notes
---------------------------------------------------------------
Moody's Investors Service has assigned a B3 senior unsecured rating
to the proposed USD notes to be issued by Jiayuan International
Group Limited (B2 stable).
The rating outlook is stable.
Jiayuan will use the proceeds from the notes to refinance existing
debt.
RATINGS RATIONALE
"Jiayuan's B2 corporate family rating reflects the company's track
record in its core markets in the Yangtze River Delta, underpinned
by its strong sales execution; and its low-cost and quality land
bank," says Danny Chan, a Moody's Assistant Vice President and
Analyst.
"On the other hand, the B2 CFR is constrained by Jiayuan's small
operating scale, moderate geographic diversification, and the
financial risks associated with its debt-funded business growth,"
adds Chan.
The proposed notes will improve Jiayuan's liquidity and debt
maturity profile without substantially impacting its credit
metrics, because the company will mainly use the proceeds to
refinance existing debt.
Moody's expects Jiayuan's revenue/adjusted debt will improve to
91%-98% over the next 12-18 months from 91.4% for the 12 months
ended June 30, 2020 as revenue growth from strong pre-sales in the
past two years outweigh debt growth to replenish the company's land
bank.
Meanwhile, the company's adjusted EBIT/interest will remain strong
in the range of 3.3x-3.8x from 3.6x over the same period, given the
expected decline in gross margin will be offset by ongoing
improvement in debt structure by refinancing trust loans with
low-cost bank borrowings.
Moody's expects that Jiayuan's contracted sales will grow to around
RMB40 billion over the next 12-18 months from RMB32 billion for the
12 months ended June 30, 2020, considering its sufficient salable
resources and the solid housing demand in its core markets. In the
full year of 2020, the company's contracted sales grew 7% to
RMB30.8 billion.
Jiayuan's senior unsecured rating of B3 is one notch below its B2
CFR because of legal and structural subordination risk. Most of the
claims are at the operating subsidiaries and, in the event of a
bankruptcy, they have priority over claims at the holding company.
In addition, the holding company lacks significant mitigating
factors for structural subordination. As a result, the expected
recovery rate for claims at the holding company will be low.
Jiayuan's liquidity is adequate. Its cash holdings of RMB9.1
billion at the end of June 2020 covered 114% of its short-term
debt. Moody's expects the company's cash holdings, together with
its contracted sales proceeds after deducting basic operating cash
flow items, will enable the company to meet its refinancing needs
over the next 12 months.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered the risks associated with the concentration
of the company's ownership in Mr. Shum Tin Ching, who held a 69.7%
stake in Jiayuan and pledged around 12.7% of the company's total
outstanding shares for financing as of July 31, 2020.
These risks are mitigated by the company's listed status on the
Hong Kong Stock Exchange and the application of the Hong Kong
Listing Rules and Securities and Future Ordinance on the company.
In addition, Mr. Shum has demonstrated his commitment to the
company by injecting assets to strengthen its operations and equity
base, and reducing his share pledge loan to lower the risk of a
change in control.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's expectation that the company's
liquidity will remain adequate, with continued access to the
onshore and offshore loan and debt capital markets; and the company
will grow its contracted sales and maintain cash collections as
planned over the next 12-18 months.
Moody's could upgrade the ratings if Jiayuan (1) grows its business
while improving its credit metrics, with adjusted revenue/debt
above 70% and EBIT/interest above 3.0x on a sustained basis; (2)
maintains adequate liquidity, with cash/short-term debt
consistently above 1.5x; and (3) keeps the risk of a change of
control at a low level.
Moody's could downgrade the ratings if Jiayuan's liquidity weakens;
the risk of a change in control increases; or contracted sales or
revenue prove weaker than Moody's had expected, leading to a
deterioration in the company's credit metrics.
Credit metrics indicative of a downgrade include adjusted
revenue/debt below 55%, EBIT/interest below 2.0x, or
cash/short-term debt below 1.0x, all on a sustained basis.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Jiayuan International Group Limited develops mass-market
residential properties mainly in Jiangsu and Anhui provinces. The
company had a total land bank of around 17 million square meters at
the end of June 2020. It also develops and operates commercial
properties alongside its residential property projects.
SINIC HOLDINGS: Fitch Assigns B+ Rating to Proposed USD Notes
-------------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Sinic Holdings
(Group) Company Limited's (B+/Stable) proposed 364-day US dollar
senior notes a 'B+' rating, with a Recovery Rating of 'RR4'.
The proposed notes are rated at the same level as Sinic's senior
unsecured rating because they constitute its direct and senior
unsecured obligations. Sinic intends to use the net proceeds from
the issue in accordance the company's Green, Social, Sustainability
Financing Framework. Sinic may adjust the plans in response to
changing market conditions and, thus, reallocate the use of the
proceeds. The use of proceeds will comply with the description
titled "Notes Being Issued as Green Notes" in the offering
document.
Sinic's rating is supported by its diverse land bank, healthy
contracted sales growth, fast sales churn and good margin. Sinic's
leverage - defined by net debt (including guarantees to joint
ventures (JV) and associates)/adjusted inventory - of below 55% at
end-1H20 is at the higher end of that of 'B+' rated peers, which
constrains the rating. This is mitigated by its quality land bank
that is sufficient for development over the next three-to-four
years. This allows flexibility in land acquisition in the next 24
months. Fitch believes its fast-churn model will help leverage stay
below 55% in the forecast period to 2023. At the same time, Sinic
has a short operating history and a limited record in a downcycle.
KEY RATING DRIVERS
Strong Position in Jiangxi: Sinic has strong brand recognition in
Jiangxi province and its capital, Nanchang, and was the province's
top-selling developer from 2017 to 2019. It was also among the
top-five developers in Guangdong province's Huizhou by contracted
sales in 2019. Sinic has been diversifying outside of its home
market in Jiangxi and has strengthened its presence in the Greater
Bay Area, the Yangtze River Delta and central-western China.
It had 138 projects in 37 cities in four regions across China by
end-1H20. Sinic's attributable contracted sales rose by 7% yoy in
1H20, mainly driven by an average selling price (ASP) of CNY14,264
per sq m.
High Leverage: Sinic had CNY10.8 billion in net debt on its
consolidated balance sheet and also provided CNY8.3 billion in
guarantees for its JVs and associates as of end-1H20. The
attributable aggregated leverage at the JVs is higher than that of
its consolidated accounts. Fitch has included the guarantees to JVs
in calculating Sinic's leverage of below 55% at end-1H20. If Fitch
was to exclude the guarantees, Sinic's leverage would have been
around 30% at end-1H20, lower than that of many 'B+' peers. Fitch
expects its leverage to stay below 55% in the forecast period, as
the company plans to spend no more than 50% of its sales proceeds
on land acquisition and provide fewer debt guarantees to its JVs.
Significant Minority Shareholders: Total non-controlling interest
in Sinic's balance sheet increased to CNY7.7 billion in 1H20, from
CNY0.8 billion in 2018, as minority shareholders injected capital
into Sinic's projects. Non-controlling interest accounted for 47.6%
of total equity at end-1H20, which is relatively high among peers.
This reduces Sinic's financial flexibility compared with
homebuilders with lower non-controlling interest, which can
potentially dispose of stakes in projects to reduce leverage.
Short Operating History: Sinic only acquired its first piece of
land in 2010 and started to expand nationally from its home market,
Nanchang, in 2016, when the Chinese property sector was in an
upcycle. Its ability to weather a downturn is still untested. Its
recent effort to expand outside of its home market in Jiangxi is
also subject to execution risk. The company has operations in 21
cities with only one project each, which may lead to higher
operating costs.
Adequate Land Bank: Sinic's attributable unsold land reserves of
10.4 million sq m at end-1H20 are sufficient for development over
the next three-to-four years. This means the company is not under
immediate pressure to replenish its land bank to sustain contracted
sales growth, which gives it more room to lower its leverage and
control its land cost. Fitch believes cautious land acquisition
will help its EBITDA margin stay above 28% in 2020 and above 24% in
the forecast period.
Improved Access to Funding: Sinic's cost of funding has been
relatively high at more than 9%, but Fitch expects this to fall as
more expensive trust loans are replaced with lower-cost financing.
Its IPO in November 2019 also improved its access to funding. The
proportion of bank borrowings increased over the past three years
and bank loans made up 57% of its debt as of end-2019. The company
continues to replace costly onshore trust and asset-management
company loans with onshore and offshore funding including bonds,
asset-backed securities and syndicated loans.
DERIVATION SUMMARY
Sinic's business profile is supported by its leading market
position in Jiangxi, healthy margins, and operating scale. Its
attributable contracted sales scale of CNY45 billion in 2019 is
larger than that of Fantasia Holdings Group Co., Limited
(B+/Stable) and Hopson Development Holdings Limited (B+/Stable).
Sinic's contracted sales scale is 15% larger than that of Hong Kong
JunFa Property Company Limited (B+/Stable). Sinic's better
land-bank quality is evident from its higher ASP. Sinic's land bank
is also more widely spread across China compared with Junfa's land
bank, which is highly concentrated in Kunming. Sinic has a higher
churn rate in terms of contracted sales to total debt but a lower
EBITDA margin. Junfa has much stronger recurring income interest
coverage and lower leverage.
Sinic's ratings are mainly constrained by its financial profile.
The company's CNY8.3 billion in guarantees to its JVs and
associates accounted for 23% of total debt on its consolidated
balance sheet. Its leverage, including guarantees to JVs and
associates, of below 55% at end-1H20 is higher than that of most of
its 'B+' rated peers, which have leverage below 50%.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Land-bank life will stay above three years in 2020-2023
-- Gross floor area (GFA) acquired is 0.9x-1.0x of its GFA sold
in 2020-2023
-- ASP to rise 20% in 2020 and 2% per year in 2021-2023
-- Development-property cost of goods sold kept at 71% of sales
in 2020-2023
-- Selling, general and administrative expenses at 4.3% of
contracted sales in 2020-2023
-- Dividend payout ratio of 25% in 2020-2023
Recovery Assumptions:
-- 25% haircut to net inventory and JV proportionately
consolidated adjusted inventory in light of Sinic's EBITDA
margin of around 25%-30%
-- 70% haircut to investment properties
-- 30% haircut to account receivables
-- 60% standard haircut to net property, plant and equipment
-- No haircut on restricted cash
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Leverage (net debt/adjusted inventory) sustained below 45%
-- EBITDA margin, after adding back capitalised interest in cost
of goods sold, above 25% for a sustained period
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Leverage (net debt/adjusted inventory) above 55% for a
sustained period
-- EBITDA margin, after adding back capitalised interest in cost
of goods sold, below 20% for a sustained period
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Sinic's short-term debt amounted to CNY12.7
billion, or 44% of its total debt, as of end-1H20. Available cash
to short-term debt was 1.0x. Its total cash of CNY17.7 billion,
after taking into account restricted cash, was enough to cover its
short-term debt by a multiple of 1.4x. Sinic's debt maturities are
concentrated in 2020-2022 with 44% of its debt maturing in 2021 and
12% after 2022.
The company is committed to improving its debt-maturity profile and
capital structure through broadening its financing channels to
support its long-term growth sustainably. Sinic's IPO in 2019
reduces its reliance on debt financing. It plans to lengthen its
debt-maturity profile through various funding options, such as both
onshore and offshore issuance, and refinancing trust loans with
bank syndicated loans.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
XINYUAN REAL ESTATE: Fitch Rates Proposed USD Unsec. Notes 'B-'
---------------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Xinyuan Real
Estate Co., Ltd.'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 Xinyuan'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 issuance for refinancing and general corporate purposes.
Xinyuan's ratings are constrained by the high leverage, measured by
net debt/adjusted inventory. We expect leverage to remain above 50%
in the next few years despite deleveraging efforts.
KEY RATING DRIVERS
Leverage Remains High: Xinyuan has slowed its land acquisitions to
deleverage. Leverage was 60% at end-1H20 and 54% at end-2019,
against 62% at end-2018. The company had a saleable land bank of
4.3 million sq m in China as of end-1H20, with estimated saleable
resources of around CNY60 billion-70 billion. This is equivalent to
around three years of land bank life. We believe there is limited
room for further deleveraging, and we expect leverage to remain at
55%-59% over the next few years.
Contracted Sales Growth Picks Up: The company's total contracted
sales rose by 20% yoy to CNY8.3 billion in 1H20, about 40% of the
full-year target of CNY20 billion-22 billion. They fell by 3% to
CNY14.6 billion in 2019, due to the delay of some project launches.
These projects were pushed back to 2020, supporting management's
higher sales target, which implies over 30% yoy growth. We estimate
the company's attributable interest in contracted sales remained
above 90%, which is higher than that of most peers.
Lower Cash Collection Rate: The cash collection rate was lower than
usual at around 70% in 1H20 because of tightened mortgage approval
and slower loan disbursements in certain cities, as well as
instalment options offered in some cities to boost sales during the
coronavirus pandemic. We expect the cash collection rate to return
to around 80% for the full year.
