/raid1/www/Hosts/bankrupt/TCRAP_Public/210225.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, February 25, 2021, Vol. 24, No. 35
Headlines
A U S T R A L I A
AFG 2018-1: S&P Raises Class E Notes Rating to BB+ (sf)
DOUBLE C: First Creditors' Meeting Set for March 4
EBONY PROPERTY: First Creditors' Meeting Set for March 5
JUMHEM PTY: First Creditors' Meeting Set for March 5
MAYVIC PTY: Second Creditors' Meeting Set for March 4
MCLENNAN ASSET: Second Creditors' Meeting Set for March 3
PRABHAT GROUP: First Creditors' Meeting Set for March 3
THIESS GROUP: Moody's Assigns Ba1 CFR, Outlook Stable
VIVA ENERGY: Sees Hope for Oil Refineries After Year of Losses
XCLUSIVE SERVICES: First Creditors' Meeting Set for March 4
C H I N A
GUANGYANG ANTAI: Fitch Affirms 'B' LongTerm Foreign-Currency IDR
GUANGZHOU R&F: Fitch Assigns B+ Rating on Proposed USD Sr. Notes
[*] CHINA: Crackdown on Defaulters Starts to Embolden Creditors
I N D I A
AGASTI SAHAKARI: CARE Lowers Rating on INR15cr LT Loan to D
BANNA LAL: CARE Raises Rating on INR4.0cr LT Loan to C
DEWAN HOUSING: CARE Reaffirms D Rating on INR14,407.90cr NCD
GUINEA MOTORS: CARE Lowers Rating on INR17cr LT Loan to B
ICONIUM LEATHER: Insolvency Resolution Process Case Summary
ITALTINTO EQUIPMENTS: Insolvency Resolution Process Case Summary
JAGRITI SOLVEX: CARE Moves D Debt Rating to Not Cooperating
JET AIRWAYS: NCLT Denies Workers Unions' Plea
JUMBO FINVEST: CARE Keeps D Debt Rating in Not Cooperating
LANCOR HOLDINGS: CARE Lowers Rating on INR182.41cr Loan to D
PENTAGON ALUMINIUM: CARE Moves D Debt Rating to Not Cooperating
RISHI TRADERS: CARE Moves D Debt Rating to Not Cooperating
RUDRA BUILDWELL: Insolvency Resolution Process Case Summary
SANGA BUILDERS: CARE Moves D Debt Ratings to Not Cooperating
SARVESH BUILDERS: CARE Keeps D Debt Rating in Not Cooperating
SIDDHIVINAYAK REALHOMES: CARE Keeps D Rating in Not Cooperating
SIDDHIVINAYAK TIMBER: CARE Keeps D Debt Rating in Not Cooperating
SILON GRANITO: CARE Reaffirms D Rating on Bank Debts
SST PACKAGING: CARE Moves D Debt Rating to Not Cooperating
SUMMIT CORPORATION: CARE Keeps D Debt Ratings in Not Cooperating
SWAMI SAMARTH: CARE Lowers Rating on INR7.03cr Loan to C
TIRUPATI BALAJI: CARE Hikes Rating on INR26.28cr LT Loan to B
TOPSGRUP SERVICES: NCLT Admits Insolvency Proceedings
VATIKA SOVEREIGN: CARE Keeps C Debt Rating in Not Cooperating
VEDANTA RESOURCES: S&P Rates New Guaranteed Sr. Unsec. Notes 'B-'
WADHAWAN GLOBAL: CARE Reaffirms D Rating on INR1,900cr NCD
WOODVILLE PALACE: CARE Lowers Rating on INR17.18cr Loan to D
ZENITH PRECISION: CARE Moves D Debt Rating in Not Cooperating
I N D O N E S I A
BANK SYARIAH: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
J A P A N
JAPAN AIRLINES: Egan-Jones Cuts Senior Unsecured Ratings to BB
KAWASAKI KISEN: Egan-Jones Hikes Senior Unsecured Ratings to CCC
MAZDA MOTOR: Egan-Jones Lowers Senior Unsecured Ratings to BB
RICOH COMPANY: Egan-Jones Lowers Senior Unsecured Ratings to BB+
N E W Z E A L A N D
PACIFIC AEROSPACE: CAA Suspends Certificates Following Insolvency
S I N G A P O R E
DYNA-MAC HOLDINGS: Annual Net Loss Widens to SGD58.4 Million
- - - - -
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A U S T R A L I A
=================
AFG 2018-1: S&P Raises Class E Notes Rating to BB+ (sf)
-------------------------------------------------------
S&P Global Ratings raised its ratings on four classes of notes
issued by Perpetual Corporate Trust Ltd. as trustee for AFG 2018-1
Trust in respect of Series 2018-1. At the same time, S&P affirmed
its ratings on three classes of notes. The transaction is a
securitization of prime residential mortgages originated by AFG
Securities Pty Ltd. (AFG).
The rating actions reflect:
-- For the raised ratings, increasing credit support and a
declining expectation of losses as the pool loan-to-value ratio
decreases. Strong cash flows are supportive of the higher rating
levels, and arrears levels remain low. As of Dec. 31, 2020, the
pool has a balance of about A$168.2 million and a pool factor of
about 48%. The pool's weighted-average loan-to-value ratio was 62%
and weighted-average seasoning was 59 months.
-- That since close, arrears have been lower compared with the
Standard & Poor's Performance Index (SPIN) for prime loans. As of
Dec. 31, 2020, loans more than 30 days in arrears make up 0.5% of
the pool.
-- That the loss of income for borrowers in the coming months
because of COVID-19 might put upward pressure on mortgage arrears
over the longer term. S&P said, "We have updated our outlook
assumptions for Australian RMBS in response to changing
macroeconomic conditions because of the COVID-19 outbreak.
Borrowers with COVID-19-related hardship arrangements comprise
about 1.59% of the pool as at Dec. 31, 2020. We have therefore
applied a range of additional stresses in our analysis to assess
the rated notes' sensitivity to the possibility of higher
arrears."
-- S&P's view that the credit support is sufficient to withstand
the stresses we apply. This credit support comprises note
subordination for all rated notes as well as mortgage insurance
covering about 50% of the loans in the portfolio.
-- S&P's expectation that the various mechanisms to support
liquidity within the transactions, including an amortizing
liquidity facility and principal draws, are sufficient under its
stress assumptions to ensure timely payment of interest.
-- The extraordinary expense reserve of A$150,000, funded at
closing by AFG, available to meet extraordinary expenses. The
reserve will be topped up via excess spread, if drawn.
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P said, "We use these assumptions about
vaccine timing in assessing the economic and credit implications
associated with the pandemic. As the situation evolves, we will
update our assumptions and estimates accordingly."
Ratings Raised
AFG 2018-1 Trust in respect of Series 2018-1
Class B: to AAA (sf) from AA (sf)
Class C: to AA (sf) from A (sf)
Class D: to A (sf) from BBB (sf)
Class E: to BB+ (sf) from BB (sf)
Ratings Affirmed
AFG 2018-1 Trust in respect of Series 2018-1
Class A2: AAA (sf)
Class A3: AAA (sf)
Class AB: AAA (sf)
DOUBLE C: First Creditors' Meeting Set for March 4
--------------------------------------------------
A first meeting of the creditors in the proceedings of Double C
Holdings Pty. Ltd. will be held on March 4, 2021, at 9:30 a.m. at
the offices of Restructuring Works, Level 8, 80 Clarence Street, in
Sydney, NSW.
Clifford John Sanderson of Restructuring Works Pty Ltd was
appointed as administrator of Double C Holdings on Feb. 22, 2021.
EBONY PROPERTY: First Creditors' Meeting Set for March 5
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Ebony
Property Group Pty Ltd will be held on March 5, 2021, at 10:00 a.m.
at the offices of McLeod & Partners, Level 9, 300 Adelaide Street,
in Brisbane, Queensland.
Jonathan McLeod and Bill Karageozis of McLeod & Partners were
appointed as administrators of Ebony Property on Feb. 23, 2021.
JUMHEM PTY: First Creditors' Meeting Set for March 5
----------------------------------------------------
A first meeting of the creditors in the proceedings of Jumhem Pty
Ltd as trustee for The Park Ridge No 2 Unit Trust will be held on
March 5, 2021, at 10:30 a.m. at the offices of McLeod & Partners
Level 9, 300 Adelaide Street, in Brisbane, Queensland.
Jonathan McLeod and Bill Karageozis of McLeod & Partners were
appointed as administrators of Jumhem Pty on Feb. 23, 2021.
MAYVIC PTY: Second Creditors' Meeting Set for March 4
-----------------------------------------------------
A second meeting of creditors in the proceedings of Mayvic Pty Ltd,
formerly trading as 'Mayvic Australia Pty Ltd', has been set for
March 4, 2021, at 10:00 a.m. via teleconference 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 March 3, 2021, at 4:00 p.m.
Gavin Moss and Desmond Teng of Chifley Advisory Pty Ltd were
appointed as administrators of Mayvic Pty on Jan. 28, 2021.
MCLENNAN ASSET: Second Creditors' Meeting Set for March 3
---------------------------------------------------------
A second meeting of creditors in the proceedings of Mclennan Asset
Services Pty Ltd has been set for March 3, 2021, at 11:00 a.m. via
Virtual Meeting by Telephone,
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 March 2, 2021, at 4:00 p.m.
Timothy Cook of Balance Insolvency was appointed as administrator
of Mclennan Asset on Dec. 24, 2020.
PRABHAT GROUP: First Creditors' Meeting Set for March 3
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Prabhat
Group Holdings Pty Ltd will be held on March 3, 2021, at 10:00 a.m.
via telephone or Zoom video conferencing.
Shane Justin Cremin of Rodgers Reidy was appointed as administrator
of Prabhat Group on Feb. 19, 2021.
THIESS GROUP: Moody's Assigns Ba1 CFR, Outlook Stable
-----------------------------------------------------
Moody's Investors Service has assigned a Ba1 corporate family
rating to Thiess Group Holdings Pty Ltd. At the same time, Moody's
has assigned a Ba1 rating to the backed senior secured notes issued
by Thiess Group Finance Pty Ltd and Thiess Group Finance USA Pty
Ltd.
The outlook on all ratings are stable.
RATINGS RATIONALE
"The Ba1 rating reflects Thiess's market-leading position as one of
the world's largest, full-service mining services providers," says
Saranga Ranasinghe, a Moody's Vice President and Senior Analyst.
Thiess is one of only a handful of mining services providers that
is capable of providing 'full life of mine services' to its clients
at the mine sites. This position makes Thiess's services hard to
replace, given that it is responsible for all aspects of operations
at the mine site, which is reflected in the strong renewal rate of
its contracts. Thiess has a long operating history and
well-established relationships with large, low cost miners.
Thiess had around $9.3 billion of work in hand at December 31,
2020, and long contracts that provide good forward revenue
visibility. The company has also operated through many industry
cycles and has flexibility when managing its cost base in down
cycles.
Thiess is jointly owned by CIMIC Group Limited (Baa2 stable) and
Elliot Investment Management, L.P. (Elliot).
The rating also reflects the financial policy in place which
includes operating below 2x on a net debt/EBITDA basis. Moody's
expects Thiess will have sufficient headroom below this threshold
under Moody's base case assumptions over the next 12-18 months.
The rating is balanced by its indirect exposure to the cyclical
mining sector, with a relatively high exposure to thermal coal
customers that are facing carbon transition risk, its private
entity status with private equity ownership, and Moody's
expectation for onerous dividend requirements that will limit the
cashflow retained within the business, which are key risks
identified under its Environmental and Governance frameworks.
The stable outlook reflects Moody's expectation that the company
will continue to renew its existing contracts, win new contracts,
and operate within the parameters set for the rating.
Liquidity
Thiess's liquidity is solid. The company had a cash balance of
AUD128 million as at December 31, 2020. The company also has an
AUD400 million revolving credit facility that matures in 2023. The
facility was undrawn at December 31, 2020.
Under Moody's base case sensitivities, these sources of liquidity,
combined with cash flow from operations, are expected to be
sufficient to cover the company's capital spending and dividends
payouts.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
Thiess's ratings take into account environmental, social and
governance factors.
Thiess is exposed to environmental risks because of its relatively
high exposure to the thermal coal mining sector. Globally, coal
mining companies and coal terminals are deemed to face very high
credit risk from environmental considerations, indicating that
these considerations are already straining issuer credit profiles
or that these pressures are likely to emerge in the future.
Policies favoring renewables, the declining cost of renewables and
the development of disruptive technologies will increase long-term
risks for coal-driven power companies, and subsequently, for
thermal coal producers, which are Thiess's customers.
In terms of corporate governance, Thiess's 50% ownership by a
private equity firm and expected high shareholder returns weigh on
its credit profile. As a private company, Thiess is not subject to
regulatory disclosure requirements, reducing transparency around
its financial and operating performance. Moody's notes that senior
management of Thiess has remained after the sale of a 50% stake to
Elliot.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Thiess's rating is not likely to be upgraded in the near term,
given the inherent cyclicality of the mining industry and the high
reliance on thermal coal mining.
However, the rating could be upgraded over time if Thiess reduces
its exposure to the thermal coal industry and diversifies its
commodity exposure while being committed to a financial policy that
is commensurate with a higher rating and moves to a fully unsecured
debt platform.
Thiess's ratings could come under downward pressure if the company
fails to renew material contracts or win new contracts, or if
operating conditions deteriorate significantly. At the same time,
ratings could be downgraded if there is a deviation from the stated
financial policy of 2x net debt/EBITDA and/or there's higher than
expected dividends extracted by shareholders.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Thiess, founded in 1934, has been a part of CIMIC Group Limited
(Baa2 stable) since 1983. Thiess is one of world's largest full
service mining services provider with revenues of around $3.6
billion for the year ending December 2020 (fiscal 2020). The
company operates in seven countries with a focus on Australia,
Indonesia, the Americas and Botswana.
VIVA ENERGY: Sees Hope for Oil Refineries After Year of Losses
--------------------------------------------------------------
Nick Toscano at The Sydney Morning Herald reports that Viva Energy
chief Scott Wyatt has expressed confidence that federal government
rescue talks will deliver the long-term support required to retain
a local oil-refining industry as the closure of two refineries
escalate fears about fuel security and large-scale job losses.
SMH relates that Viva, owner of the 65-year-old Geelong oil
refinery, on Feb. 24 revealed the plant's losses had blown out to
AUD95 million in the past year after COVID-19 travel bans wiped out
demand for petrol, diesel and jet fuel and battered the refinery's
already-strained profit margins.
The refinery dragged the ASX-listed fuel group from a AUD135
million profit in 2019 to a AUD35 million loss for the 12 months to
December 31, SMH discloses.
According to SMH, the heavy losses forced Viva to weigh closing
down the Geelong plant - one of just two refineries left in
Australia - but last year it accepted the Morrison government's
fast-tracked interim subsidy program of 1 cent per litre for
locally made fuels, funded until June 30.
