/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/210721.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Wednesday, July 21, 2021, Vol. 24, No. 139 Headlines A U S T R A L I A CONCRETE SKATEPARKS: First Creditors' Meeting Set for July 29 ELLIOTT HEADS: Second Creditors' Meeting Set for July 28 ENDOCOAL LIMITED: Receivers Seek Bids for Interest in JV C H I N A CALC BONDS: Moody's Assigns (P)Ba2 Unsec. Rating to MTN Program CHINA EVERGRANDE: Shares Slump After Unit's Bank Deposit Frozen CHINA: Shenzhen Court Grants First Personal Bankruptcy Case FANTASIA HOLDINGS: Moody's Alters Outlook on B2 CFR to Negative HNA GROUP: Struggles to Repay 60,000 Retail Investors RKPF OVERSEAS 2020A: Moody's Rates New Unsecured USD Notes 'Ba3' TSINGHUA UNIGROUP: To Sell Assets as it Moves Closer to Bankruptcy I N D I A AIBEL APPARELS: CRISIL Lowers Rating on INR10cr Cash Loan to D AIRTRAX POLYMERS: CRISIL Keeps B+ Debt Ratings in Not Cooperating AJAY INGOT: CRISIL Keeps B+ Debt Rating in Not Cooperating AKHAND JYOTI: CRISIL Keeps B+ Debt Rating in Not Cooperating ASPEN SHAVING: CRISIL Keeps D Debt Ratings in Not Cooperating BHAVANAM TEXTILES: CRISIL Moves B+ Debt Rating to Not Cooperating CHHEDA JEWELLERS: CRISIL Keeps B+ Debt Ratings in Not Cooperating COSMIC PETROCHEM: CRISIL Keeps B+ Debt Ratings in Not Cooperating EKTA DAIRY: CRISIL Keeps B+ Debt Ratings in Not Cooperating EVERWIN EDUCATIONAL: CRISIL Keeps D Debt Ratings in Not Cooperating G.NAGESWARAN: CRISIL Keeps D Debt Ratings in Not Cooperating GAJANAN TUBES: CRISIL Keeps B+ Debt Rating in Not Cooperating GREENCROP INT'L: CRISIL Keeps B- Debt Ratings in Not Cooperating HARIOM COTGIN: CRISIL Keeps D Debt Rating in Not Cooperating HK ENTERPRISES: CRISIL Keeps B Debt Rating in Not Cooperating HONEY PROPERTIES: CRISIL Keeps B Debt Rating in Not Cooperating HPCL-MITTAL ENERGY: Moody's Affirms B2 CFR, Outlook Negative HY LINK: CRISIL Keeps B- Debt Ratings in Not Cooperating INDICON CONSTRUCTION: CRISIL Moves D Ratings to Not Cooperating INDO LAMINATES: CRISIL Keeps D Debt Ratings in Not Cooperating IUA TRUST: CRISIL Keeps D Debt Ratings in Not Cooperating KAMATCHI TRADERS: CRISIL Keeps B+ Debt Rating in Not Cooperating LAXMI SRINIVASA: CRISIL Keeps B+ Debt Rating in Not Cooperating MEGHA GUM: CRISIL Keeps D Debt Ratings in Not Cooperating NEPTUNE LAMINATES: CRISIL Keeps B+ Debt Ratings in Not Cooperating NIRMLANAND STEELS: CRISIL Keeps B Debt Ratings in Not Cooperating PAVAN INDUSTRIES: CRISIL Keeps B Debt Ratings in Not Cooperating S GOKUL: CRISIL Keeps C Debt Ratings in Not Cooperating Category TEMPLE LEASING: Insolvency Resolution Process Case Summary WELD METALS: Insolvency Resolution Process Case Summary I N D O N E S I A GARUDA INDONESIA: Annual Net Loss Widens to US$2.4 Billion in 2020 GARUDA INDONESIA: Cargo Firm Files Suit Over Unpaid Debt GARUDA INDONESIA: Faces Lawsuit Over Failure to Pay Aircraft Lease P H I L I P P I N E S PHILIPPINE NATIONAL BANK: Fitch Alters Outlook on 'BB' IDR to Neg. S O U T H K O R E A OPTIMUS ASSET: CEO Gets 25 Years for Fund Fraud Schemes S R I L A N K A SRI LANKA: Moody's Puts Caa1 Issuer Rating on Review for Downgrade - - - - - ================= A U S T R A L I A ================= CONCRETE SKATEPARKS: First Creditors' Meeting Set for July 29 ------------------------------------------------------------- A first meeting of the creditors in the proceedings of Concrete Skateparks Pty Ltd as Trustee for The Lewers Family Trust will be held on July 29, 2021, at 3:00 p.m. via virtual meeting technology. Jonathan McLeod and Bill Karageozis of McLeod & Partners were appointed as administrators of Concrete Skateparks on July 19, 2021. ELLIOTT HEADS: Second Creditors' Meeting Set for July 28 -------------------------------------------------------- A second meeting of creditors in the proceedings of Elliott Heads Estates Pty Ltd has been set for July 28, 2021, at 10:30 a.m. at the offices of Worrells Solvency & Forensic Accountants, Suite GB, WIN Tower, 2 Barolin Street, in Bundaberg, Queensland. 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 July 27, 2021, at 5:00 p.m. Paul Eric Nogueira of Worrells Solvency & Forensic Accountants was appointed as administrator of Elliott Heads on June 23, 2021. ENDOCOAL LIMITED: Receivers Seek Bids for Interest in JV -------------------------------------------------------- McGrathNicol said that Jamie Harris, Anthony Connelly and Keith Crawford were appointed as Receivers over a 50% ownership interest in the Meteor Downs South Joint Venture held by Endocoal Limited. The Receivers seek urgent expressions of interest for the sale of the joint venture interest. Expressions of interest are sought by no later than Aug. 2, 2021. Interested parties may contact: Jacinta Robinson McGrathNicol Phone: +61 7 3333 9813 Email: jrobinson@mcgrathnicol.com Endocoal Limited focuses on the exploration and development of coal tenements in the Bowen Basin, Queensland, Australia. ========= C H I N A ========= CALC BONDS: Moody's Assigns (P)Ba2 Unsec. Rating to MTN Program --------------------------------------------------------------- Moody's Investors Service has assigned (P)Ba2 long-term local currency and foreign currency backed senior unsecured ratings to CALC Bonds Limited's medium-term note (MTN) program, guaranteed by China Aircraft Leasing Group Holdings Limited (CALC, Ba1 stable). CALC will use the net proceeds for aircraft acquisitions, business expansion in aircraft and related business, refinancing existing borrowings, and general corporate purposes. Incorporated in the British Virgin Islands, CALC Bonds Limited is a wholly-owned subsidiary of CALC. The entity-level outlook on CALC Bonds Limited is stable, in line with the outlook for CALC. RATINGS RATIONALE The (P)Ba2 senior unsecured MTN program ratings of CALC Bonds Limited are in line with CALC's Ba2 issuer rating, because the notes to be issued under the program will be unconditionally and irrevocably guaranteed by CALC, and the guarantee will constitute a direct, unsubordinated, unconditional and unsecured obligation of CALC. The payment obligations under the guarantee will at all times rank pari passu with CALC's present and future unsubordinated and unsecured obligations. Since the senior unsecured notes to be issued under the program will be structurally subordinated to secured indebtedness and senior unsecured indebtedness at the onshore level of CALC, the (P)Ba2 program ratings are one notch lower than CALC's Ba1 corporate family rating (CFR). Moody's does not intend to assign ratings to notes for which the payment of principal or interest is variable and contractually dependent on the occurrence of a non-credit-linked event or the performance of an index (non-credit-linked notes). FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The MTN program and notes will be unconditionally and irrevocably guaranteed by CALC. Consequently, an upgrade of CALC's issuer rating would result in an upgrade of the program and note ratings. Conversely, a downgrade of CALC's issuer rating would lead to a downgrade of the program and note ratings. Moody's could upgrade CALC's issuer rating if the company assumes greater strategic importance to China Everbright Group (CEG), indicating strengthening government support. Specifically, CALC's issuer rating could be upgraded if the company (1) significantly strengthens and maintains its total common equity (TCE)/ total managed assets (TMA) at above 15%; (2) further improves its financial flexibility through increasing committed credit facilities and debt maturities coverage to more than 150%; (3) further reduces its secured debts to less than 15% of its total assets; and (4) maintains its solid profitability and asset quality metrics. Moody's could downgrade CALC's issuer rating if (1) China Everbright Limited (CEL, Baa3 stable) is no longer the company's largest shareholder; (2) CALC's importance to, and connection with, CEG and its affiliates decline; (3) financial and liquidity support from CEG and its affiliates weaken; or (4) the company's financial metrics, including profitability, capital adequacy and debt maturities coverage, deteriorate materially. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. Listed in Hong Kong SAR, China, China Aircraft Leasing Group Holdings Limited is an aircraft lessor. It reported assets of HKD46 billion ($5.9 billion) as of the end of 2020. CHINA EVERGRANDE: Shares Slump After Unit's Bank Deposit Frozen --------------------------------------------------------------- Bloomberg News reports that investor doubts over China Evergrande Group intensified on July 19 as a creditor's successful demand to freeze some assets underscored concern that the embattled developer may struggle to raise funds. Bloomberg says the company's shares plummeted 16% to close at a four-year low in Hong Kong, while its listed electric vehicle unit sank 19%. Some of Evergrande's local bonds fell to record lows. A Chinese court froze a CNY132 million (US$20 million) deposit held by Evergrande's main onshore subsidiary, Hengda Real Estate Group, at the request of China Guangfa Bank Co., according to a court ruling released on July 13 that circulated among traders over the weekend, Bloomberg relays. Evergrande said in response it will sue Guangfa Bank, with the loan not coming due until March, according to a statement. Bloomberg relates that the news deepens concern over the financial health of China's most indebted developer as Beijing seeks to reduce leverage in the property sector. Founder Hui Ka Yan met last month with officials from the country's top financial regulator, who urged him to solve Evergrande's cash flow problems as quickly as possible. The company has sold nearly $8 billion worth of assets this year as it seeks to cut debt and maintain investor confidence. "Evergrande is on the brink of a crisis," Bloomberg quotes Shen Chen, a partner at Shanghai Maoliang Investment Management LLP, as saying. "The company may find it more difficult to raise funding in the future, whether in public bond markets or shadow banking activities such as trust loans." Evergrande's 8.75% dollar bond due 2025 fell 6.3 cents on the dollar to 58.7 cents, Bloomberg-compiled prices show. A 5.9% onshore bond issued by Hengda Real Estate dropped 9.8% to a record low. Once a prolific issuer of debt, Evergrande hasn't sold a single dollar bond in more than 17 months, Bloomberg notes. Creditors are on high alert. Several banks are reducing lending to the developer, refusing to renew maturing debt, and trust companies have also become cautious, people familiar have said. Potential sources of future funding include stock placements of its listed EV and property management units, and IPOs for arms including its beverage business, FCB, and amusement park and tourism properties, according to Fitch Ratings. The company has some $80 billion worth of equity in non-property businesses that could help generate liquidity if sold, Agnes Wong, a Hong Kong-based analyst with BNP Paribas SA, wrote in a June report, recalls Bloomberg. News on the asset freeze also triggered speculation Evergrande may struggle to get approval for a special dividend. The stock jumped 9.5% on July 16 after Evergrande said it will consider an additional payout to shore up its share price. Some $33 billion in value has now been wiped off the stock since last year's July peak, according to Bloomberg. Hedge funds and other speculators have stuck to their bearish bets. Short-selling turnover was only 14% of Evergrande's total on July 16 as the shares surged, far from a capitulation or a short squeeze. Evergrande is among the most-shorted stocks in Hong Kong, with short interest around 21% of free float, according to the latest data from IHS Markit Ltd. Evergrande affiliates also tumbled, Bloomberg states. China Evergrande New Energy Vehicle Group Ltd. slumped the most in almost two years, while Evergrande Property Services Group Ltd. lost 13%. According to Bloomberg, the Chinese government has so been silent over whether it will provide financial support for Evergrande amid a campaign to reduce moral hazard. Evergrande pledged last month to make good on overdue commercial bills and has said it has never missed a payment on public bonds. Bloomberg adds that the developer announced at the end of June that it had cut interest-bearing debt by 20% in the first