/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/100923.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, September 23, 2010, Vol. 13, No. 187 Headlines A U S T R A L I A DIRECT FACTORY: CFS Retail Likely to Acquire 50% of DFO TAX RETURNS: Court Appoints Taylor Woodings as Liquidator TIMBERLAND FURNITURES: Receivers Launch Legal Action C H I N A CHINA MEDICAL: S&P Assigns 'B+' Long-Term Corporate Credit Rating CHINA PROPERTIES: S&P Affirms 'B-' Corporate Credit Rating H O N G K O N G LI'S MARINE: Members' Final Meeting Set for October 18 LONG WINNER: Members' Final Meeting Set for October 22 MACQUARIE GOODMAN: Creditors' Proofs of Debt Due October 4 MERIDIEN HOTELS: Creditors' Proofs of Debt Due October 15 MILLION REGAL: Creditors' Proofs of Debt Due October 18 PIER INTERNATIONAL: Creditors' Proofs of Debt Due October 18 POLIFIN ASIA: Final Meetings Slated for October 18 POPE & KIERNAN: Members' Final General Meeting Set for October 18 RC TRADING: Commences Wind-Up Proceedings SEAWILH LIMITED: Creditors' Proofs of Debt Due October 12 SOL MELIA: Creditors Meetings Set for October 7 SUMMIT ORIENT: Placed Under Voluntary Wind-Up Proceedings SUNTRUST ASIA: Creditors' Proofs of Debt Due October 8 TIN LUNG: Members and Creditors' Meetings Set for October 18 WEALTH WORLD: Commences Wind-Up Proceedings WELLBOND CONTRACTING: Pang Wai Kui Steps Down as Liquidator WELL FIT: Members and Creditors' Annual Meetings Set for Sept. 27 WIDEFUL INTERNATIONAL: Commences Wind-Up Proceedings WILKS ESTATE: Cynthia Wong Tak Yee Appointed as Liquidator WINPOWER HOLDINGS: Yeung Kam Hoi Steps Down as Liquidator I N D I A BAJRANGBALI ROLLING: CRISIL Cuts Rating on INR2MM Loan to 'BB+' LALA MADHORAM: CRISIL Reaffirms 'D' Rating on INR320MM Term Loan MAA AMBA: CRISIL Reaffirms 'BB-' Rating on INR65 Million Term loan MAA AMBA TOWERS: CRISIL Rates INR98.5 Million Term Loan at 'BB+' MECH & FAB: ICRA Puts 'LBB-' Rating on INR3.8cr Fund-Based Limits NOVATECH PROCESS: ICRA Assigns 'LBB' Rating to INR14cr Loans SHREE RAM: ICRA Assigns 'LB+' Rating to INR8.9cr Term Loans SHIVAM MELTECH: Fitch Assigns National Long-Term Rating at 'B-' TULIP APPARELS: ICRA Assigns 'LBB' Rating to INR8.05cr Bank Limits J A P A N JLOC 36: S&P Downgrades Ratings on Various Classes of Notes K O R E A KIA MOTORS: Moody's Upgrades Corporate Family Rating from 'Ba1' N E W Z E A L A N D CRAFAR FARMS: Minister Says Chinese Bid "Extremely Complex" P H I L I P P I N E S EXPORT AND INDUSTRY: Shareholders Approve Sale to BDO for PHP30BB S R I L A N K A * Fitch Affirms Sri Lanka's Issuer Default Rating at 'B+' - - - - - ================= A U S T R A L I A ================= DIRECT FACTORY: CFS Retail Likely to Acquire 50% of DFO ------------------------------------------------------- CFS Retail Property Trust is set to buy half of shopping centre chain Direct Factory Outlet. The Australian Associated Press reports that units of CFS have been halted from trading, ahead of an announcement from the shopping centre owner of a "significant transaction". The AAP says that the responsible entity of the real estate investment trust (REIT), Commonwealth Managed Investments, requested the trading halt, which has been granted until Friday morning or until the announcement is made. CFS Retail Property Trust, which is owned by global fund manager Colonial First State, has interests in 25 retail properties worth AU$7.7 billion. Included in the portfolio is the Altona Gate and Chadstone shopping centres in Melbourne and Sydney's Entertainment Quarter. As reported in the Troubled Company Reporter-Asia Pacific on Aug. 20, 2010, the Business Spectator said Direct Factory Outlet was granted a bank bailout after its owner, Austexx Pty Ltd, struck an agreement with lenders, which is likely to see the firm avoid being placed in receivership. Business Spectator related that a banking syndicate including Suncorp-Metway Ltd., National Australia Bank Ltd., St George Bank and Royal Bank of Scotland owed AU$450 million have agreed to extend a line of credit to DFO to ensure it can complete the construction of its unfinished South Wharf retail development. Founded in 1996, Direct Factory Outlets has eight factory outlet- style centres operating on the Eastern Seaboard. It was founded in 1996 by rich list members David Golberger and David Wieland, and is owned by holding company Austexx Pty Ltd. TAX RETURNS: Court Appoints Taylor Woodings as Liquidator --------------------------------------------------------- The Australian Securities & Investments Commission has obtained orders in the Federal Court in Melbourne appointing liquidators to Tax Returns Australia Dot Com Pty Ltd and Online Returns Pty Ltd, following an ASIC investigation. Mr. Ross Blakeley and Mr. Quentin Olde of Taylor Woodings were appointed to the two companies. Concerns were raised with ASIC that clients of both companies had not received tax refunds and stimulus payments owed to them. Both TRADC and Online Returns operated a Web site through which taxpayers could submit a tax return to the Australian Taxation Office. ASIC said in a statement that provisional liquidators were appointed as an interim measure to preserve assets of TRADC and Online Return. In appointing provisional liquidators, Justice Dodds-Streeton of the Federal Court of Australia ruled that there was sufficient evidence to suggest that both companies had failed to pay clients substantial amounts of money received as tax refunds on their behalf from the ATO. Her Honour also concluded that the companies may have allowed tax refunds received on behalf of clients to be applied, without justification, to the purchase of a holiday property in Port Douglas, Queensland. As a result of ASIC's investigation and the provisional liquidators' report, ASIC sought orders to have TRADC and Online Returns wound up. The liquidators will be responsible for identifying and securing the assets of both companies. ASIC's investigation is continuing. Background In 2001, a former director of TRADC and Online Returns, Mr. Darren Brown, was jailed by ASIC for misappropriation of AU$1.46 million of trust funds. In 2004, ASIC successfully applied to the Victorian Supreme Court to wind up four companies owned and operated by the current director of TRADC and Online Returns, Mr. Robert Brown. TIMBERLAND FURNITURES: Receivers Launch Legal Action ---------------------------------------------------- Timberland Furnitures' receivers have launched legal action to try to secure the assets of the company, after claiming that the assets have been transferred into a new company without payment, SmartCompany reports. SmartCompany says Deloitte Partners Neil Cussen and Vaughan Strawbridge were appointed as receivers of Timberland Furnitures on September 6, and advertised the business for sale on September 10. But the receivers said it soon became apparent that six months before the group collapsed, the business, stock and goodwill of the "old" Timberland Group had been placed into a "new" Timberland Group -- without the knowledge or consent of the company's secured creditor and without any payment being made. According to SmartCompany, the receivers claim the director of the "new" Timberland Group is the wife of one of the directors of the "old" Timberland Group, Luis Santos. SmartCompany discloses that on September 