/raid1/www/Hosts/bankrupt/TCRAP_Public/210201.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
Monday, February 1, 2021, Vol. 24, No. 17
Headlines
A U S T R A L I A
ADELAIDE EVENT: Second Creditors' Meeting Set for Feb. 8
COMMAND GROUP: Second Creditors' Meeting Set for Feb. 8
GDC GROUP: Second Creditors' Meeting Set for Feb. 8
MEGAWALL PTY: Second Creditors' Meeting Set for Feb. 5
MERFAD 88: Second Creditors' Meeting Set for Feb. 8
C H I N A
ENN NATURAL: Moody's Upgrades CFR to Ba1, Alters Outlook to Stable
HNA GROUP: Declares Bankruptcy and Restructuring as Debt Woes Mount
SHANGHAI PUDONG: Moody's Affirms Baa2 Deposit Rating/Stable Outlook
I N D I A
AMIDEEP AUTOMOBILES: CRISIL Assigns B Rating to INR9.9cr Loan
ANKIT DIAMONDS: CRISIL Keeps D Debt Ratings in Not Cooperating
BALBIR FOOD: ICRA Keeps B+ Debt Ratings in Not Cooperating
BHARANI COMMODITIES: Insolvency Resolution Process Case Summary
BHAVANI WOOD: CRISIL Keeps D Debt Ratings in Not Cooperating
CAPTAB BIOTEC: ICRA Keeps D Debt Ratings in Not Cooperating
DAISY INDUSTRIES: CRISIL Keeps B Debt Ratings in Not Cooperating
DELHI INTERNATIONAL AIRPORT: S&P Keeps 'B-' ICR on Watch Negative
DNH PROJECTS: ICRA Keeps C Debt Ratings in Not Cooperating
GMR HYDERABAD: Fitch Gives Final BB+ Rating to USD300MM Sec. Notes
ICON DEVELOPERS: CRISIL Keeps B+ Debt Rating in Not Cooperating
INDUSTRIAL FORGING: ICRA Moves B+ Debt Ratings to Not Cooperating
KAMAKSHI STEELS: CRISIL Lowers Rating on INR10cr Loans to D
KAMYA CLOTHING: CRISIL Keeps B Debt Ratings in Not Cooperating
KASUKURTHI SUJATHA: CRISIL Cuts Rating on INR80cr Bank Loan to D
LAKSHMI VENKATESWARA: CRISIL Keeps B+ Ratings in Not Cooperating
MATRIX SECURITY: ICRA Lowers Rating on INR80cr Loans to B
MUSALE CONSTRUCTIONS: CRISIL Cuts Rating on INR15.5cr Loans to D
PATELNAGAR REFRACTORIES: ICRA Moves D Ratings to Not Cooperating
R L AVIATION: CRISIL Reaffirms B+ Rating on INR5.0cr Loan
R.B. GEARS: CRISIL Keeps B+ Debt Ratings in Not Cooperating
RAINBOW RICE: CRISIL Keeps B+ Debt Ratings in Not Cooperating
RAJARAM AND BROTHERS: CRISIL Cuts Rating on INR8cr Cash Loan to B
RAJASTHAN PULSES: CRISIL Keeps B+ Rating on INR15cr Loans
RAM ROLLING: ICRA Keeps B+ Debt Ratings in Not Cooperating
SHANMUKHA COTTON: CRISIL Keeps B Debt Ratings in Not Cooperating
SHETRON LIMITED: Ind-Ra Keeps BB Issuer Rating in Non-Cooperating
SHIVAM MASALA: CRISIL Keeps B- Debt Rating in Not Cooperating
SHYAM GUWAR: CRISIL Keeps B Debt Ratings in Not Cooperating
SIDDHI SALES: CRISIL Reaffirms B Rating on INR10cr Loans
SUMIT TEXSPIN: CRISIL Lowers Rating on INR77cr Loans to D
SWARNA ACADEMY: CRISIL Lowers Rating on INR8cr Loans to D
VIDEOCON GROUP: Kochhars, Dhoot Told to Appear in Court on Feb. 12
I N D O N E S I A
LIPPO KARAWACI: Fitch Affirms B- LT IDRs, Alters Outlook to Stable
LIPPO MALLS: Fitch Assigns BB- Rating to Proposed Notes
LIPPO MALLS: Moody's Assigns B1 Rating to Proposed USD Notes
J A P A N
ANA HOLDINGS: Posts JPY309.58BB Net Loss for 9Mos. Ended Dec. 31
S I N G A P O R E
EAGLE HOSPITALITY: Jan. 28 Deadline Set for Panel Questionnaires
EAGLE HOSPITALITY: MAS Grants Temporary Aggregate Leverage Waiver
EAGLE HOSPITALITY: Seeks to Pay Caretakers of 14 Closed Hotels
EZION HOLDINGS: To Sell Liftboat for US$13 Million
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A U S T R A L I A
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ADELAIDE EVENT: Second Creditors' Meeting Set for Feb. 8
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A second meeting of creditors in the proceedings of Adelaide Event
Group Pty Ltd has been set for Feb. 8, 2021, at 11:00 a.m. via
teleconference facilities.
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 Feb. 4, 2021, at 5:00 p.m.
Thomas Stuart Otway and Travis Graham William Olsen of SV Partners
were appointed as administrators of Adelaide Event on Dec. 21,
2020.
COMMAND GROUP: Second Creditors' Meeting Set for Feb. 8
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A second meeting of creditors in the proceedings of Command Group
Pty Ltd has been set for Feb. 8, 2021, at 10:00 a.m. Via Zoom Video
Conferencing.
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 Feb. 5, 2021, at 4:00 p.m.
Stewart William Free and Bradd William Morelli of Jirsch Sutherland
were appointed as administrators of Command Group on Dec. 22,
2020.
GDC GROUP: Second Creditors' Meeting Set for Feb. 8
---------------------------------------------------
A second meeting of creditors in the proceedings of GDC Group Pty
Ltd has been set for Feb. 8, 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 Feb. 7, 2021, at 4:00 p.m.
Morgan Kelly and Phil Quinlan of KPMG were appointed as
administrators of GDC Group on Dec. 22, 2020.
MEGAWALL PTY: Second Creditors' Meeting Set for Feb. 5
------------------------------------------------------
A second meeting of creditors in the proceedings of Megawall Pty
Ltd has been set for Feb. 5, 2021, at 2:30 p.m. via Zoom Meetings.
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 Feb. 4, 2021, at 5:00 p.m.
Bruno Anthony Secatore and Glenn John Spooner of Cor Cordis were
appointed as administrators of Megawall Pty on Dec. 21, 2020.
MERFAD 88: Second Creditors' Meeting Set for Feb. 8
---------------------------------------------------
A second meeting of creditors in the proceedings of:
- Merfad 88 Group Holdings Pty Ltd
- Merfad Group Holdings Pty Ltd
- Samway Group Holdings Pty Ltd
- Samway Group Pty Ltd
- Hills Shoppingtown Holdings 88 Pty Ltd
- Hills Shoppingtown Pty Ltd
- Tallahon Holdings Pty Ltd
- Tallahon Pty Ltd
- Canley 88 Group Holdings Pty Ltd
- Canley 88 Holdings Pty Ltd
- Terry 88 Holdings Pty Ltd
- Terry 88 Pty Ltd
- Reid 12 Holdings Pty Ltd
- Reid 12 Pty Ltd
- Hubert 17 Holdings Pty Ltd
- Hubert 17 Pty Ltd
- Reid 19 Holdings Pty Ltd
- Reid 19 Pty Ltd
- SF Merrylands Holdings Pty Ltd
- SF Commercial Holding Pty Ltd
- NR Terminal Holdings Pty Ltd
- NR Terminal Pty Ltd
has been set for Feb. 8, 2021, at 11:00 a.m. via Virtual meeting
only.
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 Feb. 5, 2021, at 3:00 p.m.
Todd Andrew Gammel and Barry Anthony Taylor of HLB Mann Judd were
appointed as administrators of Merfad 88 et al. on Dec. 31, 2020.
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C H I N A
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ENN NATURAL: Moody's Upgrades CFR to Ba1, Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has upgraded the corporate family rating
of ENN Natural Gas Co., Ltd. to Ba1 from Ba2. At the same time,
Moody's has upgraded to Ba1 from Ba2 the rating on the senior
unsecured notes issued by ENN Clean Energy International Investment
Limited and guaranteed by ENN Natural Gas.
Moody's has also changed the outlook to stable from positive.
This rating action follows ENN Natural Gas's collection of proceeds
from a share placement of about 245.9 million new shares on January
21, 2021, representing approximately 9.5% of the company's existing
share capital. Moody's expects the share placement to be formally
completed following the finalization of certain administration
procedures.
RATINGS RATIONALE
"The rating upgrades reflect ENN Natural Gas's improved liquidity
position and financial metrics upon completion of the share
placement," says Boris Kan, a Moody's Vice President and Senior
Credit Officer.
The share placement follows ENN Natural Gas's completion of its
acquisition of a 32.8% stake in ENN Energy Holdings Limited (ENN
Energy, Baa2 stable) from two entities controlled by Mr. Wang
Yusuo, ENN Natural Gas's chairman, in September 2020.
Net proceeds from the share placement, which amount to about RMB3
billion, will be used to repay the consideration for the ENN Energy
acquisition.
Moody's expects that ENN Natural Gas's liquidity position will
improve over the next 12 months after the share placement, although
the company still remains in a cash deficit position. Moody's
believes that the company had unrestricted cash of about RMB1.7
billion at the end of September 2020, and projects an operating
cash flow of about RMB1.3 billion and a dividend income of about
RMB550 million over the next 12 months. These cash sources, along
with the RMB3 billion net proceeds from the share placement, are
inadequate to cover its debt repayments of about RMB8.8 billion,
shareholder loans (after deducting dividend income for 2020 of
about RMB520 million) of about RMB2.2 billion, dividend payments of
about RMB250 million and capital spending of about RMB885 million
over the same period.
That said, the company has an established track record in the
capital markets and has secured access to external financing. As of
the end of September 2020, the company had uncommitted undrawn
banking facilities of about RMB3.3 billion and committed credit
facilities of about USD500 million. Moody's expects that these
external funding sources will help mitigate the company's funding
needs over the next 12 months. Particularly, the company has
already secured committed funding to refinance its USD500 million
bond that comes due in February 2021.
The share placement will also improve ENN Natural Gas's financial
position. Moody's projects that the company's retained cash flow
(RCF) to debt ratio will improve to about 15%-18% in 2021-22 after
the share placement, from 12%-15% before the share placement over
the same projection period. The stronger credit metrics support the
company's Ba1 rating.
ENN Natural Gas's CFR, through its 32.8% equity stake in ENN
Energy, reflects (1) the company's established position in the
piped-gas sector, with geographically diversified operations, (2)
its large market share that often involves monopolistic positions
in gas distribution, backed by long-term concessionary agreements,
and (3) favorable industry trends and supportive government
policies that offer good growth potential.
However, these strengths are counterbalanced by (1) the risks
associated with China's evolving regulatory framework in the city
gas sector, (2) the company's lack of majority control over ENN
Energy, (3) the company's weak liquidity and moderate financial
profile, and (4) the challenges associated with its exposure to
non-utilities businesses, which entail higher volatility and
business risk.
The rating also takes into account the following environmental,
social and governance (ESG) considerations.
ENN Natural Gas faces moderate carbon transition risk, given its
coal and methanol operations. However, the company has to date not
experienced any major compliance violations related to water
discharge or waste disposal. The company's increased exposure to
its environmentally friendly city gas business following its
acquisition of ENN Energy mitigates this environmental risk
exposure.
ENN Natural Gas faces moderate social risk in terms of meeting
worker health and safety standards in its construction and
operation of city gas, methanol and coal mine projects.
From a governance perspective, the company's ownership is
concentrated in Mr. Wang Yusuo, his wife, Zhao Baoju, and his
controlling entities, with a combined 75.6% equity stake in ENN
Natural Gas as of the end of 2020. The company's lack of majority
ownership in ENN Energy is another important consideration, as its
credit profile incorporates its significant control on ENN Energy
and the latter's stable cash flows from its city gas business.
Lastly, the company's financial policy is characterized by high
capital spending and leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that, over the next
12-18 months, ENN Natural Gas will (1) generate a majority of its
cash flows from its downstream city gas operations and manage its
exposure on its non-utilities operations, which entail higher
volatility and business risks, (2) demonstrate conservative
financial and investment policies to maintain a stable leverage and
liquidity position, and (3) retain control on, and continue to
integrate with, ENN Energy.
Moody's could upgrade the rating if ENN Natural Gas (1) establishes
a track record of business stability by increasing its cash flow
contributions from its stable downstream city gas operations,
potentially through divestment of part of its non-utilities
operations, (2) further increases its control over, and creates
synergies with, ENN Energy, (3) strengthens its operating
performance such that its financial metrics improve materially, or
(4) demonstrates conservative financial and investment policies to
further enhance its liquidity position.
Moody's assessment of leverage incorporates a pro rata
consolidation of ENN Energy, which is 32.8% owned by ENN Natural
Gas.
Financial metrics indicative of an upgrade trend include adjusted
RCF/debt (with pro rata consolidation of ENN Energy) above 20% and
funds from operations (FFO) interest coverage above 5.0x over a
prolonged period.
Downward rating pressure may arise if (1) the company's control on
ENN Energy reduces, (2) unfavorable regulatory changes
significantly reduce the company's ability to pass through upstream
gas costs for its city gas business, (3) the company encounters
liquidity problems or weakening credit metrics because of
aggressive debt-funded investments, or greater volatility in its
non-utilities businesses than historically observed, or (4) the
company further expands its non-utilities operations, potentially
through acquisitions, resulting in higher business risk.
Financial metrics indicative of a downgrade pressure include
adjusted RCF/debt (with pro rata consolidation of ENN Energy) below
13% and FFO interest coverage below 3.5x over a prolonged period.
The principal methodology used in these ratings was Regulated
Electric and Gas Utilities published in June 2017.
Founded in 1992 and headquartered in Hebei, ENN Natural Gas Co.,
Ltd. (formerly known as ENN Ecological Holdings Co., Ltd) is a
diversified energy company mainly engaged in (1) city gas
distribution, (2) chemical production and trading, (3) energy
construction services, (4) coal mining and trading, and (5)
liquefied natural gas production.
Its major asset is its 32.8% equity stake in ENN Energy Holdings
Limited, one of the largest city gas distributors in China, with
229 city gas concessions in 22 provinces as of the end of June
2020.
ENN Natural Gas is the single-largest shareholder in ENN Energy. In
2019, ENN Energy contributed 70% and 61% of ENN Natural Gas's
adjusted FFO and gross profit, respectively, under pro rata
consolidation.
ENN Natural Gas was listed on the Shanghai Stock Exchange in 1994.
Mr. Wang Yusuo, his wife, Zhao Baoju, and his controlling entities
owned 75.6% of the company as of the end of 2020.
HNA GROUP: Declares Bankruptcy and Restructuring as Debt Woes Mount
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Global Times reports that one of China's largest conglomerates, HNA
Group, on Jan. 29 declared bankruptcy and restructuring after a
multi-year debt and liquidity crisis, according to the company on
Jan. 29.