half to $88 billion. That enabled the company to meet one of China's "Three Red Lines," a trio of metrics that policy makers have used to encourage the property industry to deleverage. About China Evergrande China Evergrande Group is an integrated residential property developer. The Company, through its subsidiaries, operates in property development, investment, management, finance, internet, health, culture, and tourism markets. As reported in the Troubled Company Reporter-Asia Pacific in early July 2021, Moody's Investors Service has downgraded the corporate family ratings of China Evergrande Group to B2 from B1; Hengda Real Estate Group Company Limited to B2 from B1; Tianji Holding Limited to B3 from B2; and the backed senior unsecured ratings of Scenery Journey Limited to B3 from B2. The backed senior unsecured rating on the notes issued by Scenery Journey are guaranteed by Tianji. The notes are also supported by a keepwell deed and a deed of equity interest purchase undertaking between Hengda, Tianji, Scenery Journey and the bond trustee. At the same time, Moody's has placed the ratings under review for further downgrade. The previous ratings outlook was negative. CHINA: Shenzhen Court Grants First Personal Bankruptcy Case ----------------------------------------------------------- Global Times reports that the Shenzhen Intermediate People's Court in South China's Guangdong Province on July 19 granted a personal application for bankruptcy protection, the first such case since relevant laws went into effect in March. Global Times relates that the application was filed by Liang Wenjin, a local entrepreneur in the Bluetooth earphone industry whose company went bankrupt due to unstable sales and the effect of the COVID-19 pandemic. According to the application, Mr. Liang's assets were valued at about CNY40,000 (US$6,167) and his 20,000-yuan fixed monthly income can't cover his debts of CNY750,000 immediately. The court ruling on July 19 means that Liang's has three years to repay the entire principal to his creditors with interest and late fees waived. According to Global Times, Mr. Liang said that he once received seven to eight phone calls from debt collectors a day. "Now my mental stress has been eased, and I have more energy to repay my debts," he said. According to the Shenzhen Special Economic Zone's personal bankruptcy regulation issued in March, part of Mr. Liang's income, except for about CNY7,700 for his own and his wife's daily expenditures, will be used for repaying his debts. The Shenzhen Intermediate People's Court stated that the personal bankruptcy law gives a chance to those who are honest but suffer misfortune, Global Times relays. "The approval has a significant meaning in China's personal bankruptcy protection field," Li Weimin, director of the Beijing Wei Bo Law Firm, told the Global Times on July 19. "Before the regulation, individuals who might not be able to repay their debt would have been blacklisted in China's personal credit system," said Li, adding that the court ruling filled a gap in China's personal bankruptcy protection laws. Global Times adds that the protection regulation currently is only available for residents in Shenzhen, but officials have vowed to improve bankruptcy protections nationwide. The Fourth Plenary Session of the 19th Central Committee of the Communist Party of China in 2019 stressed the need to improve the country's bankruptcy protection system. FANTASIA HOLDINGS: Moody's Alters Outlook on B2 CFR to Negative --------------------------------------------------------------- Moody's Investors Service has changed the ratings outlook on Fantasia Holdings Group Co., Limited to negative from stable. At the same time, Moody's has affirmed Fantasia's B2 corporate family rating and B3 senior unsecured ratings. "The negative outlook reflects our expectation that given Fantasia's heavy reliance on offshore debt funding, the company will face higher refinancing uncertainty amid tight credit conditions and volatile offshore capital markets," says Celine Yang, a Moody's Vice President and Senior Analyst. "At the same time, the rating affirmation reflects our expectation that Fantasia's solid contracted sales growth and ample cash will support its liquidity in the next 12-18 months," adds Yang. RATINGS RATIONALE Fantasia's B2 CFR reflects the company's long track record in property development in the Chengdu-Chongqing Metropolitan Area, diversified income streams from its property management business, and good liquidity. On the other hand, the B2 rating is constrained by Fantasia's improving but still-high debt leverage and weak interest coverage, resulting from debt-funded growth; and its concentrated funding structure, which relies heavily on offshore USD bonds. As of the end of 2020, Fantasia's offshore debt increased to 62% of its total reported debt compared with 48% a year ago, which is high relative to many of its B-rated peers. On the other hand, its onshore bank borrowing decreased to 13% from 22% over the same period. Fantasia has a large amount of debt maturing or becoming puttable over the next 12-18 months -- namely USD2.0 billion of offshore senior notes and RMB6.5 billion of onshore corporate bonds (including puttable onshore bonds) maturing or becoming puttable from July 1, 2021 throughout December 31, 2022. Moody's expects Fantasia will repay part of these maturing debts with its internal cash given the volatility in offshore capital markets. But this would constrain the funding available for its operations, such as investments in land, if the volatile market conditions continued for a prolonged period. However, Fantasia's liquidity position is good, supported by its sufficient cash holdings. Moody's expects the company's cash holdings, together with its operating cash flow, will be sufficient to cover its maturing debt (including onshore puttable bonds), unpaid land premiums and dividend payments over the next 12-18 months. As of the end of 2020, the company had cash holdings of RMB28.1 billion (including restricted cash of RMB3.1 billion) which could cover 1.4x of its short-term debt of RMB18.2 billion. Moody's expects Fantasia's EBIT interest coverage to stay weak at 1.3x-1.4x over the next 12-18 months, similar to 1.4x in 2020. Moody's estimates its EBIT will likely grow at around 10% in the coming 12-18 months, driven by sales growth in the past 1-2 years. However, the moderate growth will be more than offset by an increase in interest costs, driven by tightened credit conditions. Fantasia's B3 senior unsecured debt rating is one notch lower than the company's B2 CFR due to structural subordination risk. The subordination risk refers to the fact that the majority of Fantasia's claims are at its operating subsidiaries and have priority over claims at the holding company in a bankruptcy scenario. In addition, the holding company lacks significant mitigating factors for structural subordination. Consequently, the expected recovery rate for claims at the holding company will be lower. In terms of governance considerations, Moody's has taken into consideration the company's concentrated ownership in Zeng Jie Baby, who has a 57.43% stake in the company as of the end of 2020. Moody's has also considered the company's established internal governance, which ensures the disclosure of material related-party transactions as required by companies listed on the Hong Kong Stock Exchange. In addition, the company's audit, remuneration and nomination committees are dominated by independent non-executive directors. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of the rating is unlikely in the near term, given the negative rating outlook. However, the rating outlook could return to stable if the company (1) reduces its reliance on offshore debt and improves its onshore funding access, (2) improves its EBIT interest coverage to above 1.5x consistently, and (3) maintains stable property sales growth supported by a high level of cash collections and good liquidity. On the other hand, Moody's could downgrade the rating if (1) the company's contracted sales, cash collections or liquidity weaken significantly; and (2) its credit metrics deteriorate, such that EBIT/interest coverage fails to recover to 1.5x, on a sustained basis. Any signs of deterioration in its funding access would also be negative for the company's rating. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in January 2018. Fantasia Holdings Group Co., Limited is a property developer in China (A1 stable). Established in 1996, the company listed on the Hong Kong Stock Exchange in November 2009. In addition to property development, Fantasia is engaged in providing property operation services, property agency services and hotel services for its own properties and properties of third parties. HNA GROUP: Struggles to Repay 60,000 Retail Investors ----------------------------------------------------- Wang Juanjuan and Yu Ning at Caixin Global report that China's debt-laden HNA Group Co. Ltd. faces billions of dollars in debt claims filed by 60,000 retail investors who poured money into wealth management products sold by its units as the once high-flying conglomerate struggles in a lengthy bankruptcy restructuring. The investors, mainly HNA employees and their relatives, filed debt claims exceeding CNY30 billion (US$4.6 billion), Caixin learned. They purchased the products mainly from three HNA-backed peer-to-peer lending sites, which raised funds for other HNA affiliates. Once among China's most aggressive overseas dealmakers, HNA borrowed heavily to buy global assets including stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc. until China tightened credit rules to crack down on capital flight and companies' debt risks, Caixin notes. After years of unsuccessful struggle to repay trillions of yuan in debts, HNA this year entered bankruptcy restructuring along with its 320 affiliates. About HNA Group China-based HNA Group Co. Ltd. offers airlines services. The Company provides domestic and international aviation transportation, air travel, aviation maintenance, and aviation logistics services. HNA Group also operates holding, capital, tourism, logistics, and other business. As reported in the Troubled Company Reporter-Asia Pacific, HNA Group on Jan. 29, 2021 declared bankruptcy and restructuring after a multi-year debt and liquidity crisis. The company was informed by South China's Hainan High People's Court on Jan. 29 that "because the company is unable to pay off its debts, related creditors appealed to the court for the company's bankruptcy and restructuring," HNA said. According to Global Times, HNA Group said it will cooperate with the court for judicial review, carry forward the debt disposal, and support the court's protection of the legal rights of its creditors so as to ensure the smooth operations of the company. On March 15, 2021, a court in Hainan approved the merger and restructuring of 320 affiliates of HNA Group into the parent company, paving way for the conglomerate to eventually emerge from bankruptcy, Caixin Global said. HNA Group was designated as administrator of the merger, and creditors will hold their first meeting June 4, according to a statement issued March 15 by the Hainan High People's Court. The 320 units will be integrated into HNA group's bankruptcy reorganization, and the group will submit a restructuring plan to the creditor meeting for approval, the court said. RKPF OVERSEAS 2020A: Moody's Rates New Unsecured USD Notes 'Ba3' ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 backed senior unsecured debt rating to the proposed senior unsecured USD notes to be issued by RKPF Overseas 2020 (A) Limited and guaranteed by Road King Infrastructure Limited (Ba3 stable). The outlook on the rating is stable. Road King plans to use the proceeds from the proposed notes to refinance its offshore debt. RATINGS RATIONALE "Road King's Ba3 corporate family rating reflects the company's track record in property development and its cautious approach to land acquisitions and financial management," says Cedric Lai, a Moody's Vice President and Senior Analyst. The rating also takes into account its track record of maintaining adequate liquidity throughout business cycles and the stable cash flow from its toll road investments. "However, the CFR is constrained by the geographic