14, the receivers commenced proceedings in the Supreme Court of New South Wales to get access to the stock held by the "new" Timberland Group on behalf of the secured creditor of the "old" Timberland Group. The matter returns to Court on September 30, 2010. Deloitte has not released the name of the secured creditor, nor revealed the level of debt involved in the collapse, SmartCompany adds. Timberland Furnitures is a Sydney-based furniture retailer. The company has 10 stores in New South Wales and the Australian Capital Territory. ========= C H I N A ========= CHINA MEDICAL: S&P Assigns 'B+' Long-Term Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to China Medical Technologies Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' issue rating to the company's proposed issue of up to US$200 million in senior unsecured notes due 2015. The rating on the notes is subject to Standard & Poor's review of the final documentation for the notes issuance. The company intends to place the bond proceeds in an escrow account to refinance its two existing convertible notes due 2011 and 2013. "The rating on CMED reflects the company's small scale compared with global peers, its highly leveraged financial risk profile, and high industry risks. These weaknesses are tempered by CMED's good profitability, recurring cash flow generation, and good niche market position. In addition, S&P believes China's healthcare industry has favorable growth potential, given its low penetration rate," said Standard & Poor's credit analyst Joe Poon. CMED faces high industry risks as it operates in China's fragmented and competitive in-vitro diagnostic market. The company is also exposed to some regulatory risks associated with renewing or obtaining approval for new products. In its opinion, the entrance of long-established and large healthcare companies from overseas and other domestic players into this business could challenge CMED's market position. However, the impact is unlikely to be felt over the next two years, in its view, given the lengthy application process for new entrants. S&P expects CMED to maintain its good profitability over the next two years due to the increased contribution from its two high- margin molecular diagnostic products: Fluorescent In Situ Hybridization and Surface Plasmon Resonance. The profitability of its other product, Enhanced Chemiluminescence, has also stabilized after a period of intense pricing competition. In fiscal 2009, the company's sales dropped 12.9% year over year due to the reduced contribution from ECLIA, but FISH sales kept the gross margin at more than 80%. SPR products will contribute sales revenue from fiscal 2010. CMED's low-cost production base and established sales and distribution network offer additional rating support. The company sells its ECLIA products through distributors to small and mid- sized hospitals; and its FISH and SPR products to large hospitals through its direct sales force. "The company's financial metrics are likely to remain weak for the current rating category over the next 12 months, in its view, but should gradually improve thereafter as it expands its revenue base and reduces debt," said Mr. Poon. The metrics have deteriorated since the debt-funded acquisition of SPR technology in 2008. In its base-case scenario, S&P expects CMED's adjusted ratio of total debt to capital to remain high, at about 55%, over the next 12 to 18 months. S&P also expect its adjusted ratio of gross debt to EBITDA to improve to about 4.5x- 5.5x over the same period. CMED's liquidity will remain adequate, in its view, following the issuance of its proposed notes. S&P believes that the company will have sufficient liquidity for its operating and financing requirements, given its light capital expenditure, modest working capital needs, and the company's decision to suspend dividend payments over the next 12 months. As a result, CMED should be able to generate satisfactory free cash flow and gradually improve its debt leverage. The company's key financial objectives are likely to involve refinancing its two convertible notes, reducing debt, and maintaining sufficient operating cash. S&P has not factored any major acquisitions into the ratings. As at June 30, 2010, CMED had cash and cash equivalents of about Chinese renminbi RMB742.3 million with no short-term debt due. The company has no debt facilities, other than its two convertible notes. It has no available undrawn banking facilities. "The stable outlook reflects its expectation that CMED will be able to maintain sufficient liquidity, including good cash flow generation, to cope with market competition and reduce debt. S&P expects the company to gradually deleverage, which would stabilize its financial risk profile," said Mr. Poon. "In addition, S&P expects CMED to benefit from the growth potential in China, given the low penetration rate in the healthcare sector. In its opinion, to improve debt leverage, the company is likely to continue to preserve cash and make no dividend payouts." CHINA PROPERTIES: S&P Affirms 'B-' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that it had affirmed its 'B-' long-term corporate credit rating on China Properties Group Ltd. The outlook was negative. At the same time, S&P affirmed the 'B-' issue rating on the group's outstanding US$300 million senior unsecured notes due 2014. Standard & Poor's then withdrew both ratings due to insufficient information. S&P assessed the ratings on limited public information and did not have interaction with management. China Properties had substantial land premiums outstanding, construction obligations, and short-term debt against cash on hand as at June 30, 2010. S&P does not have a sufficient understanding of the group's funding alternatives or sales progress, and have not been updated about its growth strategy or financial policy. S&P is therefore no longer in a position to accurately assess China Properties' credit risks, particularly regarding its liquidity position. Nevertheless, S&P understand that the group's land bank and certain assets are of good value, and therefore likely to serve as a liquidity buffer if required. ================ H O N G K O N G ================ LI'S MARINE: Members' Final Meeting Set for October 18 ------------------------------------------------------ Members of LI's Marine Products Limited will hold their final general meeting on October 18, 2010, at 10:00 a.m., at Rm. 1321, Leighton Centre, 77 Leighton Road, Causeway Bay, in Hong Kong. At the meeting, Li Shing Wai, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. LONG WINNER: Members' Final Meeting Set for October 22 ------------------------------------------------------ Members of Long Winner Investment Limited will hold their final meeting on October 22, 2010, at 10:00 a.m., at Room 1601, Wing On Centre, 111 Connaught Road Central, in Hong Kong. At the meeting, Fung Kit Yee, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. MACQUARIE GOODMAN: Creditors' Proofs of Debt Due October 4 ---------------------------------------------------------- Macquarie Goodman Container Investments No. 1 Limited, which is in members' voluntary liquidation, requires its creditors to file their proofs of debt by October 4, 2010, to be included in the company's dividend distribution. The company's liquidators