Mr. Wyatt said discussions with the federal government were ongoing
to develop the structure of a 10-year, AUD2.3 billion scheme to
support oil refineries beyond July 1 and he was confident the
"right outcome" would be found, SMH relays.
"While the outlook remains challenging, the commitment from the
government . . . gives us a lot of confidence about the opportunity
to develop a framework to provide a more sustainable [refining]
business over the long term, and return it to being a material
contributor to our business," he told The Age and The Sydney
Morning Herald.
"I feel very optimistic about the refining business and, while
there is a lot more to do, I think it will get resolved."
Australia's oil refineries - which process crude oil into fuel
products - have been under incredible strain since the onset of
COVID-19 lockdown orders that have kept people indoors, cars parked
in driveways and planes grounded, SMH says. In the past four
months, BP and ExxonMobil announced plans to close their
loss-making refineries in Perth and Melbourne's Altona, meaning
Australia now relies on imports for about 80 per cent of its
transport fuel requirements, the report relates.
SMH adds that Mr. Wyatt said retaining some domestic oil refining
capacity was important for the country's fuel security. "Having a
diversity of supply is probably the biggest protection you can have
from supply shocks, whether it be COVID-driven or some other 'black
swan'-type event," he said.
Excluding Viva's refinery, pre-tax earnings in the company's other
divisions rose 16 per cent amid strong diesel sales through retail
and commercial channels.
Viva Energy runs Australia's network of Shell petrol stations.
XCLUSIVE SERVICES: First Creditors' Meeting Set for March 4
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Xclusive
Services Pty Ltd will be held on March 4, 2021, at 11:00 a.m. at
the offices of Cor Cordis, One Wharf Lane, Level 20, 171 Sussex
Street, in Sydney, NSW.
Jason Tang and Ozem Kassem of Cor Cordis were appointed as
administrators of Xclusive Services on Feb. 22, 2021.
=========
C H I N A
=========
GUANGYANG ANTAI: Fitch Affirms 'B' LongTerm Foreign-Currency IDR
----------------------------------------------------------------
Fitch Ratings has affirmed Guangyang Antai Holdings Limited's
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B'. The
Outlook is Stable. Fitch has also affirmed the senior unsecured
rating at 'B' with Recovery Rating of 'RR4'.
Guangyang Antai's ratings are supported by its solid market
position in its core steel products, diversified product offering
and decent financial metrics. The ratings are constrained by the
company's increasing exposure to the low-margin trading business,
limited funding channels and significant external guarantees.
The Stable Outlook reflects Fitch's expectation that Guangyang
Antai's leading stainless steel products will allow it to maintain
net leverage at a level that is commensurate with its rating, even
against the increasing business risk and large external
guarantees.
KEY RATING DRIVERS
Trading Drives Business Risk: Guangyang Antai rapidly expanded in
trading in recent years, and the segment's share of revenue rose to
51% in 2019 from 25% in 2017. Fitch expects the trading segment's
share of revenue to have risen to 57% in 2020 and to stabilise from
2021. Trading carries higher counterparty risk and has higher
working capital needs than the core steel operation. However,
Guangyang Antai's core steel operation is stable given its
market-leading position and patented process for 400 series
stainless steel, which gives it some cost advantage.
Core Business Remains Robust: Guangyang Antai maintained its strong
market position in the stainless industry with 75% market share in
Shandong Province and 25% market share in 400 series stainless
steel products nationally. The core steel operation's revenue rose
by a single digit in 2019, but gross margin dropped to 6% from 12%
in 2018. This was mainly due to the addition of more lower-margin
300 series products and an increase in raw material cost.
Fitch expects steel margin in 2020 to have improved slightly due to
a decrease in stainless steel raw material cost and strong carbon
steel selling prices.
Significant External Guarantees: Guangyang Antai had external
guarantees of around CNY2.6 billion at end-2020 compared with its
own interest-bearing debt of CNY3.2 billion. External guarantees
fell from CNY3.5 billion in 2017. Fitch accounts for external
guarantees under its total debt calculations and includes all
external guarantees in calculating the company's leverage ratios.
Guarantee to Counterparty in Distress: At end-2020, one of
Guangyang Antai's counterparties, Zhong Rong Xin Da (ZRXD), had
about CNY600 million of debt undergoing restructuring as ZRXD is
experiencing some financial distress. Guangyang Antai provides a
direct guarantee to this amount. However, this amount is unlikely
to require repayment at this stage.
Limited Funding Sources: At end-2020, Guangyang had total
interest-bearing debt of about CNY3.8 billion, of which CNY2.6
billion was short-term. Guangyang Antai relies on short-term
financing from banks to refinance its debt obligations, and has
limited alternative financing options immediately available. This
is a constraint on the company's ratings as its liquidity position
is heavily dependent on bank credit facilities, which leaves the
company vulnerable and exposed to changing credit-market
conditions.
Adequate Liquidity: At end-2020, Guangyang Antai had sufficient
liquidity. The company had around CNY2.1 billion in readily
available cash and CNY2.3 billion in unused credit facilities,
which were enough to cover short-term debt maturities.
Improving Leverage: Guangyang Antai managed to maintain fairly low
FFO net leverage despite increasing business risk and being in a
highly cyclical sector. FFO net leverage rose to 3.2x in 2019 from
2.2x in 2018 mainly due to higher raw material cost and investments
in non-steel-related businesses. Fitch expects FFO net leverage
decreased to 3.1x in 2020 despite lower margin from the trading
business as Fitch expects the steel business to have performed
well. Fitch expects FFO net leverage to fall to around 3.0x in 2021
despite increasing raw-material costs.
DERIVATION SUMMARY
Guangyang Antai's ratings are supported by its strong industry
position among Chinese stainless-steel producers, a diversified
product offering in both stainless and carbon steel, and decent
financial metrics. The ratings are constrained by risks associated
with the growing trading business segment, its substantial external
guarantees (some of which were made to high-risk counterparties)
and its limited funding sources.
Compared to Chinese aluminium producer China Hongqiao Group Limited
(BB-/Stable), Guangyang Antai's business profile is weaker. In
2019, China Hongqiao's EBITDA was much larger at CNY20 billion
compared with Guangyang Antai's CNY1.8 billion, China Hongqiao also
has lower FFO net leverage.
Guangyang Antai's EBITDA is less than half of United States Steel
Corporation's (B-/Stable) CNY4 billion in 2019, but Guangyang
Antai's FFO net leverage is low at 3.2x compared with U.S. Steel's
5.6x. Both companies have similar margin of around 4%, but
Guangyang Antai has been generating positive FCF while U.S. Steel's
FCF has been negative. JSW Steel Limited (BB-/Negative) and Tata
Steel Limited (BB-/Negative) both have higher FFO net leverage than
Guangyang Antai. However, JSW and Tata both have much larger scale
and higher margin than Guangyang Antai.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Steelmaking gross margin to remain at around 7% on average
between 2020 and 2022
-- Capex of around CNY550 million per year between 2020 and 2022
-- No dividend pay-out or large investment in the near term
-- External guarantees to remain at around CNY2.6 billion between
2020 and 2022
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- More diversified funding sources to reduce reliance on cross
guarantee debt and exposure to external guarantees
-- Decreasing exposure to trading business with FFO net leverage
sustained below 2x
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continued deterioration in liquidity, in particular weakening
access to bank financing due to external guarantees
-- FFO net leverage sustained above 3.5x
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
Significant External Guarantees, Limited Funding Sources: As of
end-2020, Guangyang Antai had total interest-bearing debt around
CNY3.8 billion, of which CNY2.6 billion was short-term. Total
external guarantees amounted to CNY2.6 billion. The company had
CNY2.1 billion in readily available cash and CNY2.3 billion in
unused credit facilities, which were sufficient to cover short-term
debt.
The company's only funding channel is bank loans as it has no
immediate access to bond and equity markets. Credit facilities are
assessed and rolled over annually, and the total facility limits
have been quite consistent over the years.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch accounts for external guarantees under total debt
calculations and includes all external guarantees in calculating
the company's leverage ratios.
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.
GUANGZHOU R&F: Fitch Assigns B+ Rating on Proposed USD Sr. Notes
----------------------------------------------------------------
Fitch Ratings has assigned China-based property developer Guangzhou
R&F Properties Co. Ltd.'s (B+/Negative) proposed US-dollar senior
notes a 'B+' rating with a Recovery Rating of 'RR4'.
The proposed notes will be issued by Easy Tactic Limited, a wholly
owned subsidiary of R&F Properties (HK) Company Limited (RFHK;
B+/Negative), which is in turn a subsidiary of Guangzhou R&F. The
proposed notes' rating aligns with the rating of RFHK, which
provides the notes with an unconditional and irrevocable guarantee.
Meanwhile, Guangzhou R&F provides credit support to the notes via a
keepwell deed and deed of equity interest purchase and investment
undertaking. Guangzhou R&F intends to use the net proceeds to
refinance medium- to long-term debt due within one year.
RFHK is Guangzhou R&F's sole offshore financing and investment
platform. Its ratings are equalised with those of its parent based
on Fitch's assessment of moderate legal ties and strong operational
and strategic ties, in line with Fitch's Parent and Subsidiary
Linkage Rating Criteria.
Guangzhou R&F's ratings are constrained by weak liquidity and
refinancing risk, despite a strong business profile. The Negative
Outlook reflects reduced access to onshore capital markets and
refinancing risk on the upcoming maturities of Guangzhou R&F's
capital-market debt. However, Fitch believes the company has
options to address the upcoming maturities, with CNY250 billion of
saleable resources. It is also in discussions for asset disposals
that could bring in additional liquidity and help it deleverage.
KEY RATING DRIVERS
Manageable Upcoming Maturities: Guangzhou R&F has CNY12 billion in
capital-market debt maturing or becoming puttable during the
remainder of 2021, including CNY9 billion due in 2Q21 and CNY3
billion in 2H21. The company had a cash balance, including
restricted cash, of CNY36 billion at end-9M20, of which it plans to
maintain CNY30 billion for normal operation. Fitch believes the
company will be able to address the upcoming maturities in 2021.
Guangzhou R&F has already refinanced, repaid and extended CNY19
billion in bonds that matured in January 2021. This was achieved
through cash generated from operations (contracted sales net of
expenses), asset sales, bond issuance and stake sales in urban
renewal projects.
Refinancing Hinges on Adequate Sales: The company's refinancing
plan is based on its expectation of generating substantial cash
flow from operations. It had flat yoy attributable contracted sales
of CNY139 billion in 2020, but remains confident for its 2021
sales, which are supported by adequate saleable resources.
Reduced Capital Market Access: Guangzhou R&F's access to the
onshore bond markets appears limited, as it has not issued any
onshore bonds since its CNY1 billion issuance in April 2020 and its
bonds are trading at yields of around 15%-20%. Fitch believes it
may be challenging for the company to issue onshore bonds under
current market conditions, despite the extension of more than
CNY1.5 billion in puttable onshore bonds in the past three months.
The company plans to issue US-dollar bonds in the offshore market
to refinance USD800 million bonds due in 2Q21, including the
proposed notes, but this is subject to execution risk.
Progress in Deleveraging: The company reduced its total debt by
CNY18 billion and net debt by CNY16 billion in 9M20, without
refinancing at high rates or asset sales, by accessing its more
than CNY3 billion in cash flow from operations stemming from
disciplined land acquisitions and cost savings, despite weaker
contracted sales. Entities jointly controlled by the company's
major shareholders increased funding to the company by CNY6 billion
in 1H20, which also helped to cut Guangzhou R&F's debt.
Asset Disposals to Deleverage: The company has confirmed the sale
of a logistics park, an office building in Guangzhou and stakes in
some urban renewal projects for around CNY14 billion in the past
three months. It has received part of the proceeds and expects to
receive the rest in the next few months. It is in advanced talks on
other asset disposals. Guangzhou R&F has a large portfolio of
investment properties that it can monetise, totaling CNY37 billion
at end-9M20, as well as hotels that have a market value of about
CNY54 billion. However, Fitch believes asset disposals are subject
to execution risk.
Low Off-Balance-Sheet Debt: The company's non-controlling interests
(NCI) remained low, at only 3% of equity. As a result, Fitch
believes risk from off-balance-sheet debt is lower than that of
peers and that Guangzhou R&F has more flexibility to dispose of
stakes in development projects than developers with high NCIs.
DERIVATION SUMMARY
Guangzhou R&F's CNY139 billion attributable contracted sales scale
is significantly larger than the CNY40 billion-100 billion of 'BB-'
rated peers, except that of Greenland Holding Group Company Limited
(BB-/Stable). It is also larger than that of most 'B+' peers,
although it is lower than that of China Evergrande Group
(B+/Stable) and similar to that of Yango Group Co., Ltd.
(B+/Stable). Yango's average selling price (ASP) is 17% higher and
it has a faster churn rate, but Guangzhou R&F's 2019 EBITDA was
higher than Yango's and its land bank size is twice as large,
providing Guangzhou R&F with more flexibility on land-acquisitions
to control leverage. Fitch expects Guangzhou R&F's leverage to be
around 5pp lower than that of Yango throughout 2021-2023.
Guangzhou R&F has a long land-bank life compared with peers and its
geographical diversification is comparable with that of 'BB+' and
'BB' rated peers. It operation, which is spread across more than
140 cities, is more geographically diversified than CIFI Holdings
(Group) Co. Ltd.'s (BB/Stable) more than 50 cities. Still, the
geographical spread of both companies' operations should mitigate
risk from local policy intervention and economic volatility.
Guangzhou R&F's attributable contracted sales are more than double
that of Zhenro Properties Group Limited (B+/Stable). Zhenro's ASP
is 50% higher than that of Guangzhou R&F with a faster churn rate.
