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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, June 6, 2013, Vol. 16, No. 111
Headlines
A U S T R A L I A
EL ZORRO: Rail Company Ceases Operations; Blames Contract Loss
HOYTS GROUP: S&P Lowers Issuer Credit Rating to 'B'
MID WEST MILLING: In Receivership, McGrathNicol Takes Control
NORILSK NICKEL: Contractor Seeks to Wind Up Australian Unit
RIVERLAND WEEKLY: Newspaper Placed Into Liquidation
SCHOOLBIZ AUSTRALIA: Moore Stephens Appointed as Administrators
STARGLAZE PTY: Court Appoints Clifton Hall as Liquidator
* ASIC Cancels Peter Grealish's Registration as Liquidator
C H I N A
BANK OF CHINA: Moody's Still Keeps D Bank Fin'l. Strength Rating
BW GROUP: Moody's Says FY12 Results Improve But Challenges Remain
CHINA METALLURGICAL: S&P Lowers CCR to 'BB+'; Outlook Stable
HILONG HOLDING: Moody's Assigns First-Time 'Ba2' CFR
SUNRISE REAL ESTATE: Incurs $3.5 Million Net Loss in 2012
I N D I A
ANIMESH SILK: ICRA Reaffirms 'B' Ratings on INR9.6cr Loans
AVG LOGISTICS: ICRA Assigns 'BB' Rating to INR10.5cr LT Loan
DANAVARSHINI EXPORTS: CRISIL Cuts Ratings on INR218.8MM Loans
INTECH PHARMA: ICRA Rates INR2.83cr LT Loan at '[ICRA]B+'
LAHOTI MOTORS: CRISIL Assigns 'B' Ratings on INR120MM Loans
MNT BUILDCON: CRISIL Rates INR1.14BB Term Loan at 'B+'
NIMESH OILS: ICRA Assigns 'BB-' Ratings to INR20.60cr Loans
PUDHUAARU FINANCIAL: ICRA Rates INR11.6cr Bonds at 'BB'
R K PRODUCTS: CRISIL Assigns 'B' Ratings to INR100MM Loans
SWASTIK COPPER: ICRA Assigns 'B+' Rating to INR17.13cr Loans
J A P A N
* JAPAN: Non-Life Insurers' Underwriting Profits Bottomed Out
N E W Z E A L A N D
AWATERE VALLEY: Chinese Investors Gets OK to Buy Vineyards
DORCHESTER PACIFIC: Asks Major Shareholders to Sell Down Shares
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A U S T R A L I A
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EL ZORRO: Rail Company Ceases Operations; Blames Contract Loss
--------------------------------------------------------------
The Weekly Times reports that rail company El Zorro Transport
voluntarily shut down its operations on June 4, blaming the loss
of a contract with mining company Iluka Resources and unpaid
payments from Cargill for its financial problems.
El Zorro Transport director Ray Evans told The Weekly Times his
company had owed Cargill AUD2 million but had a repayment plan in
place.
According to the report, Mr. Evans said Cargill had stopped making
payments for work carried out during the previous four weeks, a
claim disputed by the grain trader.
A Cargill spokesman said the grain trader was well in advance of
its payments to El Zorro Transport, the report says.
Mr. Evans told The Weekly Times last week one of the problems with
El Zorro Transport was that the trading and accreditation
functions of the rail operator sat within the one company.
He said that if he was to run a rail transport company again --
and he was confident of doing so -- he would separate the trading
and accreditation functions, the report relays.
The Weekly Times says any rail company wanting to operate in
Victoria has to be accredited by the Department of Transport and
have public liability insurance of $250 million dollars as two
major requirements.
The report notes that Mr. Evans also shut down Regional Port
Enterprizes Pty Ltd, of which he was sole director and owner. It
had about 60 employees.
Neither RDE or El Zorro have been placed in liquidation.