are: Edward Simon Middleton Patrick Cowley 27th Floor, Alexandra House 18 Chater Road Central, Hong Kong MERIDIEN HOTELS: Creditors' Proofs of Debt Due October 15 --------------------------------------------------------- Creditors of Meridien Hotels (Hong Kong) Limited, which is in members' voluntary liquidation, are required to file their proofs of debt by October 15, 2010, to be included in the company's dividend distribution. The company commenced wind-up proceedings on September 3, 2010. The company's liquidators are: Thomas Andrew Corkhill Iain Ferguson Bruce 8th Floor, Gloucester Tower The Landmark, 15 Queen's Road Central, Hong Kong MILLION REGAL: Creditors' Proofs of Debt Due October 18 ------------------------------------------------------- Creditors of Million Regal Investment Limited, which is in members' voluntary liquidation, are required to file their proofs of debt by October 18, 2010, to be included in the company's dividend distribution. The company's liquidator is: Au Chun Fai Jeffrey Room 503, Bonham Trade Centre 50 Bonham Strand Sheung Wan, Hong Kong PIER INTERNATIONAL: Creditors' Proofs of Debt Due October 18 ------------------------------------------------------------ Creditors of Pier International Limited, which is in members' voluntary liquidation, are required to file their proofs of debt by October 18, 2010, to be included in the company's dividend distribution. The company's liquidator is: Philip Brendan Gilligan 7th Floor, Alexandra House 18 Chater Road Central, Hong Kong POLIFIN ASIA: Final Meetings Slated for October 18 -------------------------------------------------- Members and creditors of Polifin Asia Limited will hold their final meetings on October 18, 2010, at 10:00 a.m., and 10:30 a.m., respectively at 35th Floor, One Pacific Place, 88 Queensway, in Hong Kong. At the meeting, Lai Kar Yan (Derek) and Darach E. Haughey, the company's liquidators, will give a report on the company's wind-up proceedings and property disposal. POPE & KIERNAN: Members' Final General Meeting Set for October 18 ----------------------------------------------------------------- Members of Pope & Kiernan & Black Limited will hold their final general meeting on October 18, 2010, at 10:00 a.m., at the offices of FTI Consulting (Asia) Ltd, 1008 Shui On Centre, 6-8 Harbour Road, Wanchai, in Hong Kong. At the meeting, Bruno Arboit, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. RC TRADING: Commences Wind-Up Proceedings ----------------------------------------- Members of RC Trading Education Limited, on September 8, 2010, passed a resolution to voluntarily wind-up the company's operations. The company's liquidator is: Cheung Wing On Rickey 7B Fu Wai Court Fortress Garden 32 Fortress Hill Road Hong Kong SEAWILH LIMITED: Creditors' Proofs of Debt Due October 12 --------------------------------------------------------- Creditors of SeaWilh Limited, which is in members' voluntary liquidation, are required to file their proofs of debt by Oct. 12, 2010, to be included in the company's dividend distribution. The company commenced wind-up proceedings on September 10, 2010. The company's liquidators are: Betty Yuen Yeung Ho Siu Pik Level 28, Three Pacific Place 1 Queen's Road East Hong Kong SOL MELIA: Creditors Meetings Set for October 7 ----------------------------------------------- Creditors of Sol Melia China Limited will hold their meeting on October 7, 2010, at 10:30 a.m., at 27/F., Alexandra House, 18 Chater Road, Central, in Hong Kong. At the meeting, Edward S Middleton, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. SUMMIT ORIENT: Placed Under Voluntary Wind-Up Proceedings --------------------------------------------------------- At an extraordinary general meeting held on August 28, 2010, creditors of Summit Orient Limited resolved to voluntarily wind up the company's operations. The company's liquidator is: Kan Flavia Fang 5 Middle Lane, Flat B Discovery Bay, Midvale Village Lantau Island, Hong Kong SUNTRUST ASIA: Creditors' Proofs of Debt Due October 8 ------------------------------------------------------ Creditors of Suntrust Asia Limited, which is in members' voluntary liquidation, are required to file their proofs of debt by Oct. 8, 2010, to be included in the company's dividend distribution. The company commenced wind-up proceedings on September 3, 2010. The company's liquidators are: Ying Hing Chiu Chan Mi Har Level 28, Three Pacific Place 1 Queen's Road East Hong Kong TIN LUNG: Members and Creditors' Meetings Set for October 18 ------------------------------------------------------------ Members and creditors of Tin Lung Headwear Manufacturing Limited will hold their meetings on October 18, 2010, at 4:00 p.m., and 4:30 p.m., respectively at Room 1402, 14th Floor, Yue Xiu Building, 160-174 Lockhart Road, Wanchai, in Hong Kong. At the meeting, Leung Chi Wa Simon, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. WEALTH WORLD: Commences Wind-Up Proceedings ------------------------------------------- Members of Wealth World International Trading Co., Limited, on August 30, 2010, passed a resolution to voluntarily wind-up the company's operations. The company's liquidators are: Ho Man Kit Kong Sau Wai Unit 511, 5th Floor Tower 1, Silvercord No. 30 Canton Road Tsimshatsui, Kowloon WELLBOND CONTRACTING: Pang Wai Kui Steps Down as Liquidator ----------------------------------------------------------- Pang Wai Kui stepped down as liquidator of Wellbond Contracting Limited on September 15, 2010. WELL FIT: Members and Creditors' Annual Meetings Set for Sept. 27 ----------------------------------------------------------------- Members and creditors of Well Fit Intimate Design & Manufacturing Limited will hold their annual meetings on September 27, 2010, at 5:00 p.m., at the offices of FTI Consulting (Hong Kong) Limited, 14th Floor, The Hong Kong Club Building, 3A Chater Road, Central, in Hong Kong. At the meeting, Fok Hei Yu, the company's liquidator, will give a report on the company's wind-up proceedings and property disposal. WIDEFUL INTERNATIONAL: Commences Wind-Up Proceedings ---------------------------------------------------- Members of Wideful International Limited, on September 8, 2010, passed a resolution to voluntarily wind-up the company's operations. The company's liquidator is: Choi Siu Ling 17/F., Hing Yip Commercial Centre 272-284 Des Voeux Road Central, Hong Kong WILKS ESTATE: Cynthia Wong Tak Yee Appointed as Liquidator ---------------------------------------------------------- Cynthia Wong Tak Yee on September 10, 2010, was appointed as liquidator of Wilks Estate Company Limited. The liquidator may be reached at: Cynthia Wong Tak Yee Level 28, Three Pacific Place 1 Queen's Road East Hong Kong WINPOWER HOLDINGS: Yeung Kam Hoi Steps Down as Liquidator --------------------------------------------------------- Yeung Kam Hoi stepped down as liquidator of Winpower Holdings Limited on September 1, 2010. ========= I N D I A ========= BAJRANGBALI ROLLING: CRISIL Cuts Rating on INR2MM Loan to 'BB+' --------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Bajrangbali Rolling Mills Ltd to 'BB+/Stable/P4+' from 'BBB- /Stable/P3'. Facilities Ratings ---------- ------- INR2.0 Million Term Loan BB+/Stable (Downgraded from 'BBB-/Stable') INR4.0 Million Proposed LT BB+/Stable (Downgraded from