concentration of the company's land bank, the execution risk associated with new toll road acquisitions, and its moderate credit metrics," adds Lai. The proposed issuance will lengthen Road King's debt maturity profile and have a limited impact on its credit metrics, because the proceeds will be mainly used for refinancing. Moody's expects Road King's debt leverage - as measured by revenue/adjusted debt - will improve to around 65% over the next 12-18 months from 50% in 2020, supported by the company's contracted sales growth over the past two years, its prudent approach toward land acquisitions and its good cash collection from property sales. Road King's interest coverage - as measured by EBIT/interest - will also improve to 3.0x-3.2x over the next 12-18 months from 2.4x in 2020, as the increase in revenue and improved cash distributions from toll road projects will offset the impact of margin contraction. Moody's expects Road King's recurring income interest coverage will recover to 30%-35% over the next 12-18 months from 20% in 2020, with cash distributions from toll roads to improve to HKD700 million-HKD750 million from HKD465 million over the same period, supported by a recovery in toll traffic and revenue given the resumption of toll collections since May 2020. Moody's expects that Road King will achieve contracted sales growth to around RMB50 billion in 2021, driven by its strong brand recognition and execution capability in home markets. In the first half of 2021, Road King's contracted sales, including its share of sales in joint ventures and associates, grew 91% year on year to RMB34.9 billion. Road King's liquidity is good. The company's cash on hand of RMB14.2 billion as of December 31, 2020 can cover its short-term debt of RMB13.9 billion as of the same date. Moody's also expects its cash holding and operating cash flow to be sufficient to cover its maturing debt, committed land premiums and dividend payments in the next 12-18 months. Road King's senior unsecured rating is unaffected by subordination to claims at the operating company level, because the company's creditors benefit from its diversified business profile, including in particular, the cash flow generated from the company's toll road business. In terms of environmental, social and governance (ESG) factors, Moody's has considered the concentration of the company's ownership in its controlling shareholder, Wai Kee Holdings Limited, which held a 43% stake in the company as of December 31, 2020. Moody's has also considered (1) the fact that independent directors chair the audit and remuneration committees; (2) the company's low dividend payouts; and (3) the presence of other internal governance structures and standards as required by the Hong Kong Stock Exchange. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The stable outlook on the rating reflects Moody's expectation that Road King will maintain its prudent financial management, while growing its property development and toll road businesses; thereby preserving stable credit metrics and good liquidity. Moody's could upgrade the rating if Road King (1) expands without sacrificing profit margins; (2) grows its toll road dividends and improves its interest coverage from recurring income to above 0.6x-0.7x on a sustained basis; (3) maintains stable credit metrics, with its homebuilding EBIT/interest staying above 4.0x-4.5x and revenue/debt staying above 90%; and (4) maintains adequate liquidity. On the other hand, Moody's could downgrade the rating if (1) Road King's liquidity deteriorates because of weaker sales or aggressive land or other acquisitions; or (2) the operating performance of the company's property segment worsens. Credit metrics indicative of a downgrade include its homebuilding EBIT/interest staying below 2.5x-3.0x or revenue/debt staying below 65%, on a sustained basis. The principal methodology used in this rating was Homebuilding And Property Development Industry published in January 2018. Listed in Hong Kong SAR, China, Road King Infrastructure Limited invests in toll road projects on seven expressways across four provinces in China -- Anhui, Hebei, Hunan and Shanxi -- and Indonesia. As of December 31, 2020, the company had a property development portfolio with a land bank of 7.0 million square meters across the Bohai Rim, Yangtze River Delta, Greater Bay Area (including Hong Kong), Henan and Hubei Province. Wai Kee Holdings Limited and Shenzhen Investment Limited are the largest shareholders of the company, with 43% and 27% stakes, respectively, as of December 31, 2020. TSINGHUA UNIGROUP: To Sell Assets as it Moves Closer to Bankruptcy ------------------------------------------------------------------ South China Morning Post reports that Tsinghua Unigroup, a technology conglomerate affiliated with China's top university, is moving closer to bankruptcy restructuring after years of debt-fuelled acquisitions in the semiconductor industry, kicking off a potential scramble for its assets by creditors and other interested parties. The Post relates that two Shenzhen-listed subsidiaries, information technology infrastructure provider Unisplendour Corp and integrated circuits designer Unigroup Guoxin Micro, announced in separate filings last week that their ownership structure could change after state-owned Huishang Bank, a creditor of Unigroup, asked a Beijing court to start bankruptcy proceedings against the company. Unigroup, which had either defaulted or had cross-defaults triggered on seven onshore and offshore bonds worth about US$3.6 billion as of January, is left with no other options but to sell assets to pay off more than CNY200 billion (US$30.8 billion) in total liabilities, the Post discloses. The company, according to a Reuters report last week, is trying to sell its 46.45 per cent stake in Unisplendour to potential investors, including Alibaba Group Holding and several state-backed entities, the report relays. Neither Unisplendour nor Alibaba, owner of the South China Morning Post, could confirm or deny these talks. Bankruptcy restructuring represents a big fall for Beijing-based Unigroup, which was once seen as a major player in the country's efforts to boost semiconductor self-reliance amid the escalating US-China tech war. Unigroup, known for its unsuccessful US$23 billion bid for US chip maker Micron Technology in 2015, is not expected to have a solvency issue, according to a recent report from Pacific Securities. It said investors crave the company's high-quality semiconductor assets amid the country's drive to build up its capabilities in the industry. Still, Unigroup is expected to delay any asset sale if its liquidity condition permits, according to Gary Ng, economist for the Asia-Pacific region at the Hong Kong office of French investment bank Natixis. "Tsinghua Unigroup had paid huge premiums in [its] past acquisitions and it may be hard to fully recover the amount if the assets are put on sale," the report quotes Mr. Ng said as saying. "Compared to peers, Tsinghua has a higher goodwill at close to 20 per cent of total assets, showing the series of deals comes with heavy cost versus book value at the time of purchase." Unigroup's attractive portfolio of assets includes its shareholding in semiconductor design firm Unisoc, China's fifth-largest smartphone chip provider, and Yangtze Memory Technology Co (YMTC), the country's top memory chip maker. Unigroup, headed by chairman Zhao Weiguo and driven by debt-funded acquisitions, expanded its operations over the past decade to become a global semiconductor powerhouse. After securing 10 billion yuan from the state-backed China Integrated Circuit Industry Investment Fund (Big Fund) in 2015, Zhao was said to have attempted to buy the world's largest contract chip maker Taiwan Semiconductor Manufacturing Co. That audacious bid prompted Terry Gou Tai-ming, the billionaire founder and chairman of Foxconn Technology Group, to deride Zhao as "a stock flipper". Also in 2015, Unigroup acquired a 51 per cent stake in network equipment supplier H3C Technologies from Hewlett-Packard for US$2.3 billion. In 2016, Unigroup teamed up with the government of central Hubei province and China's Big Fund to establish YMTC, a challenger to South Korean memory chip makers Samsung Electronics and SK Hynix. Unigroup had earlier privatised two US-listed tech companies, Spreadtrum Communications and RDA Microelectronics, in 2013 and 2014, respectively. These firms were merged in 2018 to become Unisoc. Tsinghua Unigroup Co., Ltd manufactures computer products. The Company produces computer softwares, computer hardwares, computer auxiliary equipment, and other products. Tsinghua Unigroup also produces electronic components, chemicals, and other products. Tsinghua Unigroup is 51% owned by China's Tsinghua University. ========= I N D I A ========= AIBEL APPARELS: CRISIL Lowers Rating on INR10cr Cash Loan to D -------------------------------------------------------------- CRISIL Ratings has downgraded its rating on the long term bank facilities of Aibel Apparels (AA) to 'CRISIL D' from 'CRISIL BB-/Stable'. The rating downgrade reflects delays in servicing interest and principal repayments on working capital facilities and term debt respectively. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 10 CRISIL D (Downgraded from 'CRISIL BB-/Stable') The rating reflects the company's modest scale of operations and weak financial risk profile. These weaknesses are partially offset by the extensive experience of the promoters. Analytical Approach Unsecured loans from promoters have been treated as Neither Debt Nor Equity (NDNE). Key Rating Drivers & Detailed Description Weaknesses: * Modest scale of operations: Intense competition may continue to constrain scalability, pricing power, and profitability. Revenue was modest at an estimated INR28 crore in fiscal 2021. Going forward, the revenues are expected to remain flat due to muted demand. * Weak financial risk profile: The financial risk profile is constrained by estimated high gearing of over 4 times as on March 31, 2021. Debt protection metrics were also weak with interest cover of around 1 time in fiscal 2021. Strength: * Extensive experience of the promoters and established track record: The company benefits from the promoter's experience of over 15 years in the readymade garments industry. The promoters are successfully running another two companies in similar lines of business and have established strong relationship with customers and suppliers. Liquidity: Poor With average month-end bank limits almost fully utilized, liquidity is likely to remain under pressure over the medium term, mainly due to large working capital requirements. Given the economic slowdown because of Covid-19, sales have been modest resulting in lower than expected profitability. Rating Sensitivity factors Upward Factors: * Track record of timely payments on working capital limits and term loan obligations for more than three months * Sustained improvement in scale of operation by 20% and sustenance of operating margins at over 6%, leading to higher cash accruals * Improvement in working capital cycle AA was established in 2013. The company is engaged in the manufacturing of readymade garments for kids. AA is owned & managed by Shaju Thomas and Linta Jose. AIRTRAX POLYMERS: CRISIL Keeps B+ Debt Ratings in Not Cooperating ----------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Airtrax Polymers Private Limited (APPL) continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 2 CRISIL B+/Stable (Issuer Not Cooperating) Proposed Long Term 2.87 CRISIL B+/Stable (Issuer Bank Loan Facility Not Cooperating) Rupee Term Loan 2 CRISIL B+/Stable (Issuer Not Cooperating) Term Loan 4.4 CRISIL B+/Stable (Issuer Not Cooperating) Working Capital 7.5 CRISIL B+/Stable (Issuer Facility Not Cooperating) CRISIL Ratings has been consistently following up with APPL for obtaining information through letters and emails dated December 18, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of APPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on APPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of APPL continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. APPL, incorporated in 1997, manufactures high-density polyethylene (HDPE) and polypropylene (PP) woven fabric used for metal packaging, woven bags, wood