HOYTS GROUP: S&P Lowers Issuer Credit Rating to 'B'
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Standard & Poor's Ratings Services said that it has lowered the
long-term issuer credit rating on Hoyts Group Holdings LLC to 'B'
from 'B+'. At the same time, S&P lowered the ratings on the
group's first- and second-lien debt facilities to 'B+' and 'CCC+',
from 'BB-' and 'B-' respectively. The outlook on the long-term
rating is stable. The recovery ratings on the first- and second-
lien senior secured debt facilities remain '2' and '6'
respectively. At the same time, all ratings were removed from
CreditWatch with negative implications, where they were placed on
May 21, 2013.
The downgrades follow the completion of Hoyts' increased debt
refinancing, which will facilitate an increased distribution to
its private equity owners. The revised funding structure includes
a first-lien, senior secured debt facility of US$310 million
(about A$316 million); a A$40 million first-lien, senior secured
revolving credit facility (initially undrawn); and a
US$100 million (about A$102 million) second-lien, senior secured
debt facility.
"The 'B' issuer credit rating on Hoyts reflects our assessment of
the group's "fair" business risk profile and "highly leveraged"
financial risk profile," said Standard & Poor's credit analyst
Paul Draffin. "Our "highly leveraged" financial risk profile
assessment on Hoyts reflects the group's high debt levels
following the recapitalization, and Hoyts' 93% ownership by
private equity company Pacific Equity Partners. We estimate
Hoyts' fully adjusted debt to EBITDA to be about 7x following the
recapitalization."
S&P's "fair" business risk profile assessment on Hoyts reflects
the group's relatively small earnings base, exposure to the
fluctuating popularity of feature films, and growing competition
from alternative entertainment sources and content distribution
channels, particularly online. Tempering these weaknesses are the
relatively concentrated structure of the Australian and New
Zealand cinema exhibition market; material barriers to competition
provided by tight retail property zoning regulations; and the
highly institutionalized nature of retail property ownership.
Additional strengths include the company's long-term and well-
spread property-lease agreements; relatively modern and well-
maintained cinema network; and the group's ownership of the
dominant cinema advertising company in Australia and New Zealand.
Mr. Draffin added: "The stable rating outlook reflects our
expectation that Hoyts will generate modest organic earnings
growth supported by periodic refurbishments and other new
initiatives. This should allow key credit measures to be
maintained in line with expectations for the rating, including
fully adjusted debt to EBITDA of about 7x or less."
Downward rating pressure could arise if weaker-than-expected
operating performance or debt-funded investment causes fully
adjusted debt to EBITDA to be sustained at the high 7x level or
more, or if there is a material deterioration in the group's
liquidity position. Other drivers of downward rating pressure
could include a significant structural change to the group's
businesses, including a significant increase in competition in the
cinema advertising business, growing competition from alternative
entertainment sources, or a material shortening in the exclusivity
period for new film content that materially affects box office
revenues.
Upward rating pressure is considered unlikely in the near term,
given the financial objectives of the group's private equity
owners. Nonetheless, upward rating pressure could occur if the
group sustained fully adjusted debt to EBITDA below 6.5x, together
with satisfactory liquidity.
MID WEST MILLING: In Receivership, McGrathNicol Takes Control
-------------------------------------------------------------
Laura Poole at ABC News reports that Australasian Integrated
Commodities, trading as Mid West Milling, has been placed under
receivership.
Receiver McGrathNicol took control of the company on May 30,
according to ABC News.
The report notes that Mid West Milling will keep trading while an
expression of interest is put out to sell the company. The report
relates that Gerang Gerung farmer Jade Clark says he is owed tens
of thousands of dollars.
"It has a certain affect when you miss out on money that's
budgeted to come in. . . . We'll just have to continue and
hopefully things can pan out a bit better in the future. . . .
It's obviously disappointing. You try and support local business
and this happens," the report quoted Mr. Clark as saying.
Mid West Milling is a grain milling company based in Nhill, in
western Victoria, employing 15 staff.