However, Zhenro has a shorter land-bank life of around two years,
which limits its control over land acquisition costs. Zhenro's 2019
leverage was 8pp lower than that of Guangzhou R&F, but Zhenro has a
larger NCI position, which limits its deleveraging ability.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Attributable contracted sales of CNY119 billion-132 billion in
2020-2023
-- EBITDA margin, excluding capitalised interest from cost of
sales, at 27%-29% in 2020-2023
-- 15%-25% of contracted sales proceeds to be spent on land
acquisitions in 2020-2023 to maintain a land bank sufficient
for about three-to-four years of development
-- 45% of contracted sales proceeds to be spent on construction
costs in 2020-2023
-- ASP to rise by 1%-2% a year on average in 2020-2023
RECOVERY RATING ASSUMPTIONS
-- Guangzhou R&F to be liquidated in a bankruptcy, as it is an
asset-trading company
-- 10% administration claims
-- 70% advance rate to accounts receivable
-- 75% advance rate to adjusted net inventory to reflect the
above 25% EBITDA margin
-- 55% advance rate to investment properties, property, plant and
equipment
-- 60% standard haircut to net property, plant and equipment
-- 100% advance rate to restricted cash
The resulting recovery rate corresponds to a Recovery Rating of
'RR1'. However, the Recovery Rating is capped at 'RR4' because,
under Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, China falls into Group D of creditor friendliness, and
instrument ratings of issuers with assets in the group are subject
to a soft cap at the issuer's Issuer Default Rating and a Recovery
Rating of 'RR4'.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Outlook will be revised to Stable if Guangzhou R&F is able
to sustain an improvement in its liquidity position and
demonstrates an ability to access the onshore bond market with
sizeable issuance.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Any delays or issues in the execution of asset disposals
-- Weaker contracted sales in the coming months than Fitch
expects
-- No meaningful improvement in the liquidity position, with
total cash/short-term capital-market debt of below 0.5x 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
Tight but Improving Liquidity: The company had CNY36 billion of
cash (including restricted cash) as of 9M20. It has repaid CNY7
billion in debt, extended another CNY2 billion that matured in 4Q20
and refinanced CNY19 billion that matures in 1Q21. There is CNY12
billion in capital-market debt maturing or turning puttable during
the remainder of 2021. Fitch expects the company to cover this with
cash on hand, contracted sales proceeds collected, proceeds from
asset sales and issuance of new bonds.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of '3'. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
[*] CHINA: Crackdown on Defaulters Starts to Embolden Creditors
---------------------------------------------------------------
Bloomberg News reports that Chinese bondholders are gaining more
power in the corporate restructuring process, underscoring a
renewed push by authorities to reform the nation's $5.2 trillion
credit market.
Following a slew of defaults late last year that rattled markets,
disgruntled creditors have successfully pushed for borrower
concessions that would have seemed out of reach in China only a
year ago, Bloomberg says. They reversed a major automaker's plan to
make a profitable unit less accessible to bondholders, forced an
energy producer to sweeten a debt swap offer and secured an
unprecedented court ruling that required a construction company's
underwriter, rating firm and auditor to compensate individual
bondholders.
Although limited in scale, the cases are fueling optimism that
creditors will enjoy a more equal playing field as defaults in
China become more common, Bloomberg relates. Now that policy makers
are gradually dialing back financial support to distressed
borrowers, they're under pressure from local and international
investors to make the restructuring process more fair and
transparent. It's part of a broad reform push that includes stiffer
punishments for bond-market wrongdoing and a green light for
non-bank institutions to form creditor committees, Bloomberg
states.
"As a long-time distressed asset investor in China, I can see that
creditors are clearly becoming more aggressive in defense of their
financial interests," Bloomberg quotes Brock Silvers, chief
investment officer of Kaiyuan Capital, as saying. "Regulators have
been generally supportive as they attempt to improve the efficiency
of credit markets."
As a result, many borrowers are facing hard choices as regulators
turn away from bailouts and investors clamor for more rule-based,
less political enforcement options, Mr. Silvers, as cited by
Bloomberg, added.
=========
I N D I A
=========
AGASTI SAHAKARI: CARE Lowers Rating on INR15cr LT Loan to D
-----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Agasti Sahakari Sakhar Karkhana Limited (ASSKL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 15.00 CARE D Revised from CARE B;
Facilities Stable
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities of
ASSKL takes into account delays in servicing of its debt obligation
towards one of its lender.
Rating Sensitivities
Positive Factors: Factors that could lead to positive rating
action/upgrade:
* Timely repayment of its debt obligations
Negative Factor: Factors that could lead to negative rating
action/downgrade: NA
Detailed description of the key rating drivers
Key Rating Weaknesses
* Delay in payment of outstanding dues post moratorium period: The
company was availed the moratorium by the bank till September 2020.
Post which the company delayed in its debt repayment obligations
and later it was classified as SMA-2 by the bank and the payment is
due for February 28, 2021. Non-payment of the dues by February 28,
2021 will move this account to the NPA Category. The amount of the
outstanding amount is INR5.00 crore.
ASSKL was incorporated under Maharashtra Co-Operative Societies Act
1960 in a year 1992-93, to undertake sugar and sugar related
production by Mr. Madhukarrao Kashninath Pichad (Chairman) and Mr.
Sitaram Gaikar (Vice Chairman). The first crushing season of the
sugar factory was conducted in Sugar Season (SS) 1992-93 with an
installed capacity of 2500 TCD. ASSKL has set up its New Distillery
Division in FY20 with an installed capacity of 30 KLPD which will
start operating from February 2020.
BANNA LAL: CARE Raises Rating on INR4.0cr LT Loan to C
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Banna Lal Jat Constructions Private Limited (BLJCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 4.00 CARE C Rating removed from
Facilities ISSUER NOT COOPERATING category
and Revised from CARE D
Short Term Bank 24.00 CARE A4 Rating removed from
Facilities ISSUER NOT COOPERATING category
and Revised from CARE D
Detailed Rationale & Key rating Drivers
The ratings of BLJCPL have been revised mainly on account of
improvement in its liquidity position. The ratings, further,
continue to remain primarily constrained on account of its modest
scale of operations in a highly competitive industry with net loss
in FY20 (FY refers to the period from April 1 to March 31),
moderate solvency position and customer concentration of order
book. The ratings, however, continue to favorably take into account
its experienced management with its long standing association with
its reputed clientele base and moderate order book position.
Rating Sensitivities
Positive Factors - Factors that could lead to positive rating
action/upgrade:
* Sustained increase in scale of operations to more than INR30.00
Crore.
* Sustained improvement in PBILDT margin more than 11.00%.
* Sustained improvement in capital structure with overall gearing
less than 0.50 times.
Negative Factors- Factors that could lead to negative rating
action/downgrade:
* Decline in scale of operation with TOI less than INR20.00 crore
* Deterioration in capital structure with overall gearing more than
1.50 times
* Deterioration of liquidity position from current level
Detailed description of the key rating drivers
Key Rating Weakness
* Modest scale of operations in a highly competitive industry and
net loss in FY20: The scale of operations of the company as
indicated by Total Operating Income (TOI) has shown a fluctuating
trend in the last four financial years ended in FY20 owing to its
presence in the highly competitive and fragmented industry and
tender driven nature of business. The construction industry is
highly fragmented in nature with presence of large number of
unorganized players and a few large organized players which coupled
with the tender driven nature of construction contracts poses huge
competition and puts pressure on the profitability margins of the
players. During FY20, TOI of the company has declined significantly
by 53.61% over FY19 on account of low orders in hand. Till
10MFY21, the company has achieved TOI of INR12.00 crore. PBILDT
margin of the company stood moderate at 10.39% in FY20, improved by
395 bps in FY19 mainly on account of low cost of material consumed
as well as low employee costs. Despite improvement in PBILDT
margin, the company has registered net loss of INR0.10 crore mainly
on account of high depreciation and interest charges. Due to net
loss along with decline in scale of operations, the GCA level of
the company has declined significantly by 56.22% in FY20 over FY19
and stood at INR0.78 Crore.
* Moderate solvency position: The capital structure of the company
stood comfortable with an overall gearing of 0.94 times as on March
31, 2020, deteriorated from 0.68 times as on March 31, 2019 due to
disbursement of new term loans against FD coupled with higher
working capital bank borrowing and infusion of unsecured loans.
However, debt service coverage indicators of the company stood
moderate with total debt to GCA stood at 16.31 times as on March
31, 2020, deteriorated from 5.26 times as on March 31, 2019 mainly
on account of decrease in GCA level. The interest coverage ratio
stood at 1.61 times in FY20.
* Customer concentration of order book coupled with high
competitive intensity in the government civil construction Segment:
The client base of the company is skewed towards government
departments in Rajasthan with company generating majority of its
income from Public Works Department (PWD), Rajasthan. Further,
unlike many other construction companies, it has remained focused
on the road segment and moreover its orders under execution and the
orders at bidding stage are also in the road segment. This makes it
dependent on opportunities only in the road sector which is saddled
with increased execution challenges. Moreover, the company being a
regional player and all the projects are executed in Rajasthan
only, also reflects geographical concentration risk. The
construction industry is highly fragmented in nature with presence
of large number of unorganized players and a few large organized
players coupled with the tender driven nature of construction
contracts poses huge competition and puts pressure on the
profitability margins of the players. Further, as the company
participates in tenders invited by large lead contractor, high
competition and lower bargaining power restricts its profitability
margins.
Key Rating Strengths
* Experienced management: Mr Ram Prasad Jat and Mr. Sanwar Mal Jat,
Director, Graduate by qualification, have more a decade of
experience in the industry and handles operational and site
functions of the company. Further, the top management is supported
by a team of qualified employees having long standing experience in
their respective fields for executing contracts on time. Mr Banna
Lal Jat, looks after the overall affairs of the company and has
more than three decades of experience in the civil construction
industry. He has also promoted M/S Banna Lal Jat, proprietorship
concern since 1988.
* Long standing association with its reputed clientele base and
moderate order book position: The company is an 'AA' class approved
contractor and is eligible to participate in contracts of any
amount pertaining to construction work of roads. Being present in
the industry since 1988 through its group company, it has an
established track record of operations in the civil construction
industry and has long-standing relationship with PWD, Rajasthan
from where it secures its contracts. As on date, BLJCPL has an
outstanding order book position of about INR34.47 crore forming
1.45 times of FY20's TOI with 5 projects in hand reflecting
moderate order book position. As per the current order book
position, the company will execute its order within a period of
9-12 months. Nevertheless, the company's ability to secure further
orders will be critical for maintaining the growth in TOI.
Liquidity: Stretched
The liquidity position of the company stood stretched with almost
full utilization of its working capital bank borrowings during last
12 months ended January 2021. The account of the company is regular
from April 1, 2020. However, as per bank statement provided of Bank
overdraft from April 2020 to February 5, 2021 there are some
instances of overdraw in bank overdraft not more than 10 days.
Further, the operating cycle stood negative at 172 days in FY20
mainly on account of high creditors. Due to high creditors, the
current ratio stood at 1.09 times whereas quick ratio stood at
below unity level. Further, cash flow from operating activities has
deteriorated from INR2.78 crore in FY19 to INR0.83 crore in FY20
mainly on account of low profit. Furthermore, it has cash and bank
balance of INR0.13 crore as on March 31, 2020 and has envisaged
gross cash accrual of INR0.87 crore as against repayments of
INR0.50 crore during FY21.
The company has availed the moratorium for the period from March to
August 2020, however, has not availed any emergency fund under
COVID-19 relief measures.
Bhilwara (Rajasthan) based Banna Lal Jat Constructions Private
Limited (BLJCPL) was incorporated in December, 2005 by Mr. Banna
Lal Jat, Mr. Ram Prasad Jat and Mr. Sanwar Mal Jat. The company is
engaged in the business of civil contractor business with major
focus on construction of roads for both government department and
private client on contract basis. It is registered as an "AA" class
contractor with Public Works Department (PWD), Rajasthan and is
eligible for bidding of orders all over India.
DEWAN HOUSING: CARE Reaffirms D Rating on INR14,407.90cr NCD
------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Dewan
Housing Finance Corporation Ltd (DHFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 14,407.90 CARE D Reaffirmed
Debenture Issue
Subordinated Debt 1,734.00 CARE D Reaffirmed
Perpetual Debt 1,160.70 CARE D Reaffirmed
Non-Convertible
Debentures
(Public Issue) 24,944.80 CARE D Reaffirmed
Fixed Deposit
Programme 4,988.20 CARE D (FD) Reaffirmed
Long term Bank
Facilities 28,696.90 CARE D Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings of DHFL take into account the continued delays in
servicing of various debt obligations. The company is now with NCLT
(National Company Law Tribunal) for bankruptcy proceedings. The COC
(Committee of Creditors) has issued Letter of Intent to Piramal
Capital & Housing Finance Ltd, being a successful resolution
applicant for DHFL. The resolution plan proposes significant
hair-cuts to existing bondholders and fixed deposit holders.
Rating Sensitivities:
Not Applicable
Detailed description of the key rating drivers
Key rating weaknesses
* Weak financial profile: Company's financial profile continues to
be weak which is manifested in DHFL reporting loss of INR13612
crore in FY20. For H1FY21, DHFL continually reported loss of
INR2053 crore on account of net loss on fair value change, due to
the reclassification of a portion of its wholesale portfolio, as
the recoverability or otherwise of these loans is uncertain. DHFL's
book Net worth continues to be in the negative zone at INR7612
crore as on 30th September 2020, compared to INR5538 crore as on
31st March 2020.
Incorporated in 1984, DHFL is registered as housing finance company
in India with total asset size of INR80,719 crore as on March 31,
2020. DHFL had a loan portfolio of INR73,242 crore as on March 31,
2020. The company operates through a network of over 305 offices
(incl. branches and service centres).
GUINEA MOTORS: CARE Lowers Rating on INR17cr LT Loan to B
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Guinea Motors Private Limited (GMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 17.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Revised from
CARE B+; Stable and moved
to ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from GMPL to monitor the rating
vide e-mail communications/letters dated July 7, 2020, November 6,
2020, November 24, 2020, January 7, 2021, February 2, 2021 and
numerous phone calls. However, despite CARE's repeated requests,
the company has not provided the requisite information for
monitoring the rating. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating. Further, GMPL has not paid the
surveillance fees for the rating exercise as agreed to in its
Rating Agreement. The rating on GMPL's bank facilities will now be
denoted as CARE B; Stable; ISSUER NOT COOPERATING. Further, banker
could not be contacted.
Detailed Rationale & Key Rating Drivers
Key Rating Weaknesses
* Relatively small scale of operation: The company is a relatively
small player vis-a-vis other players in the automobile dealership
business marked by its total operating income of INR34.00 crore
(Rs. 51.49 crore in FY19) with a net loss of INR1.31 crore (Rs.1.53
crore in FY19) in FY20. The tangible net worth of the company was
moderately low at INR11.98 crore as on March 31, 2020. Furthermore,
the profitability margins of the company remained low marked by
PBILDT margin of 5.59% (8.21%: FY19) and negative PAT margin in
FY20.
* Limited bargaining power with Tata Motors Limited and dependence
on volume momentum: GMPL's automobile dealership model is purely in
the nature of trading wherein profit margins are very thin and
bargaining power over the principal manufacturer is also low. As
GMPL's scale of operations is relatively small in size and margin
on products is pre-decided at a particular level by the principal
manufacturer, it has a limited scope to enhance its profitability
margins.
* Renewal based dealership agreement: The dealership agreement with
Tata Motors Limited is valid for 3 years, which was renewed in
2017. Though the nonrenewability of the same would pose a risk to
the business sustenance of the company, the past track record on
agreement renewability and satisfactory performance of the company,
mitigates the risk related to renewability to an extent.