The company was informed by South China's Hainan High People's
Court on Jan. 29 that "because the company is unable to pay off its
debts, related creditors appealed to the court for the company's
bankruptcy and restructuring," HNA said, Global Times relays.
According to Global Times, HNA Group said it will cooperate with
the court for judicial review, carry forward the debt disposal, and
support the court's protection of the legal rights of its creditors
so as to ensure the smooth operations of the company.
Global Times says the move came after the change of the company's
top executives on January 22. A Hainan provincial government-led
working group also finished due diligence at the company and drew
up risk disposal plans the same day.
Once an aggressive dealmaker that spent extravagantly to buy stakes
in notable foreign assets like Hilton Worldwide Holdings and
Deutsche Bank, HNA Group, the owner of Hainan Airlines, started to
save itself by selling some of its assets after a liquidity crisis
gripped the company in 2017, focusing on its airline and tourism
businesses, Global Times says citing media reports.
After years of debt and liquidity together with the coronavirus
pandemic which plagued tourism and disrupted the aviation sector,
HNA failed to deal with risks thoroughly. It then sought the help
of the local government, according to the company.
The local government of Hainan Province last year stepped in and
established a working group with other agencies to help solve HNA's
financial woes, the company said in February 2020, Global Times
recalls.
In a statement on HNA's WeChat account on Jan. 25, the company said
that risk disposal work is gradually being carried out, but the
"severity of risks" must be given high attention.
HNA Group owns more than 2,300 companies, Global Times notes.
As of June 2019, HNA Group's total assets were worth CNY980.62
billion ($151.77 billion) with its gross liabilities hitting almost
CNY706.73 billion, Global Times discloses citing financial news
site eeo.com.
About HNA Group
China-based HNA Group Co. Ltd. offers airlines services. The
Company provides domestic and international aviation
transportation, air travel, aviation maintenance, and aviation
logistics services. HNA Group also operates holding, capital,
tourism, logistics, and other business.
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 17, 2018, HNA Group defaulted on a CNY300 million (US$44
million) loan raised through Hunan Trust. The company is already
under strict supervision by a group of bank creditors, led by China
Development Bank, following a liquidity crunch in the final quarter
of 2017. The default came despite an estimated $18 billion in asset
sales by HNA in 2018 that have done little to address its ability
to meet its domestic debts.
SHANGHAI PUDONG: Moody's Affirms Baa2 Deposit Rating/Stable Outlook
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Moody's Investors Service has affirmed the long-term Baa2
local-currency and foreign-currency bank deposit ratings, and the
short-term P-2 local-currency and foreign-currency bank deposit
ratings of Shanghai Pudong Development Bank Co., Ltd. (SPDB).
Moody's has also affirmed the bank's Baseline Credit Assessment and
adjusted BCA of ba2.
The outlook remains stable, reflecting Moody's view that the
Chinese government's willingness and capacity to support SPDB will
remain broadly unchanged over the next 12-18 months; and that
SPDB's asset quality, capital and profitability will remain roughly
stable during this period.
RATINGS RATIONALE
The affirmation of SPDB's ratings reflects Moody's expectation that
although the bank faces cyclical pressure on its profitability,
asset quality and capitalization because of the shock from the
coronavirus, its financial metrics will improve over the medium
term as China's economy recovers. In addition, the bank has
adequate liquidity and has lowered its reliance on market funding
in recent years, and continues to enjoy a very high level of
government support.
SPDB's new nonperforming loan formation rate is likely to stabilize
in the coming 12-18 months. The bank has managed its loan growth
well and has focused on improving loan structures in the past two
years, resulting in the percentage of credit card and personal
consumption loans to gross loans declining. Moody's expects the
bank's asset risk in retail loans will decline with the recovery of
economy, stabilized unemployment rate and the bank's lending policy
adjustments to lower-risk segments.
That said, new NPL formation amid structural adjustments in the
Chinese economy will remain a key risk to SPDB's asset quality,
which still lags the average among Moody's rated banks when the
bank continues to resolve some of the historical problem loans.
Moody's expects SPDB's profitability, as measured by net
income/tangible assets, will remain above 0.75% in the next 12-18
months. Credit costs will remain elevated, with more delinquencies
surfacing due to the coronavirus outbreak. The bank's net interest
margin dropped more significantly compared with its rated
joint-stock commercial bank peers in the first half of 2020 as it
adjusted its loan portfolio to lower-risk segments and the
regulator guided loan rates down. However, Moody's expects SPDB's
profitability will stabilize as the loan pricing stabilizes over
the medium term and fees and commissions continue to grow with the
recovery of the economy.
SPDB's tangible common equity capital ratio should remain above
8.5%, despite declining slightly as the growth of its risk-weighted
assets outpaces its internal capital generation capacity over next
12-18 months. Enhanced regulation relating to countercyclical
capital buffers and the coming requirement of capital surcharge for
domestic systemically important banks will support the bank's
capitalization.
Moody's expects SPDB's liquidity profile will remain stable in the
next 12-18 months. The bank's reliance on market funding has
declined in recent years on strict regulation on interbank business
and the bank's growing deposit base, although it remains higher
than that of most rated joint-stock commercial banks. The bank has
adequate liquid resources, which at 36.7% of tangible banking
assets at the end of June 2020 are sufficient to cover its market
funds.
SPDB's rating is based on China's Moderate+ Banking System Macro
Profile. Its BCA is ba2, and its ba2 adjusted BCA does not
incorporate any affiliate support. China does not have an
operational bank resolution regime, as a result, Moody's applies
its basic Loss Given Failure approach to rating SPDB's debt
securities and assumes a very high level of support from the
Chinese government in times of need. Given this, SPDB's deposit
ratings, Counterparty Risk Assessment and Counterparty Risk Ratings
incorporate three notches of uplift.
Moody's assessment of a very high level of government support is
based on SPDB's national market share of 2%-3% of total assets in
the system as of the end of September 2020. Moody's believes SPDB
is an important pillar for the Shanghai government in the financial
services industry and in the context of Shanghai's role as a
financial center. SPDB's largest shareholder is Shanghai
International Group -- a financial holding company that is wholly
owned by the Shanghai municipal government -- which held a 29.67%
stake in the bank as of the end of June 2020.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on SPDB's deposit rating could arise if the Chinese
government's capacity to support the bank strengthens, as reflected
in China's sovereign rating, or if the bank's BCA is upgraded.
Moody's could upgrade SPDB's BCA if (1) its asset quality improves,
with the ratio of impaired loans to gross loans consistently below
2%; (2) its profitability remains resilient, with its net incomes
to tangible assets consistently above 0.8%; (3) its capital
strengthens, with its TCE ratio above 10%; and (4) its reliance on
market funding decreases, with its market funds/tangible banking
assets consistently below 25%.
On the other hand, SPDB's deposit ratings could come under pressure
if support from the Chinese government weakens or if the bank's BCA
is downgraded.
Moody's could downgrade SPDB's BCA if the bank's operating
environment weakens materially; for example, if (1) China's
economic growth slows as coronavirus-induced weakness lingers; or
(2) China's corporate financial leverage increases significantly as
a result of loose monetary policies.
Moody's could also downgrade SPDB's BCA if (1) its asset quality
deteriorates, with the ratio of impaired loans to gross loans above
4%; (2) its profitability deteriorates, with its net income to
tangible assets consistently below 0.55%; and/or (3) its reliance
on market funding increases, with its market funds/tangible banking
assets above 40%.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
Headquartered in Shanghai, Shanghai Pudong Development Bank Co.,
Ltd. reported total assets of around RMB7.7 trillion as of the end
of September 2020.
The local market analyst for these ratings is Yulia Wan, +86 (212)
057-4017.
LIST OF AFFECTED RATINGS/ASSESSMENTS
Issuer: Shanghai Pudong Development Bank Co., Ltd.
Adjusted Baseline Credit Assessment, Affirmed ba2
Baseline Credit Assessment, Affirmed ba2
Long-term Counterparty Risk Assessment, Affirmed Baa2(cr)
Short-term Counterparty Risk Assessment, Affirmed P-2(cr)
Long-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed Baa2
Short-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed P-2
Long-term Deposit Rating (Foreign and Local Currency), Affirmed
Baa2; Outlook remains Stable
Short-term Deposit Rating (Foreign and Local Currency), Affirmed
P-2
Other Short Term Medium-Term Note Program (Foreign and Local
Currency), Affirmed (P)P-2
Long-term Senior Unsecured Medium-Term Note Program (Foreign and
Local Currency), Affirmed (P)Baa2
Outlook, Remains Stable
Issuer: Shanghai Pudong Dev. Bk Co., Ltd., HK Branch
Long-term Counterparty Risk Assessment, Affirmed Baa2(cr)
Short-term Counterparty Risk Assessment, Affirmed P-2(cr)
Long-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed Baa2
Short-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed P-2
Long-term Senior Unsecured Regular Bond/Debenture (Foreign
Currency), Affirmed Baa2; Outlook remains Stable
Other Short Term Medium-Term Note Program (Foreign and Local
Currency), Affirmed (P)P-2
Long-term Senior Unsecured Medium-Term Note Program (Foreign and
Local Currency), Affirmed (P)Baa2
Outlook, Remains Stable
Issuer: Shanghai Pudong Development Bank, Singapore
Long-term Counterparty Risk Assessment, Affirmed Baa2(cr)
Short-term Counterparty Risk Assessment, Affirmed P-2(cr)
Long-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed Baa2
Short-term Counterparty Risk Rating (Foreign and Local Currency),
Affirmed P-2
Long-term Senior Unsecured Regular Bond/Debenture (Foreign
Currency), Affirmed Baa2; Outlook remains Stable
Other Short Term Medium-Term Note Program (Foreign and Local
Currency), Affirmed (P)P-2
Long-term Senior Unsecured Medium-Term Note Program (Foreign and
Local Currency), Affirmed (P)Baa2
Outlook, Remains Stable
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I N D I A
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AMIDEEP AUTOMOBILES: CRISIL Assigns B Rating to INR9.9cr Loan
-------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
bank facility of Amideep Automobiles (AA).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 9.9 CRISIL B/Stable (Assigned)
The rating reflects the firm's modest scale of operations and
intense competition in the automobile dealership industry and weak
financial risk profile. These weaknesses are partially offset by
the extensive industry experience of the partners.
Key Rating Drivers & Detailed Description
Weakness:
* Modest scale of operations and intense competition in the
automobile dealership industry: Modest scale is reflected in
revenue of INR77 crore in fiscal 2020. Revenue growth may be
constrained, given the slowdown in the automobile industry. In
fiscal 2021, revenue is estimated to be lower than the previous
fiscal on account of the lockdown imposed to contain the Covid-19
pandemic. AA faces intense competition from the unorganised, used
two-wheeler market and from dealers of other leading and
established players in the segment.
* Weak financial risk profile: The firm's financial risk profile is
leveraged, as indicated by high total outside liabilities to
tangible networth ratio and modest networth of 5.44 times and
INR4.28 crore, respectively, as on March 31, 2020. Its networth is
likely to remain modest, over the medium term, on account of low
accretion to reserves resulting from low profitability because of
the trading nature of its operations. The interest coverage ratio
of the firm was average at 1.71 times as on March 31, 2020.
Strength:
* Extensive industry experience of the partners: The partners have
extensive experience of about a decade in the automotive dealership
industry. This has given them an understanding of the dynamics of
the market and enabled them to establish strong relationships with
suppliers and customers.
Liquidity: Stretched
Liquidity is stretched, marked by modest cash accrual which is
tightly matched against debt obligation and highly drawn working
capital limit. CRISIL Ratings expects the firm to generate cash
accrual of over INR50 lakh annually. In the past, the partners have
shown a tendency to withdraw capital in order to support other
businesses. However, the partners have supported the firm through
unsecured loans which stood at INR94 lakh as on March 31, 2020. The
current ratio was modest at 1.14 times as on March 31, 2020.
Outlook Stable
CRISIL Ratings believes AA will continue to benefit, over the
medium term, from its longstanding relationship with the principal
and experience of the management to mitigate the inherent risk in
the trading business.
Rating Sensitivity Factors
Upward factors
* Increase in revenue by 25% on a sustained basis while ensuring
better financial risk profile
* Significant infusion of capital, resulting in improved capital
structure
Downward factors
* Pressure on net cash accrual, resulting from decline in topline
or pressure on operating margin.
* Deterioration in the working capital cycle with gross current
assets rising to over 100 days, resulting in pressure on
liquidity.
Established in 2012 as a partnership firm, AA is an authorised
dealer of two-wheeler vehicles of Honda Motorcycle and Scooter
India Pvt Ltd. The firm also services vehicles and sells spare
parts and accessories. AA operates through one showroom, two outlet
showrooms and one service centre in Surat, Gujarat. It is owned and
managed by Mr Amitkuamar P. Kachhadiya and his family members.
ANKIT DIAMONDS: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Ankit
Diamonds (Ankit; part of the Ankit Diamonds group) continue to be
'CRISIL D/CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Foreign 42 CRISIL D (Issuer Not
Discounting Cooperating)
Bill Purchase
Export Packing 3 CRISIL D (Issuer Not
Credit Cooperating)
CRISIL Ratings has been consistently following up with Ankit 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
Ratings failed to receive any information on either the financial
performance or strategic intent of Ankit, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on Ankit
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
Ankit continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
Ankit Diamonds was set up in 1983 as a partnership firm by Mr.
Kirit Shah and his family members. The firm is engaged in cutting
and polishing of diamonds. It currently has two partners - Mr.
Kirit Shah, and Mr. Rikin Shah.
BALBIR FOOD: ICRA Keeps B+ Debt Ratings in Not Cooperating
----------------------------------------------------------
ICRA said the ratings for the INR15.00 crore bank facilities of
Shree Balbir Food Product Private Limited (SBF) continue to remain
in the 'Issuer Not Cooperating' category. The ratings are denoted
as "[ICRA]B+ (Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 12.00 [ICRA]B+ (Stable) ISSUER NOT
limits-Cash COOPERATING; Rating continue
Credit to remain in 'Issuer Not
Cooperating' category
Fund based 3.00 [ICRA]B+ (Stable) ISSUER NOT
limits-Term COOPERATING; Rating continue
Loan to remain in 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
SBF is promoted by the Balbir Vikas Bhushan Group. The Group is
involved in the manufacture and trading of steel products such as
thermo-mechanical-treatment (TMT) bars, mild steel angles, channels
and beams etc. The Group ventured in manufacturing food products
with the establishment of Shree Balbir in 2015. It is a
wholly-owned subsidiary of Balbir Structures Private Limited
(BSPL). Its manufacturing facilities are located at Silvassa (Dadra
and Nagar Haveli). BSPL, the holding company owns 54,900 square
metre land and the industrial premises in Silvassa, out of which
~10000 square metre is given to Shree Balbir on lease for setting
up of flour mill and roller mill. The plant and machinery installed
there is owned by the company. The mill has an installed capacity
of 200 MT per day (72,000 MTPA). The company started commercial
production from mid December 2016.