Bank Loan Facility 'BBB-/Stable') INR71.0 Million Cash Credit BB+/Stable (Downgraded from 'BBB-/Stable') INR13.0 Million Letter of P4+ (Downgraded from 'P3') Credit The downgrade reflects the substantial decline in BRML's revenues, and increase in its operation level losses, leading to low cash accruals, and factors in CRISIL's expectations that BRML's revenues and cash accruals will remain under pressure over the medium term. The ratings also reflect BRML's exposure to risks relating to the working-capital-intensive nature of its operations; and its marginal presence, and exposure to risks relating to cyclicality, in the steel industry. These weaknesses are partially offset by the support that the company derives from its group companies, and its promoters' experience in the steel industry. Outlook: Stable CRISIL believes that BRML will continue to benefit from its promoters' experience in the steel industry. The outlook may be revised to 'Positive' if the company's revenues and profitability increase more than expected, or if it achieves greater integration of operations. Conversely, the outlook may be revised to 'Negative' if BRML's capacity utilization declines, or it undertakes a large, debt-funded capital expenditure programme. About Bajrangbali Rolling BRML is promoted by the Kolkata-based Agarwal family, which has been in the steel business for more than 20 years. The company produces steel ingots and thermo-mechanically-treated bars, with current installed capacity of 20,000 tonnes per annum (tpa) and 18,000 tpa, respectively. Its production facility is in Darjeeling (West Bengal). The company is currently managed by Mr. Rakesh Agarwal. BRML has posted, on a provisional basis, a profit after tax (PAT) of INR2.3 million on an operating income of INR434 million in 2009-10 (refers to financial year, April 1 to March 31); it had reported a PAT of INR4.1 million on an operating income of INR735 million for 2008-09. LALA MADHORAM: CRISIL Reaffirms 'D' Rating on INR320MM Term Loan ---------------------------------------------------------------- CRISIL's rating on the bank facilities of Lala Madhoram Bhagwan Dass Charitable Society continues to reflect delays by Lala Madhoram in servicing its term loan. The delays have been caused by Lala Madhoram's weak liquidity. Facilities Ratings ---------- ------- INR20.00 Million Cash Credit D (Reaffirmed) INR320.00 Million Term Loan D (Reaffirmed) Lala Madhoram has limited track record of running a school, and weak financial risk profile, marked by high gearing, small quantum of corpus funds, and weak debt protection metrics. The society is susceptible to adverse regulatory changes in the education sector. However, the society benefits from the extensive experience of its trustees in the education sector. Lala Madhoram was established in 1982 under the Rajasthan Society Registration Act 1958. The society established Uday Bharti Public School in 1986-87 (refers to financial year, April 1 to March 31); the school's name was changed to Manav Rachna International School in 2007-08. The school is affiliated to the Central Board of Secondary Education and offers education from pre-nursery to higher secondary levels. MAA AMBA: CRISIL Reaffirms 'BB-' Rating on INR65 Million Term loan ------------------------------------------------------------------ CRISIL's ratings on the bank facilities of Maa Amba Infrastructure Pvt Ltd continue to reflect MAIPL's small scale operations in the fragmented ingots industry, and weak financial risk profile marked by low cash accruals, small net worth, and high gearing. These weaknesses are partially offset by the benefits that MAIPL derives from the support of its group companies, and its promoters' experience in the steel industry. Facilities Ratings ---------- ------- INR47.5 Million Cash Credit BB-/Stable (Reaffirmed) INR65.0 Million Term loan BB-/Stable (Reaffirmed) INR7.5 Million Letter of Credit P4+ (Reaffirmed) Outlook: Stable CRISIL expects MAIPL's scale of operations to remain small, and its financial flexibility constrained because of the start-up nature of its operations and its small net worth, over the near to medium term. The outlook may be revised to 'Positive' if the company scales up its operations further, and its net worth improves substantially. Conversely, the outlook may be revised to 'Negative' if there is any delay in ramp up of sales, and its profitability margins are lower than expected. About Maa Amba MAIPL, incorporated by the Agarwal family in 2006, set up an ingot facility in Darjeeling (West Bengal), with a capacity of 24,000 tonnes per annum (tpa), in 2009-10 (refers to financial year, April 1 to March 31). The company started commercial production in February 2010. The promoters have several other companies in the same line of business; these include RS Ispat Pvt Ltd, Bajrangbali Rolling Mills Pvt Ltd, and RS Concast Ltd. MAIPL sells ingots primarily to local traders and BRML. The company also owns two warehouses from which it earned revenues of INR8 million in 2009-10. MAIPL, on a provisional basis, posted a net loss of INR9 million on an operating income of INR60.7 million for 2009-10; it had reported a profit after tax of INR0.2 million on operating income of INR9 million for 2008-09. MAA AMBA TOWERS: CRISIL Rates INR98.5 Million Term Loan at 'BB+' ---------------------------------------------------------------- CRISIL has assigned its 'BB+/Stable' rating to Maa Amba Towers Pvt Ltd's bank facility. Facilities Ratings ---------- ------- INR98.50 Million Rupee Term Loan BB+/Stable (Assigned) The rating reflects MATPL's below-average financial risk profile, marked by a small net worth, high gearing, and weak debt protection metrics; small scale of operations; and geographically concentrated revenue profile. These rating weaknesses are partially offset by MATPL's stable revenues, supported by regular lease rentals from its warehouses, and its promoters' experience in the warehousing services business. Outlook: Stable CRISIL believes that MATPL's scale of operations will remain small and its financial risk profile, weak, over the medium term, particularly because of the company's large, debt-funded capital expenditure (capex). The outlook may be revised to 'Positive' if MATPL's capital structure improves or scale of operations increases, significantly. Conversely, the outlook may be revised to 'Negative' if the company's financial risk profile weakens, most likely because of larger-than-expected debt-funded capex. MATPL was incorporated in 2007. It is promoted by Mr. Radhey Shyam Agarwal and his son Mr. Rakesh Agarwal. MATPL is in the business of leasing out warehouses. The company owns five warehouses in Dankuni, (West Bengal), spread over eight acres; it has additional seven acres, unused so far, on the same plot. The company leases its warehouses to its customers on long-term basis (with a 15 per cent price escalation clause every three years). It is not involved in the day-to-day operations of the warehouses. MATPL, on a provisional basis, reported a loss of INR1.5 million on net sales of INR25.9 million for 2009-10 (refers to financial year, April 1 to March 31). MECH & FAB: ICRA Puts 'LBB-' Rating on INR3.8cr Fund-Based Limits ----------------------------------------------------------------- ICRA has assigned a 