Stable Underlying Margin: Xinyuan's gross profit margin in 1H20 was
affected by one-off adjustments and came in at 12% (2019: 23%).
Gross profit is dependent on assumptions about the average selling
price (ASP) and project costs because of the
percentage-of-completion revenue recognition method. According to
the company, the normalised gross profit margin was stable at 23%
in 1H20 and should remain in the 20%-25% range in the next few
years.
Quality Land Bank: More than 90% of Xinyuan's land bank is located
in Tier 2 cities in central China, western China and the Yangtze
River Delta; with half of these land plots in Zhengzhou, the
capital of Henan province. We expect the company's ASP to remain
stable at around CNY13,000/sqm.
DERIVATION SUMMARY
Xinyuan's ratings are constrained mainly by the high leverage,
which is significantly higher than that of 'B' rated peers, such as
Modern Land (China) Co., Limited (B/Stable) and Redco Properties
Group Ltd (B/Positive). Beijing Hongkun Weiye Real Estate
Development Co., Ltd.'s (B/Stable) leverage is also high at above
50%, but its EBITDA margin is much wider than that of Xinyuan.
Xinyuan has similar contracted sales scale and leverage to that of
Guorui Properties Limited (B-/Rating Watch Negative), but Guorui's
liquidity position is significantly weaker.
Xinyuan's business profile is comparable with that of 'B' rated
peers. Its attributable contracted sales of CNY15 billion were in
line with those of Beijing Hongkun Weiye and Redco. The quality of
Xinyuan's land bank is satisfactory, with an ASP of around
CNY13,000/sqm and more than 90% of its land bank is in Tier 2
cities.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- 14% growth in attributable contracted sales (12% growth in
gross floor area (GFA) sold and 2% ASP growth) in 2020; 7%
CAGR in contracted sales (5% CAGR in GFA sold and 2% CAGR in
ASP) thereafter;
-- Cash collection rate of 80% in 2020 and 85% in 2021-2023
(2019: 89%, 2018: 87%);
-- Land acquisition cost at 20% of sales proceeds in 2020 and 38%
thereafter;
-- Construction cost at 32%-34% of sales proceeds in 2020-2023;
-- Adjusted EBITDA margin (excluding capitalised interest and
assumption changes) of 19%-20% in 2020-2023 (2019: 21%).
Key Recovery Rating Assumptions:
-- The recovery analysis assumes that Xinyuan 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 sale or
liquidation processes conducted during a bankruptcy or
insolvency proceeding and distributed to creditors;
-- 100% advance rate applied to available cash, with trade
payables added to the repayment waterfall since available cash
is less than trade payables;
-- 100% advance rate applied to restricted cash;
-- 65% advance rate applied to net inventory and joint ventures,
given underlying EBITDA margin of 19%-20%;
-- 70% advance rate applied to trade receivables;
-- 60% advance rate applied to property, plant and equipment;
-- 50% advance rate applied to investment properties;
-- These assumptions result in a recovery rate for the offshore
senior unsecured debt within the 'RR4' range.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Net debt/adjusted inventory sustained below 50%;
-- EBITDA margin sustained above 15%;
-- Contracted sales sustained above CNY15 billion.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Net debt/adjusted inventory above 65% for a sustained period;
-- Deterioration in liquidity position;
-- Inability to refinance short-term debt.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Manageable Liquidity: Xinyuan's liquidity position is tight but
manageable. Xinyuan's total cash/short-term debt ratio remained
stable at 0.7x at end-1H20 (end-2019: 0.7x), with USD0.8 billion of
total cash and USD1.2 billion of short-term debt. Its available
cash/short-term capital-market debt ratio was 1.1x at end-1H20,
with USD0.7 billion of available cash to cover USD0.6 billion of
capital market maturities in the following 12 months.
Xinyuan's upcoming capital market maturities include USD224 million
in February 2021 and USD254 million in October 2021. The company
plans to refinance most of the February maturity with the proposed
issuance. It is also prepared to repay the balance with internal
resources if the proposed bond issuance does not materialise.
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.
YONGCHENG COAL: Regulator Criticizes Three Bond Underwriters
------------------------------------------------------------
Liang Hong and Luo Meihan at Caixin Global report that China's
interbank bond market regulator has criticized three more financial
institutions involved in shady bond issuances by state-owned
Yongcheng Coal, the latest of 11 companies to be named and shamed
after the coal miner's surprise default shattered confidence in
debt offerings by state-owned enterprises (SOEs).
On Jan. 15, the National Association of Financial Market
Institutional Investors (NAFMII), a self-regulatory body under
China's central bank, announced that three major underwriters of
Yongcheng Coal's bonds - Industrial Bank Co. Ltd. (link in
Chinese), China Everbright Bank Co. Ltd. (link in Chinese) and
Zhongyuan Bank Co. Ltd. (link in Chinese) - had violated
self-regulatory rules of the interbank bond market, Caixin says.
Caixin relates that violations included failing to adequately
ensure the quality of due diligence and further verify Yongcheng
Coal and Electricity Holding Group Co. Ltd.'s independence or
anomalies in its cash, NAFMII said.
About Yongcheng Coal
Yongcheng Coal & Electricity Holding Group Co. Ltd. mines and
distributes coal products. The Company produces brown coal
products, bituminous coal products, hard coal products, coking coal
products, and other related products. Yongcheng Coal & Electricity
Holding Group also provides electric generation, apparel
processing, trade, and other related services.
The company defaulted on a CNY1 billion (US$152 million) bond on
November 10, 2020.
[*] CHINA: Braces for Another Record Year of Bond Defaults
----------------------------------------------------------
Pearl Liu at South China Morning Post reports that China's
corporate defaults may set a record this year when a trio of the
central bank's debt limits kick in this month, as they crimp the
ability by borrowers to use loans to repay their outstanding debt.
One in five of China's biggest real estate developers including
China Evergrande Group will be barred from borrowing any more money
from banks according to the three red lines on debt drawn by the
People's Bank of China, the state-owned Economic Information Daily
said, the Post relays.
The Post relates that the red lines are different limits on
borrowings: liability-to-asset ratio excluding advanced receipts at
70 per cent, net debt-to-equity ratio at 100 per cent; and cash to
short-term debt ratio at one time, outlined in Beijing last August
during a financial symposium.
"If a developer crosses all three red lines, its total debt level
would not be allowed to increase any more," the report quotes S&P
Global Ratings' director Esther Liu, as saying adding that only 6.3
per cent of all rated Chinese developers can comply with the
limits. "This means the developer cannot borrow more from banks or
other financial institutions if its existing debts have not been
paid, or if its overall leverage has not improved."
The Post says the government, presiding over the only major global
economy that actually grew in 2020, is zealously keeping its iron
grip on the country's debt to avoid causing systemic risk to banks.
Regulators are also anxious to avoid runaway debt from setting off
the kind of global financial crisis that followed the US subprime
loans defaults in 2008. The real estate and construction industry
contribute to about 29 per cent of China's economic output.
Chocking off the financial lifelines of borrowers could drive many
debt issuers into defaults in China's US$15 trillion bond market at
a time of lacklustre consumer demand and uncertain job prospects
amid a raging global coronavirus pandemic, the report notes.
Chinese developers have a record CNY1.2 trillion (US$184.7 billion)
of debt due by the end of this year, 36 per cent more than in 2020,
according to Beike Real Estate Research Institute.
The Chinese central bank and financial regulators are classifying
developers - among the heaviest borrowers in China - into four
tiers based on the three red lines. The most indebted borrowers,
such as China Evergrande Group, are tagged red, and completely
barred from taking on more loans, the Post says.
Seven developers, or more than 20 per cent of the 30 biggest of
them listed on the stock exchanges of Shanghai, Shenzhen and Hong
Kong, are currently tagged as "red," the Post discloses citing a
January 11 report by Northeast Securities.
"It's not entirely clear how this will be implemented in practice,
as there's no official release of details," said S&P's Liu.
Companies would be allowed to borrow more from banks and increase
their debt by 5 per cent annually for each redline threshold that
they meet, for a maximum yearly debt expansion of 15 per cent,
starting from January 1, the Post adds citing the Economic
Information Daily.
Six developers are in the orange tier, representing those that fail
to meet two of the three red lines, the report says. More than 40
per cent are categorised yellow, for meeting two out of the three
criteria. Only six successfully fulfill all three requirements and
are tagged green, adds the Post.
"Developers have to at least partially meet some of the criteria
under the Three Red Lines, to obtain financing from banks and other
financial institutions," the report quotes Raymond Cheng, property
analyst at CGS-CIMB Securities, as saying.
Guangzhou-based Evergrande, owned by one of China's wealthiest
tycoons Hui Ka-yan, had a liability-to-asset ratio of 85.3 per
cent, excluding advanced proceeds, a net debt-to-equity ratio at
219.5 per cent while its cash to short-term debt ratio was 0.19,
according the broker, the Post discloses. Sunac China, the
country's fourth-largest home seller, and Greenland Holdings in the
sixth place are also tagged red, Northeast said.
Evergrande is slightly ahead of Hui's three-year programme to slash
CNY450 billion of debt, having pared the borrowings by CNY160
billion as of January, 10 months after the developer's chairman
outlined the plan, according to an executive familiar with the
matter, who declined to be name, the Post relates.
Evergrande is spinning off valuable businesses and issuing more
shares to raise capital, adding that so far no official action had
been taken to cut the company's credit line, the person, as cited
by the Post, said.
The Post adds that the developer said it plans to redeem a HK$16.1
billion (US$2.1 billion) convertible bond ahead of its February 10
deadline , according to a stock exchange filing on Jan. 18. The
company has arranged internal funds of HK$16.5 billion to pay the
principal and interest, and the bond will be cancelled, the
developer said.
[*] CHINA: Nonbank Creditors Granted New Power to Recoup Money
--------------------------------------------------------------
Caixin Global reports that Chinese economic and financial
regulators have taken another step forward in efforts to better
protect institutional creditors of debt-ridden firms, in the wake
of the recent wave of domestic bond defaults.
Nonbank financial institutions that are creditors of "troubled
nonfinancial companies with a relatively large amount of debt" are
allowed to set up a creditors' committee to help create
restructuring plans for the firms, Caixin relates citing a notice
jointly released on Jan. 15 by the country's top banking regulator,
top economic planner, top securities regulator and the central
bank.
A creditors' committee serves as a temporary organization to help
creditors come together so they can better negotiate with debtors,
Caixin says. Institutional creditors in the committee can work
together to study the troubled firms' restructuring and financing
plans, in a bid to defuse potential risks to the financial system.
Such a committee has to be set up by more than three institutional
creditors together, the notice said, relays Caixin.
=================
H O N G K O N G
=================
[*] HONG KONG: Bankruptcy Filings Hit Four-Year High Amid Pandemic
------------------------------------------------------------------
Caixin Global reports that in 2020, petitions for bankruptcy and
the compulsory winding-up of companies both hit four-year highs in
Hong Kong, according to data released on Jan. 15 by the city's
Official Receiver's Office.
Hong Kong's bankruptcy filings jumped to nearly 8,700 last year, up
6.6%, while filings for compulsory winding-up reached around 450,
up 7.2%, Caixin discloses.
Despite its successful management of Covid-19 infections during the
first half of 2020, the Asian financial hub has been haunted by the
recurrence of virus cases, dealing a serious blow to efforts to
recover its economy, the report says.
=========
I N D I A
=========
ADYAR GATE: ICRA Lowers Rating on INR235.60cr LT Loan to D
----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Adyar
Gate Hotels Limited (AGHL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
LT Fund based 235.60 [ICRA]D; Revised from
Term Loans [ICRA]B(Stable)
LT Fund based 45.00 [ICRA]D; Revised from
facilities [ICRA]B(Stable)
LT Unallocated 105.40 [ICRA]D; Revised from
[ICRA]B(Stable)
ST Non-fund 2.00 [ICRA]D; Revised from
Based [ICRA]A4
Rationale
The rating action follows delays in debt servicing by the company,
owing to its weakened liquidity position following the pandemic
outbreak. With sizeable debt servicing requirements, the sharp
contraction in revenues due to the covid-19 pandemic had a
detrimental impact on the company's ability to service its debt.
The company had opted for moratorium until August 31, 2020, under
the RBI's Covid-19 Regulatory Package. Subsequently, while the
company initiated an application for restructuring its loan with
its lenders, post the moratorium expiry, the company had missed its
repayments in view of its stressed cash flows and in anticipation
of a favorable restructuring of loans. However, the application for
restructuring was not formalized and AGHL applied for the Emergency
Credit Line Guarantee Scheme (ECLGS) 2.0 instead. While this has
been sanctioned and will provide much needed liquidity, as of
January 8, 2021, the company has overdues of INR6.0 crore
pertaining to debt repayment obligations for November and December
2020.