packaging, and other industrial packaging applications. The company's product range in customized fabrics includes lumber wraps, tarp fabrics, paper-coated fabrics, polyethylene-coated and uncoated fabrics, and greenhouse covers. Its plant in Alwar, Rajasthan, has capacity of 6000 tonnes per annum. AJAY INGOT: CRISIL Keeps B+ Debt Rating in Not Cooperating ---------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of Ajay Ingot Rolling Mill Private Limited (AIRMPL) continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 4 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with AIRMPL for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of AIRMPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on AIRMPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of AIRMPL continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. AIRMPL, incorporated in 2004, is promoted by Mr Vishnu Jindal and his brother Mr Sanjay Kumar Agarwal. It manufactures TMT bars (installed capacity of 30,000 tpa) from sponge iron/steel scrap. The company is based in Raigarh, Chhattisgarh. AKHAND JYOTI: CRISIL Keeps B+ Debt Rating in Not Cooperating ------------------------------------------------------------ CRISIL Ratings said the rating on bank facilities of Akhand Jyoti Jan Kalyan Sewa Samiti (AJJKSS) continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Overdraft Facility 1 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with AJJKSS for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of AJJKSS, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on AJJKSS is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of AJJKSS continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Set up in 1999 in Balrampur, Uttar Pradesh, AJJKSS is a not-for-profit society managed by Mr Chandreshwar Yadav (president) and Mr Ravi Shankar Tripathi (vice-president). It implements schemes operated by state and central governments, such as running Kasturba Gandhi Balika Vidyalaya, Uttar Pradesh Skill Development Mission, and Mid-Day Meal in Balrampur, Sitapur, and Gonda (all in Uttar Pradesh). ASPEN SHAVING: CRISIL Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Aspen Shaving Products (ASP) continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 0.5 CRISIL D (Issuer Not Cooperating) Letter of Credit 1 CRISIL D (Issuer Not Cooperating) Long Term Loan 5 CRISIL D (Issuer Not Cooperating) Proposed Fund- 1.5 CRISIL D (Issuer Not Based Bank Limits Cooperating) CRISIL Ratings has been consistently following up with ASP for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of ASP, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on ASP is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of ASP continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. ASP is a proprietorship firm of Mr Kasivi, who manages operations. The firm is into manufacturing of DE blades with a plant near Hyderabad. DE blades are cost-effective and commonly used in shaving and hair-cutting saloons. BHAVANAM TEXTILES: CRISIL Moves B+ Debt Rating to Not Cooperating ----------------------------------------------------------------- CRISIL Ratings has migrated the rating on bank facilities of Bhavanam Textiles India Private Limited (BHTIPL) to 'CRISIL B+/Stable Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 12 CRISIL B+/Stable (ISSUER NOT COOPERATING; Rating Migrated) Proposed Long Term 2.32 CRISIL B+/Stable (ISSUER NOT Bank Loan Facility COOPERATING; Rating Migrated) Term Loan 0.1 CRISIL B+/Stable (ISSUER NOT COOPERATING; Rating Migrated) CRISIL Ratings has been consistently following up with BHTIPL for obtaining information through letters and emails dated May 31, 2021 and June 30, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of BHTIPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on BHTIPL is consistent with 'Assessing Information Adequacy Risk'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL Ratings has migrated the rating on bank facilities of BHTIPL to 'CRISIL B+/Stable Issuer not cooperating'. BHTIPL, incorporated in February 2013, is a Guntur (Andhra Pradesh)-based company that manufactures cotton yarn with installed capacity of 13,644 spindles. Mr Bhavanam Rama Koti Reddy and Ms Bhavanam Adi Lakshmi are the promoters. CHHEDA JEWELLERS: CRISIL Keeps B+ Debt Ratings in Not Cooperating ----------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Chheda Jewellers (CJ) continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 10.5 CRISIL B+/Stable (Issuer Not Cooperating) Proposed Long Term 2.5 CRISIL B+/Stable (Issuer Bank Loan Facility Not Cooperating) CRISIL Ratings has been consistently following up with CJ for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non-cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of CJ, which restricts CRISIL Ratings' ability to take a forward looking view on the entity's credit quality. CRISIL Ratings believes that rating action on CJ is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of CJ continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Incorporated in 1990, CJ was promoted by Mr. Kunverji Ramji Chheda. The firm is engaged primarily in the business of retailing of gold jewellery through its 1300 square feet showroom at Mumbai (Maharashtra). COSMIC PETROCHEM: CRISIL Keeps B+ Debt Ratings in Not Cooperating ----------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Cosmic Petrochem Private Limited (CPPL) continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 3.5 CRISIL B+/Stable (Issuer Not Cooperating) Long Term Loan 3.5 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with CPPL for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of CPPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on CPPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of CPPL continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. CPPL, promoted by Mr. Kapil Maggu and Ms. Surabhi Bansal, manufactures high-density polyethylene/polyethylene (HDPE/PE) wax. Its manufacturing unit is in Haryana. Production started in December 2013. EKTA DAIRY: CRISIL Keeps B+ Debt Ratings in Not Cooperating ----------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Ekta Dairy Private Limited (EDPL) continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 9 CRISIL B+/Stable (Issuer Not Cooperating) Proposed Cash 3.5 CRISIL B+/Stable (Issuer Credit Limit Not Cooperating) CRISIL Ratings has been consistently following up with EDPL for obtaining information through letters and emails dated December 29, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of EDPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on EDPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of EDPL continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Incorporated in 2007 and promoted by Mr Narendra Kumar Sacchan, EDPL processes milk and its byproducts. The company's plant, located in Fatehpur (Uttar Pradesh), processes 0.25 million liters of milk per day. EDPL also does jobwork for Gujarat Co-operative Milk Marketing Federation Ltd and other companies. EVERWIN EDUCATIONAL: CRISIL Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Everwin Educational and Charitable Trust (EECT) continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Overdraft Facility 5 CRISIL D (Issuer Not Cooperating) Proposed Long Term 25.65 CRISIL D (Issuer Not Bank Loan Facility Cooperating) Term Loan 49.35 CRISIL D (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with EECT for obtaining information through letters and emails dated December 29, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of EECT, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on EECT is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of EECT continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. EECT, set up in 1992, provides primary, secondary, and higher secondary education through Everwin Group of Schools in Chennai. Dr B Purushothaman (Founder and Senior Principal), Ms V Mageswari (CEO), Ms M Kalaiarasi (General Principal), and Ms M P Vidhya (Trustee) look after the operations of the trust. G.NAGESWARAN: CRISIL Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------ CRISIL Ratings said the ratings on bank facilities of G.Nageswaran (GN) continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 0.5 CRISIL D (Issuer Not Cooperating) Secured Overdraft 9.4 CRISIL D (Issuer Not Facility Cooperating) CRISIL Ratings has been consistently following up with GN for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of GN, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on GN is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of GN continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. GN was set up as a proprietorship firm in 1985, by Mr G Nageswaran. The firm undertakes civil construction works, mainly for the Government of Tamil Nadu and the National Highways Authority of India. GAJANAN TUBES: CRISIL Keeps B+ Debt Rating in Not Cooperating ------------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of Gajanan Tubes (GT) continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 12 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with GT for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of GT, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on GT is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of GT continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Formed in 2004 as a partnership firm by Mr. Rajendra Dalmia, GT is engaged in trading of steel tubes especially Electric Resistance Welded tubes which find application in various industries like petrochem, chemicals, food and others. The firm is an authorized distributor of Jindal Pipes Limited. GREENCROP INT'L: CRISIL Keeps B- Debt Ratings in Not Cooperating ---------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Greencrop International Private Limited continue to be 'CRISIL B-/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 5.25 CRISIL B-/Stable (Issuer Not Cooperating) Long Term Loan 3.67 CRISIL B-/Stable (Issuer Not Cooperating) Proposed Long Term 1.08 CRISIL B-/Stable (Issuer Bank Loan Facility Not Cooperating) CRISIL Ratings has been consistently following up with Greencrop for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of Greencrop, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on Greencrop is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of Greencrop continue to be 'CRISIL B-/Stable Issuer Not Cooperating'. Greencrop, set up in 2001, manufactures pesticides and micro-nutrient fertilizers. It is based in Pune (Maharashtra), with distribution offices in Hyderabad, Bengaluru, Coimbatore (Tamil Nadu), Raipur, Indore (Madhya Pradesh), Akola (Maharashtra), and Ahmedabad (Gujarat). It is promoted by Mr Sharad Sawant and Mr Popatrao Deshmukh, who have been in the agricultural chemicals industry for around four decades. HARIOM COTGIN: CRISIL Keeps D Debt Rating in Not Cooperating ------------------------------------------------------------ CRISIL Ratings said the rating on bank facilities of Hariom Cotgin Private Limited (HCPL) continues to be 'CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 8 CRISIL D (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with HCPL for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of HCPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on HCPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of HCPL continue to be 'CRISIL D Issuer Not Cooperating'. HCPL, incorporated in 2008 by Mr. Ramesh, gins cotton, and presses and processes cotton seed into oil and cakes. In October 2015, it was taken over by Mr. Bharatbhain Selani and Mr. Chiragbhai Selani, who have been in the cotton ginning and pressing business for five decades. HK ENTERPRISES: CRISIL Keeps B Debt Rating in Not Cooperating ------------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of HK Enterprises-Delhi (HK) continues to be 'CRISIL B/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 20 CRISIL B/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with HK for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of HK, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on HK is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of HK continue to be 'CRISIL B/Stable Issuer Not Cooperating'. Set up as a partnership firm in 2017 by Mr.Ramesh Kumar and Mr. Ravindra Alhawat, HK