BHARANI COMMODITIES: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: M/s. Bharani Commodities Private Limited
Plot No. 48, 1st Floor
Nagarjuna Hills, Punjagutta
Hyderabad 500082
Insolvency Commencement Date: January 18, 2021
Court: National Company Law Tribunal, Coimbatore Bench
Estimated date of closure of
insolvency resolution process: July 17, 2021
(180 days from commencement)
Insolvency professional: CS Bhaskar B
Interim Resolution
Professional: CS Bhaskar B
4/447A, 7th Street
Aruna Nagar
K. Vadamadurai, PO
Coimbatore 641017
E-mail: bhasja@gmail.com
Last date for
submission of claims: February 3, 2021
BHAVANI WOOD: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Bhavani Wood
Works (BWW) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 11 CRISIL D (Issuer Not Cooperating)
Inland/Import
Letter of Credit 7 CRISIL D (Issuer Not Cooperating)
CRISIL Ratings has been consistently following up with BWW 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
Ratings failed to receive any information on either the financial
performance or strategic intent of BWW, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on BWW
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
BWW continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
BWW was established in 1992 is a partnership firm involved in
processing (cutting and sawing) and trading timber such as teak,
hard and fine woods. The day to day operations are managed by Mr.
Kalpesh Patel.
CAPTAB BIOTEC: ICRA Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------
ICRA said the ratings ratings for the INR13.00 crore bank
facilities of Captab Biotec Unit - II continue to remain under
Issuer Not Cooperating category. The rating is denoted as
'[ICRA]D/[ICRA]D ISSUER NOT COOPERATING'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 8.03 [ICRA]D ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Unallocated 1.47 [ICRA]D ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Non-fund Based 3.50 [ICRA]D ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis 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.
Captab, incorporated in 2015, manufactures formulations of generics
in oral dosage forms such as capsules, tablets and dry syrup. It
also manufactures injectibles. Promoted by Mr. Sushil Goel, Mr.
Pawan Goel and Mr. Kapish Goel, the firm's manufacturing facilities
are located in Baddi, Himachal Pradesh. Associate concerns –
Total Healthcare and Shiv Industries – are also involved in the
same line of business.
DAISY INDUSTRIES: CRISIL Keeps B Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Daisy
Industries (DI) continue to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 2.5 CRISIL B/Stable (Issuer Not
Cooperating)
Term Loan 3.5 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with DI 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
Ratings failed to receive any information on either the financial
performance or strategic intent of DI, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on DI is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the ratings on bank facilities of DI
continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
Established in 2012 as a proprietorship firm by Mr. Ravi Agrawal,
DI manufacturers HDPE fabrics, water proof canvas, tarpaulins, and
various types of tents at its facility in Umbergaon, Gujarat.
DELHI INTERNATIONAL AIRPORT: S&P Keeps 'B-' ICR on Watch Negative
-----------------------------------------------------------------
On Jan. 28, 2021, S&P Global Ratings kept its 'B-' long-term issuer
credit rating on Delhi International Airport Ltd. (DIAL) and its
'B-' long-term issue rating on the company's senior secured notes
on CreditWatch with negative implications. S&P placed the ratings
on CreditWatch with negative implications on March 20, 2020.
The CreditWatch placement reflects its view that DIAL's weak cash
flows and interest servicing ability could heighten refinancing
risks for the company's bond due in February 2022.
DIAL's funds from operations (FFO) cash interest coverage will
slightly weaken but stay around its earlier expectations of
slightly below 1.0x over the next three years. This follows a
lower-than-expected increase in the final order on its control
period 3 (CP3) tariff.
DIAL's high cash balance and temporary relief on payment of Airport
Authority of India (AAI) fees could support its refinancing efforts
for the US$288.75 million February 2022 bonds, but refinancing
risks remain.
S&P said, ""We believe that the CP3 tariff implementation will not
materially strain DIAL's cash flows and interest servicing
ability.
"We forecast the company's funds from operations (FFO) cash
interest coverage will remain at about 0.8x over fiscals 2022
(ending March 31, 2022) and 2023. The final tariff order announced
by the regulator on Dec. 30, 2020, allows DIAL to continue with
current base airport charges (BAC) + 10%. This is lower than our
previous expectation of a tariff that is 40% higher than the
current BAC levels. However, DIAL will be able to earn additional
compensation tariff toward discontinuance of fuel throughput
charges (to be levied from Feb. 1, 2021), which will partly offset
the lower tariff increase, in our view. We estimate DIAL's EBITDA
will be about Indian rupee (INR) 7.9 billion in fiscal 2022 and
INR9.6 billion in fiscal 2023, which is about INR700 million a year
lower than our previous expectations."
DIAL continues to face refinancing risks over the next 12 months,
though there is some progress.
S&P believes DIAL's weak interest servicing ability over the next
three fiscal years and high committed capital expenditure (capex)
could challenge refinancing prospects for its February 2022 bond if
market liquidity tightens. DIAL has engaged with domestic banks and
is also actively exploring options in the debt capital markets. The
Reserve Bank of India's cap on the cost of borrowing at 450 basis
points over LIBOR for foreign currency borrowing is another hurdle.
Capital markets still seem to have appetite for Indian airport
assets as reflected by recent bond issuance by GMR Hyderabad
Airport Ltd. and DIAL's February 2022 bonds trading above par.
DIAL can manage its liquidity needs over the next 12 months.
With a high cash balance of INR21 billion (as of Dec. 31, 2020),
liquidity sources will be sufficient to cover DIAL's operating
expenses, interest obligations, and capital spending over the 12
months to Dec. 31, 2021. There are also no debt maturities over the
period, though there is the large bullet maturity of the February
2022 bonds. The company has also invoked a force majeure clause
owing to the pandemic, allowing it to benefit from an interim stay
on high revenue share payments to Airport Authority of India (AAI).
Our base case assumes that the fee payments will likely be deferred
from January 2021 till end-December 2021, while awaiting final
decision by the arbitration tribunal. S&P said, "In our view, the
temporary stay order will provide about INR2 billion of cash flow
relief in fiscal 2021 and support intra-year liquidity in fiscal
2022. The cash relief will be available to DIAL for meeting both
operational and financial obligations, and can offer additional
liquidity buffer for the company."
S&P does not yet view DIAL's capital structure as unsustainable,
even though its interest servicing ratio is below 1.0x.
DIAL can service interest during construction (IDC) through debt,
as part of its capex loan facilities. S&P said, "We estimate IDC
will amount to about INR2 billion a year over fiscals 2023 and
2024, following the drawdown of debt to fund the heavy capex
program. This could help to cover the earnings shortfall in meeting
interest expenses over the period. We also understand the company
is considering options that could preserve cash. These include
obtaining lease financing for up to INR20 billion of its capex for
mobile equipment at the end of the capex phase (fiscal 2024), which
could offer some cash flow relief. We believe lease financing is at
the discretion of the company and not dependent on favorable market
conditions."
There are some developments on DIAL's commercial property
development (CPD) transaction with Bharti Realty Ltd. DIAL is now
seeking the necessary approvals for CPD directly with various
government agencies and believes it can expedite the process. The
transaction deadline has also been extended for another three
months to March 31, 2021, reflecting Bharti Realty's continued
interest in closing the deal. However, S&P's base case excludes the
receipt of CPD cash flows from Bharti Realty due to material delays
of over 15 months. Cash receipts under CPD could provide additional
cash flows to support FFO interest coverage above 1.0x. As per
current arrangements, DIAL could receive lease rentals of about
INR3.6 billion a year and a one-off upfront security deposit
payment of about INR15.3 billion, upon successful closure of the
transaction.
CreditWatch
-- S&P aims to resolve the CreditWatch within the next 90 days
based on DIAL's progress in putting in place credible refinancing
plans for its bond maturity in February 2022 and achieving a
sustainable interest coverage.
-- S&P expects to have greater visibility on the interim stay
order and Bharti Realty CPD transaction over the next 90 days.
S&P could lower the rating on DIAL by at least one notch if:
-- The company fails to implement a credible refinancing plan for
its February 2022 bond, or
-- It is unable to put in place measures to preserve enough cash
such that we believe DIAL's financial commitments would be
unsustainable in the long term.
S&P could affirm the rating with a stable outlook if DIAL secures
facilities for refinancing its February 2022 bond. This would also
entail the company putting in place measures to alleviate pressure
on its capital structure, such that FFO cash interest coverage is
sustainably above 1.0X.
DNH PROJECTS: ICRA Keeps C Debt Ratings in Not Cooperating
----------------------------------------------------------
ICRA said the ratings ratings for the INR28.00-crore bank
facilities of DNH Projects Limited Continues to remain under
'Issuer Not Cooperating' category'. The ratings are denoted as
"[ICRA]C/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 12.00 [ICRA]C ISSUER NOT COOPERATING;
Fund Based Rating continue to remain in
CC 'Issuer Not Cooperating'
category
Short Term- 6.00 [ICRA]A4; ISSUER NOT
Non-Fund COOPERATING; Rating continues
Based to remain in the 'Issuer Not
Cooperating' category
Long Term/ 10.00 [ICRA]C/[ICRA]A4; ISSUER NOT
Short Term- COOPERATING; Rating continues
Unallocated 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.
DNHPL was initially incorporated as a private limited company—
Nagar Haveli Real Estate Private Limited in 1996. It was
subsequently renamed and converted to a closely-held public limited
company in 2009. Its operations are collectively managed by Mr.
Vijay Desai and Mr. Ajay Desai who have an experience of over two
decades in the construction industry. The company is registered as
a contractor with the roads and buildings division of the
Government of Gujarat and undertakes the construction of industrial
units, factories, corporate and institutional buildings.
GMR HYDERABAD: Fitch Gives Final BB+ Rating to USD300MM Sec. Notes
------------------------------------------------------------------
Fitch Ratings has assigned GMR Hyderabad International Airport
Limited's USD300 million of senior secured notes due 2026 a final
rating of 'BB+'. The Outlook is Negative.
RATING RATIONALE
The ratings reflect the pick-up in India's domestic air traffic,
GHIAL's ability to fund its near-term capex requirements and sharp
deleveraging estimates. Fitch expects the steep decline in traffic
in the financial year ending March 2021 (FY21),
slower-than-expected recovery and debt-funded airport expansion to
result in leverage increasing beyond the agency's negative rating
action trigger in the next two years before reducing to less than
8.0x in FY24. GHIAL benefitted from delaying capex completion by
six months and retains some degree of flexibility in associated
payments.
The Negative Outlook reflects the risk of an increase in
coronavirus infection rates leading to the re-imposition of travel
restrictions, and the tight financial headroom with Fitch
forecasting leverage to reach 7.7x by FYE24, just under Fitch’s
downgrade trigger of 8.0x.
GHIAL will utilise proceeds from the bond issue to fund its capex
plan. The notes will rank pari passu and will be structurally
identical to the existing notes. The capex and the additional
funding requirement are a part of GHIAL's overall expansion plans,
which commenced in FY20.
KEY RATING DRIVERS
Strong Growth from Increasing Propensity to Fly - Volume Risk:
Midrange
GHIAL's FY20 passenger traffic was 21.6 million, most of which were
origin and destination passengers. Hyderabad Airport had CAGR of
12% in passengers from its first year of commercial operations in
2009 until FY20. The pandemic has hurt passenger travel, but Fitch
expects the recovery to be faster with the airport having a higher
share of domestic traffic (close to 80%). The airport faces limited
regional competition from Bangalore and Chennai airports or from
alternative transport modes. The largest carrier, Indigo, accounted
for 18% of GHIAL's aeronautical revenue in 6MFY21, which is not
significantly more than peers.
Blended Till with Annually Adjusted Weighted Average Cost of
Capital - Price Risk: Midrange
GHIAL's blended till regulatory framework is now implemented.
However, there is still some uncertainty about the price increases
for FY22-FY26 due to outstanding legal and regulatory issues with
the recent pricing decisions, including recovery of past
entitlements, classification of cargo, ground handling and fuel
farm revenue. The CP2 (FY17-FY21) tariff order was eventually
issued by the regulator on 27 March 2020 with implementation from 1
April 2020 upon withdrawal of GHIAL's stay petition, which was
obtained in February 2018. The CP3 (FY22-FY26) tariff is expected
to be applied on time from FY22 along with a favourable judgement
from Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on
settlement of INR6 billion on account of a pre-control period
entitlement. A favourable judgement was obtained from TDSAT in the
case of Bangalore International Airport. The rating case has not
considered this pre-control period entitlement and any favourable
order will improve the liquidity position further.
Experienced Management to Deliver Significant Capex -
Infrastructure Development/Renewal: Midrange
The airport is operating above designed capacity, with a
utilisation ratio above 170%. Management plans to increase capacity
from 12 million passengers to 34 million a year within four years,
to be funded through a combination of internal accruals and
additional borrowings including proceeds from the new bond
issuance. However, it puts pressure on GHIAL in the near term,
given the volume shock from the pandemic. Management has entered
into fixed-price fixed-term contracts with experienced developers.
There is some degree of payment flexibility and the capex plan
execution has been delayed by six months. The expansion should be
completed by FY23.
Limited Creditor Protections - Debt Structure: Weaker
GHIAL's senior debt is secured but the company is exposed to
refinance risk. The debt has limited creditor protection, except
for the fixed-charge cover ratio test for additional indebtedness.
The long concession tenor to 2038 mitigates refinancing risk. In
addition, GHIAL has notified the grantor for an extension of the
concession agreement by another 30 years, to 2068.
PEER GROUP
GHIAL is rated a notch higher than Delhi International Airport
Limited (DIAL, BB/Negative). Strategically located in Delhi, DIAL
has a stronger catchment area than GHIAL, which serves Hyderabad, a
vibrant but smaller city than Delhi. However, Fitch expects faster
recovery in GHIAL's passenger traffic on account of a higher
contribution from domestic passengers. Both airports are
undertaking intensive debt-funded expansion plans, but GHIAL's
capex is concentrated over the next couple of years, whereas DIAL's
investments are spread out over the next four years. Consequently,
Fitch expects GHIAL's net debt/EBITDA to decline to below 8.0x by
FY24, while Fitch estimates DIAL to stay about 10.0x until FY25.
Nevertheless, DIAL's higher leverage is compensated partially by
its stronger catchment area and its volume risk assessment,
resulting in just a notch of difference in credit assessments.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch does not expect a positive rating action in the near
term;
-- A return to a Stable Outlook could be possible, and the rating
affirmed, if Fitch sees sustained recovery in traffic and
revenue due to the easing of the pandemic resulting in normal
air traffic patterns, or if GHIAL adopts strategies that
convincingly stabilises the finances.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Traffic or revenue underperformance, adverse pricing
decisions, or cost overruns in the capex execution leading to
delay in deleveraging, such that rating case net debt/EBITDA
does not decline to less than 8.0x by FY24;
-- Further credit erosion of the major air carriers or payment
delinquencies to the finance of the airport;
-- Deterioration in airport liquidity level for a sustained
period
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
Traffic performance: 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. GHIAL's passenger traffic fell
by 72% in 2020, with domestic traffic down 68%. The passenger
traffic was 4.7 million. The rating case assumes passenger traffic
of 7.7 million in FY21. Cargo growth so far seems resilient to the
pandemic with minimal impact. The cargo tonnage as of 3QFY21 was
79,290 tonnes, which was 70% of the tonnage carried as of 3QFY20.