NORILSK NICKEL: Contractor Seeks to Wind Up Australian Unit
-----------------------------------------------------------
Nick Evans at The West Australian reports that Norilsk Nickel's
Australian operations slipped deeper into trouble after a mystery
contractor launched action to wind up its major Australian
operating subsidiary over AUD$1.8 million in unpaid bills.
The report says the legal action comes as three of the Russian
nickel miner's local directors, including managing director Edwin
van Leeuwen, quit the board of Norilsk Nickel Australia. In what
is understood to be part of a management shake-up in Norilsk's
Moscow head office, the report relates, Mr. van Leeuwen has been
replaced as the Australian boss by South African executive Wayne
Wenter. Norilsk's director of international production assets
Roman Panov, understood to be leaving Norilsk in July, also
stepped down from the NNAu board, along with Russia-based Sergey
Makarevich, the West Australian relates.
Citing a Federal Court documents lodged last week, the report
discloses that Inter Mining, appointed as Norilsk's "general
contractor" in 2011 as Norilsk was relaunching its South West
nickel operations, is seeking to appoint liquidators to Lake
Johnston, placed on care and maintenance by Norilsk last month.
According to the report, the Federal Court application claims
Inter Mining is owed AUD1.8 million of a AUD2.5 million bill for
mining services at Lake Johnston in February. Curiously, the
invoice attached to the statutory demand lists the invoice as
being "as per ACM claim". ACM is understood to stand for
Australian Contract Mining, the Perth contractor that actually
performs mining work at the mothballed nickel operation.
Norilsk Nickel is a Russian nickel and palladium mining and
smelting company.
RIVERLAND WEEKLY: Newspaper Placed Into Liquidation
---------------------------------------------------
ABC News reports that the Riverland Weekly newspaper has been
placed into liquidation.
The paper printed its last edition in March, before going into
voluntary administration and leaving its nine staff members
without a job, according to the report.
ABC News says several potential buyers expressed interest in the
business but administrators Clifton Hall met some of the
newspaper's 30 creditors on June 3 and decided to liquidate the
company.
According to the report, administrator Tim Clifton said there is
still a chance for someone to buy the newspaper's assets and start
up under a new name.
"Well we're still talking to one company or a few parties about
whether they would be interested in resurrecting the business,"
the report quotes Mr. Clifton as saying. "So the way . . . [that]
would happen is we would sell the assets effectively to a new
entity so they could start up again, including the name, or
alternatively if that doesn't happen and we can't find another
buyer, it's likely the assets will just be sold."
ABC News relates that Mr. Clifton said he expects the creditors
who tried to help keep the paper viable will not get a return on
their investment, unless the newspaper's assets are sold at a
higher price.
However, Mr. Clifton said the decision to go into liquidation will
benefit those who worked at the newspaper, the report relates.
SCHOOLBIZ AUSTRALIA: Moore Stephens Appointed as Administrators
---------------------------------------------------------------
SmartCompany reports that SchoolBiz has collapsed into
administration and the school supplies business is being
advertised for sale.
Michael Hird of Moore Stephens has been appointed as administrator
to SchoolBiz Victoria and SchoolBiz Australia.
Mr. Hird told SmartCompany SchoolBiz had been hit by problems with
its Queensland business, which had to be closed down.
"We are trying to gather all the information at the moment and we
are getting the stock valued, so it's hard to have a real view on
why it has failed," the report quotes Mr. Hird as saying.
"SchoolBiz has only been around for three years, it took off
fairly quickly and grew rapidly and that may have contributed to
the demise."
SmartCompany relates that Mr. Hird said unsecured creditors are
owed around AUD1.25 million with the major creditors being Pelican
Artline, Crayola, JazzCo and the Australian Tax Office, along with
"a lot of little creditors" including SchoolBiz's landlord, who is
owed four months' rent.
SchoolBiz's 12 employees who have all been let go are also owed
some employee entitlements, the report notes.
Moore Stephens placed a newspaper advertisement to sell SchoolBiz
on June 6 and Hird is hopeful a sale can be made.