is engaged into supply of construction and building materials primarily in and around Delhi. HONEY PROPERTIES: CRISIL Keeps B Debt Rating in Not Cooperating --------------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of Honey Properties (HP) continues to be 'CRISIL B/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Long Term Loan 7.05 CRISIL B/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with HP for obtaining information through letters and emails dated December 18, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of HP, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on HP is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of HP continue to be 'CRISIL B/Stable Issuer Not Cooperating'. Established in 2014, HP is engaged in real estate development. The company is promoted by Mr. K.S. Sameeulla and Mr. K.S. Suna Miandad. HPCL-MITTAL ENERGY: Moody's Affirms B2 CFR, Outlook Negative ------------------------------------------------------------ Moody's Investors Service has affirmed HPCL-Mittal Energy Limited's (HMEL) Ba2 corporate family rating and Ba3 senior unsecured bond rating. The outlook on the rating remains negative. "The affirmation of HMEL's Ba2 CFR balances our expectation of an improvement in its credit profile once the integration of its petrochemical operations is completed, with credit metrics that remain elevated for its current rating," says Sweta Patodia, a Moody's Analyst. "The negative outlook reflects our view that a prolonged weakness in refining margins or a delay in ramp of its petrochemical operations will delay the recovery in its credit metrics, " adds Patodia, who is also Moody's lead analyst for HMEL. RATINGS RATIONALE As of March 31, 2021, HMEL's leverage, as measured by debt/EBITDA, was around 17.8x. Moody's expects leverage to reduce to around 9.0x-10.0x by the fiscal year ending March 31, 2022 (fiscal 2022) on the back of increase in refinery throughput as well as a gradual improvement in refining margins. Despite the improvement, credit metrics will remain elevated compared to its downgrade rating trigger of 5.0x. Moody's expects HMEL's credit metrics to remain under pressure until such time its petrochemical plant starts commercial operations as debt load remains high due to ongoing expansion while existing earnings from the refining segment will remain weak over the next 12-18 months due to a depressed refining margin environment. Moody's expects the Singapore refining benchmark to average about $1.0 - $2.0/ barrel (bbl) in 2021 and recover further in 2022 but remain well below the historical average of $5-6/bbl. The petrochemical plant is currently under construction and is expected to be completed in the third quarter of fiscal 2022. As of June 2021, the physical construction of the plant was 98.5% complete. Based on management estimates, the plant is expected to commence commercial production in the fourth quarter of fiscal 2022 and will gradually ramp up to 100% capacity utilization by fiscal 2023. Moody's expects HMEL's credit profile to improve substantially once the petrochemical plant commences commercial operations as it could potentially double HMEL's EBITDA to INR75-80 billion once the petrochemical plant reaches 100% capacity utilization. However, any delays in ramp-up of commercial production will delay the earnings contribution from the plant and keep leverage at elevated levels over the next 12-18 months. HMEL's Ba2 CFR is supported by the company's high complexity refinery that consistently generates premium over regional refining margins, and by its 15-year offtake agreement with Hindustan Petroleum Corporation Ltd. (HPCL, Baa3 negative) that provides high visibility over sales volumes. The rating, however, is constrained by its weak credit metrics, the moderate scale of the company's operations, with a single refinery and crude distillation unit, and by its exposure to the cyclical nature of the refining industry. HMEL's Ba2 CFR incorporates a two-notch uplift based on Moody's expectation that the company will receive extraordinary support from its shareholder and key off-taker, HPCL. This assumption of support reflects HMEL's strategic importance to HPCL, its 49% ownership by HPCL, as well as HPCL's management oversight and track record of providing financial and operational assistance to HMEL. On March 31, 2021, 77% of total debt in HMEL's capital structure was secured, meaning claims of bondholders are subordinated to those of secured lenders. Consequently, Moody's rates the company's senior unsecured bonds one notch below its CFR. HMEL has adequate liquidity. As of March 31, 2021, HMEL had cash and cash equivalents of around INR10.4 billion, which, along with the expected cash flow from operations and the undrawn portion of the petchem facility of INR36.7 billion, will be sufficient to cover its capital spending of INR48 billion and debt service requirements of INR15 billion over the next 18 months. HMEL's ratings also consider the following environmental, social and governance (ESG) factors. First, HMEL is exposed to increasing environmental regulations and safety risks associated with its refining business, which is among the 11 sectors that Moody's has identified as having elevated environmental risk. However, these risks are somewhat mitigated by the company's track record of environmental compliance and its high refining complexity with increasing downstream integration. Second, the ratings consider HMEL's aggressive financial strategy, as evidenced by its largely debt-funded petrochemicals capacity expansion. This was mitigated by the company's low shareholder returns, long-dated debt maturity profile and an undertaking from its sponsors to cover certain shortfalls in internal cash generation and cost overruns. The ratings also consider HMEL's limited public disclosure of its financial and operating performance, given its status as a private company in India. Third, HMEL is privately owned and its ownership is concentrated in HPCL and Mittal Energy Investments, which each hold a 49% stake. HMEL's board consists of nine directors, out of which only two are independent. HPCL is in turn 51.1% owned by Oil and Natural Gas Corporation Ltd. (Baa3 negative), which is 67.7% owned by the Government of India (Baa3 negative). Mittal Energy Investments is a 100% subsidiary of Mittal Investments SARL. The indirect, partial ownership by the Government of India mitigates some of the risks arising from its concentrated ownership structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's is unlikely to upgrade the ratings until HMEL completes its ongoing expansion and successfully ramps up its petrochemical plant. Moody's could change the outlook to stable if HMEL reduces its leverage to under 5.0x. Moody's could downgrade the ratings if there is a sustained decline in either refining margins or operational efficiency, resulting in a significant deterioration in HMEL's earnings and cash flow. At the same time, any material delays in ramp-up after physical construction that defer the earnings contribution from the project, will also exert negative ratings pressure. Specifics metrics indicative of a downgrade include adjusted debt/EBITDA staying above 5.0x and debt/capitalization staying above 65% beyond March 2022 on a sustained basis. Moody's could also downgrade the ratings if (1) Moody's downgrades HPCL's ratings, or (2) there is a change in the relationship between HPCL and HMEL that lowers Moody's assessment of support incorporated into HMEL's ratings. The principal methodology used in these ratings was Refining and Marketing Industry published in November 2016. HPCL-Mittal Energy Limited, which commenced operations in 2011, owns an 11.3 million metric tons per annum (mmtpa) refinery in Bathinda, Punjab, with a Nelson Complexity Index of 12.6, making it one of the highest complex refineries in Asia. HY LINK: CRISIL Keeps B- Debt Ratings in Not Cooperating -------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Hy Link Overseas Private Limited (HOPL) continue to be 'CRISIL B-/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 8.5 CRISIL B-/Stable (Issuer Not Cooperating) Proposed Cash 12.5 CRISIL B-/Stable (Issuer Credit Limit Not Cooperating) Working Capital 4.0 CRISIL B-/Stable (Issuer Demand Loan Not Cooperating) CRISIL Ratings has been consistently following up with HOPL for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of HOPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on HOPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of HOPL continue to be 'CRISIL B-/Stable Issuer Not Cooperating'. HOPL, based in New Delhi and established in 1998 by Mr Sidharth Gulati and his family, trades in steel pipes and tubes, aluminium foil, biaxially-oriented polyethylene terephthalate (BOPET) films, refined oil, and clarified butter. INDICON CONSTRUCTION: CRISIL Moves D Ratings to Not Cooperating --------------------------------------------------------------- CRISIL Ratings has migrated the rating on bank facilities of Indicon Construction Private Limited (ICPL) to 'CRISIL D/CRISIL D Issuer not cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Bank Guarantee 1.9 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) Cash Credit 3.9 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) Funded Interest 0.9 CRISIL D (ISSUER NOT Term Loan COOPERATING; Rating Migrated) Long Term Loan 1.6 CRISIL D (ISSUER NOT COOPERATING; Rating Migrated) Proposed Long Term 7.5 CRISIL D (ISSUER NOT Bank Loan Facility COOPERATING; Rating Migrated) Working Capital 1.7 CRISIL D (ISSUER NOT Term Loan COOPERATING; Rating Migrated) CRISIL Ratings has been consistently following up with ICPL for obtaining information through letters and emails dated May 31, 2021 and June 30, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of ICPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on ICPL is consistent with 'Assessing Information Adequacy Risk'. Therefore, on account of inadequate information and lack of management cooperation, CRISIL Ratings has migrated the rating on bank facilities of ICPL to 'CRISIL D/CRISIL D Issuer not cooperating'. ICPL was established in 2003 by Mr Pradeep Kadam and Mr Ashok Dhamdhere in Pune, Maharashtra. The company, which is registered as a Class 1-A contractor with the Government of Maharashtra, undertakes civil construction for the Public Works Department and Pradhan Mantri Gram Gadak Yojana. Work comprises construction of roads, mainly in western Maharashtra. INDO LAMINATES: CRISIL Keeps D Debt Ratings in Not Cooperating -------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Indo Laminates Private Limited (ILPL) continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 15 CRISIL D (Issuer Not Cooperating) Letter of Credit 5 CRISIL D (Issuer Not Cooperating) Term Loan 9 CRISIL D (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with ILPL for obtaining information through letters and emails dated December 18, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of ILPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on ILPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of ILPL continue to be 'CRISIL D/CRISIL D Issuer Not Cooperating'. Established in 1985, ILPL manufactures laminates. It is based in Delhi and its plant is in Bahadurgarh, Haryana. Its daily operations are managed by Mr Rahul Goyal and Mr Subhash Goyal. IUA TRUST: CRISIL Keeps D Debt Ratings in Not Cooperating --------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of IUA Trust continue to be 'CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Secured Overdraft 0.50 CRISIL D (Issuer Not Facility Cooperating) Term Loan 22.00 CRISIL D (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with IUA for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of IUA, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on IUA is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of IUA continue to be 'CRISIL D Issuer Not Cooperating'. IUA was set up in 2009 by members of the Dhingra family and Maheshwari family to set up a recreational club cum sports center by the name of 'DD Club' at Delhi. KAMATCHI TRADERS: CRISIL Keeps B+ Debt Rating in Not Cooperating ---------------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of Sri Kamatchi Traders (SKT) continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 7.5 