Air traffic movement fell by 60% in the same period.
Financial Performance: The pandemic has had a significant impact on
all business segments of GHIAL. Total revenue fell by 64% to INR3.8
billion in 1HFY21 from INR10.7 billion in 1HFY20. Operating
expenses fell by 22% during the same period. Close to 80% of the
operating expenses is fixed. GHIAL's EBITDA fell by 92% to INR0.5
billion in 2QFY21 compared with INR6 billion in 2QFY20.
GHIAL availed a working capital facility of INR1.5 billion from
ICICI bank (currently drawn: INR0.5 billion) and INR1 billion from
Aditya Birla Finance Limited (fully drawn) in FY21. These
facilities are secured on pari passu basis with the note holders.
GHIAL had a cash and cash equivalent balance of INR15 billion at
end-2020, of which INR2 billion was undeployed bond proceeds to be
used towards capex. Fitch assesses the liquidity to be adequate in
the near term.
Tariff Framework: The CP2 tariff was implemented on 1 April 2020,
resulting in a decline of aeronautical revenue as a percentage of
total revenue to 37% in 1HFY21 from 61% in 1HFY20. The CP3 tariff
should be implemented in FY22. Management also expects favourable
settlement of the claim from TDSAT in 1QFY22 of about INR6 billion.
A similar favourable judgement was obtained from TDSAT in Bangalore
airport.
Annual fee payment: GHIAL had requested an extension on the
concession fee payment to the government of India due to
operational losses from the pandemic. GHIAL has to pay a revenue
share of 4% under the agreement. The government initially granted
an extension from June 2020 until December 2020. GHIAL has not paid
the concession fee for the period and is in discussion with the
government for a further extension of two years. A decision is yet
to be made, and the Fitch rating case does not consider this
payment extension.
Bond issuance: GHIAL has issued US-dollar senior secured notes of
US$300 million due in 2026. The notes' covenants and structure will
be similar to those of the previous bonds. The issue will have
limited covenants or protective features. There is an additional
indebtedness test of fixed charge coverage ratio at 2.25x. There is
no debt service reserve account, but there will be limitations on
restricted payment. If the notes are upgraded to investment grade,
certain covenants will be suspended. Management expects to take a
call spread for principal and the coupon will be fully hedged. The
notes will have the same security package as the existing US dollar
notes.
FINANCIAL ANALYSIS
Fitch Rating Case: Fitch’s 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 1QFY23;
-- Stabilisation of traffic in 2QFY23; and
-- Gradual recovery in 2QFY24.
Fitch assumes passenger traffic in FY24 will have recovered to the
FY20 level. The rating case does not consider any upside from
settlement of pending claims regarding pre-control period
entitlement. Fitch assumes CP3 tariff with a 20% haircut to be
implemented in FY22. No extension for payment of revenue share has
been taken into account.
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 upside from arbitration claims is considered and revenue share
is assumed to be paid without any extension of time. Fitch
forecasts leverage to remain above 9.0x until FY24.
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.
ICON DEVELOPERS: CRISIL Keeps B+ Debt Rating in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Icon
Developers - Guntur (IC) continues to be 'CRISIL B+/Stable Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING)
CRISIL Ratings has been consistently following up with IC 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
Ratings failed to receive any information on either the financial
performance or strategic intent of IC, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on IC is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the ratings on bank facilities of IC
continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
Established in 2016 as a partnership firm by Mr. M Narayana Swamy
and Ms. P T Venkayamma (equal ownership), IC undertakes residential
real estate development in Andhra Pradesh.
INDUSTRIAL FORGING: ICRA Moves B+ Debt Ratings to Not Cooperating
-----------------------------------------------------------------
ICRA has moved the ratings ratings for the INR13.45-crore bank
facilities of Industrial Forging Industries Private Limited to the
'Issuer Not Cooperating 'category'. The ratings are denoted as
"[ICRA]B +(Stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 10.20 [ICRA]B+ (Stable) ISSUER NOT
Fund Based CC COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Short Term- 1.50 [ICRA]A4; ISSUER NOT
Non-Fund Based COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Long Term/ 1.75 [ICRA]B+ (Stable)/[ICRA]A4;
Short Term- ISSUER NOT COOPERATING;
Unallocated Rating moved to 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.
Industrial Forging Industries Private Limited (IFIPL) was
incorporated in 1989 as a proprietorship firm in the name of
Industrial Forging Industries. However, in April 2016, the
proprietorship firm was converted into a private limited company,
with Mr. Shyam Sunder Daga (former proprietor) and Mr. Amit Daga as
Directors. The company manufactures forged steel products such as
cross arm, clamps, eye hook, nuts and bolts etc used in overhead
lines for transmission of power. Its manufacturing facility is
located at Howrah and Jangalpur in West Bengal and has an installed
capacity of 12,000 tonnes per annum.
KAMAKSHI STEELS: CRISIL Lowers Rating on INR10cr Loans to D
-----------------------------------------------------------
CRISIL Ratings has downgraded the rating on the long term bank
facilities of Kamakshi Steels Private Limited (KSPL) to 'CRISIL D'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Long Term Loan 1 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade in the rating reflects delay in debt servicing due to
stretched liquidity position.
The rating continues to reflect working capital-intensive
operations, exposure to intense competition resulting in low
profitability, and susceptibility to volatility in raw material
prices. These weaknesses are partially offset by the extensive
experience of promoters in the steel industry and KSPL's
semi-integrated operations.
Key Rating Drivers & Detailed Description
Strength:
* Extensive experience of promoters and semi-integrated operations:
The promoters' extensive experience of over 15 years in the steel
industry helped establish strong relationships with customers and
suppliers, ensuring uninterrupted supply of raw material and steady
inflow of work orders. Furthermore, KSPL manufactures billets and
thermo-mechanically treated (TMT) bars. Billets are used to
manufacture TMT bars, and presence in two segments of the value
chain gives the company an edge over non-integrated peers.
Weakness:
* Working capital-intensive operations: Operations are working
capital intensive, with gross current assets of 318 days as on
March 31, 2019, on account of large debtors, including some
stretched debtors of 75 days, and large inventory requirement of
173 days. Operations are expected to remain working capital
intensive over the medium term.
* Exposure to intense competition and Susceptibility to volatility
in raw material prices: Presence of many large and small players in
the intensely competitive steel industry limits bargaining power
with customers and suppliers. Further, the raw material and fuel
constitute a large proportion of total cost, the company is
susceptible to fluctuations in their prices.
Liquidity: Poor
Liquidity remains weak with limited cushion between accruals and
repayment obligations and high bank limit utilization. As a result
of weak liquidity, there are delays in debt servicing.
Rating Sensitivity factors
Upward factors:
* Timely debt servicing for more than 90 days
* Improvement in working capital cycle
KSPL was set up in 2003 by Mr P Krishna Reddy. The company
manufactures mild steel billets and ingots, and TMT bars. It is
based in Vijayawada.
KAMYA CLOTHING: CRISIL Keeps B Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Kamya
Clothing Private Limited (KCPL) continue to be 'CRISIL B/Stable
Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B/Stable (Issuer Not
Cooperating)
Term Loan 0.25 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with KCPL 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
Ratings failed to receive any information on either the financial
performance or strategic intent of KCPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on KCPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
KCPL continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
KCPL was set up in the early 1990s as a partnership firm, and was
reconstituted as a private limited company in 2012. The company is
promoted by Mr. Anilkumar P Nawani and his family members. Its
product portfolio comprises denims and formal shirts for men.
KASUKURTHI SUJATHA: CRISIL Cuts Rating on INR80cr Bank Loan to D
----------------------------------------------------------------
CRISIL has revised the rating on the long-term bank facilities of
Kasukurthi Sujatha Constructions Private Limited (KSCPL) to 'CRISIL
D/CRISIL D Issuer Not Cooperating' from 'CRISIL B+/Stable/CRISIL A4
Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 80 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL A4
ISSUER NOT COOPERATING')
Cash Credit 70 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Proposed Bank 70 CRISIL D (ISSUER NOT COOPERATING;
Guarantee Downgraded from 'CRISIL A4
ISSUER NOT COOPERATING')
Proposed Cash 30 CRISIL D (ISSUER NOT COOPERATING;
Credit Limit Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
CRISIL Ratings has been consistently following up with KSCPL for
obtaining information through letters and emails dated August 31,
2019 and February 6, 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 while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on KSCPL financial
performance or strategic intent. This restricts CRISIL's Ratings
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes that the rating action on KSCPL is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the rating on the long-term bank
facilities of KSCPL has been downgraded to 'CRISIL D/CRISIL D
Issuer Not Cooperating' from 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
The downgrade reflects delays in debt servicing owing to poor
liquidity.
Set up as a partnership concern in 1999 by Mr. K Jagan Mohan Rao
and his wife Mrs. K Sujatha, KSCPL was reconstituted as a private
limited company in 2004. The company primarily installs gas
pipelines, high-density polyethylene cables, and high-tension
electricity lines. It is based in Hyderabad (Telangana).
LAKSHMI VENKATESWARA: CRISIL Keeps B+ Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sri Lakshmi
Venkateswara Modern Rice Industry (SLVMRI) continue to be 'CRISIL
B+/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B+/Stable (Issuer Not
Cooperating)
Proposed Long Term 3.75 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating)
SME Credit 0.25 CRISIL B+/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SLVMRI 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
Ratings failed to receive any information on either the financial
performance or strategic intent of SLVMRI, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
SLVMRI is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the ratings on bank
facilities of SLVMRI continues to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
Incorporated in 2007, SLVMRI mills and processes paddy into rice,
rice bran, broken rice, and husk. Its rice mills are located in
Nellore (Andhra Pradesh). The firm is promoted and managed by Mr.
K. Mallikarjuna Naidu.
MATRIX SECURITY: ICRA Lowers Rating on INR80cr Loans to B
---------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Matrix
Security and Surveillance Private Limited (MSSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based 18.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB- (Stable);
continues to remain under
'Issuer Not Cooperating'
Category
Non-Fund Based 10.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB- (Stable);
continues to remain under
'Issuer Not Cooperating'
category
Unallocated 52.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating downgraded
from [ICRA]BB- (Stable);
continues to remain under
'Issuer Not Cooperating'
category
Rationale
The rating downgrade is because of lack of adequate information
regarding MSSPL's performance and hence the uncertainty around its
credit risk. 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, despite the downgrade. 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, MSSPL is promoted by Mr. M.V.S Subba Raju and
Mr. K Suya Narayana Raju. It provides a wide range of indoor and
outdoor security and surveillance solutions. The company has a wide
product range, which includes video surveillance, perimeter
detection systems, access control systems and scanning systems. The
major clients for the company are Indian Railways, Andhra Pradesh,
Telangana and Karnataka police departments, defence establishments
and various public sector banks.
MUSALE CONSTRUCTIONS: CRISIL Cuts Rating on INR15.5cr Loans to D
----------------------------------------------------------------
CRISIL Ratings has revised the rating on the long-term bank
facilities of Musale Constructions (Musale) to 'CRISIL D/CRISIL D
Issuer Not Cooperating' from 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 8 CRISIL D (ISSUER NOT Downgraded;
from 'CRISIL A4 ISSUER NOT
COOPERATING')
Cash Credit 7.5 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
CRISIL Ratings has been consistently following up with Musale
seeking information via letters and emails dated May 23, 2020 and
November 14th, 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 has been
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. Such ratings with an 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on 'Musale' financial
performance or strategic intent. This restricts CRISIL's Ratings
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes that the rating action on Musale is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the rating on the long-term bank
facilities of Musale has been downgraded to 'CRISIL D/CRISIL D
Issuer Not Cooperating' from 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
The downgrade reflects delays in serving the interest on its Covid
assistance loans and the overdrawals in the fund based facilities
for more than 30 days, leading to account being classified as SMA 1
as on 1st December, 2020.
Musale was established in 1990 and is promoted by Mr. Sonba
Gulabrao Musale and his brother, Mr. Rambhau Gulabrao Musale. The
firm is engaged in civil and infrastructure construction, primarily
in the irrigation and road segments. It is registered as a "Class
1A" contractor with Maharashtra Public Works Department. About 90
per cent of its projects have been executed in Maharashtra and
remaining in Madhya Pradesh.
PATELNAGAR REFRACTORIES: ICRA Moves D Ratings to Not Cooperating
----------------------------------------------------------------
ICRA has moved the ratings for the INR15.00 crore bank facilities
of Patelnagar Refractories Private Limited to 'Issuer Not
Cooperating' category. The rating is denoted as '[ICRA]D/[ICRA]D
ISSUER NOT COOPERATING'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 1.10 [ICRA]D ISSUER NOT COOPERATING;
Limit–Cash Rating Moved to 'Issuer Not
Credit Cooperating' category
Fund-based 12.91 [ICRA]D ISSUER NOT COOPERATING;
Limit–Term Rating Moved to 'Issuer Not
Loan Cooperating' category
Non-fund 0.25 [ICRA]D ISSUER NOT COOPERATING;
Based Limit– Rating Moved to 'Issuer Not
Bank Guarantee Cooperating' category
Unallocated 0.74 [ICRA]D/[ICRA]D ISSUER NOT
Limits COOPERATING; Rating Moved to
'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.
Patelnagar Refractories Private Limited was incorporated in 2012.
The company manufactures calcined clay, which is required to
manufacture refractories, with a production capacity of 28,800
metric tonnes per annum (MTPA). PRPL's calcination unit is located
in Patelnagar, West Bengal. The day-to-day operations of the
company are looked after by Mr. Swapan Kanti Ghosh, the Promoter of
the company, along with a team of experienced professionals.
R L AVIATION: CRISIL Reaffirms B+ Rating on INR5.0cr Loan
---------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable/CRISIL A4'
ratings on the bank facilities of R L Aviation Services Pvt Ltd
(RLPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2.5 CRISIL A4 (Reaffirmed)
Drop Line
Overdraft Facility 5.0 CRISIL B+/Stable (Reaffirmed)
Overdraft Facility 2.0 CRISIL B+/Stable (Reaffirmed)
Proposed Fund-
Based Bank Limits 2.5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect RLPL's modest scale of operations
and large working capital requirement. These weaknesses are
partially offset by the extensive experience of the promoter in the
travel agent and tour operator business and the company's sound
operating efficiency.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: The company had revenue of INR10-12
crore over the three fiscals through 2020. The revenue is likely to
decline in fiscal 2021 due to a change in the agreement between the
company and Oman Air, and is expected at INR7-8 crore over the
medium term. The intense competition in the travel agent and tour
operator industry will continue to constrain scalability, pricing
power and profitability.
* Large working capital requirement: The working capital-intensive
operations are reflected in gross current assets of 500-700 days
over the three fiscals through 2020 mainly because of loans
extended to Nikunj Agro Trading Co, for which RLPL receives
interest of 9% annually. The advances are free of any charge and
recoverable at the will of the management. However, the quantum of
advances is more than RLPL's networth. Therefore, recoverability
and increase in these advances will remain key rating sensitivity
factors.