Key rating drivers and their description
Credit strengths
* Locational advantage of Intercontinental Chennai Mahabalipuram
Resort and Fortune Sullivan; established position of Crowne Plaza:
Two of AGHL's properties are favorably located at Ooty (Fortune
Sullivan) and Mahabalipuram (ICMBR). While the first one is at a
driveable distance from several South Indian cities, the latter one
is on the outskirts of Chennai. While the demand from foreign
tourists will remain impacted for some quarters, the hotels are
likely to benefit from the growing staycation1 demand and diversion
of outbound foreign travel into the country. The Crowne Plaza
Chennai Adyar Park hotel remains an established property in the
central business district (CBD) in Chennai.
* Management tie-up with established brand: AGHL's hotels operate
under management contract with ITC and IHG under three brands. Two
of the company's properties—ICMBR and Crowne Plaza (erstwhile
Park Sheraton under management contract with ITC)—have management
and marketing arrangements with IHG, while the Ooty property
(Fortune Sullivan) operates under management tie-up with ITC. The
hotels benefit from the global marketing and advertising network of
these brands.
Credit challenges
* Stretched financial risk profile resulting in delays in debt
servicing: AGHL has relatively high borrowings for its scale of
operations due to debt-funded capex and net losses in the past.
Sharp contraction in accruals due to the impact of the pandemic and
its relatively high debt obligations compared to accruals have
impacted AGHL's liquidity position severely, despite fairly stable
annual rental income of INR13.5 crore from Sai Real Tech Park, an
IT Park in Velachery which is leased to Tata Consultancy Services
(TCS). AGHL had stretched capital structure and coverage indicators
even pre-covid with gearing, total debt/OPBDITA and interest
coverage of 5.3 times, 14.1 times and 0.6 times, respectively as on
March 31, 2020 (according to provisional financials).
* Cyclical industry vulnerable to general economic slowdown and
exogenous factors: Due to its presence in the hospitality industry,
the company is susceptible to risks arising from the cyclicality
therein. Hotel revenues are also vulnerable to general economic
slowdown and exogenous shocks (such as geopolitical crisis,
terrorist attacks, disease outbreaks, natural calamities etc). Due
to the ongoing outbreak of Covid-19, the operational metrics of the
company have been severely impacted.
* Moderate scale of operations; revenue concentration in the
Chennai market: AGHL has relatively moderate scale of operations,
with an aggregate inventory of 460 rooms as on date and operations
in two cities in South India. While the company had 564 rooms
earlier, the sale of the Vizag property (with 104 keys) in July
2019 reduced its room inventory to the current levels. Also, over
90% of the company's revenues are derived from the Chennai market,
exposing it to cityspecific event risks.
Liquidity position: Poor
The company's cashflow was severely impacted during H1 FY2021 due
to the prevailing pandemic. While there has been a sequential
improvement since, the industry and company are likely to witness a
prolonged recovery. AGHL had term loan outstanding of INR235.6
crore as on March 31, 2020 with principal repayments post the
completion of moratorium in August 2020 (repayments of INR8.4 crore
in H2 FY2021). Further the company has repayments of INR17.8 crore
and INR20.0 crore for FY2022 and FY2023 respectively. Also, despite
accruals expected to remain weak over several quarters going
forward, the sanctioning of ECLGS loans of ~ INR57 crore and loan
of ~Rs. 100 crore against lease rentals would provide additional
liquidity to the stressed cash flow of the company. Turnaround in
operations will be critical for improving the liquidity position of
the company.
Rating sensitivities
Positive triggers - ICRA could upgrade the ratings with
regularization of debt servicing obligations on a sustained basis.
Negative triggers –Not Applicable.
Adyar Gate Hotels Limited (AGHL) is owned by the Goyal family and
has a track over three decades of presence. The company has three
properties in South India and its flagship property is located in
the Central Business District in Chennai. The flagship property,
operated under the name Sheraton Park Hotels and Towers, has a
287-room five-star hotel that has tie-ups with ITC and Starwood for
using the Sheraton brand name. In July 2015, the hotel changed the
brand to Crowne Plaza under the IHG umbrella. AGHL also commenced
operations of a 106-room resort in Mahabalipuram under the name
InterContinental Chennai Mahabalipuram Resort operated by IHG from
October 2015 and Fortune Hotel Sullivan Court in Ooty with 67 rooms
(managed by ITC). This apart, the company had one more
hotel—WelcomHotel Grand Bay—in Vizag with 104 rooms (managed by
ITC). This property was sold in July 2019 for a consideration of
INR101 crore on slump sale basis. Apart from the hotels, AGHL owns
~2,50,000 square feet space in Sai Real Tech Park, an IT park in
Velachery, Chennai (currently leased to TCS). AGHL also has two
wholly-owned non-operational subsidiaries with land holdings in
Kodaikanal, Tamil Nadu.
BANWARI PAPER: ICRA Lowers Rating on INR15cr Loans to D
-------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Banwari
Paper Mills Limited (BPML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 8.00 [ICRA]D; downgraded from
[ICRA]C
Term Loan 6.30 [ICRA]D; downgraded from
[ICRA]C
Non-fund Based 0.70 [ICRA]D; downgraded from
[ICRA]A4
Rationale
The rating downgrade of BPML reflects irregularities in debt
repayments, based on feedback received from the banker. ICRA has
also taken into account the susceptibility of BPML's profitability
to volatility in raw material prices as well as intense competition
in the industry, which limits its pricing flexibility. ICRA also
takes note of extensive experience of the promoters in the paper
industry.
Key rating drivers and their description
Credit strengths
* Experienced management with an established track record in paper
industry: The management of BPML is well qualified and the
promoters have experience of over three decades in the paper
industry.
Credit challenges
* Delays in debt servicing: There has been irregularities in the
term loan repayment by the company as the liquidity profile of the
entity remains stretched.
* Highly fragmented and intensely competitive industry with a few
large paper mills and various smaller competitors: BPML's presence
in the highly fragmented paper industry characterised by intense
competition limits its pricing flexibility and hence, its ability
to effectively pass on the increase in raw material prices to
customers.
* Profitability exposed to volatility in waste paper prices and
ability to pass on increase in waste paper prices: Waste paper is
the key raw material of the company. Raw material cost forms a
major portion of the average selling price and the contribution
levels thus remain exposed to the movement in the same.
Accordingly, BPML's ability to effectively pass on the increase in
the raw material cost to its customers is critical.
Liquidity position: Poor
BPML's liquidity is poor as reflected in delays in servicing the
instalments for term loans by the company.
Rating sensitivities
Positive triggers: ICRA could upgrade BPML's rating if the company
demonstrates a track record of timely debt servicing.
Negative triggers: Not applicable.
BPML was initially established by Mr. R.N. Lakhotia and his family
in 1980. It was then purchased by Mr. Jasbir Singh Goraya and his
family the following year. Since then, the company is run by the
Goraya family in Kashipur. It manufactures writing papers, printing
papers and newsprint. The company has been operational for the past
39 years and usually manufactures papers from recycled wastes of
52, 56 and 58 grams per square metre (GSM) with brightness of
72–82%.
BENGAL SHAPOORJI: ICRA Lowers Rating on INR200cr Loan to D
----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Bengal
Shapoorji Housing Development Private Limited (BSHDPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 200.0 [ICRA]D; downgraded from
[ICRA]BBB(CE)
Note: The (CE) suffix mentioned alongside the rating symbol
indicates that the rated instrument/facility is backed by some form
of explicit credit enhancement. This rating is specific to the
rated instrument/facility, its terms and its structure and does not
represent ICRA's opinion on the general credit quality of the
entity concerned.
Rationale
The rating action follows delays in debt servicing by BSHDPL, owing
to its weakened financial risk profile following the pandemic
outbreak. The company had opted for moratorium until August 31,
2020, under the RBI's Covid-19 Regulatory Package. The company
applied for one-time restructuring plan (RP) of all its loans in
September 2020 prior to the next repayment date; however, the same
wasn't approved. For the period during which the company's
restructuring application was being reviewed by the lenders, ICRA
had not recognized the missed payments as default in accordance
with its published approach. Subsequently, the company had opted
for the Emergency Credit Line Guarantee Scheme (ECLGS). The company
is expecting a sanction of INR10.50 crore (Out of which INR7 crore
pertains to expected sanction by South Indian Bank) under ECLGS,
for which it had received an in-principle approval in December
2020. Pending the sanction and disbursement of the additional line
of credit, the company missed its principal instalment amounting to
INR6.67 crore which was due on December 31, 2020. ICRA has
recognised the default on this missed payment. It may be noted that
on January 12, 2021, BSHDPL had cleared its past dues and the
account is currently regular.
Key rating drivers and their description
Credit challenges
* Stretched financial risk profile resulting in delays in debt
servicing: Over last 9 months, Covid pandemic has significantly
impacted the project construction and collections, thereby
impacting project progress and the liquidity profile of the
company. Additionally, the company had missed payment of their debt
obligation of INR6.67 crores for the month of December 2020,
however, the dues have been cleared as on January 12, 2021 and
application made for additional line of credit under ECLGS scheme
with South Indian Bank.
* Depletion of DSRA balance: The DSRA balance of the company has
been utilized for servicing the debt obligation for the month of
September 2020 and December 2020. BSHDPL is required to restore the
DSRA balance by March 2021. Accordingly, Given the absence of
timely sponsor support on the credit enhanced instrument (backed by
unconditional, irrevocable and revolving DSRA (debt service reserve
account) guarantee from Shapoorji Pallonji and Company Private
Limited (SPCPL), the revised rating does not factor in the explicit
credit enhancement.
Liquidity position: Poor
The company's cashflow from operations was severely impacted during
9M FY2021. The DSRA balance of the company has been utilized for
servicing the debt obligation for the month of September 2020 and
partially for the month of December 2020. Accordingly, the company
is required to restore the DSRA balance by March 2021. The company
has cash and bank balance of INR4.50 crore and Debt Service Reserve
Account (DSRA) balance of INR0.58 crore with debt outstanding of
INR31.58 crore as on January 11, 2021. The sanction of ECLGS of
INR10.50 (Out of which INR7 crore pertains to expected sanction by
South Indian Bank) and creation of DSRA by March 2021 will remain
critical for improving the liquidity position.
Rating sensitivities
Positive triggers – ICRA could upgrade the rating on
sanction/disbursement of ECLGS credit line and/or restoration of
adequate DSRA balance along with timely servicing of debt
obligations on a sustained basis
Negative triggers – Not Applicable
Bengal Shapoorji Housing Development Private Limited (BSHDPL), a
Shapoorji Pallonji Group (SP Group) company, is engaged in real
estate development. The company is developing a mass housing
project named as "Shukhobrishti" over a 150-acre land parcel in
Rajarhat, Kolkata. The first phase of the project, spread across an
area of 54 acre and comprising of 7,378 units, has been completed.
BSHDPL is currently executing the second phase of the project
comprising of 12,004 units with an aggregate saleable area of 9.39
million square feet.
CARONA INDUSTRIES: ICRA Withdraws D Rating on INR36cr Loans
-----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Carona
Industries Private Limited (CIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 14.50 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based- Withdrawn
Cash Credit
Long Term- 4.10 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based- Withdrawn
Term Loan
Short Term- 1.50 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based Withdrawn
Long Term- 11.27 [ICRA]D; ISSUER NOT COOPERATING;
Unallocated Withdrawn
Short Term- 4.63 [ICRA]D; ISSUER NOT COOPERATING;
Non Fund Based Withdrawn
Short Term- (2.00) [ICRA]D; ISSUER NOT COOPERATING;
Interchangeable Withdrawn
Rationale
The Long-term ratings & Short-term ratings assigned to CIPL have
been withdrawn at the request of the company and based on the No
Due Certificates received from the banker, and in accordance with
ICRA's policy on withdrawal and suspension. ICRA is withdrawing the
rating and that it does not have information to suggest that the
credit risk has changed since the time the rating was last
reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
Liquidity position
Not captured as the rating is being withdrawn.
Rating sensitivities
Not captured as the rating is being withdrawn.
Incorporated in 2006 by Mr. K. Swaminathan, CIPL was engaged in
production of cotton hosiery yarn in the count range of 20s to 60s.
CIPL commenced commercial production in 2008 and supplies about one
- fifth of the produce to its group entity (M/s. Carona Knit Wear,
which is engaged in garment manufacturing). CIPL manufacturing
facility is located in Gobichettipalayam (Tamil Nadu) with an
installed capacity of 15,600 spindles.
DELHI AIRPORT: Fitch Downgrades LongTerm IDR to 'BB'
----------------------------------------------------
Fitch Ratings has downgraded Delhi International Airport Limited's
(DIAL) Long-Term Issuer Default Rating (IDR) and the ratings on its
outstanding senior unsecured notes to 'BB' from 'BB+'. The Outlook
is Negative.
RATING RATIONALE
The downgrade reflects the sharp drop in DIAL's volume in 2020 due
to significant travel restrictions to curb the spread of the
coronavirus. Fitch expects the recovery in traffic volumes to be
prolonged. Weaker earnings and moderately flexible capex payments
result in DIAL's projected average Fitch-adjusted net debt/EBITDAR
increasing to 10.0x.