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with SKT for obtaining information through letters and emails dated December 18, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of SKT, which restricts CRISIL Ratings' ability to take a forward looking view on the entity's credit quality. CRISIL Ratings believes that rating action on SKT is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of SKT continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. SKT, set up in 1985 as a partnership firm in Chennai, processes pulses, mainly urad dal, to produce flour used by food processing players. The firm's operations are managed by managing partner Mr S C Moha. LAXMI SRINIVASA: CRISIL Keeps B+ Debt Rating in Not Cooperating --------------------------------------------------------------- CRISIL Ratings said the rating on bank facilities of Sri Laxmi Srinivasa Industries (SLSI) continues to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 13 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with Sri Laxmi Srinivasa Industries (SLSI) for obtaining information through letters and emails dated December 18, 2020 and June 09, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of SLSI, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on SLSI is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of SLSI continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. SLSI mills and processes paddy into rice, rice bran, broken rice, and husk. The firm was set up by Mr. Srinivas Reddy and his family members. MEGHA GUM: CRISIL Keeps D Debt Ratings in Not Cooperating --------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Megha Gum and Chemicals (MGC) continue to be 'CRISIL D Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 15 CRISIL D (Issuer Not Cooperating) Term Loan 3 CRISIL D (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with MGC for obtaining information through letters and emails dated December 29, 2020 and June 29, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of MGC, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on MGC is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of MGC continue to be 'CRISIL D Issuer Not Cooperating'. Set up as a proprietorship firm by Ms. Urmila Goyal, MGC commenced operations in 2005 by setting up a guar gum refining unit in Hisar, Haryana. Its cotton ginning and cotton oil refining unit began operations in November 2012. MGC is managed by Mr. Rajinder Goyal and Mr. Anuj Goyal. NEPTUNE LAMINATES: CRISIL Keeps B+ Debt Ratings in Not Cooperating ------------------------------------------------------------------ CRISIL Ratings said the ratings on bank facilities of Neptune Laminates Private Limited (NLPL) continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 2 CRISIL B+/Stable (Issuer Not Cooperating) Term Loan 4.4 CRISIL B+/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with NLPL for obtaining information through letters and emails dated December 29, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of NLPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on NLPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of NLPL continue to be 'CRISIL B+/Stable Issuer Not Cooperating'. NLPL, incorporated in 2013, is promoted by the Veraval, Gujarat-based Limbani family and others. It manufactures laminates and started commercial production in January 2015. NIRMLANAND STEELS: CRISIL Keeps B Debt Ratings in Not Cooperating ----------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Shri Nirmlanand Steels Casting Private Limited (SNSCPL) continue to be 'CRISIL B/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 4 CRISIL B/Stable (Issuer Not Cooperating) Term Loan 2 CRISIL B/Stable (Issuer Not Cooperating) CRISIL Ratings has been consistently following up with SNSCPL for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of SNSCPL, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on SNSCPL is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of SNSCPL continue to be 'CRISIL B/Stable Issuer Not Cooperating'. SNSCPL, incorporated in 2007 and based in Raigarh, Chhattisgarh, is promoted by Mr Kamal Jindal and his brother Mr Raman Kumar Agarwal. The company manufactures mild steel ingots and thermo-mechanically treated (TMT) bars. Its daily operations are managed by Mr Kamal Jindal's son, Mr Ashish Jindal. PAVAN INDUSTRIES: CRISIL Keeps B Debt Ratings in Not Cooperating ---------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of Pavan Industries - Hyderabad (PIH) continue to be 'CRISIL B/Stable Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 5 CRISIL B/Stable (Issuer Not Cooperating) Proposed Cash 5 CRISIL B/Stable (Issuer Credit Limit Not Cooperating) CRISIL Ratings has been consistently following up with PIH for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of PIH, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on PIH is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of PIH continue to be 'CRISIL B/Stable Issuer Not Cooperating'. PIH, set up in 2006, is a partnership firm of Mr. Praveen Chowdhary and Mrs. Susheela Devi. The firm is engaged in the milling of paddy into processed non-basmati rice at Ranga Reddy, Telangana. S GOKUL: CRISIL Keeps C Debt Ratings in Not Cooperating Category ---------------------------------------------------------------- CRISIL Ratings said the ratings on bank facilities of S Gokul Das (SGD) continue to be 'CRISIL C Issuer Not Cooperating'. Amount Facilities (INR Crore) Ratings ---------- ----------- ------- Cash Credit 5.50 CRISIL C (Issuer Not Cooperating) Proposed Working 4.25 CRISIL C (Issuer Not Capital Facility Cooperating) CRISIL Ratings has been consistently following up with SGD for obtaining information through letters and emails dated December 18, 2020 and June 9, 2021 among others, apart from telephonic communication. However, the issuer has remained non cooperative. 'The investors, lenders and all other market participants should exercise due caution with reference to the rating assigned/reviewed with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived at without any management interaction and is based on best available or limited or dated information on the company. Such non co-operation by a rated entity may be a result of deterioration in its credit risk profile. These ratings with 'ISSUER NOT COOPERATING' suffix lack a forward-looking component.' Detailed Rationale Despite repeated attempts to engage with the management, CRISIL Ratings failed to receive any information on either the financial performance or strategic intent of SGD, which restricts CRISIL Ratings' ability to take a forward-looking view on the entity's credit quality. CRISIL Ratings believes that rating action on SGD is consistent with 'Assessing Information Adequacy Risk'. Based on the last available information, the ratings on bank facilities of SGD continue to be 'CRISIL C Issuer Not Cooperating'. SGD, established in 2014 and based in Thiruvananthapuram, is a proprietorship firm of Mr S Gokul Das. It is a contractor for the Kerala state Public Works Department. TEMPLE LEASING: Insolvency Resolution Process Case Summary ---------------------------------------------------------- Debtor: Temple Leasing & Finance Limited 116A, 1st Floor Somdutt Chamber-15 Bhikaji Cama Place New Delhi South West Delhi DL 110066 IN Insolvency Commencement Date: June 25, 2021 Court: National Company Law Tribunal, New Delhi Bench Estimated date of closure of insolvency resolution process: December 22, 2021 Insolvency professional: Arvind Mittal Interim Resolution Professional: Arvind Mittal 1900, JJ Colony Madanpur Khadar Phase-3, Sarita Vihar New Delhi 76 E-mail: arvindmittal81@yahoo.in - and - F-29, DLF Centre Point Sector-11 Opposite Bata Flyover Faridabad Haryana 121006 E-mail: templeleasing.rp@gmail.com Last date for submission of claims: July 22, 2021 WELD METALS: Insolvency Resolution Process Case Summary ------------------------------------------------------- Debtor: Weld Metals India Private Limited M-54, Chitranjan Park New Delhi, South Delhi 110019 IN Insolvency Commencement Date: July 6, 2021 Court: National Company Law Tribunal, New Delhi Bench Estimated date of closure of insolvency resolution process: January 2, 2022 (180 days from commencement) Insolvency professional: Mr. Anil Matta Interim Resolution Professional: Mr. Anil Matta Matta & Associates 308, RG Trade Tower Plot No. B-7 Netaji Subhash Place Pitampura New Delhi 110034 E-mail: mattaassociates@gmail.com weldmetals2021@gmail.com Last date for submission of claims: July 21, 2021 ================= I N D O N E S I A ================= GARUDA INDONESIA: Annual Net Loss Widens to US$2.4 Billion in 2020 ------------------------------------------------------------------ Nikkei Asia reports that Garuda Indonesia posted a net loss of $2.4 billion in 2020, with its auditor raising concerns over the continuity of the Southeast Asian country's flagship airline. The net loss is Garuda's biggest since at least 2005, the oldest available data on Quick-Factset, and marks a staggering increase from the $38.9 million loss it reported the previous year, Nikkei Asia notes. The figures, posted to the Indonesian Stock Exchange on July 16, further highlight the dire situation the company faces. Sales were down 68% compared with 2019, while group current liabilities exceed current assets by $3.8 billon, posing a serious problem for Garuda to meet its short-term financial obligations. It also had negative equity of $1.9 billion, meaning total liabilities exceed total assets. It also had negative cash flow -- spending more money than it made -- of $96.5 million in 2020. In a further blow, Garuda's auditor PwC assigned a "no opinion" on the financial results -- given when an auditor cannot judge whether a company's accounts have been properly created -- which would further undermine investor confidence in the carrier, Nikkei Asia relays. According to Nikkei Asia, Garuda shares have remained suspended from trading since June 18, after the company defaulted on coupon payments of $500 million on an Islamic bond. Explaining its decision to give no opinion on the financial report, PwC said in its auditor's report that Garuda's circumstances, not least its problematic finances, "indicate the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern." As part of its restructuring efforts, Garuda said in its financial statement that it is undertaking several measures, including negotiating with its creditors for a relaxation on debt payments, rationalization of employee head count and asking the government to disburse remaining rescue funds prepared for the company but yet to be paid, according to Nikkei Asia. Garuda had agreed to a rescue package of IDR8.5 trillion (US$586 million) with the government last year, but failures to meet certain performance requirements has meant that the carrier has only received 1 trillion rupiah. PwC said that as of July 16, most of the reforms Garuda has outlined have not been achieved. "The ability of management to realize [the reform measures] is key in supporting management's conclusion that it is appropriate to prepare the Group's consolidated financial statements on a going concern basis," the auditor, as cited by Nikkei Asia, said. But as a result of Garuda's failure to carry out the measures, PwC said it was "unable to obtain sufficient appropriate audit evidence to support the assumption that the management's plan is achievable in the necessary time frame to provide a basis for us to issue an audit opinion." It added: "Should the Group fail to achieve the above mentioned management's plans, it might not be able to continue operating as a going concern." Headquartered in Jakarta, Indonesia, government-owned airline PT Garuda Indonesia -- http://www.garuda-indonesia.com/-- currently has a fleet of about 77 aircraft offering service to some 27 domestic and 33 international destinations. Under its Citilink brand, it serves 10 other domestic routes. Garuda also ships about 200,000 tons of cargo a month and operates a computerized tracking system. GARUDA INDONESIA: Cargo Firm Files Suit Over Unpaid Debt -------------------------------------------------------- Reuters reports that Garuda Indonesia has been brought to court after failing to pay a debt to an air cargo firm PT My Indo Airlines (MYIA), the two companies said on July 19. According