'LBB-' rating outstanding to INR3.8 crore fund-based limits of Mech & Fab Industries. The outlook on the long term rating is stable. ICRA has also assigned an A4 rating to the INR2.5 crores non-fund based limits of Mech & Fab. The ratings derive strength from the firms' experienced management, its modest gearing and its healthy debt coverage indicators. The rating is however constrained by the modest and declining revenues of the firm on account of decreasing income from its cement plant division in the past few years. Although the firm has established relationships with reputed clients like BHEL, ABB, Siemens etc. ICRA notes that this also translates into low bargaining power for the firm given its modest size and competitive nature of the industry in which the firm operates. Moreover, ICRA also factors in the Mech & Fab's constitution as a partnership firm while keeping the ratings at a LBB-/A4 level. About Mech & Fab Mech & Fab, incorporated as a partnership firm in 1978, is engaged in fabricating transformer tanks and cement plants (raw mill housing and coal mill housing). The firm is promoted by the Aggarwal family and has its fabrication facility located in Bhopal (Madhya Pradesh). Recent Results During FY10, Mech & Fab recorded a provisional net profit after tax (PAT) of INR0.86 crore on provisional operating income of INR9.10 crore as against a PAT of INR1.02 crore on an operating income of INR16.92 crore during FY09. NOVATECH PROCESS: ICRA Assigns 'LBB' Rating to INR14cr Loans ------------------------------------------------------------ ICRA has assigned a long term rating of 'LBB' to the INR 14 crores fund-based limits of Novatech Process Equipments Private Limited. ICRA has also assigned an 'A4' rating to the INR6 crores Non-Fund based limits of NPEL. The outlook on the long term ratings is stable. The ratings are constrained by the company's small size of operations, intense competitive pressures, exposure to commodity risks in input cost and high financial risk profile. The leveraging level (i.e. Total Debt/Tangible Net-worth) as on end of March 2010 remained significantly high i.e. at 3.78 times both due to debt-funded capital expenditure and increased working capital requirements. The ratings however take into account the company's pre-qualification approvals from the leading EPC consultants/contractors as well as its long operating track record in fabrication of process equipment & supplies of resin systems on LSTK basis. As new fabrication facility set up at Kolkata for structurals & other fabricated steel items is operational since 2008-09, the company's approved vendor status from BHEL in July 2009 & favorable business potential from infrastructure sector (particularly power & roads) would remain key growth drivers, going ahead. The company has a fairly strong order-book position of INR140 Cr. as on August 2010, comprising of the single largest order of INR93 Cr. from Myanmar Petroleum Enterprise which is fixed price based and scheduled to be executed over the next 24 month period. Notwithstanding the same, the company's ability to execute these ongoing orders in a timely manner within the budgeted costs remains critical to its profitability, given its currently small size of operations. About Novatech Process Novatech Process Equipments Pvt Ltd, NPEL, was promoted in 1984, by Mr. Sukumar Ghosh, and is into the business of manufacturing & supply (i.e. fabrication) of process equipment and structurals. The company initially started with a small production unit (land on rental basis) at Vagle Estate, Thane (West) in 1984, and subsequently in 1992, set up fabrication unit at Ambarnath MIDC Area and in 1993, set up additional unit at Taloja MIDC Area ? both being near to Mumbai. With the purpose of diversification in the operations and also to capitalise on the growth opportunities in the power & other infra sectors, the company during 2008-09 set up a fabrication facility at Dulepara (E), near Kolkatta and about 100 km distance from Haldia Port. This facility commenced operations from 1st April 2009 onwards, and can cater to various structural requirements in power plants & other process industries, as well as can be used for fabricated steel items such as steel girders used in road bridges. NPEL reported a profit after tax (PAT) of INR1.17 crore in FY 2009-10 on an operating income of INR36.2 Crore. SHREE RAM: ICRA Assigns 'LB+' Rating to INR8.9cr Term Loans ----------------------------------------------------------- ICRA has assigned an 'LB+' rating to the INR8.90 crore term loans and INR7.00 crore cash credit facility of Shree Ram Proteins Private Limited. ICRA has also assigned an 'A4' rating to the INR0.5 crore short-term, non-fund based limits of Shree Ram Proteins Private Limited. The rating is constrained by the stretched liquidity profile of the company reflected through the irregular debt servicing and the limited track record of operations for the company. The rating is further constrained by lack of refining capacity which coupled with the highly fragmented nature of the edible oil industry limits the bargaining power while supplying to refined oil plants and the substitution threat from imports post rationalization of duty structure in the edible oil industry with availability of cheaper substitutes like palm oil. The ratings also take into account the concentration on a single type of oilseed and the vulnerability of profitability to the movements in raw material prices, which are subject to seasonality and crop harvest. The ratings, however, take comfort from the favorable location at Gondal (Rajkot) with availability of high quality raw material; the favourable demand outlook for edible oil in India and the strong market for cotton seed oil in Gujarat. The ratings also favourably consider the experience of the promoters in the cotton ginning industry and the comparative advantage over traditional oil seed processing units by producing value added products like linters and de-oiled cake, with a high demand potential. About Shree Ram Shree Ram Proteins Pvt. Ltd., incorporated in August 2008, is located at Gondal (Rajkot), and is primarily involved in the area of cotton seed processing. The product mix of the company comprises of cotton linters, cotton seed hulls, cotton seed oil and de-oiled cakes. The company commenced commercial production in February 2010. The group concern of the company is Shree Ram Cotton Industries (SRCI), which is involved in cotton ginning and pressing. Recent Results In the year FY10, SRPPL has reported operating income of INR13.1 crore and profit after tax of INR0.12 crore (audited) for two months of operation. SHIVAM MELTECH: Fitch Assigns National Long-Term Rating at 'B-' --------------------------------------------------------------- Fitch Ratings has assigned India's Shivam Meltech Private Limited a National Long-term rating of 'B-(ind)' with a Stable Outlook. The agency has also assigned ratings to SMPL's bank loans: -- INR280 million long-term loans: 'B-(ind)'; -- INR48.5 million fund-based loans: 'B-(ind)'; and -- INR6.5 million non fund-based loans: 'F4(ind)'. The ratings are constrained by SMPL's relatively small scale of operations in the domestic steel industry, weak credit metrics (net leverage in FY10: 12.2x) and exposure to raw materials price volatility. The