A first meeting of creditors will be held on June 12 in Sydney.
SchoolBiz sold office supplies, classroom materials, cleaning
supplies, school furniture, sporting goods and school uniforms.
STARGLAZE PTY: Court Appoints Clifton Hall as Liquidator
--------------------------------------------------------
Timothy Clifton of Clifton Hall was appointed liquidator of
Starglaze Pty Ltd on June 3, 2013, by Order of the Federal Court
of Australia.
* ASIC Cancels Peter Grealish's Registration as Liquidator
----------------------------------------------------------
The Australian Securities and Investment Commission has cancelled
the registration of Peter Roger Grealish, of Sydney, as a
registered liquidator and as an official liquidator.
ASIC made this decision following the sentencing of Mr. Grealish
to 12 months imprisonment by the District Court of New South Wales
on 26 April 2013.
Mr. Grealish had been a registered liquidator since November 2004
and an official liquidator since February 2006. He was practising
as a registered liquidator and an official liquidator with BDO
East Coast Partnership until April 23, 2013.
"The charges that led to Mr. Grealish's jailing suggest a lack of
honesty. Honesty is an essential trait for liquidators as
gatekeepers in the financial services industry," ASIC Commissioner
John Price said.
Mr. Grealish has the right to appeal to the Administrative Appeals
Tribunal for a review of ASIC's decision.
On April 26, 2013, Mr. Grealish was sentenced to an aggregate term
of imprisonment of two years to commence on April 26, 2013, and
expiring on April 25, 2015, with a non-parole period of one year.
The sentence followed pleas of guilty to:
* one count of giving false/misleading evidence at
a hearing of the Police Integrity Commission; and
* five counts of making a false statement to obtain
a financial advantage.
To avoid fines for various traffic offences, Mr. Grealish falsely
stated that another person was driving the vehicle at the time
when each offence was committed.
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C H I N A
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BANK OF CHINA: Moody's Still Keeps D Bank Fin'l. Strength Rating
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BOC Group Life is 51%-owned by BOC Hong Kong (Holdings) Limited
(unrated) and 49%-owned by Bank of China Group Insurance Company
Limited (unrated). Both shareholders are ultimately owned by the
Bank of China Limited (deposits rating of A1 stable, bank
financial strength rating/baseline credit assessment of D/ba2
stable), one of the largest state-owned banking groups in China.
Ratings Rationale
"The A2 IFS rating reflects BOC Group Life's good brand name,
well-established bancassurance platform, and strong market
position in the life insurance business in Hong Kong, with a
particular focus on Renminbi (RMB) denominated policies. In
addition, the company's level of capitalization is solid and its
profitability improved in 2012," says Stella Ng, a Moody's
Assistant Vice President and Analyst.
As a strategic subsidiary of the Bank of China Group, BOC Group
Life enjoys strong distribution support from Bank of China (Hong
Kong) Limited (BOCHK) (deposits rating of Aa3 stable, bank
financial strength rating/baseline credit assessment of C+/a2
stable), through the latter's extensive network of over 260
branches in Hong Kong and its large customer base.
BOC Group Life has a leading position in the RMB life insurance
market in Hong Kong, and has received its Qualified Foreign
Institutional Investor (QFII) license in January 2013 that allows
the insurer to further expand its RMB business.
"Given the continued demand for RMB bank deposits in Hong Kong,
the anticipation of RMB appreciation, and the territory's larger
exposure to onshore RMB investment channels, we believe that BOC
Group Life will maintain a stable growth in its RMB business in
the coming year," says Ng.
Moody's notes that the insurer's capitalization is solid. With
continued favorable experience in mortality / morbidity, and
better-than-expected net investment returns in 2012, BOC Group
Life's capital position has been enhanced. Its local solvency
ratio was well above the preferred statutory level of 150% at end-
2012.
"However, the company's strengths are partially offset by its
narrow business focus on savings-type products, and the
concentration risk associated with its bond investments in the
corporate sector," adds Ng.