to Reuters, the court proposal had no immediate impact to Garuda's operations, the company said in the statement, adding it will ensure flight services continue. The first court appearance is set for July 27. "We are currently studying the PKPU proposal submitted by MYIA together with consultant appointed by the company to provide further response to the proposal," Reuters quotes Garuda chief executive Irfan Setiaputra as saying in a statement, without providing details on the debt amount. PKPU is an Indonesian court proceeding that could be initiated by either debtor or creditor seeking debt settlement. The Indonesia Stock Exchange has suspended trading of Garuda's shares since June 18 after the airline defaulted on its $500 million sukuk a day earlier. Garuda has said it was considering settling its outstanding debt in court as its finances continue to be significantly impacted by the coronavirus pandemic, Reuters relates. A legal representative of MYIA confirmed the suit but declined to share further details, adds Reuters. Headquartered in Jakarta, Indonesia, government-owned airline PT Garuda Indonesia -- http://www.garuda-indonesia.com/-- currently has a fleet of about 77 aircraft offering service to some 27 domestic and 33 international destinations. Under its Citilink brand, it serves 10 other domestic routes. Garuda also ships about 200,000 tons of cargo a month and operates a computerized tracking system. GARUDA INDONESIA: Faces Lawsuit Over Failure to Pay Aircraft Lease ------------------------------------------------------------------ The Jakarta Post reports that Garuda Indonesia is facing an insolvency lawsuit over its failure to pay aircraft lease while trying to stay afloat in an industry severely hit by the COVID-19 pandemic. Publicly listed AerCap Ireland Ltd., an aircraft leasing firm based in Dublin, filed on June 4 an insolvency lawsuit against Garuda with the Supreme Court of New South Wales in Australia, the report discloses. During the ongoing trial, Garuda was "in the process of negotiating with AerCap to reach a commercial deal and restructure the contract outside the Court", the 72-year-old airline company stated in its financial report released on July 16, the Jakarta Post relates. Headquartered in Jakarta, Indonesia, government-owned airline PT Garuda Indonesia -- http://www.garuda-indonesia.com/-- currently has a fleet of about 77 aircraft offering service to some 27 domestic and 33 international destinations. Under its Citilink brand, it serves 10 other domestic routes. Garuda also ships about 200,000 tons of cargo a month and operates a computerized tracking system. ===================== P H I L I P P I N E S ===================== PHILIPPINE NATIONAL BANK: Fitch Alters Outlook on 'BB' IDR to Neg. ------------------------------------------------------------------ Fitch Ratings has revised the Outlook on Philippine National Bank's (PNB) Long-Term Issuer Default Rating (IDR) to Negative from Stable, and affirmed the Long-Term IDR at 'BB'. The revision in the Outlook follows similar revision of the Outlook on the Philippine sovereign rating (see Fitch Revises Philippines' Outlook to Negative; Affirms at 'BBB') as well as challenges to the bank operating environment. At the same time, Fitch affirmed PNB's Viability Rating (VR) at 'bb'. Philippines' economy has recovered more slowly than Fitch's earlier expectation, with GDP continuing to shrink by -4.2% in 1Q21. Business confidence and private consumption remain sluggish and pose sustained challenges to banking system asset quality. Fitch expects Philippines' GDP to expand by 5.0% in 2021 (2020: -9.6%), before rebounding to 6.6% in 2022 and 7.3% in 2023. The less vigorous economic recovery is likely to weigh on loan demand and business opportunities over the next 12 to 18 months. Fitch has thus revised the Philippine's bank operating environment score to 'bb+'/negative from 'bb+'/stable. KEY RATING DRIVERS IDRS, VR AND SRF PNB's VR and Support Rating Floor (SRF) are currently at the same level. The bank's VR of 'bb' reflects its standalone credit strengths, which are underpinned by the bank's adequate loss absorption buffers and reasonable franchise as the fifth-largest bank in the Philippines. However, these strengths are offset by Fitch's assessment of the challenging operating conditions. These challenges continue to exert pressure on the bank's asset quality and profitability, which are already significantly weaker than major peers. Should business conditions continue to deteriorate the bank's company profile score will most likely be lowered, to reflect the more challenging operating environment, and Fitch believes that management's strategic objectives may also be adjusted accordingly. Meanwhile, the bank's SRF reflects Fitch's view of moderate probability of state support to the bank, in times of need, taking into consideration its systemic importance, with market share of 5%-6% in assets and deposits, as well as Philippine's sovereign fiscal flexibility. The Negative Outlook on the Long-Term IDR mirrors that of the sovereign and also reflects sustained challenges in the operating environment, which would continue to weigh on the bank's credit profile over the rating horizon. PNB's reported gross non-performing loan (NPL) ratio of 10.7% at end-March 2021 was the highest among Fitch-rated local peers, and significantly higher than the system average of 4.3%. The ratio had deteriorated on the back of lumpy impairment in its related-party corporate exposures, a contracting loan book and weakening in its broader portfolios due to the pandemic-induced economic downturn. The bank's stage 3/impaired loans ratio had similarly deteriorated to 11.5% by end-2020 from 3.6% at end-2019. Fitch expects the bank's impaired loans ratio to remain high in the next 12 months on continued credit migration of loans under debt moratoriums, which expired in December 2020, and the sluggish economic recovery. Against this backdrop, Fitch has revised the bank's asset quality score to 'b+'/stable from 'bb-'/negative. PNB's profitability and earnings profile is hampered by its lower operating efficiency, higher reliance on volatile revenue sources, such as trading and gains on property sales, as well as worse-than-peers asset quality. Fitch expects credit costs to remain high in 2021 due to its low reserve coverage, even though it had booked significant provisions in 2020. Fitch expects continued compression in the net interest margin, a muted loan growth outlook and the absence of large trading gains in 2021 to continue to weigh on the bank's operating profitability. Fitch has revised the bank's earnings and profitability score to 'b+'/stable from 'bb-'/negative because of this development. PNB's common equity Tier 1 (CET1) ratio of 14.1% as of end-March 2021 provides satisfactory buffers to withstand moderate credit stresses in the system. PNB had recently completed a property dividend transaction, which was part of its effort to monetise the low-return earning assets on three prime properties it owns. Fitch expects the gain from the revaluation of the assets, netting of the transaction cost, to increase its core capitalisation level. Fitch expects the bank's capitalisation to remain steady in the near term, with sustained profitability and a muted loan growth outlook. Funding and liquidity are PNB's relative rating strength. The bank's loan to deposit ratio of 74.2% and liquidity coverage ratio of 203.4% as at March 2021 reflect its liquid balance sheet. The share of low-cost current and savings account deposits had also increased to 78% of the bank's total compared to 68% at end-2019, which reinforces the strength of its deposit franchise. Fitch expects the bank's funding and liquidity profile to remain stable in the near term, helped by the central bank's dovish monetary policy stance. Even so, Fitch has assigned a negative outlook on the funding and liquidity score to mirror that of the sovereign rating, as the state's ability to support system liquidity may be reduced if pressures continue to build. RATING SENSITIVITIES IDRS, VR AND SRF Factors that could, individually or collectively, lead to negative rating action/downgrade: -- PNB's VR and SRF are currently at the same level. A downgrade in the sovereign rating would most likely prompt similar action on the operating environment score, and could result in similar revision in the bank's SFR and VR, which would lead to a downgrade of its Long-Term IDR. -- Fitch may also downgrade the bank's VR if Fitch sees a deterioration of the bank's financial profile beyond Fitch's base case scenario, such as if the projected impaired loan ratio stays in excess of 10% over a prolonged period, and the CET1 ratio falls below 12%. Excessive credit growth in higher risk sectors such as unsecured consumer lending, that is coupled with the thinning of capital buffers, could also pressure the bank's VR. However, Fitch believes that this scenario is improbable in the near term because of the muted economic outlook. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch may revise the Outlook on bank's Long-Term IDR back to Stable should the Outlook on the sovereign rating be revised to Stable and/or operating environment outlook is revised to stable. -- PNB's VR and IDRs could be upgraded if Fitch sees material improvements in its asset quality metrics, such as if its NPL ratio and profitability recover close to pre-pandemic levels. Upgrade prospects, however, are low in the near term, given the magnitude of recovery required amid the soft economic outlook. 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 IDRs of PNB is linked to that of the Philippine sovereign. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ===================== S O U T H K O R E A ===================== OPTIMUS ASSET: CEO Gets 25 Years for Fund Fraud Schemes ------------------------------------------------------- Yonhap News Agency reports that the CEO of the scandal-ridden private equity investment firm, Optimus Asset Management, was sentenced to 25 years in prison on July 20 for running one of the largest fund fraud schemes in the country's financial history. According to Yonhap, the Seoul Central District Court found Kim Jae-hyun guilty of fraud and embezzlement in the fraudulent fund case but imposed a prison term significantly below the life imprisonment sought by prosecutors against Kim. The court also imposed a fine of KRW500 million (US$434,000), on top of the KRW75.1 billion in forfeiture to cover his fraud, Yonhap discloses. Both Lee Dong-yeol, the company's second-largest shareholder, and Yoon Seok-ho, an executive at the company, were sentenced to eight years in prison on the same charges, Yonhap relates. Calling the case "massive fraud that disrupted the capital market, Judge Hur Sun-ah said Kim "totally ignored the basic work ethics and principles of the financial market, such as keeping faith with investors," and caused them "astronomical damage." She also reprimanded Kim and the other defendants for going "as far as generating fraudulent documents for investors" in order to sustain the fraud, and impeding investigations by trying to destroy evidence. "It is unclear how much money the victims can recover," she added. Yonhap says the vast fraud scheme run by the private equity company took in money of about KRW1.35 trillion from approximately 3,200 individual and institutional investors from April 2018 to June 2020, by lying that the money would be invested in safe public institutions. However, most of the money was actually funneled into risky assets or used to pay returns to investors to give the appearance that the company was engaged in serious and sound financial transactions, according to investigators. The company failed to redeem more than KRW554 billion for its customers, Yonhap notes. Yonhap relates that the scandal has engulfed the country's political and financial sectors, after one of the company's internal documents was disclosed to media last year, suggesting that some influential figures allegedly lobbied to help the company conceal its fraudulent activities. But investigations into various allegations have yet to produce meaningful outcomes, except that a former director at the Financial Supervisory Service (FSS) was charged with taking bribes in January, adds Yonhap. ================= S R I