Although the pandemic has reduced passenger travel, infection rates
in India have stabilised and a domestic air traffic recovery is
underway. However, the Negative Outlook reflects the risk of an
increase in infection rates that will lead to re-imposition of
travel restrictions. Fitch's rating case does not assume annual fee
payment to Airports Authority of India (AAI) from the fourth
quarter of the financial year ending March 2021 (FY21) till
end-FY22. Any unfavourable arbitration order could also put
significant pressure on the ratings.
DIAL's ratings are supported by its solid market position as
operator and developer of Indira Gandhi International Airport,
India's largest airport by passenger traffic. The ratings are also
supported by most of the airport's traffic being origin and
destination, as well as India's favourable demographics and
consumers' increasing propensity to fly. Fitch believes DIAL's
business strength supports its access to domestic banks and capital
markets to address its short-term liquidity needs and refinancing
plans.
KEY RATING DRIVERS
Strong Market Position as India's Gateway Airport- Volume Risk:
Stronger
The airport is the largest international airport in India. It
handled about 67 million passengers in FY20 with transit passengers
making up only about 20% of total traffic. Growth is driven by
India's favourable demographics and local consumers' increasing
propensity to fly. Fitch expects passenger travel to recover once
the economy rebounds in the medium term, following a sharp drop due
to the pandemic. The airport is located in the National Capital
Region, which has a catchment population of over 22million.
Regulatory Framework in Place with Improving Tariff Visibility -
Price Risk: Midrange
The Airports Economic Regulatory Authority (AERA) of India has
confirmed the hybrid till regulatory framework will be used at
DIAL, with 30% of non-aeronautical revenue used to subsidise
aeronautical expenses. AERA also determined that the aeronautical
tariffs charged by DIAL must be no less than the Base Airport
Charges + 10% (BAC+10%), which serves as a floor for aeronautical
tariffs and removes downside risk to DIAL's airport charges.
Experienced Management to Deliver Expansion Capex - Infrastructure
Development/Renewal: Midrange
DIAL has a large expansion plan over the next four years. The
project has a total cost of INR98 billion, which DIAL plans to
finance using the proceeds of its US dollar bonds and internal
accruals, and it has been largely approved by AERA. DIAL's
management has a record of executing expansion projects within
tight timelines.
Refinancing Risk Mitigated by Laddered Maturity - Debt Structure:
Midrange
DIAL's debt structure primarily comprises US dollar bullet bonds.
The noteholders benefit from an escrow account for the bonds, which
have a cash waterfall mechanism in place. Additional indebtedness
is permissible only if no default occurs and the fixed-charge
coverage ratio test is not less than 2.5x till 2026 and 2.25x till
2029. The refinancing risk of the bullet bonds is mitigated by
DIAL's laddered maturity over 2022 to 2029, and its current
concession term until 2036.
PEER GROUP
GMR Hyderabad International Airport Limited (GHIAL, BB+/Negative)
is DIAL's closest peer. Both airports benefit from the fast-growing
air passenger market in India. DIAL has a larger catchment area
than GHIAL, which serves Hyderabad, a vibrant but smaller city than
Delhi. DIAL and GHIAL operate under the same economic regulatory
framework.
While GHIAL has some pending disputes with regulators regarding
tariff determination, DIAL has implemented Base Airport Charges,
which effectively removes downside risk to aeronautical tariffs.
Both airports are undertaking large debt-funded expansion plans.
Fitch forecasts DIAL's leverage to average at 9.9x over FY22-FY25,
compared with 5.8x for GHIAL. DIAL's higher leverage is partly
offset by its larger catchment area and more favourable volume risk
assessment.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Positive rating action is not expected in the near term.
-- The Outlook could be revised to Stable if Fitch sees sustained
recovery in DIAL's traffic and revenue due to the easing of
the pandemic, especially with the roll-out of effective
vaccines, or if DIAL adopts strategies that convincingly
stabilise its finances.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Extended period of significant traffic declines that presents
further challenges to the airport or higher-than-estimated
capex payments resulting in net debt/EBTIDA being consistently
above 10x.
-- Further credit erosion of the major air carriers or payment
delinquencies.
-- Sustained deterioration in airport liquidity level and failure
to complete refinancing of the USD288.75 million notes due in
February 2022 well in advance of the scheduled maturity.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT UPDATE
Air travel was suspended during the nation-wide lockdown between 23
March and end of May 2020. Domestic air travel resumed on 25 May
2020. India has signed air bubble agreements with more than 20
countries to ensure safe corridors as of November 2020. The air
traffic movement for 2QFY21 is about 40% of the level a year
earlier and passenger traffic is close to 20% of that in 2QFY20.
Cargo traffic has recovered more sharply, with the tonnage in
2QFY21 close to 80% of that in 2QFY20.
Financial Performance: Due to air travel restrictions implemented
to control the spread of Covid-19, DIAL's revenue across all
business segments fell sharply:
-- Total revenue fell by 61% to INR8 billion in 1HFY21 from INR21
billion a year earlier.
-- Operating expenses fell by 30% to INR15 billion in 1HFY21 from
INR20 billion a year earlier. Annual fees to AAI of INR3
billion account for 24% of the operating expenses. The High
Court in January 2021 allowed the suspension of annual fee
payment to AAI, which will reduce DIAL's operating expenses in
4QFY21.
-- DIAL had an EBITDA loss of INR6 billion in 1HFY21, compared
with EBITDA of INR0.1 billion a year earlier.
-- DIAL has drawn down of a working-capital facility of INR3.35
billion (currently drawn: INR3 billion). This is likely to be
repaid in 4QFY21 from cash that would have been used to pay
the annual fee to AAI. DIAL had a cash balance of INR25
billion at end-December 2020.
Tariff Framework Approved: The regulator's tariff order allows DIAL
to charge tariffs at BAC + 10%. In addition, DIAL is allowed to
charge fuel throughput charges as part of the tariff on a per
person basis. This charge was previously set at INR500 per
kilolitre of fuel. There is no significant impact on revenue due to
this reclassification.
Suspension of Annual Fee Payment to AAI: In December 2020, DIAL
approached the Delhi High Court to suspend payment of monthly fees
to AAI due to the Covid-19 pandemic, which it saw as a force
majeure event. Under its agreement with AAI, DIAL is required to
pay 45.99% of its annual revenue as concession fees to AAI. The
Delhi High Court granted an interim stay order, which upholds
DIAL's right to suspend payment of the fees to AAI till an
arbitration tribunal makes a decision on the matter. The cash that
would have been used to pay the fees can be used to operate the
airport. The same order was also passed for Mumbai International
Airport Limited (MIAL) in December.
FINANCIAL ANALYSIS
Fitch Rating Case: Fitch’s revised rating case scenario assumes a
65% decline in passenger traffic in FY21, based on the following
assumptions of the quarterly traffic trend: significant reduction
in international traffic and, to a lesser extent, in domestic
traffic in 2QFY23, stabilisation of traffic in 3QFY23, and gradual
recovery in 4QFY23 and 1QFY24. Fitch assumes traffic in FY24 to
recover to the FY20 level. Fitch has factored in the waiver of
annual fee payment to AAI from 4QFY21 till the end of FY22. The
Phase III revenue of INR3.6 billion from a commercial property
jointly developed with Bharti Realty at the airport is included
from FY22, following delays in approval from AAI. Fitch forecasts
leverage of 9.9x from FY22 to FY25 under this rating case.
Coronavirus Severe Downside Case: The coronavirus sensitivity case
assumes the trough of the crisis lingers for one more year,
resulting in air traffic recovery to pre-pandemic levels by FY25.
No waiver in the annual fee payment to AAI is factored in. Fitch
forecasts leverage of 15.6x from FY22 to FY25 under this case.
SECURITY
The security package includes a first ranking charge on insurance
contracts, all rights, titles, permits, approvals and interests
related to project agreements, operating revenues and receivables,
and the company's accounts. AAI being a significant minority
shareholder also has rights over the security package.
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.
DIGITAL MICRON: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Digital Micron Roto Print Private Limited
102, Shri Krishnas Times Square (1st Floor)
Scheme No. 47, Sneh Nagar Main Road
Indore MP 452001
IN
Insolvency Commencement Date: January 11, 2021
Court: National Company Law Tribunal, Indore Bench
Estimated date of closure of
insolvency resolution process: July 10, 2021
Insolvency professional: Mr. Satyendra Sharma
Interim Resolution
Professional: Mr. Satyendra Sharma
M-3, Block No. 51
1st Floor, Anupam Plaza-II
Above Axis Bank
Sanjay Place
Agra 282002
E-mail: satyendrasirp@gmail.com
cirp.digitalmicronrotoprint@
gmail.com
Last date for
submission of claims: January 25, 2021
FIBREMARX PAPERS: ICRA Downgrades Rating on INR52cr Loans to D
--------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Fibremarx Papers Private Limited (FPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 32.00 [ICRA]D; downgraded from
[ICRA]C
Term Loan 17.50 [ICRA]D; downgraded from
[ICRA]C
Short-term 2.50 [ICRA]D; downgraded from
Non-fund Based [ICRA]A4
Rationale
The rating downgrade of FPPL reflects irregularities in debt
repayments, based on feedback received from the banker. ICRA has
also taken into account the susceptibility of FPPL's profitability
to volatility in raw material prices as well as intense competition
in the industry, which limits its pricing flexibility. ICRA also
takes note of extensive experience of the promoters in the paper
industry.
Key rating drivers and their description
Credit strengths
* Experienced management with an established track record in paper
industry: The management of FPPL is well qualified and the
promoters have experience of over three decades in the paper
industry.
Credit challenges
* Delays in debt servicing: There has been irregularities in the
term loan repayment by the company as the liquidity profile of the
entity remains stretched.
* Highly fragmented and intensely competitive: FPPL's presence in
the highly fragmented paper industry characterised by intense
competition limits its pricing flexibility and in turn, its ability
to effectively pass on the increase in raw material prices to
customers.
* Profitability exposed to volatility in waste paper prices and
ability to pass on increase in waste paper prices: Waste paper is
the key raw material of the company. Raw material cost forms a
major portion of the average selling price and thus, the
contribution levels remain exposed to the movement in the same.
Accordingly, the ability of the company to effectively pass on the
increase in the raw material cost to its customers is critical.
Liquidity position: Poor
FPPL's liquidity is poor as reflected in delays in servicing the
instalments for term loans by the company.
Rating sensitivities
Positive triggers: ICRA could upgrade FPPL's rating if the company
demonstrates a track record of timely debt servicing.
FPPL started operations in 2006 to manufacture paper for writing,
printing and newsprint. The initial capacity was 33,000 metric
tonnes (MT) per annum, which was subsequently increased over the
years and is currently 60,000 MT per annum. The company
manufactures 60-80 grams per square metre (GSM) of writing paper,
45-50 GSM of newsprint and its customer mix consists of publishers,
retailers, wholesalers.
GANESH CARS: ICRA Keeps B+ Debt Rating in Not Cooperating
---------------------------------------------------------
ICRA said the ratings for the INR10.00-crore bank facilities of
Ganesh Cars Private Limited Continues to remain under 'Issuer Not
Cooperating' category'. The ratings are denoted as "[ICRA]B+
(Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 10.00 [ICRA]B+ (Stable); ISSUER NOT
Fund Based CC COOPERATING; 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
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.
Ganesh Cars Private Limited (GCPL) is an authorized dealer of
passenger and commercial vehicles of Maruti Suzuki India Limited
(MSIL). GCPL commenced its operations in 1998 and is the exclusive
dealer of MSIL in Vellore district in Tamil Nadu. Apart from sale
of vehicles, the company is also involved in sale of spare parts
and accessories of MSIL. The Company has six showrooms spread
across Vellore, Vaniyambadi, Thiruvannamalai and Kanchipuram in
Tamil Nadu. The promoter of the company is Mr. Ramprakash who has
vast experience in the auto dealership business.
GOODWILL THEATRES: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Goodwill Theatres Private Limited
Novelty Chambers, 2nd Floor
M S Road, Mumbai 400007
Insolvency Commencement Date: January 7, 2021
Court: National Company Law Tribunal, Navi Mumbai Bench
Estimated date of closure of
insolvency resolution process: July 6, 2021
(180 days from commencement)
Insolvency professional: Ravi Prakash Ganti
Interim Resolution
Professional: Ravi Prakash Ganti
Flat No. 2
Ashiana CHS Ltd.
Plot No. 60-A
Sector-21, Kharghar
Navi Mumbai 410210
E-mail: gantirp@gmail.com
- and -
404, Mayuresh Cosmos
Plot no. 31, Sector-11
CBD Belapur
Navi Mumbai 400614
Last date for
submission of claims: January 27, 2021
H.K. AGRO: ICRA Keeps D Debt Ratings in Not Cooperating Category
----------------------------------------------------------------
ICRA said the rating for the INR10.00-crore bank facilities of H.K.