Moody's notes that BOC Group Life has a business model with lower
profit margins compared to companies with a stronger emphasis on
protection products. This is because a high proportion of its
business is from savings products.
"While BOC Group Life has made effort to improve its product
diversification since last year, shifting to more protection-type
and regular-premium long term products, we expect the company to
face challenges in balancing its product mix in the coming twelve
months, in order to reduce its exposure to market conduct risks,"
says Ng.
On the asset side, BOC Group Life's non-RMB investments mostly
comprise fixed income securities. While it has, therefore, only a
limited exposure to asset classes with volatile returns such as
equities and real estate, Moody's notes that its fixed income
portfolio mostly comprises corporate rather than government bonds.
Although the portfolio is skewed towards investment grade
securities, mostly relating to established Hong Kong and Chinese
companies, it does create some vulnerability both to a widening of
credit spreads and to name-specific shocks given that the
portfolio is quite concentrated.
Meanwhile, RMB premiums are mostly ceded to a single reinsurer,
which means that its RMB portfolio has minimal market risk.
However, it is exposed to single counterparty risk that is
mitigated by measures instituted by the company.
BOC Group Life's A2 IFS rating incorporates a one-notch uplift
from its stand-alone credit profile, reflecting its affiliation
and integration with BOCHK in terms of branding, distribution,
funding and risk management. Moody's believes the group will
continue providing operational support and financial flexibility
to the company, in times of need.
Moody's would consider upgrading the rating if: (1) the company
improves substantially its market position; (2) its adjusted
capital to assets ratio consistently exceeds 8%, or its local
solvency ratio exceeds 250%; (3) its profitability improves, with
return on assets consistently exceeding 1.2%, or significant
improvement in value of new business as business scale maintains;
and (4) it exhibits profitable and robust new business growth,
with greater diversity in product mix and distribution channels.
On the other hand, the rating could be downgraded if: (1) its
capitalization levels weaken significantly and consistently, such
that its adjusted capital to assets ratio falls below 4%; (2) its
profitability deteriorates because of volatile investment income,
and if its return on assets consistently falls below 0.8%; (3)
there is a material increase in its high-risk assets relative to
its shareholders' equity; (4) any change in its distribution
arrangement with BOCHK that undermines sales, or there is a rating
downgrade of BOCHK; and (5) unfavorable regulation change
impacting the sale of RMB policies.
The principal methodology used in this rating was Moody's Global
Rating Methodology for Life Insurers published in May 2010.
Headquartered in Hong Kong, BOC Group Life Assurance Company Ltd
is the sixth-largest life insurer in Hong Kong in 2012, by total
in-force premiums. It offers endowment, traditional life,
universal life, and health insurance products. At end-2012, BOC
Group Life's total assets amounted to HKD66.2 billion. Its
shareholders' equity totaled HKD4.2 billion.
BW GROUP: Moody's Says FY12 Results Improve But Challenges Remain
-----------------------------------------------------------------
Moody's Investors Service says that the results of BW Group (BW,
Ba2 negative) for the fiscal year ended FY2012 have improved year-
on-year but challenges remain.
BW recorded operating earnings for the year despite the
challenging environment for the shipping industry. Its revenue
increased to $1.0 billion in 2012 from $966 million in 2011, while
its reported EBITDA rose to $320 million from $287 million over
the same period.
The company's reported net loss also narrowed to $89 million from
$314 million, mainly because of lower vessel impairment charges
and mark-to-market losses on interest-rate derivates, and a lower
share of losses from joint ventures and associates.
"While BW's reported EBITDA from its tanker segment declined
because most of its crude carriers came of profitable time
charters and were contracted on spot basis at substantially lower
rates, EBITDA from the LPG segment nearly doubled from the prior
year, largely offsetting the negative impact from the tanker
segment," Vikas Halan, a Moody's Vice President and Senior
Analyst.