* Automobile dealership business being less profitable and highly
working capital intensive, leading to moderately leveraged capital
structure: The business of automobile dealership is having inherent
low profitability and high working capital intensity due to large
inventory holding. GMPL's PBILDT margin remained low at 5.59% in
FY20. Further, the PAT margin too remained very low, an inherent
feature of the automobile dealership business. The overall gearing
ratio was deteriorated from the last year mainly on account of
availment of additional finance from Tata Motors Limited and higher
utilization of its working capital limit. The debt coverage
indicators marked by total debt to GCA was -17.43x in FY20, however
it was improved mainly on account of improvement in cash profit
levels during the year. Moreover, majority debt comprises working
capital borrowings to fund inventory which are inherent in the
automobile dealership business. The company has to maintain the
fixed level of inventory for display and to guard against supply
shortages. Further, the company delivers the vehicle only after
receipt of full payment or against the release order from financial
institution (funding the vehicle) which takes around 10-15 days'
time to release the funds. Furthermore, the company follows monthly
billing cycle (for claims against free services under warranty
period of Tata Motors Limited) and receives payment within 15 days
of billing.
* Increasing competition: Going forward, with a view to provide
increased access to its customers, Tata Motors Limited is set to
grow the dealership network. While this would provide expansion
opportunities to GMPL, it would also expose the company to
competition from other Tata Motors Limited dealer. Moreover, in
order to capture the market share, the auto dealers offer better
buying terms like providing credit period or allowing discounts on
the purchase. Such discounts offered to the customers create margin
pressure and negatively impact the earning capacity of the company.
Further, the competition may intensify further with the presence of
other automobile companies like Toyota, Honda, Maruti Suzuki,
Hyundai, Chevrolet, Ford, Nissan etc., launching new models at
competitive prices, may result in decline of the market share of
Tata Motors Limited, which in turn also affects its dealers
including GMPL.
Key Rating Strengths
* Long track record and experienced promoter: The company has been
in automobile dealership business since 2001, thus having a track
record of around 17 years. Mr. Arjun Kumar Gupta, Mr. R. K. Singh
and Mr. Anand Gupta are the directors of GMPL and looks after the
overall management of the company. Mr. Arjun Kumar Gupta having
around four decades of experience in the automobile industry and
are ably supported by other directors, Mr. R. K. Singh and Mr.
Anand Gupta along with the team of experienced professional who
have rich experience in the same line of business.
* Authorized dealer of Tata Motors Limited in Bihar: GMPL is
getting a competitive advantage of being sole dealer of Tata Motors
Limited's passengers' vehicle in Patna.
Guinea Motors Pvt. Ltd. (GMPL) was incorporated in February, 2000
by Mr. Arjun Kumar Gupta, Mr. R. K. Singh and Mr. Anand Gupta of
Patna, Bihar. The company commenced operation from January, 2001 as
an authorized dealer of Tata Motors Ltd (TML) for its passenger
cars, spares & accessories for nine districts of Bihar. At present,
GMPL offers passenger vehicles of Tata Motors Limited through its
two showrooms (self-owned) equipped with 3-S facilities (Sales,
Service and Spare-parts) at Patna. Apart from this, the company
also purchases and sells pre-owned cars. It has one stock-yards
(rented), having a capacity to store around 150 passenger cars
each. The company also has the two workshops at Patna. Mr. Arjun
Kumar Gupta (Director), along with other directors Mr. R. K. Singh
and Mr. Anand Gupta who have significant experience in the
dealership business look after the day to day operation of the
company. They are further supported by a team of experienced
professionals.
ICONIUM LEATHER: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Iconium Leather Works Private Limited
Mezzanine Floor, SY No. 62
Site No. 13, 6th Cross
NS Palya, BTM Layout
Bangalore 560076
Insolvency Commencement Date: February 5, 2021
Court: National Company Law Tribunal, Bengaluru Bench
Estimated date of closure of
insolvency resolution process: August 4, 2021
Insolvency professional: Kondisetty Kumar Dushyantha
Interim Resolution
Professional: Kondisetty Kumar Dushyantha
No. 404/2, 7th Main
9th Main, 2nd Block
Jayanagar, Bengaluru 560011
E-mail: dushyanthak@gmail.com
Last date for
submission of claims: March 5, 2021
ITALTINTO EQUIPMENTS: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: Italtinto Equipments Private Limited
S5/2422, Vrundavan Complex
Opposite Satyam Petrol Pump
Sonale Village
Mumbai Nashik Highway
Bhiwandi, Thane MH 421302
Insolvency Commencement Date: February 9, 2021
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: August 7, 2021
Insolvency professional: Mr. Bhaskar Gopal Shetty
Interim Resolution
Professional: Mr. Bhaskar Gopal Shetty
C-77, Shanti Shopping Centre
Mira Road East 401107
Thane District
Maharashtra
E-mail: cabgshetty@gmail.com
italtinto.cirp@
sparkresolutions.co.in
Last date for
submission of claims: March 5, 2021
JAGRITI SOLVEX: CARE Moves D Debt Rating to Not Cooperating
-----------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Shri
Jagriti Solvex Private Limited (SJSPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 15.88 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SJSPL to monitor the rating
vide letters/emails communications dated July 6, 2020,October 28,
2020, November 10, 2020, November 24, 2020, January 4, 2021,
February 2, 2021 and numerous phone calls. However, despite CARE's
repeated requests, the entity has not provided the requisite
information for monitoring the rating. In line with the extant SEBI
guidelines, CARE has reviewed the ratings on the basis of the
publicly available information which, however, in CARE's opinion is
not sufficient to arrive at fair rating. The rating on Shri Jagriti
Solvex Private Limited's bank facilities will now be denoted as
CARE D; ISSUER NOT COOPERATING. Further, banker could not be
contacted.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The rating assigned to the bank facilities of Shri Jagriti Solvex
Private Limited take into account the on-going delays in debt
servicing.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Ongoing delays in debt servicing: There are on-going delays in
debt servicing of the entity. As per the bank statement received,
as on December 31, 2019, there are ongoing delays in repayment of
principal and interest of term loan account.
Shri Jagriti Solvex Private Limited was incorporated in November
2011 with an objective to enter into the extraction of rice bran
oil business. However, the company started its commercial operation
from April 2017. The company procures raw material i.e. rice bran
from the rice millers. The company also sells its by-products i.e.
rice bran crude oil; rice bran fatty acid etc. in open market. The
company sales rice bran oil (refined) under the brand name of
"Johar". The manufacturing unit of the company is located at
Village: Mohandi, Bagbahra, Mahasamund, Chhattisgarh with an
installed capacity of 60000 metric tons per annum. Mr. Kamal Kumar,
Mr. Shashank Srivastava and Mr. Harshwardhan Kaushik who have
around 20 years, 12 years and 5 years of experience in similar line
of business, look after the day to day operation of the company.
JET AIRWAYS: NCLT Denies Workers Unions' Plea
---------------------------------------------
BloombergQuint reports that the National Company Law Tribunal
(NCLT) has rejected applications of Jet Airways (India) Ltd.'s
workers unions seeking a copy of the resolution plan submitted by a
consortium led by Dubai-based entrepreneur Murari Lal Jalan and
Kalrock Capital.
A bench comprising Janab Mohammed Ajmal and V Nallasenapathy, who
heard the case through video conferencing, observed that a
resolution plan can only be presented to the creditors' committee
or the adjudicating authority for its approval, BloombergQuint
says. Insolvency code doesn't contemplate sharing of the plan with
any other entity, the tribunal said while dismissing the plea.
This order comes after three unions - the National Aviators' Guild,
representing more than 1,000 pilots, Jet Aircraft Maintenance
Engineers Welfare Association and the Jet Airways Cabin Crew
Association, together representing 70% of the airline's ground
staff - moved the NCLT seeking a stay on any final order until
their plea was decided by the tribunal, according to
BloombergQuint.
Jet Airways was once India's largest national carrier by market
value. A consortium of 26 lenders led by State Bank of India had
initiated insolvency proceedings against the airline after it
defaulted on its loan obligations. The plea was admitted by the
NCLT in June 2019 and Ashish Chawchharia was appointed as its
resolution professional. A resolution plan submitted by the
Jalan-Kalrock consortium was approved in October last year.
BloombergQuint relates that the three unions requested the NCLT to
pass an order directing the resolution professional to share the
full copy of the resolution plan, along with valuation and other
reports prepared by Alvarez and Marsal. Further, they also sought
an approval to participate in the proceedings before the tribunal.
According to BloombergQuint, the union argued that Jet Airways'
resolution professional refused the unions' plea for a copy of the
resolution plan citing confidentiality. Employees of the airlines
were interested in its resolution and remained on payroll despite
financial hardships. As the approval or rejection of the plan may
adversely affect the employees, they must be made aware of the
plan. And lastly, the insolvency code requires dissemination of
the resolution plan to the applicants.
Gaurav Joshi, senior advocate representing the resolution
professional, argued that the IBC requires the resolution
professional to ensure confidentiality of a plan, BloombergQuint
relays. It doesn't state that all creditors deserve to be heard
during its approval. And lastly, the applications are an attempt to
derail the insolvency resolution process of the company.
Citing judgments of the apex court, the tribunal dismissed the
unions' argument and noted that some of them were operational
creditors. Being so, their role was very limited in the resolution
process and hence, they are not eligible to intervene in the
insolvency process, the report notes.
About Jet Airways
Based in Mumbai, India, Jet Airways (India) Limited was one of
India's top airlines founded by Naresh Goyal. It provided
passenger and cargo air transportation services as well aircraft
leasing services. It operated flights to 66 destinations in India
and international countries.
Jet Airways on April 17, 2019, halted all flight operations after
its lenders rejected its plea for emergency funds.
On June 20, 2019, the National Company Law Tribunal (NCLT), Mumbai
Bench, accepted an insolvency petition against Jet Airways filed by
its creditors as they attempt to recover some of their dues.
Ashish Chhawchharia of Grant Thornton India has been named as the
resolution professional in the case. Law firm Cyril Amarchand
Mangaldas will represent the interests of the lenders' consortium,
according to a Reuters report.
Creditors have filed claims worth INR30,907 crore, according to
Financial Express. The RP has so far admitted claims worth over
INR14,000 crore.
Jet Airways would be acquired by an investor consortium under a
multi-million dollar resolution plan approved by the carrier's
creditors on Oct. 17, 2020.
JUMBO FINVEST: CARE Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Jumbo
Finvest (India) Limited (JFIL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 525.03 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated November 8, 2019, placed the
rating of JFIL under the 'Issuer non-cooperating' category as JFIL
had failed to provide information for monitoring of the ratings
including no default statement for the month of October 2019. JFIL
continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and
letter/email dated January 6, 2021, February 8, 2021 and February
9, 2021. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on December 16, 2019, the following was
the rating weakness (updated for the information available from
banker interaction):
Key Rating Weaknesses
* Delay in debt servicing obligation: As per the feedback of a
lender of JFIL, there are ongoing delays in debt servicing of
principal and interest on term loan due to poor liquidity.
JFIL was promoted by Mr. Ajay Singh and his family members in 1998
for carrying on a tractor dealership in the name of Ajay Tractors
Pvt. Ltd. In 2003, its tractor dealership business was
discontinued and the company was registered as a non-deposit taking
NonBanking Finance Company (NBFC) with Reserve Bank of India (RBI).
JFIL is engaged in secured and unsecured lending mainly for loan
against property, personal loans and vehicle financing through its
150 operational branches (as on June 30, 2018) in Rajasthan,
Maharashtra and Madhya Pradesh.
LANCOR HOLDINGS: CARE Lowers Rating on INR182.41cr Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Lancor Holdings Limited (LHL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 182.41 CARE D Revised from
CARE BB-; Negative
Short Term Bank
Facilities 5.00 CARE D Revised from CARE A4
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the rated facilities of LHL
takes into account instances of delays in debt servicing in respect
of few of the rated borrowings/ bank facilities on account of
moderation in sales momentum and collections in the ongoing
projects due to the impact of COVID-19 and resultant tight
liquidity position of the company. CARE also takes note of LHL's
communication sent to stock exchanges dated February 13, 2021
regarding the rephasement of loan facilities with some financial
institutions.
Rating sensitivities
Positive factors: Factors that could lead to positive rating
action/upgrade
* Satisfactory track record of timely servicing of debt
obligations
Detailed description of the key rating drivers
Key rating weaknesses
* Exposure to sales risk associated with old/on-going projects with
moderate booking status: Total inventories outstanding as on March
31 2020 stood at INR280 crore, of which unsold inventories stood at
INR47 crore. During the period from FY15 to FY17, LHL has completed
the construction of around eleven projects involving saleable area
of 9.56 lsf (lakh square feet) of which some portion remains unsold
as on March 31, 2020. With respect to ongoing projects, apart from
TCP Altura, other projects were located in the outskirts of the
city. Sales booking and construction progress in respect of TCP
Altura is relatively better as compared to other projects. Lumina
project is located at Guduvancheri which is an upcoming suburb in
the southwest of Chennai situated between Chengalpet and Tambaram
junction of the Grand Southern Trunk Road (GST) at a distance of 35
km (approx) from Chennai central. Guduvancheri is surrounded by IT
parks like Mahindra World City, Shriram Gateway and automobile
giants like Ford, Renault Nissan, BMW and Bharat Benz. Townsville,
Town & Country, Harmonia is located at Sriperumbadur which is
situated in NH4 (Chennai- Bangalore highway) around 40km from
Chennai central. Sriperumbadur is home to many automobile companies
and few IT companies. While both Guduvancheri and Sriperumbadur are
witnessing fast developments due to presence of /upcoming
automobile companies and IT Parks, it is to be noted that both
these markets are located in the outskirts of Chennai with more
scope for development as a result demand is moderate. Excluding
Town & Country and Harmonia which are villa project, total
construction progress achieved in ongoing projects is 54% as
against this sales booking stood moderate at 31% as on September
30, 2020.
* Lower than expected sales velocity and collection during FY20;
During H1FY21 sales velocity and collection witnessed further
moderation due to impact of COVID-19: During FY20, LHL sold around
INR59 crore and collected around INR63 crore as against total sales
of INR59 crore and collection of INR61 crore during FY19. During
7mFY21, on account of the covid-19 induced economic slowdown, sales
momentum and collection witnessed further moderation. LHL sold
around INR18 crore and collected around INR16 crore during 7mFY21.
During 9mFY21 (refers to period from April 01 to March 31), LHL
reported total income of INR23.26 crore and after tax loss of
INR8.99 crore.
* Delays in servicing few of its debt obligations: As stated above,
due to COVID-19 pandemic induced slowdown, the collections of the
company has witnessed moderation in 9mFY21 resulting in stretched
liquidity position thereby company opting for rephasement of
loans/borrowings from two of its lenders. As stated above,
stretched liquidity position has resulted delays in servicing
interest obligations in respect of few of its lenders/borrowings.