ratings are also constrained by the delays in commissioning of the additional ingot plant due to lack of power supply from Durgapur Projects Ltd., which has significantly disrupted the company's operations. SMPL's ratings however benefit from the past experience of its management in the domestic steel industry, along with continuous equity infusion for the ongoing capex program (FY10: INR124 million and FY09: INR30 million). Positive rating triggers include supply of power for the ongoing capex for a quarter, which would enable timely commissioning and successful commercialization of the additional unit. Negative rating trigger include any further delay of beyond CY2010 in getting power for the additional unit, which would further stress the company's liquidity and credit metrics. SMPL's revenues improved to INR366.9 million in FY10 (FY09: INR296.2 million) although its EBITDAR margins reduced to 4.9% during the year (FY09: 5.9%) due to raw material price volatility. The company's total debt increased to INR222.3 million in FY10 (FY09: INR77.3 million) on account of additional loans taken for the ongoing project. The company reported a negative free cash flow (FCF) of INR263.5 million in FY10. Fitch expects FCF to stay negative over the short-to-medium term due to the ongoing capex program. SMPL was incorporated in 2004 and owns a 23,436 metric ton per annum (MTPA) ingots manufacturing facility in Durgapur. It has also set up an additional ingot plant, which would double the existing capacity, and is undergoing a capex program to set up a 120,000 MTPA rolling mill plant, which is expected to be commissioned in Q3FY11. TULIP APPARELS: ICRA Assigns 'LBB' Rating to INR8.05cr Bank Limits ------------------------------------------------------------------ ICRA has assigned an 'LBB' rating on the long term scale to the INR8.05 Crore bank limits of Tulip Apparels Private Limited. The long term rating has been assigned a Stable outlook. ICRA's rating is constrained by highly fragmented nature of the industry, modest scale of operations of the company and TAPL's limited presence in the textile value chain. The rating is also inhibited by relatively high gearing and intended debt-funded capital expenditure which is expected to keep the capital structure modest. Further, ICRA is cognizant of the fact that the company is in nascent stages of establishing its in-house brand in the ladies suits segment which is expected to impact the Company's profitability in the medium term. However, the rating draws comfort from long standing experience of promoters in the industry, approval from the buying houses of brands like Marks & Spencer's and the company's ability to undertake wide variety of work in the embroidery space which strengthens its competitive positioning. Moreover, the rating also favorably factors in the moderate profitability and coverage indicators of the company. Incorporated in 1997 as Lilly Impex Private Ltd by Mr. Mohit Gupta & Mr. Rajesh Jindal, the company was taken over by the current directors Mr. Rajesh Goel and Mr. Ajay Singla in late CY2000. LIPL did not have any operations but fulfilled all the legal requirements to be operated as a company. Post the acquisition, the name was changed to Tulip Apparel Pvt Ltd. The current promoters have more than a decade of experience in the textile Industry. TAPL is primarily engaged in undertaking Schiffli and multi-head computerised embroidery on garments, on job-work basis. Further, the company diversified into manufacture of unstitched and semi-stitched ladies suits in FY 2007. ========= J A P A N ========= JLOC 36: S&P Downgrades Ratings on Various Classes of Notes ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class C1, C2, and D floating-rate secured notes issued under the JLOC 36 LLC transaction and kept the ratings on classes C1 and C2 on CreditWatch with negative implications, where they were placed on June 21, 2010. At the same time, Standard & Poor's placed its rating on class B on CreditWatch with negative implications. S&P also affirmed its ratings on classes A1 through A3, and X notes issued under the same transaction. Of the 34 loans that initially backed the transaction, seven loans (the seven loans originally represented a combined 8.9% or so of the total initial issuance amount of the notes) have been repaid by their respective maturity dates, and six loans (the six loans originally represented a combined 17.9% or so of the total initial issuance amount of the notes) have defaulted so far. Two of the six defaulted loans (the two loans originally represented a combined 2.4% or so of the total initial issuance amount of the notes) have been fully recovered. Meanwhile, the servicer is proceeding with the liquidation of the properties backing the remaining four defaulted loans (the four loans originally represented a combined 15.5% or so of the total initial issuance amount of the notes). There remain 25 loans including these four defaulted loans. In September 2009, S&P lowered its assumption with regard to the likely collection amount from the four defaulted loans that have yet to be recovered. However, on June 21, 2010, S&P placed classes C1 and C2 on CreditWatch with negative implications, citing uncertainty over the recovery prospects for the properties backing 19 of the transaction's 25 remaining loans (the 19 loans originally represented a combined 63.7% or so of the total initial issuance amount of the notes). S&P downgraded classes C1 and C2 because: S&P has reassessed the recovery prospects for the related collateral properties backing the abovementioned 19 loans after considering a number of factors-including property cash flows, information obtained through discussions with the asset manager, as well as the type and locations of the properties in question?and lowered its assumption of the likely collection amount accordingly. S&P has lowered its assumption with respect to the likely collection amount from the properties backing one of the four defaulted loans that have yet to be recovered (the loan originally represented about 5.4% of the total initial issuance amount of the notes). S&P also lowered its rating on class D because it is highly possible that total proceeds from the sales of the collateral properties backing some of the four loans that have defaulted and have not yet been recovered, may be less than the rated portions of the loans, which would very likely affect principal payments on the class D notes. At the same time S&P placed class B on CreditWatch with negative implications and kept classes C1 and C2 on CreditWatch negative because: With regard to two additional remaining loans (two loans other than the 19 loans that S&P reviewed; the two loans originally represented a combined 9.5% or so of the initial issuance amount of the notes), the maturity dates are still some way off and the related collateral properties consist of office buildings in Tokyo, which is a real estate market of relatively strong liquidity. Even so, it is its view that a decline in the likely collection amount from the related collateral properties appears inevitable. S&P intend to review its ratings on the classes that S&P placed on CreditWatch with negative implications after assessing the recovery prospects for the properties backing the two loans in question (the two loans other than the 19 loans that S&P reviewed). S&P affirmed its ratings on classes A1 to A3 given the current level of credit enhancement for these classes. JLOC 36 LLC is a multi-borrower CMBS transaction. The notes were originally secured by 34 nonrecourse loans, which were originally backed by 99 real estate properties. The transaction was arranged by Morgan Stanley Japan Securities Co. Ltd., and Premier Asset Management & Loan Services Corp. is the transaction servicer. The ratings address the full and timely payment of interest and the ultimate repayment of principal by the transaction's legal final maturity date in February 2016 for the class A1 to A3 notes, the full payment of interest and ultimate repayment of principal by the legal final maturity date for the class B to D notes, and the timely payment of available interest for the class X notes. Rating Lowered JLOC 36 LLC Secured notes due February 2016 Class To From Initial Issue Amount ----- -- ---- -------------------- D CCC- (sf) CCC (sf) JPY4.3 bil. Ratings Lowered, Kept On Creditwatch Negative Class To From Initial Issue Amount ----- -- ---- -------------------- C1 BBB- (sf)/Watch Neg A- (sf)/Watch Neg JPY 3.6 bil. C2 BBB- (sf)/Watch Neg A- (sf)/Watch Neg JPY 24,250,000 Rating Placed On Creditwatch Negative Class To From Initial Issue Amount ----- -- ---- -------------------- B AA (sf)/Watch Neg AA (sf JPY 6.8 bil. Ratings Affirmed Class Rating Initial Issue Amount ----- ------ -------------------- A1 AAA (sf) JPY 29.05 bil. A2 AAA (sf) JPY 65,300,000 A3 AAA (sf) JPY 8,000,000 X (IO) AAA (sf) JPY59.1 bil. (initial notional principal) * Interest-only The issue date was May 9, 2007. ========= K O R E A ========= KIA MOTORS: Moody's Upgrades Corporate Family Rating from 'Ba1' --------------------------------------------------------------- Moody's Investors Service has upgraded Kia Motors Corp's corporate family rating to Baa3 from Ba1 and withdrawn the rating. At the same time, Moody's has assigned Kia a Baa3 issuer rating. This concludes Moody's review for possible upgrade initiated on 3 August 2010. The rating outlook is stable. Ratings Rationale "The rating action mainly reflects a one-notch upgrade of Kia's standalone rating to Ba2 from Ba3 and an ongoing two-notch uplift from the high likelihood of parental support from Hyundai Motors Company (Baa2/Stable). The upgrade in the standalone rating results from a rapid improvement in Kia's competitive position and financial profile, underpinned by the success of its new models," says Chris Park, a Moody's Vice President/Senior Analyst. Kia has strongly outperformed its global peers since 2009, with its global unit sales growing 17% in 2009 and a further 35% YoY in 1H10. The robust growth has been supported by the success of its ambitious new models, which Moody's views as being the result of structural improvements in its product quality/renewal and design capability. These factors -- together with the fact that its new models are very competitive in the Korean market and will also be launched in other major markets -- suggest that the growth in its market share will continue over the short to medium term. Kia's previously weak financial profile has exhibited a dramatic turnaround since 2009, propelled by much higher utilization rates, a significant growth in average selling prices, and a sizeable working capital surplus, which has been driven in turn by a drop in inventory. Earnings growth has also benefited from favorable exchange rates. In this regard, in 2010, debt/EBITDA will likely improve to about 2x from 4.3x a year ago and retained cash flow/net debt to 70-80% from 24%, thereby solidly positioning the company at its Ba2 standalone rating. Its profitability will remain vulnerable to volatile exchange rates, and its working capital deficits could also grow, leading to an increase in short-term debt. Nonetheless, Moody's expects Kia's key credit metrics over the next couple of years to remain largely consistent with the levels in 2010, in light of its strengthened earnings, competitive new models, and the expected gradual increase in global auto demand. The rating action also factors in a substantial improvement in Kia's liquidity profile. Its maturing debt over the next 12 months had shrunk by about 60% to KRW2.4 trillion as of August 2010 from end-2009. This debt can be comfortably met by its liquidity holdings of KRW2.7 trillion and back-up credit lines. The two-notch uplift from parental support continues to reflect Kia's high operational integration with and its strategic importance to HMC. The stable outlook reflects Moody's expectation that Kia's overall business and financial profiles will remain solid for its standalone rating, underpinned by its robust auto sales. The ratings could be upgraded if Kia's standalone rating is upgraded by the company establishing a longer track record to sustain its current strong financial profile, with RCF/net debt of above 35-45% and debt/EBITDA of less than 3-3.5x, and continued progress in the growth of its global market share. The rating could be downgraded if KMC witnesses a substantial deterioration in its operating cash flow, as a result of worse- than-anticipated market conditions, or it is unable to outperform the market and contain its working capital deficits. Downward pressure may also arise from a material deterioration in its liquidity position. This development could be evidenced by RCF/net debt below 20-25% and debt/EBITDA above 4.5-5x on a sustained basis. Moody's last rating action on Kia was taken on August 3, 2010, when it placed Kia's Ba1 rating under review for possible upgrade. Kia, headquartered in Seoul, Korea, is Korea's second largest automotive maker. The company is part of Hyundai Motor Group which is the world's fifth largest and Korea's dominant automotive maker. Kia sold 1.7 million auto units in 2009. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. ==================== N E W Z E A L A N D ==================== CRAFAR FARMS: Minister Says Chinese Bid "Extremely Complex" ----------------------------------------------------------- New Zealand's Land Information Minister Maurice Williamson said Wednesday that Natural Dairy's bid to buy the Crafar family farms is "extremely complex," the New Zealand Press Association reports. According to NZPA, the Overseas Investment Office is considering Hong Kong-based Natural Dairy's bid for the 20 central and lower North Island farms. However, Mr. Williamson said the complex nature of the bid meant the OIO could not be specific about when it would give its recommendation. NZPA says the government would make a final decision once it had the OIO's recommendation. About Crafar Farms Crafar Farms, New Zealand's largest family owned dairy business, runs about 20,000 milking cows, and carries about 10,000 of other stock. The company employs 200 staff. Crafar Farms was placed in receivership by its lenders Westpac Banking Corp., Rabobank Groep and PGG Wrightson Finance. The banks are owed around NZ$200 million and put KordaMentha partners Michael Stiassny and Brendon Gibson in as receivers after Crafar Farms breached covenants on its loans. The New Zealand Herald said CraFarms' banks have been working with the Ministry of Agriculture and Forestry, Federated Farmers and Fonterra to ease