"The performance of its LNG segment was stable because most of the
vessels remain on long-term time charters," he adds.
While BW's consolidated (including BW offshore) operating-lease-
adjusted credit metrics, measured by debt/EBITDA, improved to 5.7x
at end-2012 from 6.0x a year ago, its leverage will increase in
2013 owing to its growth plans.
BW continues to optimize and expand its fleet. In 2012 and early
2013, BW acquired one product tanker and two very large gas
carriers (VLGC) and disposed its oldest two very large crude
carriers (VLCC) and one medium gas carrier (MGC). In April 2013,
the company also acquired a 100% interest in a company, which owns
four product tankers that were previously operated by BW.
Consequently, BW now owns all the 17 product tankers it operates.
In December 2012, the company also ordered its first floating
storage and regasification unit (FSRU), scheduled for delivery in
2015, in line with its strategy to invest in its gas supply and
logistics chain. It already has two LNG vessels on order scheduled
for delivery in 2014 and 2015 respectively.
In May 2013, BW acquired a fleet of 10 VLGCs from Maersk Tankers;
it will own five of them and the remaining five are chartered in.
The vessels, which will be delivered in Q3 2013, will boost BW's
LPG fleet size to 42, making BW Group the largest owner of the LPG
carriers.
BW's capex commitments for the next five years have reached about
$1.0 billion, including its planned acquisitions of gas carriers
from Maersk Tankers. By comparison, its committed capex was $208
million at the end of 2011.
"Nevertheless, we expect that the company's leverage ratio will
remain within our tolerance level of below 6.5x debt/EBITDA for
its Ba2 rating," says Halan, also Moody's Lead Analyst for BW.
The acquisition of VLGCs will provide the company with more
vessels that it can include in the collateral pool for lenders.
The negative rating outlook reflects Moody's view that the
company's borrowings will increase following its recent
acquisitions and investments in new builds. This in turn can erode
BW's credit metrics, if the charter rates for its gas carriers
deteriorate while the tanker segment remains under pressure.
The rating outlook could return to stable if BW can manage its
fleet optimization and expansion in such a way that its credit
metrics remains appropriate for its ratings, as indicated by
debt/EBITDA of below 6.0x and EBIT/interest of more than 1.5x-
2.0x, on a sustainable basis.
The rating could come under pressure if BW's profit margins weaken
further or if it takes on additional debt-funded
expansion/acquisitions. Credit metrics indicating downgrade
pressure include debt/EBITDA of more than 6.5x and EBIT/interest
of less than 1.0x-1.5x.
The principal methodology used in rating BW was the Global
Shipping Industry Methodology published in December 2009.
BW is a diversified shipping group with operations in four key
segments: liquefied petroleum gas (LPG), tankers, liquefied
natural gas (LNG) and floating, production, storage and offloading
vessels (FPSO). It currently operates a fleet of 95 owned, part-
owned or controlled vessels.
BW is a privately held holding company, of which 93% is owned by
the Sohmen family and 7% by HSBC. BW owns 49.8% stake in BW
Offshore Ltd, an Oslo listed company and the world's second-
largest FPSO owner and operator.
CHINA METALLURGICAL: S&P Lowers CCR to 'BB+'; Outlook Stable
------------------------------------------------------------
Standard & Poor's Ratings Services lowered the long-term corporate
credit rating on China Metallurgical Group Corp. (MCC Group) and
the rating on the outstanding senior unsecured notes the company
guarantees to 'BB+' from 'BBB-'. The outlook is stable.
At the same time, S&P affirmed its 'cnBBB+' Greater China regional
scale rating on the engineering and construction (E&C) company and
its notes.
S&P lowered the rating on MCC Group because of the company's
deteriorated capital structure and its cash flow coverage ratio
remaining low. S&P therefore lowered the stand-alone credit
profile to 'bb-' from 'bb' to reflect its expectations of a slow
recovery for the group.
"Our assessment of the likelihood of extraordinary government
support is unchanged," said Standard & Poor's credit analyst Jian
Cheng.