* Project implementation risk: The total construction cost for the
ongoing projects is INR204 crore, of which around INR109 crore (54%
of construction cost) is incurred as on September 30, 2020. The
remaining cost required to complete the ongoing project is INR95
crore. It is to be noted that around INR41 crore term loan is left
to be availed for these projects and around INR5 crore is to be
received from customers for the units which are sold already,
proceeds of which will be used to fund the project. The remaining
amount required to complete the project is INR49 crore which will
be met through fresh sales of the units of the ongoing projects.
The civil works are being outsourced to two companies namely PR
Engineering & Contractors and Sri Suraj Builders. LHL provides
money in the form of mobilization advances to the contractors to
start the project. Remaining money will be released by LHL based on
the milestone achieved by the contractors for every stage of
construction.
* Exposure to intense competition in the real estate industry:
Chennai is home to quite a few IT/ ITES, manufacturing and
logistics companies and has been the preferred destination for
these industries since the last few years. This has led to high
growth in the residential market in Chennai. Nevertheless, the
project returns are exposed to current slowdown in the overall real
estate market, the tight credit market for real estate funding and
the project profitability vulnerable to fluctuations in
construction material and labour costs. The real estate market in
Chennai is highly fragmented with a large number of developers. The
projects completed in the past and ongoing projects are situated in
the Chennai region. This exposes LHL to the regional concentration
risk which is partly mitigated by the brand image enjoyed by the
company in Chennai market.
Liquidity: Poor
On account of moderation in collections and due to COVID-19
pandemic induced slowdown, LHL has been experiencing liquidity
issues resulting in delays in debt servicing in respect of few of
its facilities/borrowings. The company has received sanctions from
some of its other lenders under the Emergency Credit Line Guarantee
Scheme announced by RBI for the sectors affected by COVID-19.
Incorporated in the year 1985, Lancor Holdings Limited (LHL) is
promoted by Mr.R.V. Sekhar which is engaged primarily in
development of residential real estate projects in Chennai, Tamil
Nadu. LHL has also developed few commercial properties in the past.
LHL has completed sixty two residential projects involving area of
40.59 lsf, eight commercial properties involving 4.68 lsf in the
past and is currently executing two residential projects with a
saleable area of 6.99 lsf.
PENTAGON ALUMINIUM: CARE Moves D Debt Rating to Not Cooperating
---------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Pentagon
Aluminium Company Private Limited (PAPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 17.08 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from PAPL to monitor the ratings
vide email communications/letters dated September 15, 2020, October
1, 2020, January 5, 2021, January 29, 2021 and numerous phone
calls. However, despite CARE's repeated requests, the company has
not provided the requisite information for monitoring the ratings.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on Pentagon Aluminium Company Private Limited
bank facilities will now be denoted as CARE D; ISSUER NOT
COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account non-availability of requisite
information and no due-diligence conducted due to noncooperation by
Pentagon Aluminium Company Private Limited with CARE'S efforts to
undertake a review of the rating outstanding. CARE views
information availability risk as a key factor in its assessment of
credit risk.
Detailed description of the key rating drivers
Key Rating Weaknesses
There had been instances of delay in the interest servicing of the
term loan facility due to stretched liquidity position in
the past.
Delhi-based, Pentagon Aluminium Company Private Limited (PAPL) was
incorporated in February 2014 by Mr Amit Sharma and Ms Shakuntala
Kaushik. PAPL is setting up a manufacturing (Hot rolling mill) unit
at Una, Himachal Pradesh with the objective to manufacture
aluminium products such as aluminium sheets, plates and coils of
various shapes and sizes with proposed installed capacity of 3600
tonnes per annum. The company commenced it's operations in
September 2018. There are a total of only 2 hot rolling plants in
India wherein one is owned by HINDALCO and the other by the VEDANTA
Group. The finished products find their application in PET Bottles,
Shoe dyes, Fans Cookers, Medicine sheets, beer and wine bottle
caps, etc. The products goes through various stages starting from
melting to alloying to casting to reheating and then finally to
rolling.
RISHI TRADERS: CARE Moves D Debt Rating to Not Cooperating
----------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Rishi
Traders (RT) to Issuer Not Cooperating category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.73 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE has been seeking information from RT to monitor the rating
vide e-mail communications dated July 9, 2020, July 23, 2020,
August 31, 2020, October 27, 2020, November 5, 2020, November 13,
2020, December 15, 2020, December 29, 2020, January 8, 2021,
January 14, 2021 and numerous phone calls. However, despite CARE's
repeated requests, the firm has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating. The rating on RT's bank
facilities will now be CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The rating takes into account the delays in servicing of debt
obligations
Detailed description of the key rating drivers
At the time of last rating on November 4, 2020 the following were
the rating weaknesses:
Key Rating Weaknesses
* Delay in servicing of debt obligations: During the last review,
as per discussion with the banker, there were ongoing delays in
repayment of the WCDL (Not rated by CARE) for the period August
2020 to October 2020. The same was mainly on account of its poor
liquidity marked by fully utilized bank limits. Further, the
financial risk profile of the company was affected due to the
imposed lockdown and resultant slowdown due to the Covid-19
pandemic. The firm had availed moratorium for the period of 3
months from March to May 2020 for interest payments of WCDL as per
Covid-19 Regulatory Package announced by RBI.
Nagpur based RT was established as a partnership concern in the
year 2011. The firm is engaged in ginning and pressing of cotton
and extraction of oil from cotton seed with an installed capacity
to gin and press 30000 tons of cotton per annum and to extract
18000 tons of oil per annum.
RUDRA BUILDWELL: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Rudra Buildwell Constructions Private Limited
Flat No. 118A, G.F. Pocket 6 MIG Flat
Mayur Vihar, Phase-III
New Delhi 110096
India
Insolvency Commencement Date: February 16, 2021
Court: National Company Law Tribunal, Bench-III, New Delhi
Estimated date of closure of
insolvency resolution process: August 15, 2021
Insolvency professional: Mr. Prabhat Ranjan Singh
Interim Resolution
Professional: Mr. Prabhat Ranjan Singh
Chamber No. 119
C.K. Daphtary Block
Supreme Court of India
Tilak Lane, New Delhi
National Capital Territory of Delhi
110001
E-mail: prabhat.rs.advocate@gmail.com
- and -
Resurgent Resolution Professionals LLP
905, 9th Floor, Tower C
Unitech Business Zone
The Close South, Sector-50
Gurugram, Haryana 122018
E-mail: cirp.rudrabuildwellc@gmail.com
Classes of creditors: Real Estate Investors
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Saurabh Agrawal
Mr. Abhishek Anand
Mr. Ramit Rastogi
Last date for
submission of claims: March 3, 2021
SANGA BUILDERS: CARE Moves D Debt Ratings to Not Cooperating
------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Sanga
Builders Private Limited (SBPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 8.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Shory Term Bank 20.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SBPL to monitor the
rating(s) vide e-mail communications dated January 11, 2021,
January 20, 2021 and January 28, 2021 among others and numerous
phone calls. However, despite CARE's repeated requests, the company
has not provided the requisite information for monitoring the
ratings. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on SBPL's bank facilities will now be denoted as
CARE D/CARE D; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on March 4, 2020 the following were the
rating strengths and weaknesses.
Key Rating Weaknesses
* Irregularity in debt servicing: There were delays in debt
servicing in the past.
Sanga Builders Private Limited (SBPL) was incorporated in 2007 by
Mr Moinuddin Kagzi and Mr Alimuddin Kagzi. The company is engaged
development of land and construction activity and generally
executes contracts for private players. SBPL also executes contract
of housing projects for Army Welfare Housing Organisation (AWHO).
SARVESH BUILDERS: CARE Keeps D Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sarvesh
Builders (India) Private Limited (SBIPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Debentures– 130.00 CARE D; ISSUER NOT
COOPERATING
Nonconvertible Rating continues to remain
Debentures under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 24, 2020 placed the
rating of SBIPL under the 'issuer non-cooperating' category as
SBIPL had failed to provide information for monitoring of the
rating. SBIPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter/email dated January 8, 2021, January 15, 2021 and
January 18, 2021. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on February 24, 2020 the following were
the rating weaknesses:
Key Rating Weaknesses
* Ongoing delays in servicing of debt: The rating has been
reaffirmed on account of the ongoing delays in debt servicing of
the company.
Analytical approach: Combined
SBIPL has invested the money into real estate project in group
company namely 'Renuka Realtors' (RR). SBIPL holds 99% stake in
RR.
Incorporated in 2010, Sarvesh Builders (India) Pvt. Ltd. [SBIPL –
part of Ruparel group] is a special purpose vehicle created for
real estate development of residential building situated at Sewree,
Mumbai. The operation of the company is looked after by Mr. Amit
Ruparel & Mr. Milind Ruparel. The company has availed development
rights from M/s Renuka Realtors (part of Ruparel group –
established in April 7, 2005) for redevelopment project known as
Shree Balaji SRA Co-op. Housing Society Limited under slum
rehabilitation authority. SBIPL is a majority partner (99%
partnership interest) in M/s Renuka Realtors. The re-development
project named 'Ruparel Jewel' is a proposed 48 storey tower in the
Sewree location with 239,466 lsf of saleable area. The development
is proposed to comprise of 2 & 3 BHKs with select pent houses and
duplexes. The project is expected to be completed by December 2022
(as per RERA). The total estimated cost of the project has been
revised to INR370.82 crore which is expected to be funded by
promoter funds of INR23 crore, NCD of INR130 crore and balance
through customer advances. Ruparel group is a Mumbai based real
estate developer. The group has around 15 years of experience in
developing real estate projects in Mumbai and Navi Mumbai region.
The group has completed five projects with a total built-up area of
3.63 lakh square ft. and currently has multiple ongoing projects
located across various prime locations in Mumbai.
SIDDHIVINAYAK REALHOMES: CARE Keeps D Rating in Not Cooperating
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shree
Siddhivinayak Realhomes Private Limited (SSRPL) continues to remain
in the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Debentures– 395.00 CARE D; ISSUER NOT
COOPERATING
Nonconvertible Rating continues to remain
Debentures under ISSUER NOT COOPERATING
category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 24, 2020 placed the
rating of SSRPL under the 'issuer non-cooperating' category as
SSRPL had failed to provide information for monitoring of the
rating. SSRPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter/email dated January 14, 2021, January 15, 2021 and
January 18, 2021. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on February 24, 2020 the following were
the rating weaknesses:
Key Rating Weaknesses
* Ongoing delays in servicing of debt: The rating has been
reaffirmed on account of the ongoing delays in debt servicing of
the company.
Analytical approach: Combined
SSRPL has invested the money into real estate projects in other
group company namely 'Shree Siddhivinayak Infrastructure & Realty'
(SSIR) and 'Ruparel Infra & Realty Private Limited' (RIRPL). SSRPL
holds 98.98% stake in RIRPL & 99% in SSIR.
Incorporated in November 2016, Shree Siddhivinayak Real Homes
Private Limited (SSRPL) is part of Ruparel group, which has
invested the money into real estate projects in firms namely 'Shree
Siddhivinayak Infrastructure & Realty' (SSIR) and 'Ruparel Infra &
Realty Private Limited' (RIRPL). Thus there is no project in the
company. As on December, 2019 there were six residential cum
commercial projects namely Elara, Skygreens, Palacio (executed in
SSIR), Optima-Phase I & II, and West Park (executed in RIRPL) under
the SRA scheme at Kandivali, Mumbai. As on December, 2019 the RERA
registered projects have total saleable area of 10.68 lsf and
non-registered RERA projects would have saleable area of 52.70 lsf
with total cost of INR3,999.93 crore and revenue potential of
INR9,573 crore. Ruparel group is a Mumbai based real estate
developer. The group has completed five projects with a total
built-up area of 3.63 lakh square ft. and as on December, 2019 had
multiple ongoing projects located across various prime locations in
Mumbai.
SIDDHIVINAYAK TIMBER: CARE Keeps D Debt Rating in Not Cooperating
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of
Siddhivinayak Timber Trading (STT) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated November 27, 2019, placed
the rating of STT under the 'issuer non-cooperating' category as
STT had failed to provide information for monitoring of the rating
as agreed to in its Rating Agreement. STT continues to be
non-cooperative despite repeated requests for submission of
information through email letter dated January 20, 2021, February
2, 2021, February 4, 2021 and numerous phone calls. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on November 27, 2019 the following were
the rating weaknesses:
Key Rating Weaknesses
* Delay in debt servicing obligations: As per banker interaction
dated July 4, 2018, there were continuous overdrawals in cash
credit facility for more than 30 days and the account was
classified as NPA.
Siddhivinayak Timber Trading (STT) is based out of Nagpur and was
established as proprietorship concern in the year 2012 by Mr.
Ashwin Patel. STT is engaged in the business of processing and
trading of timber logs. The main variety of wood which the firm
imports is Teak Wood, termed as commercial wood which is primarily
used for interior decoration and furniture. The firm has a saw mill
in Kalmana, Nagpur with total installed capacity of 4,000 cubic
feet per annum.
SILON GRANITO: CARE Reaffirms D Rating on Bank Debts
----------------------------------------------------
CARE has reaffirmed the rating assigned to the bank facilities of
Silon Granito LLP (SGL) to 'CARE D/ CARE D' and has simultaneously
withdrawn it, with immediate effect. The rating reaffirmation
factors in the delays in servicing its debt obligations owing to
poor liquidity position.
The rating withdrawal is at the request of SGL and 'No Objection
Certificate' received from the bank that has extended the
facilities rated by CARE.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Ongoing delays in debt servicing: There are irregularities in
servicing of its term loan debt obligations due to poor liquidity
position of the firm. The firm had availed the moratorium granted
by its lenders as a COVID-19 relief measure (as permitted by the
Reserve Bank of India) from March 2020 till August 2020.
Morbi (Gujarat) based SGL was established in October 2017 as a
Limited Liability Partnership, promoted by Mr. Vinod Kumar Nakrani
and Mr. Vasantlal Dethariya along with thirteen other partners. SGL
has set up a new plant in Morbi (Gujarat) for manufacturing of
ceramic vitrified tiles of GVT and CGVT type with an installed
capacity of 9000 boxes per day with the size of 600 mm X 600 mm and
600 mm X 1200 mm as on March 31, 2019. Commercial operations
started from October 2018. The promoters of the firm have long
experience in the ceramic industry through their association with
five associate entities. These associate concerns are mainly
engaged into manufacturing of wall tiles, roofing tiles, and
ceramic vitrified tiles.
SST PACKAGING: CARE Moves D Debt Rating to Not Cooperating
----------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of S.S.T
Packaging Private Limited (SSTPPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.49 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from SSTPPL to monitor the rating
vide e-mail communications/letters dated June 15, 2020, July 15,
2020, October 21, 2020, November 10, 2020, December 18, 2020,
February 1, 2021 and numerous phone calls. However, despite CARE's
repeated requests, the company has not provided the requisite
information for monitoring the ratings. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
publicly available information which however, in CARE's opinion is
not sufficient to arrive at a fair rating. Further, SSTPPL has not
paid the surveillance fees for the rating exercise as agreed to in
its Rating Agreement. The rating on SSTPPL's bank facilities will
now be denoted as CARE D; ISSUER NOT COOPERATING.