Strengths
* Extensive experience of the promoter: The decade-long experience
of the promoter, his strong understanding of the local market
dynamics, and healthy relationships with customers and suppliers
should continue to support the business.
* Sound operating efficiency: The company had operating margin of
20-23% in the three fiscals through 2020. RLPL has healthy
operating efficiency, as indicated by comfortable return on capital
employed (RoCE), driven by economies of scale and experienced
management. Operating margins are expected to remain 18-20% over
the medium term due to service based nature of operations.
Liquidity: Poor
Bank limit was utilised averagely at 90% on average over the 12
months through August 2020. Cash accrual is expected over INR1.5
crore against term debt obligation of INR0.60 crore over the medium
term, and the surplus will cushion liquidity. Current ratio was
healthy at 1.77 times as on March 31, 2020.
Outlook: Stable
CRISIL Ratings believes RLPL will continue to benefit from the
promoter's experience and its strong association with Oman
airlines.
Rating sensitivity factors
Upward factors
* Significant growth in revenue, with net cash accrual above
INR2.00 crore
* Reduction in loans and advances leading to improved working
capital cycle and thus improved liquidity
Downward factors
* Operating income declining by more than 15% or significant
decline in operating profitability leading to low cash accrual
* Further stretch in working capital cycle or increase in debt
levels impacting financial & liquidity risk profile
RLPL was incorporated in 2008 and is based in Delhi. The company is
owned and managed by Mr Chetan Gupta. RLPL is an authorised general
sales agent for Oman Air for passenger tickets in India.
R.B. GEARS: CRISIL Keeps B+ Debt Ratings in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of R.B. Gears
Private Limited (RBGPL) continue to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3 CRISIL B+/Stable (Issuer Not
Cooperating)
Term Loan 5 CRISIL B+/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with RBGPL 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
Ratings failed to receive any information on either the financial
performance or strategic intent of RBGPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RBGPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
RBGPL continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
RBGPL was incorporated in 2009 by Punjab based Mr. Sanjeev Garg and
his wife Mrs. Renu Garg. RBGPL is engaged in manufacturing of auto
components mainly gears, shafts etc., for tractors industry.
RAINBOW RICE: CRISIL Keeps B+ Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Rainbow Rice
Private Limited (RRPL) continue to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 50 CRISIL B+/Stable (Issuer Not
Cooperating)
Proposed Working 3 CRISIL B+/Stable (Issuer Not
Capital Facility Cooperating)
CRISIL Ratings has been consistently following up with RRPL 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
Ratings failed to receive any information on either the financial
performance or strategic intent of RRPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RRPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
RRPL continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
RRPL, promoted as partnership in 1990 by Mr Surinder Kumar and his
brother Mr Sunil Kumar, was reconstituted as a private limited
company, RRPL, in 2010. The company processes basmati rice (PUSA
1121 grade and non-basmati) at its plant at Kurukshetra (Haryana).
RRPL has a milling and sorting capacity of 12 tonnes per hour.
RAJARAM AND BROTHERS: CRISIL Cuts Rating on INR8cr Cash Loan to B
-----------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facility of Rajaram and Brothers (RB) to 'CRISIL B/Stable' from
'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B/Stable (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects deterioration in the firm's business and
financial risk profiles. The operating margin declined to negative
7.1% in fiscal 2020 from 1.3% in fiscal 2019 on account of decline
in raw material prices. The deterioration in business risk profile
led to weakening of the financial risk profile on account of
negative networth of INR4.62 crore, resulting to profit after tax
(PAT) losses in fiscal 2020. This has led to deterioration in the
financial risk profile. Improvement in the operating profitability
and capital structure will be a key monitorable.
The rating continues to reflect the company's weak capital
structure and a modest scale of operations and low operating
margin. These weaknesses are partially offset by the extensive
experience of the partners in the maize processing industry.
Analytical approach
Unsecured loan, from the partners, of INR5.75 crore as on March 31,
2020, has been treated as neither debt nor equity because it
remains in the business.
Key rating drivers and detailed description
Weaknesses:
* Weak capital structure: Networth was negative INR4.62 crore as on
March 31st 2020, owing to PAT losses. Gearing is expected to
decline due to negative networth, the capital structure will remain
constrained because of continued high reliance of external debt.
Improvement in capital structure will be a rating sensitivity
factor.
* Modest scale of operations and low operating margin: The revenue
of the firm was modest at INR116 crore in fiscal 2020 and is
expected to remain muted in fiscal 2021. The operating margin was
negative 7.1% in fiscal 2020, owing to volatility in raw material
prices. Operating margin is expected to remain at 2-3% over the
medium term and any improvement from this level will be critical
for business performance.
Strength:
* Extensive industry experience of the partners: The partns have
been in the maize processing industry for over 50 years. This has
helped them to establish a strong client and supplier base,
resulting in continuous scaling up of revenue. Benefits from their
extensive experience should continue to support the business.
Liquidity: Stretched
Bank limit utilisation was high at 86.02% on average for the 12
months ended November 30, 2020. Cash accrual was negative INR4.62
crore in fiscal 2020 and is expected to be INR1-1.3 crore, however
with absence of any term debt obligation supports liquidity to some
extent. Current ratio was low at 0.72 time as on March 31, 2020.
The partners are likely to extend support in the form of unsecured
loans to meet its working capital requirement. Liquidity is further
supported by moratorium granted by the bank for servicing of
interest till August 2020.
Outlook: Stable
CRISIL Ratings believes RB will continue to benefit from the
extensive industry experience of the partners.
Rating sensitivity factors
Upward factors
* Steady revenue growth and sustenance of operating profitability
at over 3%
* Improvement in the capital structure
Downward factors
* Deterioration in the business risk profile, with revenue
declining by 15%
*Stretch in the working capital cycle
RB was established as a partnership firm in 1966 by Mr Rajaram
Gupta and his family members in Mandsaur, Madhya Pradesh. The firm
manufactures maize derivatives, which include starch, glucose,
dextrose monohydrate, hydrol, sorbitol, maltose corn syrup, gluten,
maize oil and maize oil cake. These products find applications in
different industries such as food, pharmaceuticals, paper,
textiles, adhesives, inks and paints. The manufacturing facility at
Mandsaur has a capacity of 1,700 quintal per day and operates in
three shifts.
RAJASTHAN PULSES: CRISIL Keeps B+ Rating on INR15cr Loans
---------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Rajasthan
Pulses (RP) continue to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL B+/Stable (Issuer Not
Cooperating)
Proposed Long Term
Bank Loan Facility 3.5 CRISIL B+/Stable (Issuer Not
Cooperating)
Warehouse Receipts 4.0 CRISIL B+/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with RP 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
Ratings failed to receive any information on either the financial
performance or strategic intent of RP, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RP is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the ratings on bank facilities of RP
continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
RP, a partnership firm based in Kanpur (Uttar Pradesh), processes
and trades in pulses such as masoor dal, matar dal, chana dal,
arhar dal and urad dal. The firm was incorporated in 2001 by Mr.
Manoj Agarwal and three other partners. The firm procures raw
pulses and processes them into split pulses or dal and sells them
directly.
RAM ROLLING: ICRA Keeps B+ Debt Ratings in Not Cooperating
----------------------------------------------------------
ICRA said the ratings for the INR16.50 crore bank facilities of
Shri Ram Rolling Mill (SRRM) continue to remain in the 'Issuer Not
Cooperating' category. The ratings are denoted as "[ICRA]B+
(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 10.00 [ICRA]B+ (Stable) ISSUER NOT
limits-Cash COOPERATING; Rating continue
Credit to remain in 'Issuer Not
Cooperating' category
Fund based 5.09 [ICRA]B+ (Stable) ISSUER NOT
limits-Term COOPERATING; Rating continue
Loan to remain in 'Issuer Not
Cooperating' category
Untied Limits 1.41 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating continue
to remain in 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Shri Ram Rolling Mill (SRRM) was established as a partnership firm
by the Raipur-based Gidwani family in 2006. SRRM's plant is located
at Rawabhata Industrial Area in Raipur, Chhattisgarh. SRRM has
facilities for manufacturing mild steel (MS) ingots/billets and
steel structurals with an annual capacity of 40,000 metric tonnes
(MT) and 10,000 MT per annum, respectively.
SHANMUKHA COTTON: CRISIL Keeps B Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Shanmukha
Cotton Products (SCP) continue to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Cash 1.25 CRISIL B/Stable (Issuer Not
Credit Limit Cooperating)
SME Credit 0.25 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SCP 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
Ratings failed to receive any information on either the financial
performance or strategic intent of SCP, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SCP
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SCP continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
Established in 2000, SCP is engaged in ginning and pressing of raw
cotton into cotton bales. The firm is based out of Guntur in Andhra
Pradesh and promoted by Mrs. Mannava Padma and her family. The day
to day operations of the firm are managed by Mr. Raja Rao.
SHETRON LIMITED: Ind-Ra Keeps BB Issuer Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Shetron
Limited's Long-Term Issuer Rating of 'IND BB (ISSUER NOT
COOPERATING)' in the non-cooperating category and has
simultaneously withdrawn it. Thus, the rating is based on the best
available information.
The detailed rating actions are:
-- INR320.1 mil. Long-term loan* due on January 2031 is
withdrawn;
-- INR287.5 mil. Fund-based facilities# is withdrawn; and
-- INR390.0 mil. Non-fund-based facilities # is withdrawn.
*Maintained at 'IND BB (ISSUER NOT COOPERATING)/Stable' before
being withdrawn
#Maintained at 'IND BB (ISSUER NOT COOPERATING)/Stable/IND A4+
(ISSUER NOT COOPERATING)' before being withdrawn
KEY RATING DRIVERS
The ratings have been maintained in the non-cooperating category
because the issuer did not participate in the rating exercise
despite continuous requests and follow-ups by Ind-Ra.
Ind-Ra is no longer required to maintain the ratings, as the agency
has received a no-due certificate from one of its lenders since the
loan was closed. The lender has issued a no-objection certificate
for the remaining facilities from other banks. This is consistent
with the Securities and Exchange Board of India's circular dated
March 31, 2017, for credit rating agencies.
COMPANY PROFILE
Shetron is a Bengaluru-based company, listed on the Bombay Stock
Exchange. It was established in 1980 by Diwakar S. Shetty and his
associates jointly with the Karnataka State Industrial & Investment
Development Corporation. The company manufactures metal packaging,
printed metal sheets, metal cans & lug caps for foods, and dry-cell
battery jackets & components.
SHIVAM MASALA: CRISIL Keeps B- Debt Rating in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Shivam Masala
Private Limited (SMPL) continues to be 'CRISIL B-/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B-/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SMPL 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
Ratings failed to receive any information on either the financial
performance or strategic intent of SMPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SMPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SMPL continues to be 'CRISIL B-/Stable Issuer Not Cooperating'.
SMPL, incorporated in 1999 and promoted by Mr. Venugopal Khanna and
his family members, processes and distributes spices and pickles
under its registered brand, Paras.
SHYAM GUWAR: CRISIL Keeps B Debt Ratings in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Shree Shyam
Guwar Gum Industries (SSGGI) continue to be 'CRISIL B/Stable Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1 CRISIL B/Stable (Issuer Not
Cooperating)
Rupee Term Loan 1 CRISIL B/Stable (Issuer Not
Cooperating)
Warehouse Receipts 15 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SSGGI 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
Ratings failed to receive any information on either the financial
performance or strategic intent of SSGGI, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SSGGI
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SSGGI continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
SSGGI, set up in 2015 at Sri Ganganagar-Rajasthan, by Mr. Naveen
Kumar and Mr. Nitin Kumar, processes guar gum seed. The firm also
trades in agricultural commodities such as coriander and cotton.
SIDDHI SALES: CRISIL Reaffirms B Rating on INR10cr Loans
--------------------------------------------------------
CRISIL has reaffirmed its rating on the long term bank loan
facilities of Siddhi Sales Corporation (SSC) at 'CRISIL B/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Packing Credit 9 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect firm's below average financial risk
profile and exposure to intense competition in yarn industry. These
weaknesses are partially offset by the Partners extensive
experience.
The lockdown and other measures taken by various central and state
governments towards containment of COVID-19 are expected to have
minimal impact on the business risk profile of SSC. Firm has
generated revenues of INR70 crore till December 2020. Overall
revenue for FY 21 is expected to be higher than of FY 20. However
profitability for FY 21 would remain a key monitorable.
Analytical Approach
Of Unsecured loans of INR1.53 crore as on March 31, 2020, INR1
crore has been treated as neither debt nor equity since they are
expected to remain in the business.
Key Rating Drivers & Detailed Description
Weakness:
* Below average financial risk profile: Financial risk profile
continues to remain below average with modest net worth and high
total outside liabilities to adjusted net worth ratio of INR2.82
crore and 4.4 times respectively as on March 31, 2020. Owing to low
operating margins, interest cover and net cash accruals to adjusted
debt ratio are average at estimated 1.68 times and 0.01 time as on
March 31, 2020. Financial risk profile is expected to remain below
average in the medium term.
* Exposure to intense competition in the yarn industry: The
industry is highly regulated in terms of cotton prices,
export/import policies, which affects the operating performance of
the firm. Moreover the majority of the revenue is generated from
exports thus business remains vulnerable to fluctuations in forex
rates.
Strength:
* Extensive experience of the partners: Benefits from partners'
experience of more than three decades, and healthy relations with
major customers and suppliers should continue to support the
business risk profile and market position.
Liquidity- Poor
Liquidity is poor with Net Cash Accruals (NCA) expected at INR0.4
to 0.6 crore in the medium term, against repayment obligations of
INR0.26 to 0.53 crore per annum. Company had minimal unencumbered
cash and bank balance of INR0.52 crore as on March 31, 2020. Bank
limit utilization is 82% for 12 months through Aug 2020. Liquidity
is supported by emergency covid loans of INR1.58 crore and
unsecured loans from partners amounting to INR1.53 crore as on
March 31, 2020.
Outlook Stable
CRISIL believes SSC will continue to benefit from the extensive
experience of its partners and healthy relations with customers.
Rating Sensitivity Factors
Upward factors
Growth in NCA to above INR0.6 crore per annum
Improvement in financial risk profile
Downward factors
* Sharp decline revenues or lower operating margin, leading to much
lower than expected cash accruals
* Deterioration of financial risk profile; especially interest
cover falling below 1 time
Established in 1985 as partnership firm by Mr. Rintu Pandya and his
father, Mr. Kanubhai Pandya, SSC is engaged in exports of cotton
yarn.
SUMIT TEXSPIN: CRISIL Lowers Rating on INR77cr Loans to D
---------------------------------------------------------
CRISIL Ratings has removed its rating on the bank facilities of
Sumit Texspin Pvt Ltd (STPL) from 'Rating Watch with Negative
Implications' and has downgraded the rating to 'CRISIL D' from
'CRISIL BB-'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL D (Downgraded from
'CRISIL BB-/Watch Negative
and removed from Watch)
Term Loan 57 CRISIL D (Downgraded from
'CRISIL BB-/Watch Negative
and removed from Watch)
The downgrade reflects delay by STPL in servicing its term debt
obligation in November and December 2020, post voluntary withdrawal
of its one-time debt restructuring application with the lender. The
instalments have not been serviced till date owing to weak
liquidity.