L A N K A ================= SRI LANKA: Moody's Puts Caa1 Issuer Rating on Review for Downgrade ------------------------------------------------------------------ Moody's Investors Service has placed the Government of Sri Lanka's Caa1 foreign currency long-term issuer and senior unsecured debt ratings under review for downgrade. The decision to place the ratings under review for downgrade is driven by Moody's assessment that Sri Lanka's increasingly fragile external liquidity position raises the risk of default. This assessment reflects governance weaknesses in the ability of the country's institutions to take measures that decisively mitigate significant and urgent risks to the balance of payments. Although the government has secured some financing, mainly from bilateral sources, its financing options remain narrow with borrowing costs in international markets still prohibitive. Absent large and sustained capital inflows through a credible external financing strategy, Moody's expects Sri Lanka's foreign exchange reserves to continue declining from already low levels, further eroding its ability to meet sizeable and recurring external debt servicing needs, and increasing balance of payment risks. Extremely weak debt affordability -- with interest payments absorbing a very large share of the government's very narrow revenue base -- compounds the debt repayment challenge. The rating review will focus on assessing whether the sovereign is able to use a period of time provided by its current foreign exchange reserves and bilateral arrangements to implement measures that widen and increase its financing sources for the medium term, and thereby avoid default for the foreseeable future. Sri Lanka's foreign currency country ceiling has been lowered to Caa1 from B3, while the local currency country ceiling remains unchanged at B1. The three-notch gap between the local currency ceiling and the sovereign rating balances relatively predictable institutions and government actions against the low and declining foreign exchange reserves adequacy that raises macroeconomic risks as well as the challenging domestic political environment that weighs on policymaking. The three-notch gap between the foreign currency ceiling and local currency ceiling takes into consideration the high level of external indebtedness and the risk of transfer and convertibility restrictions being imposed given low foreign exchange reserves adequacy, with some capital flow management measures already imposed. These ceilings typically act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS RATIONALE FOR INITIATING THE REVIEW FOR DOWNGRADE Sri Lanka's low and declining foreign exchange reserves adequacy, limited and narrowing set of external financing options for the government, and the extremely large share of government revenue taken up by interest payments raises the risk of debt default. The increasing fragility of the situation and continued worsening of credit metrics without decisive actions are indications that institutional credibility and effectiveness have weakened compared with Moody's prior assessment. In contrast to the urgency of the situation -- and notwithstanding the government's stated commitment to repay its debt -- Moody's expects a credible and durable financing strategy to only materialise over a number of years. Meanwhile, Moody's expects the coverage by foreign exchange reserves of external repayments to continue falling from already low levels. As of the end of June, Sri Lanka's foreign exchange reserves (which in Moody's definition exclude gold and Special Drawing Rights) amounted to just around $3.6 billion, down 30% since the start of the year and insufficient to cover the government's annual external debt repayments alone of around $4-5 billion over the next 4-5 years. Taking into account plausible projections for the balance of payments, the country's foreign exchange reserves will fall further over the next 2-3 years, unless Sri Lanka manages to markedly raise capital inflows. Moody's baseline scenario assumes that the government and the Central Bank of Sri Lanka (CBSL) will continue to secure some foreign exchange resources and financing support through a combination of project-related multilateral loans, official sector bilateral assistance including central bank swaps, commercial bank loans, and the divestment of some state-owned assets -- albeit at a relatively slow pace. Measures introduced by CBSL, such as the required sale of a share of all inbound remittances and export proceeds to the central bank, will also generate additional reserves, while capital flow management measures restricting imports and outbound remittances and investment will help retain some foreign exchange resources in the country. These measures can only shore up reserves temporarily and marginally; they also come at a cost to the economy. Meanwhile, Sri Lanka's current account deficit is likely to remain stable and relatively narrow compared to peers at around 1-2% of GDP over the next few years, with the gradual recovery of the tourism sector partly hampered by the ongoing wave of infections and border restrictions. Foreign direct investment has the potential to pick up with the development of the Colombo Port City and the government's privatisation plans, although amounts are likely to increase only gradually over time. By contrast, Moody's does not assume that the government will enter into programme-based financing facilities with multilateral development partners at this stage, which significantly narrows its external financing options. Furthermore, while the government has historically relied on international market access to finance its fiscal deficits and external repayment needs, borrowing costs remain prohibitive with Sri Lanka's government bond spreads to US Treasuries still very wide at more than 1600 basis points, compared to around 500 basis points before the onset of the coronavirus pandemic. Sri Lanka's long-standing fiscal weaknesses complicate the government's policy choices. Moody's expects Sri Lanka's economy to grow by around 3.5% this year, taking into account less stringent pandemic-containment measures compared to last year. Economic growth is likely to accelerate further next year on base effects and the reopening of borders, providing some boost to government revenue. However, even with some revenue increases, Moody's estimates that the government's fiscal deficit will remain wide at around 9.5-10% of GDP this year and average 8.5% over the next two years. In turn, the government's debt burden will likely rise further to around 110% of GDP over 2022-23, from around 100% at the end of 2020 and around 87% in 2019. Extremely weak debt affordability magnifies debt repayment risks. Interest payments exceeded 70% of government revenue in 2020 and will likely remain around 60-70% over the next few years -- highest across sovereigns that Moody's rates by some distance -- even as revenue rebounds from very low levels. Indeed, government revenue is likely to remain around 10% of GDP over the next few years, unless the government's efforts to enhance tax administration and impose special taxes can sizeably and durably expand its revenue base. While domestic resources have been sufficient so far to finance the government's wider deficit in local currency, limited fiscal resources impose difficult policy choices to rationalise social spending and development expenditure, if interest payments continue to be prioritised. Given very weak credit metrics, there is material risk that falling reserves precipitate a crisis of confidence, involving a negative spiral of a rapidly depreciating exchange rate, rising inflation, higher domestic interest rates, higher debt payments in local currency terms, and a weaker domestic economy. In this scenario, default risk would increase sharply. Conversely, the sovereign's track record at securing some financing options, from foreign and domestic investors, may keep such an adverse scenario at bay for some time. The rating review will focus on assessing whether the sovereign is able to use a period of time provided by its current foreign exchange reserves and bilateral arrangements to implement measures that widen and increase its financing sources for the medium term, and thereby avoid default for the foreseeable future. ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS Sri Lanka's ESG Credit Impact Score is highly negative (CIS-4), reflecting its highly negative exposure to environmental and social risks. Ongoing challenges to institutional and policy effectiveness constrain the government's capacity to address ESG risks. The exposure to environment risk is highly negative (E-4 issuer profile score). Variations in the seasonal monsoon can have marked effects on rural household incomes and real GDP growth: while the agricultural sector comprises only around 8% of the total economy, it employs almost 30% of Sri Lanka's total labour force. Natural disasters including droughts, flash floods and tropical cyclones that the country is exposed to also contribute to higher food inflation and import demand. Moreover, ongoing development projects to improve urban connectivity have increased the rate of deforestation, although the country continues to engage development partners to preserve its natural capital, such as its mangroves. The exposure to social risk is highly negative (S-4 issuer profile score). Balanced against Sri Lanka's relatively good access to basic education, which has continued to improve throughout the country in the post-civil war period, are weaknesses in the provision of some basic services in more remote and rural areas, such as water, sanitation and housing. As the country's population continues to grow, the government will face greater constraints in delivering high-quality social services and developing critical infrastructure amid ongoing fiscal pressures. The influence of governance is highly negative (G-4 issuer profile score). While international surveys point to stronger governance in Sri Lanka relative to rating peers, including in judicial independence and control of corruption, institutional challenges remain, particularly in the pace and effectiveness of reforms. Domestic political developments also tend to weigh on fiscal and economic policymaking. The ratings would likely be confirmed at their current level if the risk of external debt default were to diminish materially and durably. This could stem from the government demonstrating its capacity to use short-term financing sources as a means to gain time to secure a medium-term external financing strategy that maintained a manageable cost of debt, and a faster and more sustained buildup in non-debt creating foreign exchange inflows. Additionally, likely implementation of fiscal consolidation measures, particularly greater revenue mobilisation, that pointed to a material narrowing of fiscal deficits in the next few years and contributed to lower annual borrowing needs, would also support a confirmation of the rating. The rating would likely be downgraded in a status quo scenario where the financing of Sri Lanka's large external debt repayments remained uncertain while foreign exchange reserves adequacy still looked likely to continue deteriorating. GDP per capita (PPP basis, US$): 13,215 (2020 Actual) (also known as Per Capita Income) Real GDP growth (% change): -3.6% (2020 Actual) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 4.6% (2020 Actual) Gen. Gov. Financial Balance/GDP: -11.1% (2020 Actual) (also known as Fiscal Balance) Current Account Balance/GDP: -1.3% (2020 Actual) (also known as External Balance) External debt/GDP: 61.0% (2020 Actual) Economic resiliency: ba2 Default history: No default events (on bonds or loans) have been recorded since 1983. On July 14, 2021, a rating committee was called to discuss the rating of the Sri Lanka, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have materially decreased. The issuer's fiscal or financial strength, including its debt profile, has not materially changed. The issuer's susceptibility to event risks has not materially changed. The principal methodology used in these ratings was Sovereign Ratings Methodology published in November 2019. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. 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