Agro Impex continue to remain under 'Issuer Not Cooperating'
category'. The ratings are denoted as "[ICRA]D/[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 3.00 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based/CC Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term- 2.38 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based/TL Rating continues to remain in
the 'Issuer Not Cooperating'
category
Short Term– 1.00 [ICRA]D; ISSUER NOT
COOPERATING;
Fund based Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term/ 3.62 [ICRA]D/[ICRA]D ISSUER NOT
Short Term- COOPERATING; Rating continues
Unallocated to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity. The
rating action has been taken in accordance with ICRA's policy in
respect of noncooperation by a rated entity available at
www.icra.in.
Established in 2014, H.K Agro Impex is a proprietorship firm
managed by Mr. Mohammed Ansari. The firm is engaged in processing
cashew kernels from raw cashew nuts. The firm has its processing
unit in Mangalore, Karnataka with an installed capacity of
processing 60 bags of raw cashew nuts per day as on August 2016.
ICON CABLES: Insolvency Resolution Process Case Summary
-------------------------------------------------------
Debtor: Icon Cables Limited
306, Plot No. 12
Sector 12
Vardhman Sudershan Plaza
Dwarka New Delhi
DL 110078
IN
Insolvency Commencement Date: January 12, 2021
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: July 10, 2021
Insolvency professional: Anurag Nirbhaya
Interim Resolution
Professional: Anurag Nirbhaya
204, Sagar Plaza
Plot No. 19, District Centre
Laxmi Nagar, New Delhi
National Capital Territory of Delhi
110092
E-mail: anurag@canirbhaya.com
cirp.iconcables@gmail.com
Last date for
submission of claims: January 26, 2021
INDRADEV GOODS: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Indradev Goods Private Limited
Corporate Affair:
235/2A, AJC Bose Road
3rd Floor
Kolkata 700020
West Bengal
Insolvency Commencement Date: January 8, 2021
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: July 7, 2021
(180 days from commencement)
Insolvency professional: Mr. Uday Narayan Mitra
Interim Resolution
Professional: Mr. Uday Narayan Mitra
72/1, Dawnagazi Road
Bally, Kolkata
West Bengal 711201
E-mail: udaynarayanmitra@yahoo.co.uk
Mobile: 94335-32994
8240850244
Last date for
submission of claims: January 22, 2021
IRE-TEX PREMIER: ICRA Keeps B Ratings in Not Cooperating Category
-----------------------------------------------------------------
ICRA said the ratings for the INR14.00-crore bank facilities of
Ire-Tex Premier India Pvt Ltd Continues to remain under 'Issuer Not
Cooperating' category'. The ratings are denoted as "[ICRA]B
(Stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 4.00 [ICRA]B (Stable); ISSUER NOT
Fund Based CC COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long Term- 4.50 [ICRA]B (Stable); ISSUER NOT
Fund Based TL COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Short Term– 5.00 [ICRA]A4; ISSUER NOT
Bank Guarantee COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long Term/ 0.50 [ICRA]B (Stable)/[ICRA]A4;
Short Term- ISSUER NOT COOPERATING;
Unallocated 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
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.
Ire-Tex Premier India Pvt Ltd was incorporated on March 5, 2007 and
is involved in manufacturing of Expanded Poly Ethylene (EPE)/Low
density Poly Ethylene (LDPE) foam and air bubble products. The
company's products majorly cater to various types of packaging
needs of the customers. The company is ISO 9001 certified and has
its manufacturing facility at Sriperumbudur in Tamil Nadu, spread
across 5-acre land with built-up area of 1,00,000 sqft (40,000 sqft
of admin building and 60,000 sqft of factory premises). The company
has capacity to produce 4,500 Metric Tonnes Per Annum (MTPA) of
packaging material.
KANSARA POPATLAL: CRISIL Keeps B Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Kansara
Popatlal Tibhovandas Metal Private Limited (KCSPL) continue to be
'CRISIL B/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Long Term 5.15 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating)
Term Loan 3.95 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL has been consistently following up with KCSPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KCSPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KCSPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KCSPL
continues to be ' CRISIL B/Stable Issuer Not Cooperating'.
Incorporated in 1978, KCSPL is promoted by Mr. Bhavesh Mavani and
family. This Gandhinagar (Gujarat)-based company manufactures
stainless steel products such as coils, sheets, rounds, and pipes.
KEYSTONES INFRA-CON: CRISIL Keeps B Rating in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Keystones
Infra-Con (India) Private Limited (KIPL) continue to be ' CRISIL
B/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 11 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL has been consistently following up with KIPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
' The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KIPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KIPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KIPL
continues to be ' CRISIL B/Stable Issuer Not Cooperating'.
Based in Vijayawada (Andhra Pradesh) and incorporated in 2012, KIPL
is engaged in real estate development. The company is promoted by
Mr. Srinivas Lingam and Mr. K Venkata Siva Raju. It is currently
undertaking AVSR Sky Court project in Vijayawada.
KRISHNAGIRI CASHEW: CRISIL Keeps B+ Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Krishnagiri
Cashew Exports (KC) continue to be ' CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.25 CRISIL B+/Stable (Issuer Not
Cooperating)
Long Term Loan 0.75 CRISIL B+/Stable (Issuer Not
Cooperating)
Proposed Long Term 3.00 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating)
CRISIL has been consistently following up with KC for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KC, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KC is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KC
continues to be ' CRISIL B+/Stable Issuer Not Cooperating'.
KC was established in 2004 by Mr. Girish as a sole proprietorship
concern, to process and trade in cashew kernels.
KSK WATER INFRASTRUCTURES: Insolvency Resolution Case Summary
-------------------------------------------------------------
Debtor: KSK Water Infrastructures Private Limited
8-2-293/82/A/431/A
Road No. 22, Jubilee Hills
Hyderabad 500033
Telangana
Insolvency Commencement Date: January 1, 2021
Court: National Company Law Tribunal, Hyderabad Bench
Estimated date of closure of
insolvency resolution process: June 29, 2021
Insolvency professional: Naga Bhushan Bhagawati
Interim Resolution
Professional: Naga Bhushan Bhagawati
H.No. 1-1-380/38
Ashok Nagar Extension
Hyderabad 500020
E-mail: nagabhushanca@gmail.com
rp.kskwater@gmail.com
Last date for
submission of claims: January 21, 2021
KUNAL COTTON: CRISIL Keeps B- Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Kunal Cotton
Industries (KCI) continue to be ' CRISIL B-/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.00 CRISIL B-/Stable (Issuer Not
Cooperating)
Proposed Long Term 0.70 CRISIL B-/Stable (Issuer Not
Bank Loan Facility Cooperating)
Term Loan 0.30 CRISIL B-/Stable (Issuer Not
Cooperating)
CRISIL has been consistently following up with KCI for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KCI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KCI is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KCI
continues to be ' CRISIL B-/Stable Issuer Not Cooperating'.
KCI was established as a partnership firm in 2011. The firm gins
and presses raw cotton, and has a ginning unit in Bhainsa district
(Telangana). Mr. M.Jagdish, Mrs. M.Kunda Jagdish, and Mr. M.Kunal
Jagdish are the partners.
MALANKARA PLANTATIONS: ICRA Lowers Rating on INR15cr Loan to B+
---------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Malankara Plantations Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 15.00 [ICRA]B+ (Stable); ISSUER NOT
Fund Based CC COOPERATING; Rating downgraded
from [ICRA]BB+ (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Rationale
The rating is downgraded because of lack of adequate information
regarding Malankara Plantations Limited 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 Malankara Plantations 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.
Malankara Plantations Limited was founded in 1910 as a joint stock
company under the name Malankara Rubber & Produce Co Limited by its
founder Late Mr. P John. The company is currently engaged in the
production of tea and rubber at it two tea estates - Karimtharuvi
and Penshurst - in Elappara and a rubber estate in Thodupuzha at
Idukki district (Kerala). The company also operates an automobile
dealership of Tata Motors at Kottayam established in 2013. It
currently operates two showrooms and one service centre along with
a Tata Motors Assured (TMA) centre.
MVR GAS: ICRA Keeps B+ Debt Ratings in Not Cooperating Category
---------------------------------------------------------------
ICRA said the ratings for the INR14.50-crore bank facilities of MVR
Gas Continues to remain under 'Issuer Not Cooperating' category'.
The ratings are denoted as "[ICRA]B+ (Stable)/[ICRA]A4; ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 7.25 [ICRA]B+ (Stable); ISSUER NOT
Fund Based CC COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long Term- 3.24 [ICRA]B+ (Stable); ISSUER NOT
Fund Based TL COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Short Term– 2.67 [ICRA]A4; ISSUER NOT
Bank Guarantee COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long Term/ 1.34 [ICRA]B+ (Stable)/[ICRA]A4;
Short Term- ISSUER NOT COOPERATING;
Unallocated 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
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.
MVR Gas is a proprietorship concern, established in the year 1999
by Mr. B.V. Sadanand. The proprietor has an experience of 28 Years
in the oil and gas industry and looks after the entire operations.
The concern is engaged in the business of bottling and marketing of
LPG for domestic use as well for use in commercial establishments
such as hotels, restaurants and industries. The concern purchases
LPG from domestic suppliers, does bottling in its own centre near
Bangalore and supplies them to end users through distributors.
NAKODA GLOBAL: ICRA Withdraws B Rating on INR1cr Cash Loan
----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Shree
Nakoda Global Limited (SNGL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based–
Cash Credit 1.00 [ICRA]B (Stable); Withdrawn
Non-Fund
Based Limit 14.00 [ICRA]A4; Withdrawn
Rationale
The ratings have been withdrawn in accordance with ICRA's policy on
withdrawal, and as desired by the company on receipt of no
objection certificate provided by the bank. ICRA does not have
adequate information to suggest that the credit risk has changed
since the time the ratings were last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured for the ratings
withdrawal due to inadequacy of incremental information since the
time the ratings were last reviewed.
Liquidity position
Liquidity position has not been captured for the ratings withdrawal
due to inadequacy of incremental information since the time the
ratings were last reviewed.
Rating sensitivities
Sensitivities have not been captured for the ratings withdrawal due
to inadequacy of incremental information since the time the ratings
were last reviewed.
Shree Nakoda Global Limited (SNGL) was incorporated in 1993 by the
Raipur-based (Chhattisgarh) Nakoda Group, promoted by Mr. Virendra
Goel. SNGL's operations are managed by his younger brother, Mr.
Surendra Goel and Mr. R. K. Agarwal. SNGL trades in steel products
as well raw materials and intermediate products consumed mainly by
the steel players. The flagship company of the Nakoda Group, Shree
Nakoda Ispat Limited (SNIL) manufactures steel.
NIKHIL TOBACCOS: ICRA Withdraws B+ Rating on INR20cr Loans
----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Nikhil
Tobaccos (NT), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 18.00 [ICRA]B+ (Stable); ISSUER NOT
Based-Cash Credit COOPERATING; Withdrawn
Long Term- 2.00 [ICRA]B+ (Stable); ISSUER NOT
Unallocated COOPERATING; Withdrawn
Rationale
The Long-term ratings assigned to NT have been withdrawn at the
request of the company and based on the No Objection Certificate
received from the banker, and in accordance with ICRA's policy on
withdrawal and suspension. ICRA is withdrawing the rating and that
it does not have information to suggest that the credit risk has
changed since the time the rating was last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
Liquidity position
Not captured as the rating is being withdrawn.
Rating sensitivities
Not captured as the rating is being withdrawn.
Nikhil Tobbacos, established as a proprietorship concern by Mrs.
Gutta Suma in the year 2012, has been engaged in processing and
trading of tobacco leaf. The administrative office cum godown of
the concern is situated at Ongole, Prakasm dist. The godown of the
concern is spread over an area of 1 acre with built up area of
47000 square feet. The storage capacity of the godown is around 800
tonnes.
PASUPATI AGROVET: CRISIL Lowers Rating on INR47cr Loans to B
------------------------------------------------------------
CRISIL Ratings has revised the ratings on bank facilities of
Pasupati Agrovet Private Limited (PAPL) to 'CRISIL B/Stable Issuer
Not Cooperating' from ' CRISIL BB+/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable' ISSUER
NOT COOPERATING)
Proposed Long 17 CRISIL B/Stable (ISSUER NOT
Term Bank COOPERATING; Revised from
Loan Facility 'CRISIL BB+/Stable' ISSUER
NOT COOPERATING)
Term Loan 10 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB+/Stable' ISSUER
NOT COOPERATING)
CRISIL has been consistently following up with PAPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PAPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on PAPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of PAPL
Revised to 'CRISIL B/Stable Issuer Not Cooperating' from ' CRISIL
BB+/Stable Issuer Not Cooperating'.
Set up in 1991 by Mr. Prakash Kumar Rout and his family members,
PAPL is engaged in poultry breeding and hatching of eggs. It also
manufactures poultry feed.