On October 1, 2020, the company had applied for one-time debt
restructuring of loans after the Reserve Bank of India (RBI) issued
guidelines, under the 'Resolution framework for Covid-19-related
stress' on August 6, 2020. Post this, CRISIL Ratings placed STPL's
rating on 'Watch with Negative Implications'. In November 2020, the
client withdrew its one-time restructuring application.
The rating also factors in the weak financial risk profile, large
working capital requirement and exposure to competition and
volatility in raw material prices. These weaknesses are partly
mitigated by the extensive experience of the promoters in the
textile industry.
Analytical approach: Unsecured loans (Rs 19.11 crore as on 31st
March 2019) extended to STPL by the promoters have been treated as
neither debt nor equity. This is because these loans are expected
to remain in the business over the medium term
Key rating drivers and detailed description
Weaknesses
* Weak liquidity leading to delay in servicing of term debt
obligation: The company has not serviced its term debt obligation
due in November and December 2020, after it withdrew the one-time
restructuring plan with its lender. Further, these payments have
not been cleared till date, owing to weak liquidity amidst the
Covid-19 pandemic and muted demand.
* Weak financial risk profile: The Company's financial risk profile
remained weak due to leveraged capital structure, driven by large
debt funded capital expenditure undertaken. The subdued operating
performance on account of pandemic in fiscal will keep the
financial risk profile weak in current fiscal as well.
* Exposure to competition and volatility in raw material prices:
Intense competition and limited differentiation in end-products may
continue to restrict revenue and profitability. Performance also
remains susceptible to fluctuation in prices of raw materials,
cotton and yarn.
* Working capital-intensive operations: Gross current assets were
at 281 - 645 days over the three fiscals ended March 31, 2019. Its
intensive working capital management is reflected in its gross
current assets (GCA) of 281 days as on March 31, 2019. Operations
may remain highly working capital intensive, owing to the Covid-19
pandemic, and thus, result in full bank limit utilization.
Strength
* Extensive experience of the promoters: The three-decade-long
experience of the promoters in the textile industry, their strong
understanding of market dynamics and established relationships with
suppliers and customers, will continue to support the business risk
profile.
Liquidity: Poor
Liquidity remains weak, as reflected in almost full bank limit
utilisation for the 12 months ended December 31, 2020. Subdued
performance amidst the Covid-19 pandemic and demand challenges have
kept the topline and profit suppressed. This led to delay in term
debt repayment over the past few months. The company has also
sought additional bank lines under the Emergency Credit Line
Guarantee Scheme, and sanctioning and disbursement of these lines
are critical.
Rating sensitivity factors:
Upward factors:
* Timely servicing of debt for minimum 90 days
* Growth in revenue and sustained margin leading to cash accrual of
over INR6 crore
STPL, which was incorporated in 2001, is owned and managed by Mr
Satya Narayan Inani and Mr Nirmal Gadia. The company traded only in
fabrics and yarn initially, and purchased a (defunct) spinning and
weaving plant in 2017. STPL is currently engaged in weaving yarn
and fabrics, and also provides weaving and allied textile services
on a job-work basis.
SWARNA ACADEMY: CRISIL Lowers Rating on INR8cr Loans to D
---------------------------------------------------------
CRISIL Ratings has revised the rating on the long-term bank
facilities of Swarna Academy of Sciences (SAS) to 'CRISIL D Issuer
Not Cooperating' from 'CRISIL B+/Stable Issuer Not Cooperating'.
The downgrade reflects delay in repayment of term loan.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long 1 CRISIL D (ISSUER NOT COOPERATING;
Term Bank Downgraded from 'CRISIL B+/Stable
Loan Facility ISSUER NOT COOPERATING')
Term Loan 2.5 CRISIL D (ISSUER NOT COOPERATING;
Downgraded from 'CRISIL B+/Stable
ISSUER NOT COOPERATING')
Cash Credit/ 4.5 CRISIL D (ISSUER NOT COOPERATING;
Overdraft Downgraded from 'CRISIL B+/Stable
facility ISSUER NOT COOPERATING')
CRISIL Ratings has been consistently following up with SAS, seeking
information via letters and emails dated July 25, 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 has been
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 also lack a forward-looking
component'.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on 'SAS' financial
performance or strategic intent. This restricts CRISIL's Ratings
ability to take a forward-looking view on the entity's credit
quality. CRISIL believes that the rating action on SAS is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the rating on the long-term bank
facilities of SAS has been downgraded to 'CRISIL D Issuer Not
Cooperating' from 'CRISIL B+/Stable Issuer Not Cooperating'.
The downgrade reflects delay in repayment of term loan.
SAS was founded in 2007, in Vijaywada, Andhra Pradesh by Mrs M
Swarna Devi and other associates. SAS operates an institute called
MVR College of Engineering and Technology, offering post-graduate
courses in engineering, business management (MBA), technology (M
Tech) and polytechnics.
VIDEOCON GROUP: Kochhars, Dhoot Told to Appear in Court on Feb. 12
------------------------------------------------------------------
Livemint.com reports that a special PMLA court in Mumbai on Jan. 30
issued summons to former ICICI Bank managing director Chanda
Kochhar and other accused after taking cognizance of the charge
sheet filed against them by the Enforcement Directorate in a money
laundering case and asked them to appear before court on February
12.
According to the report, the ED filed its first charge sheet
against Kochhar, her husband Deepak Kochhar, and Videocon Group
promoter Venugopal Dhoot on money laundering charges in November.
Special PMLA Judge AA Nandgoankar took cognisance of the complaint
filed by ED on Jan. 30 and directed all the accused to remain
present before it on Feb. 12, Livemint.com says.
Livemint.com says the ED had filed a money laundering case against
the Kochhars, Dhoot and others for "illegal sanctioning of loans
amounting to INR1,875 crore to the Videocon Group of companies".
The ED had arrested Deepak Kochhar in September after it filed a
criminal case of money laundering based on an FIR registered by the
CBI against the Kochhars, Dhoot and others.
According to Livemint.com, the ED has alleged that an amount of
INR64 crore, out of the loan amount of INR300 crore sanctioned by a
committee headed by Chanda Kochhar to Videocon International
Electronics Limited, was transferred to Nupower Renewables Pvt Ltd
(NRPL) by Videocon Industries Limited on September 8, 2009, a day
after disbursement of loan by ICICI Bank.
NRPL was earlier known as Nupower Renewables Limited (NRL) and is
Deepak Kochhar's company, as per the ED, which has also claimed
that "net revenue of INR10.65 crore was generated by NRL from these
tainted funds".
Therefore, as per the ED, proceeds of crime amounting to INR74.65
crore were transferred to or generated in NRPL, Livemint.com
notes.
These are part of the first charge sheet filed by the agency in
this case.
Livemint.com says the CBI had booked Chanda Kochhar on charges of
criminal conspiracy, cheating and abuse of official position for
"dishonestly sanctioning loans to the Videocon Group".
As per CBI's FIR, she received "illegal gratification through her
husband from Videocon MD VN Dhoot for sanctioning a term loan of
INR300 crore to Videocon International Electronics Ltd."
About Videocon Industries
Videocon Industries sells consumer products like color televisions,
washing machines, air conditioners, refrigerators, microwave ovens
and many other home appliances in India.
On June 6, 2018, National Company Law Tribunal (NCLT), Mumbai
bench, admitted a petition for initiating insolvency resolution
process against the company under the Insolvency and Bankruptcy
Code, 2016.
According to Videocon's FY17 annual report, the company is liable
to repay the liability of other group companies to the extent of
INR5,082 crore as on March 31, 2017. The company's total debt stood
at INR19,506 crore as of March 2017.
=================
I N D O N E S I A
=================
LIPPO KARAWACI: Fitch Affirms B- LT IDRs, Alters Outlook to Stable
------------------------------------------------------------------
Fitch Ratings has revised the Outlook on Indonesia-based
homebuilder PT Lippo Karawaci TBK to Stable, from Negative, and has
affirmed the Long-Term Foreign- and Local-Currency Issuer Default
Ratings (IDR) at 'B-'. Fitch Ratings Indonesia has also upgraded
Lippo's National Long-Term Rating to 'BBB-(idn)', from 'BB+(idn)'.
The Outlook is Stable.
The Stable Outlook reflects Fitch’s expectations that Lippo will
maintain sufficient liquidity at the standalone level, which
excludes key listed subsidiaries, PT Lippo Cikarang Tbk and PT
Siloam International Hospitals Tbk, but includes other business
units, to meet its obligations through end-2022. However, the
company may need to resort to further asset sales to boost
liquidity beyond 2022, which is a key risk.
Fitch expects liquidity to be driven by rising property presales in
the next two years, such that the free cash flow gap will remain
below -20% of gross debt. The sale of Lippo Mall Puri on 27 January
2021 to Lippo Malls Indonesia Retail Trust (LMIRT, BB-/Negative)
will also boost liquidity and should allow Lippo to maintain a
positive cash balance at the standalone level through to end-2022.
'BBB' National Ratings denote a moderate default risk relative to
other issuers or obligations in the same country. However, changes
in circumstances or economic conditions are more likely to affect
the capacity for timely repayment than is the case for financial
commitments denoted by a higher-rated category.
KEY RATING DRIVERS
Improving Presales: Fitch expects presales at the standalone level
- excluding the sales at Lippo Cikarang - to improve to around
IDR2.0 trillion in 2021 and IDR2.4 trillion in 2022, from IDR1.7
trillion in 2020. Lippo's ability to drive sales despite a
challenging economic environment reflects the company's flexible
product mix, which it can shift towards affordable landed homes -
defined by Fitch as abodes priced at or below IDR1.5 billion
(USD100,000) - where demand has held-up despite the pandemic-led
downturn.
Fitch expects the majority of 2021-2022 presales at the standalone
level to stem from affordable landed homes and the remainder from
existing high-rise projects that are nearing completion. Demand for
the more expensive high-rise units is likely to stay soft in the
next 12-18 months amid the challenging economic environment, as
they are typically purchased by upgraders and investors. Lippo had
completed 89% of the construction of its high-rise project
inventory as of end-September 2020 and says it is on track to
finish construction by 2Q21.
Narrowing Free Cash Flow Gap: Fitch projects Lippo's free cash flow
gap to improve to around -10% of gross debt in 2021-2022, from
Fitch’s estimate of -20% at end-2020. Fitch estimates negative
free cash flow of -IDR2.7 trillion in 2020, and -1.2 trillion in
2021-2022. The improvement stems from lower construction costs in
2021-2022, as Lippo incurred most of the costs on its high-rise
projects at the standalone level in 2020 and expects to focus on
landed homes over the medium-term. The improvement also partly
stems from a modest increase in dividends from subsidiaries.
Lippo will have an inventory of completed high rise homes of around
IDR1.5 trillion for sale in 2Q21, which Fitch expects to be sold in
equal volumes in 2021-2022. Fitch’s assumptions of rising
dividend income stem from an increase in Lippo's ownership of LMIRT
to 58.4%, from 32.3%, following the recent rights issue, and
LMIRT's enhanced cash flow from the purchase of Mall Puri.
Furthermore, Fitch projects Siloam and Lippo Cikarang will start
paying modest dividends in 2021 and 2022, respectively.
Puri Mall Sale Boosts Liquidity: Lippo received cash of IDR625
billion upon the sale of Mall Puri and Fitch expects it to recover
the IDR424 billion in related-party loan given to LMIRT to fund the
mall's purchase. Lippo's enhanced shareholding in LMIRT is valued
at around IDR2.5 trillion, which can be sold to boost liquidity if
required. Fitch assumes the company will recover IDR300 billion of
the loan from LMIRT in 2021 and the balance in 2022. Beyond the
sale of Mall Puri, Fitch believes Lippo has fewer asset-sale
options to boost liquidity.
Renegotiated Rent-Support Payments: Fitch forecasts overall rent
support payments by Lippo to fall to around IDR800 billion in
2021-2022, from around IDR1 trillion in 2019. The lower rent is
driven by Lippo's renegotiations with First REIT, whereby the
company will pay around IDR550 billion starting 2021, albeit at a
4.5% annual escalation versus the previous 2.0% and with a longer
tenor. The revised agreement also excludes currency risk to Lippo.
The lower payments to First REIT are partly offset by additional
rent paid to LMIRT following the mall sale, which Fitch estimates
at around IDR200 billion a year.
Improving Sector Outlook: Fitch expects presales of Indonesian
homebuilders to improve in 2021, supported by healthy demand for
affordable landed homes and a recovering economy. Fitch forecasts
GDP to rise by 6.6% in 2021, following Fitch’s estimate of a 2.0%
contraction in 2020. Growth is off a lower base, but is underpinned
by government measures to support households and businesses. This
should boost demand for affordable homes, but the resumption of
international travel and a complete easing of social-distancing
measures will be key drivers of renewed foreign investment in the
property sector.
ESG Factors: Lippo has an ESG Relevance Score of '4' for management
strategy. The ESG score of '4' indicates that the degree of success
of management's strategy may have a materially positive or negative
impact on Lippo's rating, in conjunction with other factors.
DERIVATION SUMMARY
Lippo's ratings can be compared with peers such as PT Kawasan
Industri Jababeka Tbk (KIJA, B-/BBB-(idn)/Stable), PT Alam Sutera
Realty Tbk (ASRI, CCC+) and PT Ciputra Development Tbk (CTRA,
B+/Stable).
Lippo has a larger presales scale than KIJA. Fitch expects
attributable presales, including Lippo's 84% share of Lippo
Cikarang's presales, to rise to IDR3.0 trillion in 2021, from
Fitch’s 2020 estimate of IDR2.5 trillion. In comparison, KIJA's
attributable presales are likely to hover at around IDR1.0 trillion
in the next two years. However, KIJA is rated at the same level on
the international and national rating scales, supported by a
stronger cash flow profile. Fitch expects neutral or only
marginally negative free cash flow in the next two years, based on
steady cash flow from KIJA's non-development business, which is
anchored by earnings from its long-term power-purchase agreement
with an Indonesian state utility company.
Fitch forecasts similar attributable presales for ASRI of
IDR2.0-2.5 trillion in 2021. The company also has higher free cash
flow than Lippo due to a lower amount of debt, a higher profit
margin and a larger portion of land plot sales in its sales mix.
However, ASRI is rated one-notch lower than Lippo to account for
near-term liquidity risk, whereby the company needs to regain
access to local banks to repay its USD46 million unsecured notes
due in April 2022, following a distressed debt exchange in 2020.
CTRA has a larger operating scale than Lippo. Fitch expects
attributable presales of IDR4 trillion-5 trillion in the next two
years, supported by a diversified product offering and wide
geographic presence in Indonesia. CTRA also has a better operating
cash flow profile. Fitch forecasts free cash flow/gross debt to
remain at or below -5% and for leverage to stay below 40%. CTRA's
credit profile is also supported by its non-development cash flow
from shopping malls, hotels and offices, which provides some
downside protection to earnings against more cyclical property
presales. As such, Fitch rates CTRA two-notches higher than Lippo.