Users of these ratings (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating in February 3, 2020 the following were
the rating weaknesses and strengths. (Updated the information
available from Ministry of Corporate Affairs).
Key Rating Weaknesses
* Delay in debt servicing: There was a delay in term loan debt
servicing of the company owing to poor liquidity position owing to
inadequate cash accruals from operations which has resulted into
frequent instances of over-drawings in the bank limits.
S.S.T Packaging Private Limited (SSTPPL) was incorporated in 2016
by Mr. Tanmay Kumar and Mrs. Snigdha Kumar based out of Kolkata,
West Bengal for setting up a manufacturing unit for paper poly
coating and paper cups. The commercial operation of the company has
started from July 2017 onwards. The company has been engaged in
manufacturing of paper poly coating & paper cups at its plant
located at Sonarpur, Kolkata, West Bengal with an installed
capacity of 700 tons per month. The company procures its raw
materials from Japan, China and Kolkata and it sells its products
in the domestic market.
SUMMIT CORPORATION: CARE Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Summit
Corporation Private Limited (SCPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 11.17 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 1.50 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Detailed Rationale, Key Rating Drivers and Detailed description of
the key rating drivers
CARE had, vide its press release dated November 27, 2019, placed
the rating of SCPL under the 'issuer non-cooperating' category as
STT had failed to provide information for monitoring of the rating
as agreed to in its Rating Agreement. STT continues to be
non-cooperative despite repeated requests for submission of
information through email letter dated January 20, 2021, February
2, 2021, February 8, 2021 and numerous phone calls. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last rating on November 27, 2019 the following were
the rating weaknesses (updated for information available from
Registrar of companies):
Key Rating Weaknesses
* Delay in debt servicing obligations: There were delays in
repayment of debt obligations and the account was classified as
NPA.
Pune-based, Summit Corporation Private Limited (SCPL) was
incorporated in the year 2012, formerly known as Bharat J Com India
Private Limited, which was incorporated in the year 2006. SCPL is a
part of summit group and engaged in the manufacturing of fabricated
sheet metal items for engineering and automobile companies. The
company also undertakes projects on turnkey basis for companies,
which include supply, installation and commissioning assistance,
shop fabrication and installation of pressure vessels, installation
of storage tanks and others.
SWAMI SAMARTH: CARE Lowers Rating on INR7.03cr Loan to C
--------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of Shri
Swami Samarth Construction (SSSC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.03 CARE C; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B; Stable
Short Term Bank 1.00 CARE A4; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated December 16,2019, placed the
ratings of SSSC under the 'issuer non-cooperating' category as had
failed to provide information for monitoring of the rating as
agreed to in its Rating Agreement. SSSC continues to be
non-cooperative despite repeated requests for submission of
information through numerous phone calls and emails dated August
11, 2020, November 10, 2020, January 13, 2021and February 2, 2021.
In line with the extant SEBI guidelines, CARE has reviewed the
rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of these ratings (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
The revision in the rating assigned to the bank facilities of SSSC
takes into account non-availability of information due to
non-cooperation by SSSC with CARE'S efforts to undertake a review
of the rating outstanding. CARE views information availability risk
as a key factor in its assessment of credit risk.
Detailed description of the key rating drivers:
At the time of last rating on December 16, 2019 the following were
the rating strengths and weaknesses:
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small scale of operation with moderate profitability margins: The
operations of the firm remained small with total operating income
(TOI) of INR12.54 crore and capital employed of INR13.71 crore as
on March 31, 2018(Provisional), thus, limiting financial
flexibility of the firm in times of stress. Moreover, being in the
tender driven nature of business, the firm's profit margins stood
moderate in FY18.
* Moderate solvency position: The relatively low net worth base of
the firm led to increased reliance on debt to support its business
operations, hence resulting in moderate capital structure.
Moreover, due to moderate profitability and debt profile, the debt
coverage indicators stood moderate. Working capital intensive
nature of operations: Operations of the entity remained working
capital intensive with high gross current assets of 446 days in
FY18 with funds blocked mostly in receivables. The working capital
requirements are met by the internal accruals and cash credit
facility. The average utilization of cash credit facility during
the past twelve months ended July 31, 2018 remained high.
* Presence of the firm in highly fragmented with intense
competition due to exposure to tender driven nature of business:
The firm operates in an industry characterized by high
fragmentation and presence of a large number of players in the
organized and unorganized sector. SSSC business is tender-based
which is characterized by an intense competition resulting in
moderate operating margins for the firm. The growth of business
depends entirely upon the firm's ability to successfully bid for
tenders and emerge as the lowest bidder. Further, the high
concentration of execution of projects for Karnataka Government
entities makes the firm's revenues and profitability susceptible to
any drop in the tenders awarded by the client.
* Proprietorship nature of constitution: Being a proprietorship
concern, it is exposed to the risk of withdrawal of capital by the
proprietor on personal exigencies, dissolution of firm due to death
and restricted financial flexibility due to inability to explore
cheaper sources of finance leading to limited growth potential.
Key Rating Strengths
* Established operations and experienced proprietor: SSSC has a
track record of over a decade in the industry and has strengthened
its position by establishing good relations with government
entities over the years. The proprietor of the firm has an
experience of two decades in the industry and is assisted by a team
of well qualified and experienced professionals. Being in the
industry for about two decades helps the promoter to gain adequate
acumen about the business which will aid in smooth operations of
SSSC.
* Healthy order book position providing revenue visibility over
medium term: The firm has an outstanding order book to sales ratio
of approximately 3.83 times of TOI of FY18 as on July 2018, which
is to be executed over a period of 2 months to 48 months providing
revenue visibility only for medium term.
SSSC was established in 2006 as a proprietorship firm by Mrs. Smita
Prakash Survase. SSSC is engaged in business of execution of civil
projects under contract for various Government Departments. SSSC is
a registered government contractor as Class-I-A with Public Works
Department (PWD); Solapur, Class-I-A with Maharashtra Jeevan
Pradhikaran (MJP) and Class-I-B with Maharashtra Water Conservation
Corporation (MWCC), Aurangabad.
TIRUPATI BALAJI: CARE Hikes Rating on INR26.28cr LT Loan to B
-------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Tirupati Balaji Fbres Limited (TBFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 26.28 CARE B; Stable Revised from
Facilities CARE D
Short Term Bank
Facilities 2.55 CARE A4 Revised from CARE D
Detailed Rationale & Key Rating Drivers
The revision in the ratings assigned to the bank facilities of TBFL
factors in improvement in operating performance and collections of
debtors resulting in better liquidity position and regularization
of past delays in debt servicing. The ratings continue to be
constrained by working capital intensive nature of operation, small
scale and moderate profitability margins, susceptibility of its
margins to volatility in raw materials prices, and presence in a
highly competitive nature of the industry. However, the ratings
derive strength from extensive experience of the promoters,
comfortable gearing and moderate debt coverage indicators.
Rating Sensitivities
Positive rating sensitivities - Factors that could lead to positive
rating action/upgrade:
* Improvement in cash flow from operations leading to better
liquidity position
* Increase in the scale of operations and operating revenue so as
to improve profitability margins beyond 10% on a sustained basis.
* Decline in the collection and creditors period below 40 days.
Negative rating sensitivities - Factors that could lead to negative
rating action/downgrade:
* Deterioration in the overall gearing above 1.00x.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small scale of operations and moderate profitability margins:
Despite being operational for more than a decade, the scale of
operations has remained small and the total operating income of the
company declined by 18.74 % to INR56.38 cr during FY20 (refers to
the period from April 1 to March 31) (PY: INR69.38 cr) owing to
muted demand from company's end user segment. The small scale
limits the company's financial flexibility and deprives it from
benefits of economies of scale. However, the PBILDT margin
increased to 9.02% in FY20 (PY: 6.61%) mainly due to lower cost of
the raw material consumed. The PAT margin, however declined to
1.27% (PY: 1.80 %) on account of an increase in the interest cost.
The company reported total operating revenue of INR47.72 cr, PBILDT
of INR3.12 cr and loss of INR0.11 cr during 9MFY21 (refers to the
period from April 1, 2020 to December 31, 2020).
* Highly competitive industry: The paper and pulp industry is
highly fragmented with the presence of many organized and
unorganized players leading to stiff competition amongst them.
There is dependence of the industry to improved activity from
service, advertising, education, FMCG, retail, consumer durables
and pharmaceutical sector. The highly fragmented and competitive
nature of the industry has a bearing on overall profitability of
the players.
* Susceptibility of margins to volatility in prices of raw material
and exchange rates: The main raw material used by the
company is waste paper constituting 45.05 % of total cost of sales
in FY20 (PY: 52.27%). Around 48.93% (PY: 33.12 %) of the raw
material is imported and the rest is procured domestically and the
company remains exposed to the volatility in raw material prices
and foreign exchange fluctuation risk which adversely impacts the
profitability margins.
* Debt-funded expansion project: The company had envisaged to
expand its capacity of 13,200 MTPA as on March 31, 2018 to 33,000
MTPA by the end of March 2020. Also, due to the increased
competition from the nearby manufacturers and digitalization, the
company has discontinued the manufacturing of NPP and WPP. Though,
the plant was set up FY19, however change in process took time and
the plant became fully operational in March 2020. The new process
involves usage of starch and chemicals which is expected to improve
the quality even with less thickness. The total cost incurred by
the company towards the project as on March 31, 2020 is approx.
INR29 cr. The project cost is funded through term loan of INR19.00
crore and the rest through internal accruals. The company had
received the sanction of INR19.00 crore from State Bank of India,
however only INR14.57 cr. has been availed by the company.
* Working-capital intensive operations: The working capital cycle
of the company increased to 73 days in FY20 (PY: 64 days) mainly
because of increase in collection period to 72 days as on March 31,
2020 (PY: 59 days). The average inventory period increased to 73
days as on March 31, 2020 (PY: 40 days) and creditors period is
increased to 72 days during FY20 (PY: 35 days). The increase in the
inventory period can be attributed to delays in the shipment of raw
material owing to the pandemic.
Key rating strengths:
* Improvement in liquidity position and regularization of debt
servicing: Tirupati Balaji Fbres Ltd had delayed on term loan
installment due on August 15, 2020 which was repaid on October 31,
2020 and installment due on October 15, 2020 which was repaid on
October 31, 2020. Post this, the company has fully repaid the
installments and interest of November 2020; December 2020 and
January 2021. The company had availed only moratorium 1 as per the
RBI guidelines on the term loan and CC from SBI. The interest and
principal payments were deferred till May 31, 2020. No moratorium
was taken for the term loan from HDFC. In order improve high debtor
realization, the company has changed the credit policy and now
allows payments made on advance or fortnightly basis.
* Extensive experience of the promoters: The Agarwal family has
wide experience in running paper mills and it has promoted group
companies such as Silvertoan Papers Limited(rated BWR BBB-; Stable
/BWR A3 as per PR dated February 02, 2021 and ICRA BBB-;
Stable/ICRA A3 as per PR dated January 20, 2020, Bindlas Duplux
Limited (rated CARE BBB-; Stable/ CARE A3 as per PR dated February
03, 2021), and Annapurna Imports. The experienced management and
long track record has resulted in established relations with
customers and suppliers.
* Comfortable overall gearing and moderate coverage indicators: The
debt equity ratio stood at 0.52x as on March 31, 2020 (PY: 0.60x)
on account of reduced term debt as on March 31, 2020. The overall
gearing stood at 0.90x as on March 31, 2020 (PY: 0.97x) on account
of marginal reduction in debt. The TD/GCA stood at 9.24x as on
March 31, 2020 (PY: 7.05x) on account of reduced GCA. Due to
increase in the interest cost, the interest coverage ratio
deteriorated to 2.04x in FY20 (PY: 5.11x). The overall gearing
stood at 1.05x and the debt equity ratio stood at 0.66x as on
December 31, 2020.
* Industry outlook and prospects: The demand-supply situation of
paper and paper products industry has been hit hard due to
imposition of lockdown to prevent the spread of Covid-19. The
supplies of paper and paper products industry were affected as the
industry operations were shut in the initial phase of lockdown.
While operations resumed with reduced capacities as restrictions
eased, challenges remain in terms of logistics disruption,
migration of labor, and subdued demand from consumers.
Nevertheless, demand from packaging segment gives some respite to
the industry players as resumption of economic activities
subsequent to partial lifting of lockdown prompted online purchases
of non-essential items in addition to essential items thereby
supporting the demand for packaging. This segment accounts for the
highest share (~54%) in paper industry's demand followed by
printing & writing segment (~35%).
Liquidity analysis: Stretched
The temporary closure of business operations due to lockdown has
affected the liquidity of TBFL. The company had availed only
moratorium 1 as per the RBI guidelines on the term loan and CC from
SBI. The interest and principal payments were deferred till May 31,
2020. No moratorium was taken for the term loan HDFC. The debtors
more than 180 days stood at INR4.64 cr as on December 31, 2020. The
reason for high debtors is because majority of these debtors are
not realized since March 2020 as the company has not received
payments from many small debtors since March 2020. The company's
inventory increased enormously to INR13.37 cr as on March 31, 2020
(PY: INR6.78 cr) owing to delays in shipments of raw material
imported. The inventory as on December 31, 2020 stood at INR15.30
cr. the reason for high inventory as on December 31, 2020 was
because of the increase in the product cost. The company has nil
free cash balance as on December 31, 2020.
TBFL was originally incorporated in 1995 as Balaji Cellulose
Products Limited by Mr Salekchand Agarwal. Subsequently in 2007,
the company was taken over by the members of 'Garg' family post
which name of the company was changed to its current name TBFL on
April 17, 2007. Later on, in August 2011, Mr Naveen Agarwal, Mr
Pankaj Agarwal and Mr Prashant Agarwal took over the management of
the company who are also the present shareholders of TBFL. The
company has changed its name from Tirupati Balaji Fibres Limited to
Tirupati Balaji Fbres Limited on April 26, 2018. TBFL is engaged in
manufacturing and trading of writing & print paper (WPP), news
print paper (NPP) and kraft paper using recyclable waste paper. Due
to the increased competition from the nearby manufacturers and
digitalization, the company has discontinued manufacturing of NPP
and WPP. It has its manufacturing facilities at Muzzafarnagar,
Uttar Pradesh with an installed capacity of producing 33,000 MT of
kraft paper per annum as on March 31, 2020.
TOPSGRUP SERVICES: NCLT Admits Insolvency Proceedings
-----------------------------------------------------
The Economic Times reports that the Mumbai bench of the National
Company Law Tribunal (NCLT) has admitted insolvency proceedings
against Topsgrup Services and Solutions, popularly known as Tops
Security.