The issuer credit rating is two notches above the stand-alone
credit profile based on S&P's view that there is a "moderately
high" likelihood of timely and sufficient extraordinary support
from the government of China (AA-/Stable/A-1+; cnAAA/cnA-1+) if
the company faces financial distress.
"We forecast MCC Group's revenue to drop about 9% in 2013 because
growth in installed steel capacity in China has slowed," Mr. Cheng
said. Nevertheless, S&P believes MCC Group is able to secure
orders due to its steel companies' technology upgrades for
specialty products, energy efficiency, and emission control.
S&P expects the revenue contribution from its property development
will continue to increase this year, but the profit margin will
remain flat because of the large amount of real estate projects
available for sale.
S&P believes MCC has reversed its trend of negative operating cash
flow, improving to breakeven in 2012, from a negative figure of
more than Chinese renminbi (RMB) 17 billion in 2011. Standard &
Poor's forecasts MCC's operating cash flow at about RMB7 billion
in 2013.
S&P attributes the improvement to (1) reduction in the working
capital requirements in its engineering and construction
contracts, particularly away from build and transfer projects; (2)
faster collection of long-term receivables; and (3) faster sale of
property development projects.
Nevertheless, MCC's funds from operations (FFO) remain weak and
S&P do not expect them to improve much. The company's sale of its
underperforming paper business will help improve its FFO to total
debt. In S&P's view, FFO to total debt may improve to slightly
above 5% in 2013, from about 3.8% in 2012.
"We expect MCC's ratio of debt to total capital will remain above
70% for some time. Although the company has reduced its debt,
significantly lowered capital expenditures and sold its paper
business in 2012, high impairment charges from the write-down of
Huludao and other Australian iron ore projects caused the debt-to-
capital ratio to rise above 74% in 2012. It may take some time
for company to rebalance its equity base. We do not factor in any
capital injection from the government or near-term equity raising
in our forecast," S&P said.
The stable outlook reflects S&P's expectation that the MCC Group
has reversed its negative free operating cash flow due to improved
working capital management and substantially lower capital
expenditures. Although S&P expects some softness in its core
engineering and construction business, any further deterioration
of its financial position is unlikely in next 24 months.
S&P may lower the rating if MCC Group's stand-alone credit profile
deteriorates further. This could happen if the company's EBITDA
interest coverage falls below 1.5X and FFO to total debt declines
below 5% for 12 consecutive months.
S&P may also downgrade the company if it believes the level of
government support has diminished.
S&P may raise the rating if MCC Group reduces its leverage such
that it improves its financial risk profile. An upgrade trigger
could be a ratio of FFO to total debt of above 10% and EBITDA
interest coverage of more than 2.5x over a sustained period.
HILONG HOLDING: Moody's Assigns First-Time 'Ba2' CFR
----------------------------------------------------
Moody's Investors Service has assigned a first-time Ba2 corporate
family rating to Hilong Holding Limited.
Moody's has also assigned a provisional (P)Ba2 senior unsecured
rating to Hilong's proposed bonds.
The ratings outlook is stable.
The company plans to use the proceeds from the proposed issuance
to repay bank borrowings, expand the capacities of its coating
materials and services segment and its oilfield services segment
and for general corporate purposes.
Moody's will remove the provisional status from the bond rating
after Hilong completes the issuance on satisfactory terms and
conditions.
Ratings Rationale
"The Ba2 ratings reflect Hilong's strong market positions in its
core drill pipes and coating materials businesses in China on the
back of its product offerings, technological capabilities and
close relationships with oil majors," says Kaven Tsang, a Moody's
Vice President and Senior Analyst.
"Consequently, the company is strongly placed to benefit from the
projected growth in demand for drill pipes and coating materials
for oil country tubular goods in China," he adds.
Hilong produces a wide range of drill pipes (American Petroleum
Institute (API) and non-API standards) for conventional and
unconventional oil reservoirs, and coating materials. It also has
the capacity in developing new drill pipes and coating techniques.