POPPYS KNITWEAR: ICRA Keeps B+ Debt Rating in Not Cooperating
-------------------------------------------------------------
ICRA said the ratings for the INR113.00 crore bank facilities of
Poppys Knitwear Private Limited continue to remain under Issuer Not
Cooperating category. The Long term rating is denoted [ICRA]B+
(Stable) ISSUER NOT COOPERATING and the Short term rating is
denoted [ICRA]A4 ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 102.00 [ICRA]B+ (Stable); ISSUER NOT
Fund Based CC COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Short Term– 11.00 [ICRA]A4; ISSUER NOT
Bank Guarantee COOPERATING; 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 dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Poppys Knitwear Private Limited (Poppys) is a garment exporter
based out of Tirupur, Tamil Nadu. Promoted by Mr. Sakthivel in
1973, Poppys is engaged in knitting, processing (dyeing),
garmenting (sewing), printing and embroidery of cotton garments.
Poppys has its manufacturing facilities located in and around the
thirupur belt (knitting, processing, 2 garmenting, and printing and
embroidery facilities). The company caters primarily to exports to
renowned brands/marketers in the Europe and US market.
PRAMUK INFRACON: ICRA Keeps B+ Debt Ratings in Not Cooperating
--------------------------------------------------------------
ICRA said the ratings for the INR100.00 crore bank facilities of
Pramuk Infracon LLP continue to remain under Issuer Not Cooperating
category. The rating is denoted [ICRA]B+ (Stable) ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 90.00 [ICRA]B+ (Stable); ISSUER NOT
Fund Based TL COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Long Term- 10.00 [ICRA]B+ (Stable); ISSUER NOT
Unallocated COOPERATING; 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 dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Pramuk Infracon LLP is a Bengaluru-based real-estate firm engaged
in the development of residential and commercial projects. The firm
was incorporated in 2011 with Mr. SKB Prasad and Mr. N Keshavmurthy
as partners. The entity is into the business of real estate
development and has completed two projects since its inception with
a total built-up area of 6.3 lakh square feet. Presently, the firm
is executing its third mixed-use project named Pramuk MM Meridian
Heights in KR Road, Jayanagar, Bengaluru. The project consists of
two residential towers, comprising of 2B+25 floors each with 132
residential units and one commercial tower, comprising of 3B+7
floors with total area of 3,16,731 square feet (sqft).
SANDOR LIFESCIENCES: ICRA Lowers Rating on INR35cr NCD to D
-----------------------------------------------------------
ICRA has downgraded the long-term rating assigned to INR35.00 crore
Non-Convertible Debentures of Sandor Lifesciences Private Limited
(SLPL) to [ICRA]D from [ICRA]B-. The rating action follows the
delay in servicing of its interest and principal obligation on the
Non-convertible debentures within the due date.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 35.00 [ICRA]D; downgraded from
Debentures [ICRA]B- (Negative)
Material Event
SLPL had delayed in making principal and interest payment on its
Non-Convertible Debentures which was due on January 8, 2021.
Impact of the Material Event
ICRA has downgraded the long-term rating assigned to INR35.00 crore
Non-Convertible Debentures of SLPL to [ICRA]D from [ICRA]B- The
rating action follows the delay in servicing of its interest and
principal obligation on the Non-convertible debentures within the
due date.
Rationale
The rating downgrade reflects the default by SLPL in servicing the
NCD redemption along with the agreed returns which was due on
January 8, 2021. As informed by the debenture trustee to ICRA, SLPL
had not made the requisite payments on the due date and had sought
an extension of redemption date for which the debenture holders
approval was not received before the due date.
Key rating drivers and their description
Credit strengths: Not Applicable
Credit challenges
* Irregularities in debt servicing: The company has failed to
redeem the NCDs on time on account of stretched liquidity position
of the company.
Liquidity position: Poor
The company's liquidity position is poor given the high NCD
repayments and low cash flows.
Rating sensitivities
Positive triggers - ICRA could upgrade the ratings with
regularization of debt servicing obligations on a sustained basis.
Promoted by Mr. Rajeev Sindhi, Sandor Lifesciences Private Limited
(SLPL), provides services in medical genetics, cellular biology,
protemics, genomics etc. The company is also a provider of trained
scientists and research assistants to the Centre for DNA
Fingerprinting and Diagnostics, operated by the Department of
Biotechnology, Ministry of Science and Technology and University of
Delhi. The company also provides bio-repository services following
standard protocols for inventory and tracking solutions. Also, the
R&D department of SLPL is recognised by the Department of
Scientific and Industrial Research.
SANGAM FORGINGS: CRISIL Keeps B Debt Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sangam
Forgings Private Limited (SFPL) continue to be ' CRISIL
B/Stable/CRISIL A4 Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.00 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Long Term 1.90 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating)
Letter of credit & 4.50 CRISIL A4 (Issuer Not
Bank Guarantee Cooperating)
CRISIL has been consistently following up with SFPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SFPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SFPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of SFPL
continues to be ' CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
SFPL, set up in 1976, is in the business of open dye forging of
wheels, shafts and gear blanks, which are used in the steel,
cement, and fertiliser industries, among others. SFPL is managed by
Mr. Arvind Shah.
SHARANAMMA DIGGAVI: ICRA Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
ICRA said the ratings for the INR8.00 crore bank facilities of
Sharanamma Diggavi Memorial Educational Trust to remain under
Issuer Not Cooperating category. The rating is denoted as [ICRA]D
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 6.29 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based/TL Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term- 1.71 [ICRA]D; ISSUER NOT COOPERATING;
Unallocated 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 dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Sharanamma Diggavi Memorial Education Trust (SDME) was formed and
registered as a Trust in the year October, 2006. SDME was
established by the educationist Mr. Basawaraj Diggavi, the Chairman
of SDME. SDME operates three educational institutions comprising of
one primary school, one high school and one pre-university college.
SIDHI VINAYAK: ICRA Lowers Rating on INR10cr Term Loan to D
-----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sidhi
Vinayak Foundation (SVF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 10.00 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating downgraded from [ICRA]B
(Stable) and moved to 'Issuer
Not Cooperating' category
Rationale
The rating downgrade of SVF takes into account delays in servicing
the principal repayment for term loans in October 2020 and
instalments for vehicle loans in December 2020, based on feedback
received from the bankers.
The rating is based on limited information on the entity's
performance since the time it was last rated in July 2019. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sidhi Vinayak Foundation, 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.
SVF entered into an agreement with Millennium Education Management
Private Limited for establishing a school campus named The
Millennium School in Palwal. The school commenced operations from
April 2017 onwards with classes from KG to VII and a student
strength of around 63. In FY2020, it is expected to operate with
classes from KG to IX with strength of around 410 students against
a total capacity of 480.
SUPRAJA DAIRY: CRISIL Keeps B+ Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Supraja Dairy
Private Limited (SDPL) continue to be ' CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.95 CRISIL B+/Stable (Issuer Not
Cooperating)
Long Term Loan 0.41 CRISIL B+/Stable (Issuer Not
Cooperating)
Proposed Long Term 1.29 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating)
CRISIL has been consistently following up with SDPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SDPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on SDPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of SDPL
continues to be ' CRISIL B+/Stable Issuer Not Cooperating'.
SDPL, which was set up in 1993, processes milk and produces and
sells milk products under its brand 'Millkline'. Commercial
operations began in 1996, and the company has a manufacturing
facility at Achutapuram, and seven chilling plants in different
locations. Mr. B R M Raju manages the daily operations.
TIRUPATI COLOUR: CRISIL Lowers Rating on INR6cr Cash Loan to B
--------------------------------------------------------------
CRISIL Ratings has revised the ratings on bank facilities of
Tirupati Colour Pens Private Limited (TCPPL) to 'CRISIL B/Stable
Issuer Not Cooperating' from ' CRISIL BB/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.00 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable' ISSUER NOT
COOPERATING)
Long Term Loan 1.10 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable' ISSUER NOT
COOPERATING)
Proposed Long Term 2.90 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB/Stable' ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with TCPPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TCPPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on TCPPL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of TCPPL
Revised to 'CRISIL B/Stable Issuer Not Cooperating' from ' CRISIL
BB/Stable Issuer Not Cooperating'.
TCPPL, which was set up in fiscal 2008, manufactures use-and-throw
pens and sketch pens, under the brand, 'Balaji'. The company
derives 90-95% of its revenue from West Bengal and Bihar, and the
rest from exports to Africa.
TRANS VOLT: CRISIL Keeps B Debt Ratings in Not Cooperating
----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Trans Volt
Engineering (TVE) continue to be ' CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 0.5 CRISIL B/Stable (Issuer Not
Cooperating)
Long Term Loan 0.41 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Long Term 4.09 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating)
CRISIL has been consistently following up with TVE for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TVE, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on TVE is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of TVE
continues to be ' CRISIL B/Stable Issuer Not Cooperating'.
TVE, established in 2008 as a proprietary firm by Mr. Anirudha
Chavan, manufactures radiators for electrical transformers. Its
manufacturing facility is located in Pirangut near Pune.
TRIPURA NATURAL: CRISIL Keeps B+ Debt Rating in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Tripura
Natural Gas Company Limited (TNGCL) continues to be ' CRISIL
B+/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 17.00 CRISIL B+/Stable (Issuer Not
Cooperating)
CRISIL has been consistently following up with TNGCL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TNGCL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on TNGCL is consistent
with ' Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of TNGCL
continues to be ' CRISIL B+/Stable Issuer Not Cooperating'.
TNGCL is a joint venture between GAIL (49%), Tripura Industrial
Development Corporation Ltd (25.5%), and Assam Gas Company Ltd
(25.5%). The company, incorporated in July 1990, distributes CNG
and PNG in Agartala (Tripura).
TURQUOISE & GOLD: ICRA Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
ICRA said the rating for the INR14.70-crore bank facilities of
Turquoise & Gold Apparels Private Limited continue to remain under
'Issuer Not Cooperating' category'. The ratings are denoted as
"[ICRA]D/[ICRA]D ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 1.50 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based/TL Rating continues to remain in
the 'Issuer Not Cooperating'
category
Short Term– 10.00 [ICRA]D; ISSUER NOT
COOPERATING;
Fund based Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long Term/ 3.20 [ICRA]D/[ICRA]D ISSUER NOT
Short Term- COOPERATING; Rating continues
Unallocated to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity. The
rating action has been taken in accordance with ICRA's policy in
respect of noncooperation by a rated entity available at
www.icra.in.
Incorporated in 2008, TGAPL is promoted and managed by Ms. Dimple
Varma along with her sisters, Ms. Samara Mahindra and Ms. Natasha
Mahindra. The company manufactures readymade garments primarily,
for the exports market and specializes in children's wear and
women's wear. It has a presence in the domestic market through its
showrooms in Bangalore and Goa. It has three manufacturing
facilities in Bangalore, with a total workforce of around 1,700 and
a total production capacity of 17 lakh garments per month.
VADIVEL PYROTECHS: ICRA Withdraws B+ Rating on INR15cr LT Loan
--------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Vadivel Pyrotechs Private Limited (VPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term-Fund 15.00 [ICRA]B+ (Stable); ISSUER NOT
Based-Cash Credit COOPERATING; Withdrawn
Rationale
The Long-term ratings assigned to VPPL have been withdrawn at the
request of the company and based on the No Due Certificate received
from the banker, and in accordance with ICRA's policy on withdrawal
and suspension. ICRA is withdrawing the rating and that it does not
have information to suggest that the credit risk has changed since
the time the rating was last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
VPPL is primarily engaged in manufacturing of fireworks. It sources
raw materials indigenously and a majority of its customers are
located in North India. It was formed in 2011, by consolidating the
businesses of four entities managed by the promoter group. The
Company, which has four manufacturing facilities in and around
Sivakasi, has leased six more manufacturing facilities since
April2013fromthepromoter group. The promoters of the company are
Mr.V Arumugasamy and Mr. A Vasantha Vikash.
=================
I N D O N E S I A
=================
CIPUTRA DEVELOPMENT: Fitch Rates Proposed Unsec. Notes 'B+'
-----------------------------------------------------------
Fitch Ratings has assigned Indonesia-based homebuilder PT Ciputra
Development Tbk's (CTRA, B+/Stable) proposed unsecured medium-term
notes a rating of 'B+' with a Recovery Rating of 'RR4'. The
proceeds of the notes, issued by CTRA, will primarily be used to
refinance the company's SGD150 million unsecured notes due
September 2021, with the rest for other debt refinancing,
acquisitions, working capital and general corporate purposes.
CTRA's 'B+' Long-Term Issuer Default Rating (IDR) with a Stable
Outlook is underpinned by our belief that it will maintain
attributable pre-sales, which excludes the share of pre-sales
attributable to minority interests, of over IDR4 trillion in
2021-2022, notwithstanding the challenging economic environment.
This is supported by the company's diversified products and land
bank, and healthy demand for affordable landed homes priced at, or
under, IDR1.5 billion. The Stable Outlook also assumes CTRA will
maintain a moderate leverage profile, with net debt/adjusted
inventory below 45%, and sound liquidity.