the Crafars out of their business. This follows multiple convictions for environmental lapses and animal neglect in recent years and the revelation on September 28, 2009, from interest.co.nz of animal neglect on one of its large farms in the King Country near Benneydale. ===================== P H I L I P P I N E S ===================== EXPORT AND INDUSTRY: Shareholders Approve Sale to BDO for PHP30BB ----------------------------------------------------------------- Roderick T. dela Cruz at the Manila Standard Today reports that stockholders of Export and Industry Bank Inc. have approved the sale of the heavily indebted bank to Banco de Oro Unibank Inc. for more than PHP30 billion. "What was settled was to approve the resolution to authorize the bank to sell all its assets to BDO in exchange of BDO assuming all the bank's [EIB] liabilities," the Manila Standard quoted Exportbank President Juan Victor Tanjuatco as saying. The Manila Standard says shareholders of Exportbank will not receive any cash from BDO as the smaller bank's liabilities exceed its total assets. BDO, meanwhile, will transform all 50 Exportbank branches into BDO units. According to Manila Standard, Mr. Tanjuatco said the transaction with BDO would not lead to a merger, adding that it was a direct purchase of assets and assumption of all liabilities of Exportbank. The Manila Standard relates Exportbank Chairman Jaime Gonzalez said the bank hoped to conclude the transaction with BDO as well as the sale of three subsidiaries before the end of the year. These subsidiaries include EIB Savings Bank, EIB Securities and shares in Banclife Insurance Co. Inc. About EIB Headquartered in Makati City, Manila, Export and Industry Bank, Inc. -- http://exportbank.com.ph/-- has 50 branches and has revived former Urban Bank unit under new names. Its principal activity is the provision of commercial banking services such as deposit taking, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange and trust services. The Troubled Company Reporter-Asia Pacific, citing the Daily Tribune, reported on December 08, 2009, that the Monetary Board ruled that the possible closure of Export and Industry Bank poses a systemic risk, paving the way for regulators to allow the Philippine Deposit Insurance Corp. to extend a PHP10.9-billion loan for its rehabilitation. The Daily Tribune said EIB is seeking PHP3.3 billion in fresh capital since June 2009 for its rehabilitation but had sought from regulators extensions on the deadline given to it every month since then. EIB has been under the so-called prompt corrective action scheme, the intensive care unit for banks, since 2007 because of lack of capital. ================ S R I L A N K A ================ * Fitch Affirms Sri Lanka's Issuer Default Rating at 'B+' --------------------------------------------------------- Fitch Ratings has affirmed Sri Lanka's Long-term foreign and local currency Issuer Default Ratings at 'B+', and simultaneously revised the Outlook to Positive from Stable. Fitch also has affirmed Sri Lanka's Short-term IDR at 'B' and Country Ceiling at 'B+'. The Outlook revision is in large part a reflection of Sri Lanka's economy benefitting from the end of a prolonged civil war in 2009, from a more disciplined policy framework put in place under the Stand-By Arrangement (SBA) with the IMF, and from an improved external liquidity position bolstered by the IMF programme. Fitch believes these developments support the prospects for Sri Lanka to achieve sustained medium-term growth, without a resurgence in inflation or another bout of external liquidity stress (as experienced over end-2008 to early-2009). Foreign exchange reserves stood at US$5.8bn at end- July 2010, well above the low of US$1.1bn in March 2009, bolstered by US$1.0bn of IMF funds. Sri Lanka's authorities have made headway in rebuilding and integrating the two war-torn Northern and Eastern provinces into the rest of the local economy, which is helping to boost Sri Lanka's productive capacity, particularly in the agriculture and tourism sectors. This is highlighted by real GDP growing 8.5% yoy in Q210, from a 7.1% yoy rise in Q110. Fitch is forecasting real GDP growth to average 7.2% in 2010-2012, versus an average of 5.1% over the last 20 years. The authorities look to be implementing a more prudent macroeconomic policy framework under the IMF SBA. The Central Bank of Sri Lanka (CBSL) appears to have shifted the focus of monetary policy towards fighting inflation and away from supporting growth. As evidence, the CBSL has maintained a positive real interest rate environment since February 2009 (versus an average of -12% in 2008). Fitch views the CBSL's management of monetary policy as broadly appropriate, which along with more benign global energy and food prices, is helping to keep the inflation rate in the single-digit range (up 5.6% yoy in January-to-August 2010). Sri Lanka's authorities also appear more ready to tackle the sovereign's biggest ratings constraint - weak public finances. The budget deficit of 9.9% of GDP in 2009 and public debt of 86.2% of GDP were both well above the medians for the 'B' rating peer group of 4.9% and 37.3%, respectively. Similarly, the government revenue-to-GDP ratio stood at just 15% in 2009, which is well below the 'B' rating peer group median of 28.1%. The Presidential Commission on Taxation is set to release its final recommendations in November 2010. New tax measures will be crucial in determining if the authorities can get the public finances on a more sustainable path. Equally vital, the end of the civil war should provide the authorities much needed flexibility in cutting spending on defence and resettling refugees. Maintained policy discipline would support the case for a ratings upgrade. If the Sri Lankan authorities can sustainably boost the tax revenue base and restrain spending to consolidate the budget deficit, this would help lower the country's overall public debt burden and directly address a key rating weakness. Similarly, a sustained period of stronger GDP growth that does not see a return to accelerating inflation or a sharp deterioration in the current account deficit would also support Sri Lanka's ratings. Fitch would also view a pick-up in foreign direct investment as a positive development as this could help bolster the country's external finances and also improve the overall competitiveness of the economy. More specifically, this could help stem concern over Sri Lanka's export sector following the loss of reduced tariff rates via the GSP Plus facility to the European Union in mid- August 2010. On the other hand, the agency would negatively view an erosion of macroeconomic policy discipline as an acceleration of inflation would undermine Sri Lanka's export competitiveness and result in a sharp rise in domestic borrowing costs for the fiscal authorities and raise overall interest payments. These already stood at 43% of government revenues in 2009, which is well above the 'B' rating peer group median of 5.7%. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* 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., Frederick, Maryland, USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2010. 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$625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***