KEY ASSUMPTIONS
-- Presales at the standalone level of IDR2.0 trillion in 2021
and IDR2.4 trillion in 2022
-- Free cash flow gap of -IDR1.2 trillion in 2021-2022, from
around -IDR2.7 trillion in 2020
-- Dividends income from subsidiaries of IDR250 billion in 2021
and IDR450 billion in 2022
-- Recovery of loan to LMIRT: IDR300 billion in 2021 and IDR124
billion in 2022
-- Recurring EBITDA from hotels, malls and management fees of
IDR100 billion-150 billion in 2021-2022
-- Cash balance at the standalone level, excluding Lippo Cikarang
and Siloam, but including other business units, of IDR1.4
trillion in 2021 and IDR400 billion in 2022 (2020 estimate:
IDR2.3 trillion)
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch does not expect an upgrade in the next 18 months given
Fitch’s belief that Lippo will generate negative free cash
flow. Over the longer term, an upgrade will depend on Lippo's
ability to generate neutral free cash flow on a sustained
basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Negative free cash flow/gross debt weaker than -20% for a
sustained period
-- An inability to maintain sufficient cash on hand to cover
standalone level-obligations on a rolling 12-18 month basis
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
Asset Sales Required from 2023: Fitch expects cash on hand at the
standalone level to drop to around IDR1.4 trillion in 2021 and
IDR300 billion in 2022, from an estimated IDR2.3 trillion at
end-2020. The company may have to resort to asset sales from 2023
to pay annual interest expenses of around IDR1.2 trillion and
rental support of around IDR800 billion. Lippo's earliest
significant debt maturity is its USD420 million unsecured bond due
in January 2025. The company has more than IDR950 billion of
short-term bank loans funding working capital at the standalone
level, which Fitch expects lenders to roll over in the normal
course of business.
Lippo was not compliant with the incurrence covenant of
consolidated fixed-charge cover of above 2.0x on in its US-dollar
bonds as at end-2019 and is therefore restricted from raising debt,
aside from permitted indebtedness, and paying dividends. Fitch does
not believe the company will be compliant with the covenant in
2020, given the muted EBITDA growth amid the pandemic. Lippo
confirms that it has headroom to raise around IDR300 billion of new
debt, if required, within the permitted indebtedness allowed in the
indenture. However, Fitch does not think Lippo will need to draw
down debt until at least end-2022.
ESG CONSIDERATIONS
Lippo has an ESG Relevance Score of '4' for management strategy.
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.
LIPPO MALLS: Fitch Assigns BB- Rating to Proposed Notes
-------------------------------------------------------
Fitch Ratings has assigned Lippo Malls Indonesia Retail Trust's
(LMIRT, BB-/Negative) proposed notes a 'BB-' rating. The proposed
notes will be issued by LMIRT's wholly owned subsidiary, LMIRT
Capital Pte. Ltd. and will be guaranteed by Perpetual (Asia)
Limited in its capacity as the trustee of LMIRT.
The proposed notes are rated at the same level as LMIRT's Issuer
Default Rating (IDR), as they will constitute its direct, unsecured
and unsubordinated obligations. LMIRT plans to use the proceeds to
refinance debt and to boost its liquidity buffer.
KEY RATING DRIVERS
Delayed Recovery: Weak consumer sentiment and consumption, stemming
from the uncertainty caused by Indonesia's stringent lockdown
response to a spike in COVID-19 cases and the associated risk of a
re-imposition of pandemic-related movement restrictions, have
delayed a recovery in mall traffic and tenant revenue, particularly
at restaurants and entertainment outlets that usually draw crowds.
The government has extended movement restrictions, in place since
11 January, to 8 February; these limit shopping malls' opening
hours to 7pm, from 9pm, and restrict dining capacity to 25%.
Vaccine deployment has begun, but Fitch believes risks remain to
Fitch’s recovery expectations due to the uncertain duration of
the pandemic and associated restrictions to shopping mall
operations to curb infections.
Weak Economy: Indonesia's consumer confidence index has been below
100 since April 2020, indicating that consumers are pessimistic
about the economic outlook; a level not seen in the previous
decade, according to a survey by Bank Indonesia. The index
recovered to 96.5 in December, from 84.8 in April. The poor
sentiment has been reflected in weak household spending. Monthly
retail sales have improved from the lows in May, but plunged by 21%
yoy in October through to December. Fitch believes consumers have
limited their spending to boost saving and to avoid visiting
shopping malls.
Around half of LMIRT's revenue is derived from assets targeting
low- to middle-income consumers. Fitch believes the segment's
purchasing power has felt the brunt of the weaker economy, as it is
the most likely to be affected by furloughs and job cuts.
Lower Occupancy Rates: LMIRT estimates occupancy was around 80% at
end-2020, against above 90% historically. Leases expiring in 2020
represented 14% of LMIRT's total net leasable area and only half
renewed, contributed to the lower occupancy. Affected tenants also
faced issues pre-pandemic and are therefore likely to terminate
their leases under the current environment. Continued weak consumer
sentiment will impair LMIRT's tenant's ability to continue
operating and paying rent. This risks to Fitch’s forecasts is as
reflected in the Negative Outlook.
Ringfenced from Parent: Fitch rates LMIRT on a standalone basis, as
Fitch believes the trust is sufficiently ringfenced from 58.35%
parent, PT Lippo Karawaci TBK (Lippo, B-/Negative). LMIRT has a
right of first refusal over Lippo's malls. It bought a large
portion of malls from its sponsor, but as a Singapore-listed REIT,
it is subject to stringent regulations that require two independent
valuations and minority unitholder approval for related-party
transactions. Fitch thinks these rules adequately mitigate the
risks such transactions pose to minority unitholders.
Mall Acquisition Neutral: Fitch believes LMIRT's Puri Mall
acquisition is neutral to its rating, as incremental cash flow net
of cost of debt drawn to finance the acquisition is insufficient to
offset weakness in the rest of the portfolio and lost cash flow
from two divested assets in 2020. Fitch assumes Lippo will cover
any shortfall to the guaranteed minimum net property income of
IDR340 billion, at least over 2021-2022, as it has sufficient
liquidity and has set aside funds to complete the transaction. The
mall's average occupancy was around 90% at end-2020, with a
weighted-average lease expiry of 3.4 years.
Perpetual Securities Treated as Equity: Fitch treats LMIRT's SGD260
million of perpetual securities, issued in 2016 and 2017, as 100%
equity due to strong going-concern and gone-concern loss-absorption
features. This also factors in LMIRT's intention to maintain the
securities as a permanent part of its capital structure by
replacing them at their next call-date with similar instruments or
common equity.
DERIVATION SUMMARY
Fitch rates PT Pakuwon Jati Tbk (PWON, BB/Stable) higher than
LMIRT, due to PWON's stronger financial profile, which more than
offsets its exposure to the riskier property-development business.
PWON has a demonstrated record in managing development risks, such
that they do not impair its strong liquidity and financial profile.
Fitch expects PWON to maintain non-development EBITDA of above
USD100 million in the next year or two, while the company's low
leverage allows it to maintain comfortable coverage ratio headroom.
Fitch believes PWON's superior mall portfolio relative to LMIRT
should also lead to better business stability through the cycle.
LMIRT is rated higher than Emirates REIT (B+/Negative), due to the
REIT's weaker financial and business profile. Emirates REIT
reported average occupancy that was already lower than that of
LMIRT before the pandemic, at around 70% in 2019. The REIT's office
space exposure, which experienced oversupply before the pandemic,
exacerbates the weakness of its business profile. The company's
more stable business in the education sector has also deteriorated
in recent years, owing to overcapacity and signs of expatriates
leaving Dubai. Fitch expects Emirates REIT's leverage, as measured
by net debt/EBITDA, to remain high over the next 12 to 18 months,
at above 10x, compared with LMIRT's 6x-7x. Emirates REIT also faces
higher refinancing risk on its USD400 million Sukuk due 2022
relative to LMIRT's manageable liquidity and maturities.
KEY ASSUMPTIONS
-- A revenue decline of 45% in 2020 and 38% in 2021 from 2019
levels and an EBITDA decline of 54% in 2020 and 43% in 2021
compared with 2019 (2019: revenue and EBITDA was up by 19% and
5%, respectively).
-- Entertainment outlets to remain closed until end-2021, while
other segments exhibit a gradual recovery.
-- Limited deterioration in occupancy, which should stay flat at
around 80% through to end-2021.
-- LMIRT to continue paying perpetual coupons, but distribute
less dividends than historically, in line with its weaker
performance.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch may revise the Outlook to Stable upon clear evidence
that the operating environment is stabilising, allowing LMIRT
to maintain FFO fixed-charge cover of at least 1.3x on a
sustained basis (2019: 2.5x).
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- FFO fixed-charge cover below 1.3x 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
Laddered Maturities, Adequate Liquidity: LMIRT's rating is
supported by its record of maintaining adequate liquidity and its
unencumbered assets base. It had SGD123 million in cash at
end-September 2020 and received USD75 million (SGD105 million) in
new committed loans in October. This is sufficient to cover the
SGD175 million term loan due in August 2021. LMIRT does not have
other significant debt maturities until 2024, when its USD250
million notes are due. The refinancing plan, if successful, will
further extend LMIRT's debt maturity profile and improve its
liquidity position. The trust's liquidity profile is also supported
by diversified banking lines, access to debt and capital markets
and unencumbered assets providing financial flexibility.
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.
LIPPO MALLS: Moody's Assigns B1 Rating to Proposed USD Notes
------------------------------------------------------------
Moody's Investors Service has assigned a B1 senior unsecured rating
to the proposed senior notes to be issued by LMIRT Capital Pte.
Ltd., a wholly-owned subsidiary of Lippo Malls Indonesia Retail
Trust (LMIRT, B1 negative). The proposed notes are guaranteed by
Perpetual (Asia) Limited, in its capacity as trustee of LMIRT.
The proceeds from the notes will be used to refinance existing
borrowings of LMIRT and its subsidiaries and for general corporate
and working capital purposes.
RATINGS RATIONALE
"The proposed USD bond issuance will reduce refinancing risk and
lengthen LMIRT's debt maturity profile," says Junling Tan, a
Moody's Analyst.
The rating on the proposed notes is aligned with LMIRT's B1
corporate family rating, as the bond is not exposed to legal or
structural subordination risk. As of September 30, 2020, 100% of
LMIRT's total debt was unsecured, including the debt issued by
LMIRT Capital Pte. Ltd.
LMIRT's B1 rating incorporates its degree of independence as a
publicly listed and regulated trust in Singapore (Aaa stable)
despite becoming a subsidiary of its sponsor, Lippo Karawaci Tbk
(P.T.) (B3 stable) following the rights issuance. However, given
the linkages between LMIRT and Lippo Karawaci, LMIRT's rating will
remain constrained at no more than two notches above that of Lippo
Karawaci
LMIRT's negative outlook reflects uncertainty surrounding the
impact from the coronavirus-related disruptions on the earnings and
performance of LMIRT's properties. A delay in the operating
environment recovery leading to weaker performance of LMIRT's
properties, could result in a breach in financial covenants under
the trust's bank loans from the fourth quarter of 2021, which will
weaken the trust's liquidity profile.
Moody's estimates LMIRT's 2020 revenue to have declined 46% from
the previous year due to temporary mall closures and weaker demand
for retail space. Consequently, Moody's expects LMIRT's adjusted
net debt/EBITDA will weaken to around 10.7x in 2020 from 5.2x in
2019, and adjusted EBITDA/interest expense to around 1.3x from 3.0x
over the same period. Based on Moody's assumption of a gradual
recovery in operating conditions, improving occupancy rates in 2021
and the issuance of the proposed notes, adjusted net debt/EBITDA
and EBITDA/interest expense should strengthen to around 7.5x and
1.7x, respectively, in 2021.
LMIRT's liquidity is adequate. As of 30 September 2020, the trust
had cash and cash equivalents of SGD123 million and USD75 million
(SGD102 million) in undrawn committed credit facilities, compared
to utilized revolving credit facilities of around SGD44 million and
a syndicated term loan of SGD175 million maturing in August 2021.
Moody's expects LMIRT will rely on external funding should the
trust decide to redeem its SGD140 million perpetual securities
callable in September 2021.
In terms of environmental, social and governance (ESG) factors,
Moody's has taken into consideration the governance risk stemming
from related-party transactions between LMIRT and the Lippo group
of companies. This risk is partially mitigated by the regulatory
oversight provided by the Monetary Authority of Singapore and
exercised through the board, which mostly consists of independent
directors. Furthermore, there is an alignment of interest between
LMIRT and its sponsor, Lippo Karawaci, because the latter has
around 58% stake in the trust.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the negative ratings outlook, an upgrade is unlikely over the
next 12-18 months. Nonetheless, the outlook could return to stable
if (1) improvements in the trust's operating performance strengthen
its credit metrics, such that adjusted net debt/EBITDA falls below
7.0x-7.5x and adjusted EBITDA/interest expense rises above 2.0x on
a sustained basis; or (2) the trust maintains good liquidity and a
well-distributed debt maturity profile.
On the other hand, LMIRT's ratings could be downgraded if (1) the
operating environment fails to recover or deteriorates further,
leading to higher vacancy levels and declining operating cash flows
or falling asset valuations; (2) the trust's credit metrics fails
to improve, with adjusted net debt/EBITDA remaining above 7.5x or
adjusted EBITDA/interest expense staying below 2.0x; (3) the trust
fails to maintain adequate liquidity over the next 12 to 18 months;
(4) the trust increases its exposure to the Lippo group of
companies; or (5) the credit quality of the Lippo group of
companies, including Lippo Karawaci, weakens. A downgrade of Lippo
Karawaci's rating will also result in downgrade of LMIRT's rating.
The principal methodology used in this rating was REITs and Other
Commercial Real Estate Firms published in September 2018.
Lippo Malls Indonesia Retail Trust (LMIRT) is a real estate
investment trust and has been listed on the Singapore Stock
Exchange since November 2007. At September 30, 2020, it had a
portfolio of 21 retail malls and seven retail spaces across major
cities in Indonesia, with a total appraised value of around SGD1.45
billion.
=========
J A P A N
=========
ANA HOLDINGS: Posts JPY309.58BB Net Loss for 9Mos. Ended Dec. 31
----------------------------------------------------------------
The Japan Times reports that ANA Holdings Inc. on Jan. 29 reported
a record net loss of JPY309.58 billion in the April to December
period, as the major airline has been reeling from the global
coronavirus pandemic that hurt travel demand at home and abroad.
The loss is a reversal from a net profit of JPY86.45 billion in the
same period last year, underscoring the severity of the hit from
the spread of the novel coronavirus to the airline industry, the
report says.
ANA, the parent of All Nippon Airways Co., posted an operating loss
of JPY362.41 billion in the nine-month period, as revenue tumbled
66.7% to JPY527.61 billion, The Japan Times discloses.
The airline maintained its earnings outlook for the current
business year through March. It projects a record net loss of
JPY510 billion on revenue of JPY740 billion.