KEY RATING DRIVERS
Modest Recovery in Pre-Sales: We expect CTRA to post attributable
pre-sales of IDR4.3 trillion in 2021 and IDR4.9 trillion in 2022,
from IDR3.8 trillion in 2020 and IDR4.4 trillion in 2019. However,
our forecasts are subject to a high degree of uncertainty over the
path of the pandemic globally and in Indonesia. We believe
landed-home sales will account for a large majority in 2020 and
2021 (2020: 90%; 2017-2019 average: 54%), and we expect CTRA to
maintain its focus on homes priced under IDR2 billion per unit,
targeting end-users rather than investors and upgraders.
Weaker Non-Development Cash Flows: We estimate CTRA's
non-development gross profit (before depreciation and amortisation)
as a ratio to net interest expense fell to around 1.0x in 2020,
from 1.8x in 2019, as the company had to offer significant rebates
to shopping mall tenants to combat the effects of social distancing
on their sales, in line with market norms.
Fitch expects non-development gross profit interest cover to
recover modestly to 1.4x by 2023 due to our belief the health
crisis will remain largely unaddressed until after 2021, and
international travel - a key driver of CTRA's hotel earnings - will
only improve meaningfully in 2022. On the other hand, we expect the
recovery in CTRA's hospitals that began in 3Q20 to continue in the
next 12-18 months with revenue from coronavirus-related services
rising rapidly to offset lower revenue from traditional elective
procedures.
Limited Near-Term Foreign-Ownership Impact: We do not expect
Indonesia's relaxation of rules to allow foreigners to own
high-rise properties to have a meaningful impact on CTRA's
pre-sales in the next one-to-two years, as long as the health
crisis remains largely unaddressed and international business
travel is not normalised. However, over the longer term, the
changes, if the regulations are implemented without ambiguity, may
help raise sales for the sector. CTRA has over 200,000 sq m in
sellable mixed-development area in Greater Jakarta, which would be
attractive to foreign property investors.
Strong Financial Profile: We expect CTRA to maintain homebuilder
leverage, defined as net debt/adjusted inventory, of around 30%
over the next few years (2020 estimate: 28%; 2019: 27%). We believe
its cash flow from operations will remain neutral over the medium
term, supported by faster cash collections and more flexible
construction costs on landed homes, which will largely cover CTRA's
land purchase outlay.
Free cash flow (FCF)/gross debt may weaken to around -9% to -10% in
2020-2021 as CTRA completes investment-property construction, and
improve to low-single digits thereafter as we expect the company to
slow its capex as it re-assesses demand for commercial properties
and hotels in the current environment.
Large Land Bank, Minority Interests: CTRA had around 2,341 hectares
in land bank at end-2019, with a sizeable presence in the main
urban areas of Greater Jakarta and Greater Surabaya. The land bank
supports over 15 years of development, a key competitive advantage.
The group also develops projects with land owners on a profit- or
revenue-sharing basis, expanding its operational scale while
limiting the balance-sheet burden. We expect CTRA to provide
support to joint ventures based on its shareholding due to the
reputational risk. We have proportionately consolidated the key
financials of major subsidiaries when computing CTRA's financial
metrics.
Parent-Subsidiary Linkage: CTRA and its subsidiaries have strong
operational and strategic linkages from common shareholders and
board members. PT Ciputra Residence (CTRR, A(idn)/Stable) is
considered strategically important as it owns most of CTRA's
Jakarta land bank, accounting for 23% of 2019 consolidated revenue.
They have moderate legal linkages from a cross-default provision in
CTRA's SGD150 million cross-border unsecured notes. We believe
there is reputational risk to CTRA from the subsidiaries' use of
the "Ciputra" brand. We therefore treat the group as a single
operating entity.
DERIVATION SUMMARY
CTRA's IDR can be compared with that of PT Bumi Serpong Damai Tbk
(BSD, BB-/Stable), while CTRR's National Long-Term Rating can be
compared with that of PT Kawasan Industri Jababeka Tbk (KIJA,
B-/BBB-(idn)/Stable) and PT Buana Lintas Lautan Tbk (BULL,
A-(idn)/Negative).
BSD is rated one-notch higher than CTRA to reflect its larger
pre-sales scale as we expect BSD to maintain attributable pre-sales
of more than IDR5 trillion over the medium term, notwithstanding
the current economic downturn, compared with IDR4 trillion-5
trillion for CTRA. BSD also has a significantly larger land bank
than CTRA, and higher EBITDA margins of around 45% over the next
few years, which supports stronger CFFO generation, compared with
around 30% EBITDA margins for CTRA. BSD also has a larger portfolio
of non-development EBITDA-generating shopping malls, offices and
hotels, which we expect will cover its interest costs by an average
1.2x over the next four years, compared with around 0.9x for CTRA,
which provides BSD with more financial flexibility during economic
downturns.
KIJA's IDR and National Long-Term Rating are multiple notches below
CTRA's IDR and CTRR's National Long-Term Rating to reflect its
smaller operating scale as we expect attributable pre-sales to
hover under IDR1 trillion in the next two years. Around half of
KIJA's pre-sales stem from the sale of industrial land, which is
more volatile during economic downturns, and the company's
pre-sales are concentrated in its two main townships, compared with
CTRR's significantly greater geographical and product diversity.
CTRR's financial profile is also stronger than that of KIJA as we
expect leverage to hover around 30% in the next few years, compared
with around 50% for KIJA.
BULL's National Long-Term Rating of 'A-(idn)' with a Negative
Outlook is lower than CTRR's rating to reflect its increased
cash-flow volatility on account of a rising mix of spot-rate
charter revenue on the back of its recent aggressive fleet
expansion. We also believe CTRA has a stronger liquidity position,
with cash on hand net of next 12 months' FCF sufficient to cover
next 12 months' debt maturities, whereas BULL may have to rely on
lenders rolling over some of its current term-loan maturities,
which is subject to the value of its fleet remaining steady and
providing sufficient collateral cover.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating Ccse for the issuer
include:
-- Attributable pre-sales of IDR4.3 trillion in 2021 and IDR4.9
trillion in 2022
-- Annual land banking expenses of around IDR400 billion-600
billion from 2020-2024
-- Capex of around IDR500 billion in 2020, reducing to less than
IDR200 billion in 2021
Key Recovery Rating Assumptions
-- The recovery analysis assumes CTRA will be liquidated in a
bankruptcy rather than continue as a going concern because it
is an asset-trading company
-- To estimate liquidation value, we assume a 75% advance rate
against the value of accounts receivable and a 50% advance
rate against inventory, investment properties and other plant,
property and equipment. We believe the company's reported
land-bank value, which is based on historical land cost, is at
a significant discount to current market value, which is
reflected in gross profit margins of around 50% on average on
property sales, and, thus, is already conservative.
-- Fitch assumes that CTRA's approximately IDR8 trillion in
secured bank loans outstanding as of 30 September 2020 will
rank prior to its SGD150 million senior unsecured notes in a
liquidation
-- Fitch has deducted 10% of the resulting liquidation value for
administrative claims
-- The above estimates result in a recovery rate corresponding to
an 'RR1' Recovery Rating for CTRA's senior unsecured notes.
Nevertheless, we have rated the senior notes 'B+' 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.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Annual attributable pre-sales sustained above IDR5 trillion
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Annual attributable pre-sales sustained below IDR3.5 trillion
-- Net debt/adjusted inventory sustained above 45%, as long as
non-development gross profit excluding depreciation and
amortisation/net interest cover is sustained at or above 1.0x
-- Weakening in overall legal and operational ties between the
parent and the operating subsidiaries
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Comfortable Liquidity: CTRA had IDR4.4 trillion in cash on hand as
of 30 September 2020, which, net of Fitch's estimate of an
aggregate FCF deficit of around IDR1 trillion starting 4Q20 through
to end-2021, is sufficient to cover maturing term loans and bonds
of around IDR3 trillion. The company has a record of maintaining
more diversified fund sources than domestic peers, with a ratio of
cross-border debt to domestic bank debt of 20:80 as of 30 September
2020. This mitigates refinancing risk, in Fitch's view, in the
event cross-border debt markets tighten. The company has minority
shareholders in several key subsidiaries, but Fitch estimates that
more than 90% of CTRA's cash and equivalents are in wholly owned
subsidiaries, which therefore supports sufficient cash
fungibility.
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.
MEDCO ENERGI: Moody's Completes Review, Retains B1 Rating
---------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Medco Energi Internasional Tbk (P.T.) and other ratings
that are associated with the same analytical unit. The review was
conducted through a portfolio review discussion held on January 12,
2021 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.
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.
Medco Energi Internasional Tbk (P.T.)'s (Medco) B1 rating is
supported by its better scale and geographic distribution of its
reserves and production following the acquisition of Ophir Energy
plc in 2019. The rating also incorporates the company's cash flow
visibility with revenue from fixed price gas contracts accounting
for about one-third of its total revenue. Medco's rating benefits
from its very good liquidity with the company proactively
refinancing its upcoming debt maturities in advance.
However, the rating remains constrained by Medco's exposure to the
cyclicality in commodity prices and its appetite to increase scale
through acquisitions and investments.
The principal methodology used for this review was Independent
Exploration and Production Industry published in May 2017.
PAN BROTHERS: Moody's Lowers CFR to Ca on Debt Restructuring Risk
-----------------------------------------------------------------
Moody's Investors Service has downgraded Pan Brothers Tbk (P.T.)'s
corporate family rating to Ca from Caa1.
At the same time, Moody's has downgraded to Ca from Caa1 the backed
senior unsecured rating on the 2022 bond issued by PB International
B.V., a wholly owned subsidiary of Pan Brothers, and guaranteed by
Pan Brothers and all of its subsidiaries.
The outlook on all ratings remains negative.
"The downgrade reflects our expectations of a high likelihood of
imminent default, and the increasing risk of a debt restructuring
as the January 27 maturity of its $138.5 million revolving credit
facility draws closer," says Stephanie Cheong, a Moody's Analyst.
"The negative outlook reflects the additional uncertainty around
the recovery rate for its $171 million bond due 2022 in case of a
default," adds Cheong.
RATINGS RATIONALE
The company's ability to service its financial obligations mainly
depends on whether it can come to a satisfactory resolution with
syndicated lending banks on the extension of its $138.5 million
revolving credit facility, before it comes due on January 27, 2021.
A missed payment not remediated within the cure period is an event
of default under the indenture of its US dollar bond due 2022 and
could lead to an acceleration of payments.
The bond is current with respect to interest payments and the next
semi-annual interest payment of $6.5 million is due on January 26,
2021. A missed scheduled payment of either interest or principal is
considered as a default under Moody's definition.
Should a default occur, Moody's estimates that the prospect of a
full recovery of principal and interest for the senior secured
bondholders will be low.
The company had plans to issue a $350 million bond to refinance the
revolving credit facility and its outstanding senior unsecured bond
due 2022. But these plans cannot be executed until the company
receives the requisite waiver and consent from existing syndicated
lending banks and letter-of-credit providers. This includes the
extension of the maturity of its $138.5 million revolving credit
facility due January 27.
That said, even if these consents are obtained, Moody's believes
the company will only be able to launch a bond in February, at the
earliest.
In terms of environmental, social and governance (ESG) factors, the
rating incorporates governance risks arising from the company's
concentrated ownership structure and aggressive financial strategy
resulting in tight liquidity and elevated risk of debt
restructuring.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded or the outlook returned to stable if
the company refinances both its revolving credit facility and bond
(without a loss of principal to bank lenders or bond holders),
resulting in a sustainable capital structure with adequate
liquidity.
The ratings could be downgraded further if Moody's estimates that
expected losses for the company's creditors will be higher than
those implied by the Ca rating.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
Pan Brothers Tbk (P.T.) is the largest listed manufacturer of
garment products in Indonesia, with a total production capacity of
117 million pieces of garments per year as at September 30, 2020.
The company employs around 38,000 people across 25 factories and in
10 manufacturing locations in Banten, West and Central Java.
Pan Brothers generated approximately $697 million in revenue for
the 12 months ended September 30, 2020.
SAKA ENERGI: Moody's Completes Review, Retains B2 CFR
-----------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Saka Energi Indonesia (P.T.) and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on January 12, 2021 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.
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.
Saka Energi Indonesia (P.T.)'s B2 corporate family rating reflects
its weak financial and operating profile; its small scale and need
to invest to improve its operating profile; its long-term contracts
with quality counterparties that are fixed price in nature; and its
exposure to high geographic concentration risk as its production
and reserves are primarily in Indonesia.
Saka's B2 rating incorporates one notch of uplift from parental
support, which takes into account (1) the cross-default clauses
between Saka and PGN; and (2) the reputational and funding risks to
PGN and its ultimate shareholder, Pertamina (Persero) (P.T.)
(Baa2), should Saka default. PGN holds 100% stake in Saka, while
PGN is in turn 56.96% owned by Pertamina, the 100% state-owned
national oil company in Indonesia.