According to the report, the bench has also appointed chartered
accountant Rajendra Karanmal Bhuta as interim resolution
professional (IRP) to oversee the company's day-to-day affairs and
revival plans.
Punjab National Bank (International) Ltd had on March 16 last year
approached the tribunal seeking initiation of corporate insolvency
resolution process against Topsgrup after its UK-based subsidiary
The Shield Guarding Company allegedly defaulted on dues of over
INR136 crore, ET recalls.
"The bench notes that this petition has been filed for a total
outstanding debt of 13.63 million, which translates to about INR136
crore, which is due and payable by the corporate debtor to the
financial creditor as of January 28, 2020," an NCLT division bench
comprising judicial member Suchitra Kanuparthi and technical member
Chandra Bhan Singh said in an order issued on Feb. 19, ET relays.
ET has seen a copy of the order.
As per the case, Shield Guarding Company had borrowed from PNB NSE
1.34 % International at various occasions between 2012 and 2015.
Subsequently, the company defaulted on its dues in September 2015
and later it was declared a NPA in November 2015, ET discloses.
Topsgrup Services Limited provides security services. The Company
offers enterprise risk management solutions including guarding,
investigations, electronic security integration, facility
management, and emergency response services. Topsgrup Services
serves customers in India.
VATIKA SOVEREIGN: CARE Keeps C Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Vatika
Sovereign Park Private Limited (VSPPL) continues to remain in the
'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term Bank 182.97 CARE C (CE); Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated December 3, 2019, placed the
rating(s) of VSPPL under the 'issuer non-cooperating' category as
VSPPL had not paid the surveillance fees for the rating exercise as
agreed to in its Rating Agreement. VSPPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails dated January 25, 2021; January 14,
2021 and January 8, 2021. In line with the extant SEBI guidelines,
CARE has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers (Guarantor: Vatika
Limited)
At the time of last rating on December 3, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
* Delays in servicing of debt obligations: Auditor in its report
for FY19 has reported the instances of delays in debt servicing by
the company. The delays have been on few facilities (not rated by
CARE) ranging from 0-90 days.
* Project execution and saleability risk: The company is developing
10 projects (4 commercial and 6 residential) on which it has
incurred 47% of the projected cost as on July 30, 2019 (P.Y. 42%).
While the company has incurred 35.83% of projected construction
cost as on July 31, 2019 (P.Y.30.16%). All the approvals necessary
for completion of project are in place as on July 31, 2019. As on
July 31, 2019, the company has sold 49% of 603.43 lsf area at a
sales consideration of INR8990.74 crore and received INR7469.71
crore of customer advances translating into 83% of sales
consideration.
* Subdued industry scenario: With the on-going economic conditions,
the real estate industry is facing issues on many fronts. These
include subdued demand, curtailed funding options, rising costs,
restricted supply due to delays in approvals, etc. thereby
resulting in stress on cash flows. The industry has seen low demand
for quite some time now primarily due to factors like sustained
high level of inflation, which apart from keeping interest rates
high, has adversely impacted the buying power a nd affordability
for the consumers.
* Risks emanating from exposure to group and related entities:
Vatika Ltd (Vatika) has invested in various subsidiaries and group
companies that are primarily land-holding companies. Apart from
investments in subsidiaries of about INR926.58 crore as on March
31, 2019 (PY: INR899.34 crore), Vatika has provided loans and
advances to these companies aggregating more than INR3500 crore.
* Moderation in financial risk profile marked by continued
elevation in gearing levels: The financial risk profile is
characterized by the presence of high debt with overall gearing
stood at 4.15x (P.Y. 6.06x) as on March 31, 2019 as per provisional
results. The company has debt repayment of INR1008.49 crore
scheduled to be repaid in FY20 at group level inclusive of
standalone debt of repayment of INR948.90 crore.
Liquidity: Stretched
The liquidity of the company is stretched on account of low
collections of ~Rs. 167 cr in 4MFY20 as against principal repayment
obligation of INR948.49 cr in FY20. The company has lumpy repayment
obligations in the near term as well as pending expenditure on
construction which makes the current liquidity profile stretched.
Key Rating Strengths
* Experienced promoters and established track record of group:
Vatika Group is promoted by Delhi based- Bhalla family. Mr. Anil
Bhalla, who is currently the Chairman of the Board and is an active
participant in the company affairs. He is assisted by his two sons
–Mr. Gautam Bhalla who handles the real estate business and Mr.
Gaurav Bhalla who handles other verticals, including hotels,
facility management and business center. The group has completed
seven commercial projects comprising total saleable area of 21.04
lakh square feet (lsf) and two residential project (Vatika City)
with saleable area of 40.14 lsf in Gurgaon. The company had
received PE-funding from global funds like Baer Capital, Goldman
Sachs in 2008 and has tied-up with Government of Singapore's
sovereign wealth fund 'GIC' in 2015 for development of group
housing projects 'Sovereign Park', 'Seven Elements' and 'Urban
Expression' in 'Vatika Express City' township project in Harsaru,
Gurgaon. The group has land bank of about 103.14 acres having
market value of INR2,211 crore as on March 31, 2019.
* Project updates: Vatika is currently executing ten projects
including six residential projects (saleable area of 545.49 lsf)
and four commercial projects (saleable area of 57.94 lsf). The
residential projects are located in Gurgaon, Ambala and Jaipur,
while the commercial projects are located in NCR primarily in
Gurgaon and Faridabad. The company had incurred approximately 47%
of the aggregate project cost till July 31, 2019. On the sales
front, Vatika has sold about 49% of the total saleable area till
July 31, 2019. The stagnancy in sales is in-line with overall
subdued demand scenario in the industry.
Analytical approach: Combined, CARE while arriving at the rating of
Vatika Limited, has considered combined financials which includes
its subsidiaries and associate companies (Vatika Seven Elements
Private Limited and Vatika Sovereign Park Pvt Ltd) which are under
the same management to which Vatika has also provided support in
the form of Corporate Guarantee.
VSPPL was incorporated in 2011 for the purpose of real estate
project development. The company is a step-down subsidiary of
Vatika Limited, Group's flagship company. VSPPL is developing a
9.68 acres luxurious residential towers at a cost of INR645 crore,
part of Vatika India Next (An integrated township with area
spanning over 677 acres having residential- floors, plots, villas,
group housing, gated towns and commercial projects) in Sector 99,
Gurgaon with saleable area of 68.02 lakh square feet (lsf). The
project is a joint venture between Vatika Limited and GIC,
Singapore's sovereign wealth fund. Project is designed by Arcop,
Canada and Landscaping is designed by M. Paul Friedberg, New York.
VEDANTA RESOURCES: S&P Rates New Guaranteed Sr. Unsec. Notes 'B-'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating to
Vedanta Resources Ltd.'s proposed guaranteed senior unsecured
notes.
Vedanta Resources Finance II Plc will issue the notes and they will
be guaranteed by Vedanta Resources and two of its subsidiaries --
Twin Star Holdings Ltd. and Welter Trading Ltd. These two
subsidiaries together own 38.1% in Vedanta Ltd., which is Vedanta
Resources' subsidiary. The issuer will lend the proceeds to Twin
Star for the acquisition of equity shares of Vedanta Ltd., in
accordance with existing laws. Any remaining proceeds will be used
to service existing debt.
S&P said, "We rate the proposed notes the same as the issuer credit
rating on Vedanta Resources (B-/Stable/--). We do not notch the
issue rating for subordination risk because a majority of the
company's assets are in India, a jurisdiction where we believe the
priority of claims in a bankruptcy scenario is highly uncertain."
The stable outlook on Vedanta Resources reflects reduced
refinancing risk over the next 12-18 months. The company's funding
access is likely to improve following the open offer. Vedanta
Resources has substantially refinanced its US$670 million bond due
June 2021. While the company still has sizable debt maturities over
the next year, S&P believes it is better placed to manage them
through access to subsidiary cash as well as refinancing. Strength
in the underlying operational earnings is also key to the outlook.
S&P said, "We note the announcement of the resignation of the
company's group chief financial officer. We understand from the
company that the departure was due to personal reasons and there
are no material organizational reasons."
WADHAWAN GLOBAL: CARE Reaffirms D Rating on INR1,900cr NCD
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Wadhawan Global Capital Ltd (WGCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 1,900 CARE D Reaffirmed
Debenture Issue
Detailed rationale & key rating drivers
The rating of WGCL takes into account the continued delays in
servicing of debt obligations. Further, put option was triggered on
NCDs as per the terms of debenture trust deed and the obligation of
repaying the debenture holders is on Dewan Housing Finance Ltd
(DHFL). DHFL continues to remain stressed and its resolution
process is underway with NCLT (National Company Law Tribunal) under
Insolvency and Bankruptcy Code.
Rating Sensitivities:
Positive Factors: Factors that could lead to positive rating
action/upgrade
* Regularization of existing default along with regular debt
servicing track record for at least 3 months.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Deteriorating financial performance: Company reported loss of
INR524 in FY19 as compared loss of INR171 crore in FY18 mainly on
account of provision for diminution in value of investments.
Wadhawan Global Capital Ltd. (WGCL) is a Core Investment Company
which is jointly promoted by Mr. Kapil and Dheeraj Wadhawan
(promoters of DHFL). As on March 31, 2019, Mr. Kapil Wadhawan, Mr.
Dheeraj Wadhawan and Ms. Aruna Wadhawan together hold 85% stake in
the company. Incorporated as Wadhawan Housing Pvt. Ltd., the name
of the company was subsequently changed to WGCL w.e.f. May 31,
2014.
WOODVILLE PALACE: CARE Lowers Rating on INR17.18cr Loan to D
------------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Woodville Palace Hotel (WPH), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 17.18 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category and Revised from
CARE C; Stable
Detailed Rationale & Key Rating Drivers
The revision in the rating assigned to the bank facilities of WPH
takes into account ongoing delays in the servicing of debt
obligation.
Detailed description of the key rating drivers
* Ongoing delays in the servicing of debt obligation: There are
ongoing delays in the servicing of term debt obligation.
Woodville Palace Hotel (WPH) was established in April, 1977 as a
proprietorship concern and is currently being managed by Mr. Kanwar
Uday Singh, as its proprietor. The firm is running a hotel with the
name of "Woodville Palace Hotel" on ~5 acres of land in Shimla,
Himachal Pradesh. The hotel comprises of total 27 rooms, along with
1 banquet hall, 1 bar, 1 restaurant, 1 lounge, 1 dining hall and
parking area for around 30 cars.
ZENITH PRECISION: CARE Moves D Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Zenith
Precision Private Limited (ZPPL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 25.69 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE has been seeking information from ZPPL to monitor the
rating(s) vide e-mail communications December 10, 2020 to February
2, 2021 and numerous phone calls. However, despite CARE's repeated
requests, the company has not provided the requisite information
for monitoring the ratings. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of best
available information which however, in CARE's opinion is not
sufficient to arrive at fair rating. The rating on Zenith Precision
Private Limited bank facilities will now be denoted as CARE D;
ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
At the time of last press release dated February 28, 2020 the
following were the rating strengths and weaknesses:
Key Rating Weaknesses
* On-going delays in debt service obligations: As per the bank
statements analysis, there are penal charges debited to term loan
due to delay in repayment of principal and interest due to
stretched liquidity position.
* Small scale of operations albeit to growth: The scale operations
marked by the total operating income has grown by 25.04% although
stood small at INR42.50 crore in FY19. The growth in TOI is due to
favourable marked condition for aerospace industry coupled with
repeated order from existing customers and addition of new
customers during the year. Further, ZPPL has registered the total
operating income of INR40.34 crore for 10MFY20 (prov.).
* Financial risk profile marked by the declined profitability
margin, leveraged capital structure and weak debt coverage
indicators:
Profitability: The PBILDT margin has declined by 414 bps, however,
stood satisfactory at 11.63% in FY19 as compared to 15.77% in FY18.
The decline in the PBILDT margin due to volatility in the raw
material prices (steel & iron) coupled with yo-y increase in
variable overhead like employee cost, power & fuel and selling and
distribution cost. Further, PAT margin has declined by 183 bps and
stood thin at 0.34% in FY19 as compared to 2.17% in FY18 on back of
decline in PBILDT in absolute amount coupled with increase in
depreciation cost on account of increased fixed assets during the
year.
Gearing: The capital structure marked by the overall gearing ratio
deteriorated and stood leveraged at 2.28x as on March 31, 2019 as
compared to 2.01x as on March 31, 2018 due to increase in total
debt for purchase of plant & machinery and high working capital
utilization levels during the year. The debt profile of company
constitutes of term loan of INR18.11 crore, working capital
borrowings of INR18.08 crore and interest free unsecured loans of
INR1.52 crore as against tangible net worth of INR16.57 crore as on
March 31, 2019.
Coverage Indicators: The debt coverage indicators marked by the
PBILDT interest coverage ratio stood at satisfactory at 2.52x in
FY19 as compared to 1.89x in FY18 due to decline in the finance
cost during the year. However, the total debt to GCA stood week at
16.06x in FY19 as compared to 14.99x due to increased debt levels.
Further, the total debt to CFO stood week at 15.96x as on March 31,
2019 due to decline the net profit coupled with absolute amount of
increase in inventory levels and trade receivables as on March 31,
2019.
* Working capital intensive nature of operations: The operating
cycle of ZPPL stood elongated despite of improvement from 243 days
in FY18 to 180 days in FY19. This is due to realization of
receivables and marginal improvement in inventory holding period
from 207 days in FY18 to 173 days due to fast movement of finished
goods on back of favourable market condition. The processing of the
orders takes 10-12 weeks during the period most of raw material,
semi-finished products remains in the manufacturing process
resulting high inventory levels. Further, the company receives the
credit period of 30-60 days and allows same credit period to its
customers. To meet the working capital gap ZPPL relays upon the
working capital borrowings which resulted in high utilization of
~95% during last one year ended January 2020.
* Highly fragmented industry with intensive competition from large
number of players and vulnerability of profits to raw material
price movement and foreign exchange fluctuations: ZPPL faces stiff
competition in the precision business from large number of
established and unorganized players in the market. Competition gets
strong with the presence of unorganized players leading to pricing
pressures. Further, the major raw material for manufacturing of
precision tool components is steel which is highly susceptible to
price fluctuations. Since the raw material is one of the major cost
drivers (consisting around 25% of the total operating income), the
profitability margins of the company is suspect to input price
fluctuations. Though the prices of the finished goods move in
tandem with raw material prices, there is a time lag which exposes
the firm to volatility risk.
Key Rating Strengths
* Long track record of operations with experienced promoters in the
precision tool industry: ZPPL was incorporated in 1986 and has been
manufacturing of precision components business since then. It has
established a long track record of operation which enables the
company to bag repeat orders from its existing customers
and acquire new customers.