The net loss came as ANA booked a special loss of JPY76 billion.
The Japan Times says the global coronavirus pandemic has caused
travel restrictions, dealing a severe blow to airlines globally.
According to The Japan Times, ANA’s revenue from international
flights plunged 93.6% from a year ago to JPY32.3 billion as the
number of passengers saw a 95.9% fall to only about 321,000 in the
nine-month period as Japan’s sweeping entry ban was in place.
Sales from flights were down 71.7% to JPY156.3 billion after the
number of passengers fell 71.5% to 9.91 million.
The Japan Times says the government launched a subsidy program to
help struggling local tourism last year but was forced to suspend
it in late December due to resurging coronavirus cases. Travel
demand normally increases in Japan during the New Year holidays
from late December to early January.
ANA has been canceling domestic flights to cope with the crisis.
The outlook for travel demand for the rest of fiscal 2020 and
beyond remains uncertain as the pandemic is expected to take more
time to be brought under control even as vaccinations have begun in
some parts of the world including the United States and Britain,
the report states.
ANA is seeking to become leaner to overcome the pandemic, cutting
costs and reducing its fleet such as B-777s that are suitable for
long-distance flights. President and CEO Shinya Katanozaka has
promised that the airline will return to profitability in fiscal
2021, adds The Japan Times.
About ANA Holdings
Headquartered in Tokyo, Japan, Ana Holdings Incorporated provides a
variety of air transportation-related services.
As reported in the Troubled Company Reporter-Asia Pacific on Nov.
5, 2020, Egan-Jones Ratings Company, on October 30, 2020,
downgraded the foreign currency and local currency senior unsecured
ratings on debt issued by Ana Holdings Inc. to B+ from BB-.
=================
S I N G A P O R E
=================
EAGLE HOSPITALITY: Jan. 28 Deadline Set for Panel Questionnaires
----------------------------------------------------------------
The United States Trustee is soliciting members for an unsecured
creditors committee in the bankruptcy case of EHT US1, Inc.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a questionnaire
available at https://bit.ly/397PnpR and return it to
Richard.Schepacarter@usdoj.gov at the Office of the United States
Trustee so that it is received no later than 5:00 p.m., on Jan. 28,
2021.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About Eagle Hospitality Group
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust and Eagle Hospitality Business Trust. Based in Singapore,
Eagle H-REIT is established with the principal investment strategy
of investing on a long-term basis, in a diversified portfolio of
income-producing real estate which is used primarily for
hospitality and/or hospitality-related purposes, as well as real
estate-related assets in connection with the foregoing, with an
initial focus on the United States.
EHT US1, Inc., and 26 affiliates, including 15 LLC entities that
each owns hotels in the U.S., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 21-10036) on Jan. 18, 2021.
EHT US1, Inc., estimated $500 million to $1 billion in assets and
liabilities as of the bankruptcy filing.
The Debtors tapped PAUL HASTINGS LLP as bankruptcy counsel; FTI
CONSULTING, INC., as restructuring advisor; and MOELIS & COMPANY
LLC, as investment banker. COLE SCHOTZ P.C. is the Delaware
counsel. RAJAH & TANN SINGAPORE LLP is Singapore Law counsel, and
WALKERS is Cayman Law counsel. DONLIN, RECANO & COMPANY, INC., is
the claims agent.
EAGLE HOSPITALITY: MAS Grants Temporary Aggregate Leverage Waiver
-----------------------------------------------------------------
Byuma Devi at The Business Times reports that Eagle Hospitality
Trust (EHT) has received a waiver from the Monetary Authority of
Singapore (MAS) and authorisations from the United States
Bankruptcy court as it moves ahead with the bankruptcy
proceedings.
EHT, which is a stapled trust comprising Eagle Hospitality Reit
(EH-Reit) and the currently dormant Eagle Hospitality Business
Trust (EH-BT), is now being managed by DBS Trustee - as EH-Reit's
trustee - after a proposed change of manager fell through.
According to BT, DBS Trustee said in an announcement on Jan. 28
evening that the United States Bankruptcy Court had, at a hearing
on Jan. 21, authorised the joint administration of the cases of all
EHT entities that had filed for Chapter 11 bankruptcy in the
District of Delaware.
BT relates that the court had also approved the
debtor-in-possession (DIP) financing facility from Monarch
Alternative Capital on an interim basis, allowing the EHT entities
to borrow up to US$9.3 million until the next hearing on Feb. 11.
DBS Trustee had previously said that Monarch will extend a DIP
credit facility of up to US$100 million to the Chapter 11 entities,
and this facility can be increased to as much as US$125 million, BT
says.
The entities were also authorised by the court on an interim basis
to pay critical vendors for the ongoing operations and maintenance
of the hotels in its portfolio, the report nots.
In addition, the court appointed the chief restructuring officer of
the entities to act as the foreign representative in any Singapore
proceedings, and confirmed the application of the worldwide
automatic stay in respect of any claims against the entities which
prevents any enforcement action or the start or continuation of
other legal proceedings against the entities.
Documents lodged on Jan. 18 cited Alan Tantleff, senior managing
director at FTI, consulting as the chief restructuring officer, BT
adds.
In Singapore, the MAS has granted EH-Reit a temporary waiver from
its property funds appendix which states that its total borrowings
and deferred payments should not exceed 50 per cent of its
deposited property before Jan. 1, 2022, and 45 per cent after that
date, BT reports.
As at end-September 2020, EH-Reit's aggregate leverage stood at
65.5 per cent, due primarily to the most recent valuations of its
properties, BT discloses.
DBS Trustee had made an application for the waiver to MAS as the
DIP financing will result in an increase in EH-Reit's aggregate
leverage. The waiver will end on March 31, 2022.
DBS Trustee previously said the Chapter 11 filings would allow for
a stable and collective process to protect the Chapter 11 entities
and their assets, relates BT.
Current troubles for EHT include a list of defaults, legal
proceedings and employment-related claims, the report adds.
About Eagle Hospitality Group
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust and Eagle Hospitality Business Trust. Based in Singapore,
Eagle H-REIT is established with the principal investment strategy
of investing on a long-term basis, in a diversified portfolio of
income-producing real estate which is used primarily for
hospitality and/or hospitality-related purposes, as well as real
estate-related assets in connection with the foregoing, with an
initial focus on the United States.
EHT US1, Inc., and 26 affiliates, including 15 LLC entities that
each owns hotels in the U.S., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 21-10036) on Jan. 18, 2021.
EHT US1, Inc., estimated $500 million to $1 billion in assets and
liabilities as of the bankruptcy filing.
The Debtors tapped PAUL HASTINGS LLP as bankruptcy counsel; FTI
CONSULTING, INC., as restructuring advisor; and MOELIS & COMPANY
LLC, as investment banker. COLE SCHOTZ P.C. is the Delaware
counsel. RAJAH & TANN SINGAPORE LLP is Singapore Law counsel, and
WALKERS is Cayman Law counsel. DONLIN, RECANO & COMPANY, INC., is
the claims agent.
EAGLE HOSPITALITY: Seeks to Pay Caretakers of 14 Closed Hotels
--------------------------------------------------------------
Debtors EHT US1, Inc., et al., filed a motion asking the U.S.
Bankruptcy Court for the District of Delaware to pay $3.4 million
for caretakers of their closed hotels.
As part of a real estate investment trust structure, the Debtors
were generally removed from the everyday business of managing the
Hotels. Under the Master Leases and related agreements, the Master
Lessees were responsible for working with the Hotel Managers to,
pursuant to the terms of the applicable HMAs, fund operational
expenses (including with respect to personnel, vendors,
contractors, and taxing authorities), while the Master Lessors were
only responsible for certain costs associated with fee ownership,
such as real estate taxes. Unfortunately, the Master Lessees
failed to comply with their obligations under the HMAs and fund the
operation of the Hotels, leading to the temporary closure of
fifteen Hotels, fourteen of which remain closed as of the Petition
Date, and, ultimately, the termination of all Master Leases.
Twelve of the fourteen Hotels that remain closed as of the Petition
Date are owned by Debtor Propcos, while two of these fourteen
Hotels are owed by Non-Debtor Propcos. In April and May 2020, in
connection with the closure of the Closed Hotels, the applicable
Debtor Propcos entered into hotel caretaker agreements with certain
hotel operators so as to ensure that basic and limited safeguard
services are provided at the Closed Hotels to prevent waste at and
material damage to the Closed Hotels.
Prior to the Petition Date, the Debtors paid the caretaker costs
through the end of November 2020, as well as a portion of the
caretaker costs for the month of December 2020. In particular, on
January 12, 2021 the Debtors paid approximately $654,000 of the
approximately $2.1 million in December 2020 caretaker costs,
leaving approximately $1.6 million unpaid. In addition, the Debtors
estimate that, for the period from January 1, 2021 to the Petition
Date, the caretaker costs are approximately $1.2 million. This
means that, as of the Petition Date, an aggregate amount of
approximately $2.8 million in caretaker costs remain outstanding,
of which approximately $80,000 relates to the Closed Hotels owned
by the Non-Debtor Propcos.
As of the Petition Date, the ten caretaker bank accounts held at
Bank of America contained balances totaling approximately $550,000.
These accounts are purportedly subject to a security agreement with
the Debtors' prepetition lender group and subject to set-off
claims. If the hotel caretakers are denied access to these funds,
the Debtors will need to provide an additional approximately
$550,000 to the hotel caretakers to fund hotel operations.
G. David Dean, Esq., of COLE SCHOTZ P.C., the Debtors' counsel,
explains that the uninterrupted provision of caretaker services is
critical to preserve the value of the Closed Hotels. Absent such
services, the Closed Hotels would be put at risk of theft, mold,
and other damage to the property. Moreover, if the hotel
caretakers were to discontinue providing caretaker services, the
Debtors may not be able to secure an alternative service provider
-- especially on mere five business days' notice. In addition, to
the extent that the hotel caretakers discontinue paying third
parties for services rendered or goods provided in connection with
the caretaking services, it is possible that such third parties
will assert claims against the applicable Debtor Propco and/or
impose mechanics' liens or similar liens on the Closed Hotels.
The Debtors estimate that the Caretaker Claims total approximately
$3.4 million in the aggregate. The Debtors submit that it would
suffer immediate and irreparable harm if the hotel caretakers were
to discontinue providing caretaker services. Under the Interim
Order, the Debtors seek the authority to pay the Caretaker Claims
only up to the amount of $2.5 million, of which amount no more than
$100,000 may be used to pay Caretaker Claims against the Non-Debtor
Propcos.
About Eagle Hospitality Group
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust and Eagle Hospitality Business Trust. Based in Singapore,
Eagle H-REIT is established with the principal investment strategy
of investing on a long-term basis, in a diversified portfolio of
income-producing real estate which is used primarily for
hospitality and/or hospitality-related purposes, as well as real
estate-related assets in connection with the foregoing, with an
initial focus on the United States.
EHT US1, Inc., and 26 affiliates, including 15 LLC entities that
each owns hotels in the U.S., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 21-10036) on Jan. 18, 2021.
EHT US1, Inc., estimated $500 million to $1 billion in assets and
liabilities as of the bankruptcy filing.
The Debtors tapped PAUL HASTINGS LLP as bankruptcy counsel; FTI
CONSULTING, INC., as restructuring advisor; and MOELIS & COMPANY
LLC, as investment banker. COLE SCHOTZ P.C. is the Delaware
counsel. RAJAH & TANN SINGAPORE LLP is Singapore Law counsel, and
WALKERS is Cayman Law counsel. DONLIN, RECANO & COMPANY, INC., is
the claims agent.
EZION HOLDINGS: To Sell Liftboat for US$13 Million
--------------------------------------------------
Uma Devi at The Business Times reports that Ezion Holdings on Jan.
29 said it will sell the Teras Conquest 7 liftboat for a cash
consideration of US$13 million.
The gain on disposal for the transaction for the nine-month period
from Jan. 1, 2020 to Sept. 30, 2020, is US$650,000 after accounting
for transaction costs.
Based on Ezion's financial statements for the third fiscal quarter
of FY 2020 ended September, the net book value of the vessel stood
at US$12.3 million. The excess of the consideration over the book
value of the vessel is US$700,000, BT discloses.
Using the same set of financial statements, the company added that
the net losses generated for the nine-month period of its fiscal
year ended September was US$37.2 million.
According to BT, Ezion said its wholly-owned subsidiary Teras
Conquest 7 had entered into a memorandum of agreement (MOA) with
Elite Point - a Singapore-incorporated firm that is in the business
of chartering ships, barges and boats with crew. The MOA was
executed by the Singapore branch of CIMB Bank Berhad.
BT relates that the consideration was arrived at after arm's length
negotiations after taking into account several factors including
the market price of vessels with similar specification and age, the
values of the vessel and its existing charter contract, as well as
its operating history and present and future burn rates.
As part of the transaction, Elite Point will place a deposit
US$650,000 into a bank account with an escrow agent within three
banking days after the date of execution of the MOA and the escrow
agreement. Elite Point will transfer the balance of the
consideration into the same account within seven banking days after
Teras Conquest 7 provides notice of the date of which it intends to
tender the notice of readiness for delivery of the vessel. Any
balance will be transferred to the seller upon delivery of the
vessel.
ET adds that Ezion said the disposal will allow the group to
immediately reduce its outstanding liabilities via the partial
repayment of secured bank loans.
The company said the amount received from the disposal will be
utilised to repay the secured bank loan of the group. The mortgages
of the vessel will also be discharged pursuant to the disposal.
The disposal will not have any impact on the issued and paid-up
share capital of Ezion, the report adds.
About Ezion Holdings
Based in Singapore, Ezion Holdings Limited
--http://www.ezionholdings.com/-- an investment holding company,
develops, owns, and charters offshore assets to support the
offshore energy markets in Singapore, India, Brunei, Thailand, the
Middle East, Nigeria, and internationally. The company operates
through Liftboats, Jack-Up Rigs, Offshore Support Logistics
Services, and Others segments. It owns, charters, and manages rigs
and vessels involved in the production, maintenance, and
exploration phases of the oil and gas, and offshore windfarm
industries. The company also provides shipping agency and
management services, as well as undertakes engineering works;
financing services; and cargo transportation services. In addition,
it holds assets or investments involved in renewable energy, and
other oil and gas related industries.
As reported in the Troubled Company Reporter-Asia Pacific on Oct.
21, 2020, Ezion Holdings on Oct. 19 announced its restructuring
plan to refocus its business on the provision of vessel-management
services, following a strategic review of its options in
consultation with major lenders. According to The Business Times,
the company said that it will take steps to realise value by
disposing of its vessels in an orderly manner over a period of
time; this will enable it to better manage its cashflow constraints
by reducing the holding costs of the vessels as well as the amount
of liabilities. It will also implement further cost-cutting
measures in line with business requirements and continue the search
for potential investors to recapitalise the group and realise the
value of the listed status of the company, on the basis of a
vessel-management company.
The company has appointed RSM Corporate Advisory as corporate
restructuring advisor to oversee the implementation of the
restructuring plan over the course of the next year and will in due
course hold an informal meeting for securities holders.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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