The rating was placed under review for possible downgrade on
January 6, 2021; for details see Moody's press release issued on
that date.
The principal methodology used for this review was Independent
Exploration and Production Industry published in May 2017.
=========
J A P A N
=========
MONTEROZA INC: Pub Chain Shuts 20% of its Locations Due to Virus
----------------------------------------------------------------
Japan Today reports that the Japanese owner of several popular pub
chains said it was shutting down 20% of its bars in Tokyo, saying
the latest lockdown measures made it difficult to keep them open.
Monteroza, which owns the Shirokiya and Uotami pub chains known for
their inexpensive food and all-you-can-drink menus, said it was
closing 61 of its 337 locations in Tokyo, Japan Today relates.
According to Japan Today, Japan declared a second state of
emergency over the coronavirus pandemic in areas including Tokyo
earlier this month, asking restaurants and bars to close by 8:00
p.m. and urging people to stay home.
"At this rate, the survival of our business is in jeopardy. We have
around 20,000 employees including part-time workers, and it will be
difficult to maintain their employment," the privately-owned
company said in a statement.
Japan Today adds Monteroza said that as a large business, it was
unlikely to qualify for the payments being planned for small bars
and restaurants as part of a government rescue package.
=========
M A C A U
=========
SJM HOLDINGS: Fitch Gives First-Time 'BB+' LT Foreign-Currency IDR
------------------------------------------------------------------
Fitch Ratings has assigned SJM Holdings Limited (SJMH) a Long-Term
Foreign-Currency Issuer Default Rating (IDR) of 'BB+' with a
Negative Outlook, and a senior unsecured rating of 'BB+'. Fitch has
also assigned the Macau-based gaming operator's proposed US dollar
senior notes a 'BB+' rating.
The ratings reflect SJMH's record of maintaining a conservative
financial position, with well-established operations in Macau.
Fitch forecasts adjusted net debt/EBITDAR will recover to 3.5x and
1.8x by 2022 and 2023, respectively, driven by the opening of Grand
Lisboa Palace (GLP), the group's integrated resort in Cotai, in
early 2021 and a recovery from the pandemic. The ratings are also
supported by a minimal capex pipeline following the completion of
the HKD39 billion GLP.
The main constraints on its credit profile include geographical
concentration in the competitive Macau gaming market and a
weaker-than-peer market position due to its lower exposure to
Cotai, where visits have been rising at the expense of the Macau
peninsula, where most of SJMH's existing casinos are located. The
Negative Outlook reflects the risk of a recovery that is slower
than Fitch’s expectations, which may result from extended travel
restrictions and a slower ramp-up of GLP.
The proposed notes are rated at the same level as SJMH's senior
unsecured rating as they represent the company's unconditional and
irrevocable obligations. SJMH intends to use the net proceeds from
the proposed notes to refinance its existing debt and for general
corporate purposes.
KEY RATING DRIVERS
Coronavirus Exposure: SJMH's operations have been severely affected
by the travel restrictions between mainland China, Hong Kong and
Macau. Its net gaming revenue fell 79% in 9M20, in line with the
83% decline in the gross gaming revenue (GGR) of the Macau market.
The Macau gaming sector improved marginally in recent months, with
the GGR contraction slowing to 66% yoy in December 2020 from 90% in
September after the easing of travel restrictions, such as the full
resumption of individual visit scheme (IVS) visas to Macau.
However, the application process for an IVS visa remains more
troublesome than previously and restrictions on other visas, such
as IVS to Hong Kong and transit visas, continue. The eventual
easing of travel to Hong Kong and the potential availability of a
vaccine drive Fitch’s assumption of a recovery from 2H21 to 2023,
by which time Fitch forecasts a full recovery to 2019 levels for
the Macau gaming sector.
GLP Outlook: Fitch believes GLP will allow SJMH to gain a foothold
in Cotai and raise its market share. Fitch forecasts GLP will have
EBITDA of HKD2.0 billion with 330 tables by 2022 and HKD3.5 billion
with 380 tables by 2023, which will be partially offset by slightly
lower EBITDA at its existing properties due to table reallocation
and business diverted to GLP. Rivals Wynn Palace, which opened in
August 2016, had EBITDA of HKD5.0 billion with 325 tables in 2019,
and MGM Cotai, which opened in February 2018, had EBITDA of HKD2.4
billion with 259 tables in 2019.
Leverage to Improve: Fitch analyses gaming companies
"through-the-cycle", which can tolerate temporarily weaker metrics
through major development cycles or operational disruptions, such
as Covid-19, if Fitch expects the issuer to deleverage to within
the rating thresholds. Fitch forecasts SJMH's adjusted net
debt/EBITDAR (excluding working-capital cash) to improve to 3.5x by
2022 and 1.8x by 2023 (2020 estimate: -7.1x). Uncertainty remains
over GLP's operational ramp-up amid the pandemic, but Fitch
believes there is sufficient buffer at the rating level.
Conservative Financial Management: SJMH has a record of maintaining
a strong balance sheet, with a net cash position until 2019. Both
of its major project launches - Grand Lisboa, opened in 2007, and
GLP, opening in 2021 - were financed with a balanced funding
structure, using about 50% debt. SJMH has consistently declared
more than 50% of its net profit in dividends. It did not declare a
dividend in 1H20 after a net loss, and Fitch does not expect the
company to declare any dividends for 2020 and 2021 while it remains
loss-making.
Minimal Capex Pipeline: SJM's development pipeline has been focused
on GLP, which was completed in 2020, and all material outstanding
payments will be made by 2021, for which funds have been secured.
Thereafter, Fitch forecasts maintenance capex of just HKD500
million a year. Fitch does not expect the company to make any major
investments in the foreseeable future as there is no more land
available for gaming development in Macau and overseas investments
are unlikely.
Weaker Market Position; Concentration Risk: SJMH's credit profile
is weakened by its geographical concentration in the competitive
Macau gaming market and its higher exposure to the Macau peninsula.
Its geographical concentration also exposes the company to the risk
of its gaming concession expiring in 2022, even though Fitch
continues to believe the concession rebidding process will be
pragmatic, and cyclical downturns in the market.
On the other hand, SJMH has a long history of operating in the
Macau gaming industry with an established brand. Fitch maintains a
positive outlook on the industry in the longer term, supported by
China's expanding middle class and the development of
infrastructure in and around Macau.
DERIVATION SUMMARY
SJMH has high geographical concentration and a weaker market
position than Las Vegas Sands Corp (LVS, BBB-/Negative), as LVS has
a portfolio of quality assets in attractive regulatory regimes.
SJMH had historically maintained a more conservative balance sheet,
but its leverage has increased as a result of the GLP development,
while the deleveraging progress is subject to uncertainty over the
ramp-up of GLP and the recovery from the pandemic.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
For the existing properties:
-- Baseline net revenue assumptions of -37%, -10% and 0%
(relative to 2019) in 2021, 2022 and 2023, respectively, based
on Fitch’s expectations of a recovery in the Macau gaming
industry. In addition, Fitch applied a -10% adjustment
throughout the forecast period to account for business
diversion and table reallocation as a result of the opening of
GLP.
-- EBITDA margin to gradually recover to 2019 levels: 24%, 20%
and 4% for Grand Lisboa, other self-promoted casinos and
satellite casinos, respectively, by 2023, as efficiency
improvement from the reallocation of staff is offset by lower
revenue.
For GLP:
-- To open by phases from April 2021.
-- Adjusted property EBITDA of HKD0 billion, HKD2.0 billion and
HKD3.5 billion in 2021, 2022 and 2023, based on margins of 0%,
18% and 22%, respectively.
Other assumptions:
-- Capex of HKD3.5 billion, HKD500 million and HKD500 million in
2021, 2022 and 2023, respectively
-- No dividends declared in 2020 and 2021
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Factors that could lead to a revision of the Outlook to Stable:
-- Evidence of stabilisation in demand and signs of a significant
rebound in Macau gaming demand
-- A successful ramp-up of GLP's operations
-- Adjusted net debt/EBITDAR returning to below 2.0x for a
sustained period
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Adjusted net debt/EBITDAR remaining above 2.0x for a sustained
period (rating case: 3.5x in 2022 and 1.8x in 2023)
-- Material deviation from the deleveraging timeframe due to a
worse-than-expected recovery trajectory and/or a slower-than
expected ramp-up of GLP
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Sufficient liquidity: SJMH had a cash balance of HKD5.9 billion and
a committed undrawn credit facility of HKD8.5 billion as of 30
September 2020. The company had a debt balance of HKD16.8 billion,
mainly a syndicated loan for the construction of GLP, of which
HKD5.2 billion will be due in 2021.
SJMH reduced its operating expense to around HKD12.8 million per
day in 3Q20, or approximately HKD4.7 billion per annum, and its
annual maintenance capex is low at around HKD400 million-500
million after the completion of GLP, for which Fitch estimates
there is around HKD3 billion in outstanding payments. Fitch
believes the company has sufficient liquidity to meet its
obligations, considering its liquidity, cost rationalisation to
preserve cash and minimal capex planned following GLP's
completion.
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.
=====================
N E W Z E A L A N D
=====================
AIR NEW ZEALAND: Posts NZD454MM Net Loss for Year Ended June 30
---------------------------------------------------------------
Radio New Zealand reports that Air New Zealand has reported a
NZD454 million loss after a year with more than 4,000 job losses,
planes grounded, and routes dropped.
It reported a NZD454 million loss for the year ended June because
the Covid-19 pandemic clipped its wings.
Air New Zealand's international flights dropped from more than
30,000 in 2019, to under 10,000 last year, RNZ discloses.
Overall passenger numbers fell from 17.6 million to 8.4 million.
It brought in more than 10 million items of PPE gear to help with
the Covid-19 response, while its cleaning staff used over 45,000
litres of disinfectant on aircraft.
According to RNZ, Chief executive Greg Foran said returning to
normal levels of air travel would be complex.
"We are working closely with government agencies on preparations
for safe travel," the report quotes Mr. Foran as saying.
Mr. Foran wanted the airline to emerge from Covid-19 in a better
position.
Air New Zealand's first quarantine-free flight from Auckland to
Brisbane took flight on January 7, RNZ adds.
Based in Auckland, Air New Zealand Limited operates scheduled
passenger flights to 20 domestic and 32 international destinations
in 20 countries, primarily around and within the Pacific Rim.
=================
S I N G A P O R E
=================
ENRON CAPITAL: Creditors' Proofs of Debt Due January 22
-------------------------------------------------------
Goh Thien Phong, as liquidator of Enron Capital and Trade Resources
Singapore Pte Ltd, will receive proofs of debt from the company's
creditors until Jan. 22, 2021.
Failure to prove claims by the due date will exclude a creditor
from sharing in the company's distribution of first and final
dividend.
Holders of equity interest will also have until Jan. 22, 2021, to
submit their proof of equity interest in the company.
The Liquidator can be reached at:
Goh Thien Phong
c/o PricewaterhouseCoopers LLP
7 Straits View
Marina One, East Tower
Level 12
Singapore 018936
=================
S R I L A N K A
=================
HATTON NATIONAL: Moody's Withdraws Caa1 Long Term Deposit Ratings
-----------------------------------------------------------------
Moody's Investors Service has withdrawn the following ratings,
assessments and outlooks of Hatton National Bank PLC (HNB):
Long-term Counterparty Risk Ratings (Foreign and Local Currency)
of B3
Short-term Counterparty Risk Ratings (Foreign and Local Currency)
of NP
Long-term Deposit Ratings (Foreign and Local Currency) of Caa1;
Outlook Stable
Short-term Deposit Ratings (Foreign and Local Currency) of NP
Long-term Counterparty Risk Assessment of B3(cr)
Short-term Counterparty Risk Assessment of NP(cr)
Long-term Issuer Rating (Foreign) of Caa1; Outlook Stable
Baseline Credit Assessment (BCA) and Adjusted BCA of caa1
Outlook Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
HNB is headquartered in Colombo and reported total assets of
LKR1,324.4 billion ($7.2 billion) at September 30, 2020.
SAMPATH BANK: Moody's Withdraws Caa1 Long Term Deposit Ratings
--------------------------------------------------------------
Moody's Investors Service has withdrawn the following ratings,
assessments and outlooks of Sampath Bank PLC (Sampath):
Long-term Counterparty Risk Ratings (Foreign and Local Currency)
of B3
Short-term Counterparty Risk Ratings (Foreign and Local Currency)
of NP
Long-term Deposit Ratings (Foreign and Local Currency) of Caa1;
Outlook Stable
Short-term Deposit Ratings (Foreign and Local Currency) of NP
Long-term Counterparty Risk Assessment of B3(cr)
Short-term Counterparty Risk Assessment of NP(cr)
Long-term Issuer Rating (Foreign) of Caa1; Oulook Stable
Baseline Credit Assessment (BCA) and Adjusted BCA of caa1
Outlook Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
Sampath is headquartered in Colombo and reported total assets of
LKR1,108.6 billion ($6.0 billion) at September 30, 2020.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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