Mr. Deepak Pinto, Managing Director of the company has over 2
decades of experience business of machining. A graduate in MS IE
from Texas Tech, USA, he has worked in the United States before
returning to India to take the family business. His experience in
USA helped the company in establishing the customer base there.
The Executive Director, Ms Anaheeta Pinto has over decade
experience in the business. She has a BA (Hons) degree and has
worked as advertising senior. She has guided Zenith's corporate
communications and marketing strategy which has been key to the
development of their new business.
* Reputed and established customer base: Due to long track record
of operations, the company has established customer base such as
Bosch Limited, GE Transportation Systems, USA, Goodrich Aerospace
Services Private Limited, Goodrich Aircraft Interior Products,
Volvo India Private Limited, Wipro Enterprises Limited among
others. Strong business relationship with these customers has
enabled the company to get repetitive orders from these customers.
* Diversified revenue streams: The products manufactured by the
company find its application in automotive, locomotive, medical
components and aerospace industries. The company gets about 65% of
the revenue from sale of aerospace components while the rest 35% of
the revenue is generated from sale on non-aerospace components to
other industries. About 86% of the sales are exports and deemed
exports. The components are exported to USA.
* Favourable demand outlook of precision tool and aerospace
industry: The Indian economy has witnessed phenomenal growth in the
last decade emerging as a global manufacturing hub. There exists
ample opportunities in high technology oriented Aerospace,
Locomotive, Power and general engineering sectors. With the current
"Make in India" initiative, growth prospects are very positive.
Thus, it is imperative for ZPPL to maintain quality of its products
and increase its scale of production while upgrading its
technologies to benefit from the industry growth.
Bangalore based Zenith Precision Private Limited (ZPPL) was
incorporated in 1986 as a Private Limited Company by Mr J.F.Pinto.
The company is engaged in the manufacturing of precision components
and sub-assemblies which find application in variety of industries
such as locomotive, automobile, medical components and aerospace
industries. The company has three manufacturing units located in
the suburbs of Bangalore of which 2 units manufacture aerospace
components. The company has diversified revenue base with majority
of sales (about 90%) being exports (to USA) and deemed exports. It
procures its raw materials domestically from Karnataka. Currently,
Mr. Deepak Pinto, the Managing Director of the company looks after
the day to day operations.
=================
I N D O N E S I A
=================
BANK SYARIAH: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of state-owned PT Bank Syariah Indonesia Tbk (BSI),
previously known as PT Bank BRISyariah Tbk, at 'BB+'. This follows
the completion of a merger with PT Bank Syariah Mandiri and PT Bank
BNI Syariah, effective 1 February 2021. At the same time, Fitch
Ratings Indonesia has affirmed BSI's National Long-Term Rating at
'AA(idn)' and National Short-Term Rating at 'F1+(idn)'. The Outlook
on the long-term ratings is Stable.
'AA' National Long-Term Ratings denote expectations of a very low
level of default risk relative to other issuers or obligations in
the same country or monetary union. The default risk inherent
differs only slightly from that of the country's highest rated
issuers or obligations.
'F1' National Short-Term Ratings indicate the strongest capacity
for timely payment of financial commitments relative to other
issuers or obligations in the same country. Under the agency's
National Rating scale, this rating is assigned to the lowest
default risk relative to others in the same country or monetary
union. Where the liquidity profile is particularly strong, a "+" is
added to the assigned rating.
KEY RATING DRIVERS
IDR AND NATIONAL RATINGS
BSI's ratings reflect Fitch's expectation that the bank would
benefit from extraordinary support from its majority shareholder,
PT Bank Mandiri (Persero) Tbk (BBB-/AA+(idn)/Stable/bb+), if
needed. Mandiri owns 50.95% of BSI after the merger, while PT Bank
Negara Indonesia (Persero) Tbk (BBB-/AA+(idn)/Stable/bb+) holds
24.91% and PT Bank Rakyat Indonesia (Persero) Tbk
(BBB-/AA+(idn)/Stable/bb+) 17.29%. The three shareholders are
Indonesia's largest state-owned banks and the parents of the three
merging entities. Fitch expects support from the Indonesian
government (BBB/Stable), the ultimate shareholder, to flow through
Mandiri to support BSI, if required.
Fitch sees BSI as a strategic subsidiary of Mandiri, with an
important role in expanding the parent's presence in the thriving
sharia banking sector in Indonesia, the country with the world's
largest Muslim population. BSI is the seventh-largest bank in the
industry and Fitch's view of support takes into account the
significant contribution that Fitch expects BSI to make to Mandiri;
the subsidiary accounted for around 15% of the parent's
consolidated assets at the time of the merger. Fitch believes that
a sale of the subsidiary is highly unlikely in the future,
considering the recent merger and the importance of BSI to
Mandiri's sharia banking strategy. Fitch's view of BSI's importance
to Mandiri is also based on operational integration with the parent
in areas such as human resources, IT and risk management, and the
considerable reputational risk to the parent if the subsidiary were
to default.
ISSUE RATINGS
BSI's Basel III-compliant subordinated sukuk are rated three
notches below its National Long-Term Rating; two notches for loss
severity and one notch for non-performance to reflect the risk of
coupon and principal deferral. Notching for loss severity reflects
the sukuk's subordination and Fitch's view of poor recovery
prospects compared with senior unsecured obligations. The Tier 2
debt instruments have an embedded permanent write-down feature
(principal and/or interest in full or in part) that can be
triggered when the bank approaches its point of non-viability. The
sukuk also incorporate features that allow coupons and principal to
be deferred and accumulated if the bank's capital position falls
below its minimum requirements.
Fitch believes BSI's subordinated obligations may benefit from
institutional support from parent, but non-performance risk
mitigation is not possible under Fitch's criteria, as BSI's
subordinated debt rating is capped at the equivalent rating on
similar instruments - if issued - by its support provider,
Mandiri.
RATING SENSITIVITIES
IDR AND NATIONAL RATINGS
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade of Mandiri's IDRs would lead to a downgrade of
BSI's Long-Term IDR. A perceived weakening of BSI's strategic
importance to the parent, including, but not limited to,
execution slippages or poor performance that might lead to a
lower contribution to its parent's goals, would be negative
for its ratings.
-- A downgrade of BSI's National Long-Term Rating would be likely
to arise from a weakening of its overall credit profile on a
relative basis to the national-rating universe of Indonesian
rated entities. A downgrade of BSI's Long-Term IDR would be
most likely to trigger a downgrade of its National Long-Term
Rating.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade of Mandiri's IDRs would be likely to lead to a
corresponding upgrade of BSI's Long-Term IDR. Fitch's view of
BSI playing a stronger role in the parent group could be
positive for the subsidiary's ratings. This could be
manifested in a significant and sustainable increase in BSI's
contribution to the parent, or if Fitch views BSI's sharia
banking segment to have become a core business of the parent.
-- An upgrade of BSI's National Long-Term Rating would be likely
to arise from a strengthening of its overall credit profile on
a relative basis to the national-rating universe of Indonesian
rated entities. An upgrade of BSI's Long-Term IDR could lead
to an upgrade of its National Long-Term Rating.
ISSUE RATINGS
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The rating on BSI's subordinated sukuk is sensitive to
Mandiri's Viability Rating. A downgrade in Mandiri's Viability
Rating would lead to a downgrade of BSI's subordinated sukuk
rating. A downgrade could also result from a downgrade of
BSI's National Long-Term Rating by more than one notch,
assuming no changes to the parent's Viability Rating.
Mandiri's standalone credit profile influences Fitch's
Assessment of non-performance risk.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade in Mandiri's Viability Rating would result in an
upgrade of BSI's subordinated sukuk ratings. An upgrade could
also occur if Fitch reassesses loss severity or non
performance risk of existing or future subordinated debt
issued by Mandiri or BSI, leading to a narrowing of notching,
although Fitch believes this is an unlikely prospect in the
medium term.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond 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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of BSI are linked to those of Mandiri, based on Fitch's
expectation of extraordinary support from its parent, if needed.
ESG CONSIDERATIONS
BSI has an ESG Relevance Score of '4' for Governance Structure due
to Fitch's belief that there is a moderate risk that the government
may use its majority ownership to exert undue influence on the
bank's board - for example, to support government policy
initiatives - that may constrain senior management's independence
and effectiveness. This has a negative impact on the bank's credit
profile, and is relevant to the rating in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
=========
J A P A N
=========
JAPAN AIRLINES: Egan-Jones Cuts Senior Unsecured Ratings to BB
--------------------------------------------------------------
Egan-Jones Ratings Company, on February 16, 2021 downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Japan Airlines Co Ltd. to BB from BB+.
Headquartered in Shinagawa City, Tokyo, Japan, Japan Airlines Co
Ltd. Japan Airlines Co. Ltd. provides air transportation services.
KAWASAKI KISEN: Egan-Jones Hikes Senior Unsecured Ratings to CCC
----------------------------------------------------------------
Egan-Jones Ratings Company, on February 19, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Kawasaki Kisen Kaisha, Ltd. to CCC from CCC-.
Headquartered in Chiyoda City, Tokyo, Japan, Kawasaki Kisen Kaisha,
Ltd. operates marine cargo and passenger transportation around the
world.
MAZDA MOTOR: Egan-Jones Lowers Senior Unsecured Ratings to BB
-------------------------------------------------------------
Egan-Jones Ratings Company, on February 19, 2021, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Mazda Motor Corporation to BB from BB+.
Headquartered in Fuchu, Hiroshima, Japan, Mazda Motor Corporation
manufactures and sells automobiles, trucks, auto parts, and its
accessories.
RICOH COMPANY: Egan-Jones Lowers Senior Unsecured Ratings to BB+
----------------------------------------------------------------
Egan-Jones Ratings Company, on February 18, 2021, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Ricoh Company, Ltd. to BB+ from BBB-.
Headquartered in Ota City, Tokyo, Japan, Ricoh Company, Ltd.
manufactures and markets office automation equipment, electronic
devices, and photographic instruments.
=====================
N E W Z E A L A N D
=====================
PACIFIC AEROSPACE: CAA Suspends Certificates Following Insolvency
-----------------------------------------------------------------
Smart Aviation reports that the New Zealand Civil Aviation
Authority (CAA) has suspended the certificates of Pacific
Aerospace, after it told the regulator it is insolvent, but
operators of aircraft made by the New Zealand aircraft manufacturer
may continue flying.
Smart Aviation relates that the CAA said the aircraft manufacturer
notified it on February 10 that it was insolvent, "and as a result,
we suspended Pacific Aerospace's certificates which had previously
allowed it to design, manufacture and maintain aircraft."
"These certificates require the organisation to be in a financial
position to comply with all their safety requirements and this is
sadly no longer the case for Pacific Aerospace," CAA added.
According to the report, the CAA said it has issued a notice to
operators of Pacific Aerospace produced aircraft, saying they may
continue to operate unless a serious safety or airworthiness issue
is identified which would affect all aircraft of that type.
"Normally such issues would be addressed by the manufacturer or
another organisation which has responsibility through holding a
'type certificate'."
With PAL in financial distress and its certificates suspended, the
CAA is reviewing how safety issues involving Pacific Aerospace
aircraft could be addressed in future."
It said there are four options: reinstatement of Pacific
Aerospace's certificates if the company can meet its
responsibilities under those certificates; the CAA assumes
operational safety responsibility for Pacific Aerospace aircraft,
transfer of this responsibility and 'type certificates' to another
company or - as an absolute last resort - suspension or revocation
of the certificates allowing Pacific Aerospace aircraft to
operate.
Pacific Aerospace is based in the regional town of Hamilton and
reportedly has around 100 employees. The company, which can trace
its history back to the 1950s, produces mostly small general
aviation aircraft but its most well-known aircraft, the
nine-passenger Pacific Aerospace P-750 XSTOL is used by some
commercial operators in developing countries such as Papua New
Guinea and Indonesia.
=================
S I N G A P O R E
=================
DYNA-MAC HOLDINGS: Annual Net Loss Widens to SGD58.4 Million
------------------------------------------------------------
The Business Times reports that Dyna-Mac Holdings, which fabricates
topside modules and structures for the offshore oil and gas
industry, posted a smaller net loss of SGD11.7 million for the
fourth quarter ended Dec. 31, 2020, compared with the SGD24.1
million loss in the year-ago period.
Revenue rose 3.3 per cent to SGD30.1 million in Q4 FY2020 from
SGD29.1 million in Q4 FY2019 - mainly due to higher project
progress achieved, Dyna-Mac said in its results statement on Feb.
19.
On the other hand, cost of sales eased 13 per cent to SGD38.3
million.
Other expenses shrank by 85.6 per cent to SGD593,000. The expenses
in Q4 FY2020 mainly arose from net foreign exchange loss of
SGD600,000. In contrast, the expenses in Q4 FY2019 were chiefly due
to fair value losses on asset held for sale of SGD3.9 million.
Other income climbed to SGD2.9 million in Q4 FY2020 from SGD228,000
in Q4 FY2019. "The other income in Q4 FY2020 comprised mainly
income recognised from the government grants. In contrast, the
other income in Q4 FY2019 mainly derived from sale of scrapped
materials," Dyna-Mac said, BT relays.
Loss per share eased to 1.14 Singapore cents in the latest quarter
from 2.36 Singapore cents in the year-ago period.
For full-year 2020, Dyna-Mac's net loss widened to SGD58.4 million
from a SGD23.7 million loss in FY2019, BT discloses. Revenue
slipped 14.1 per cent to SGD84 million - largely on the back of
slower progress of projects and a small order book. "There was no
physical progress since end-April up to the beginning of September
as the workers were kept in the dormitory," the group said.
Cost of sales increased 19.1 per cent to SGD114.5 million, BT
discloses.
Other income increased to SGD7.2 million in FY2020 from SGD1.1
million in FY20219.
However, administrative expenses rose 42.3 per cent to SGD30.6
million. "The increase was mainly due to production salaries and
related costs being reclassified from cost of sales during the
production stand-down and suspension period, coupled with expected
credit losses on trade and other receivables," Dyna-Mac said.
No dividend was declared, unchanged from the previous year.
According to BT, the group noted that the Covid-19 pandemic
continues to have an adverse impact on its business.
BT relates that the group said that while new fabrication projects
it has secured are expected to maximise the utilisation of the
group's yard facilities and provide sustained revenue streams up to
Q2 2022, market conditions remain difficult and margins remain
depressed. "In addition to higher labour costs, the group also
faces challenges in ramping up its foreign worker headcount to meet
its needs due to the Covid-19 containment measures imposed by the
government."
Dyna-Mac Holdings Ltd. (SGX:NO4) -- https://www.dyna-mac.com/ --
offers engineering, procurement and construction services to the
offshore oil and natural gas, marine construction and other
industries. The Company builds topside modules for floating
production storage and offloading, semi-submersibles, manifolds,
buoys, process piping, and tanks for petrochemical and
pharmaceutical plants.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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