These strengths have helped Hilong secure close business
relationships with its customers, such as China National Petroleum
Corporation ("CNPC", Aa3 stable), China Petroleum and Chemical
Corporation ("Sinopec", Aa3 stable), and which makes it difficult
for smaller companies to take its market share.
"Hilong is also fairly diversified geographically, and which could
partly offset the challenges of industry cyclicality and customer
concentration," says Tsang, also Moody's Lead Analyst for Hilong.
Hilong has production facilities and/or service centers in Canada,
the US, Columbia, Ecuador, Nigeria, the UAE, Kazakhstan, and
Russia. About 44% of its revenues came from outside China in 2012.
On the other hand, Hilong's ratings are constrained by the small
scale of its operations, and volatility in its performance owing
to the cyclical nature of the drill pipes and oilfield services
businesses.
It also faces high customer concentration. Its major customers are
oil giants in China and other countries. Its top five customers
accounted for approximately 50%-55% of the company's revenues in
2011 and 2012. Nevertheless, Moody's believes this risk is
manageable, as Hilong's core customers are financially strong and
Hilong has built close relationships with these customers.
Furthermore, Hilong is pursuing a debt-funded expansion plan that
entails execution and financial risks. Over the next few years,
the company's credit metrics will weaken, as the EBITDA
contribution from these investments will progressively realize
over the medium term.
However, the company's projected financial metrics -- adjusted
debt/EBITDA of between 3x and 3.5x, and EBITDA/interest of between
4.5x and 5.5x -- in the next one to two years position Hilong at
the Ba2 level.
Moody's expects Hilong to use the proceeds from the new bond
issuance to pay down its existing debt. Therefore, Moody's has not
notched Hilong's bond rating for legal and structural
subordination. Hilong's secured and subsidiary debt stood at 18.2%
of the company's total assets at end-2012. Moody's expects this
ratio to fall below 15% in the medium term, as the company
diversifies its funding through the offshore bond issuance.
The stable outlook reflects Moody's expectation that Hilong will
maintain its leadership position in China and cautiously pursue
its planned expansion.
An upgrade in the near term is unlikely, given the company's small
scale. However, Moody's would consider upgrading the ratings over
the medium term if Hilong : (1) successfully expands its capacity
and achieves its planned sales growth, while also maintaining its
gross margins; and (2) improves its credit metrics such that
adjusted debt/EBITDA falls below 2x and EBITDA/interest stays
above 6.5x-7x on a sustained basis.
The ratings would be under pressure if Hilong's financial position
weakens, such that adjusted debt/EBITDA exceeds 4x,
EBTIDA/interest slips below 3.5x-4x and its the gross margin
declines below 30% resulting in: (1) an inability to pass on
increases in raw material costs to its customers; (2) greater
pressure on its working capital, and which prompts it to raise a
substantial amount of debt; or (3) a more aggressive debt-funded
expansion plan or a dividend payout ratio that weakens its
leverage and/or liquidity.
The principal methodology used in this rating was Global Oilfield
Services Rating Methodology published in December 2009.
Established in 2001, Hilong Holding Limited is an integrated
oilfield equipment and services provider. It has three main
businesses: drill pipes and related products; coating materials
and services; and oilfield services. Listed on the Hong Kong Stock
Exchange in 2011, the company had a market capitalization of
HKD7.8 billion as of May 30 2013. Mr. Jun Zhang, the Chairman and
the Founder, is the controlling shareholder, with a 63.74% equity
interest in the company.
SUNRISE REAL ESTATE: Incurs $3.5 Million Net Loss in 2012
---------------------------------------------------------
Sunrise Real Estate Group, Inc., filed with the U.S. Securities
and Exchange Commission its annual report on Form 10-K disclosing
a net loss of US$3.47 million on US$8.52 million of net revenues
for the year ended Dec. 31, 2012, as compared with a net loss of
US$1.15 million on US$8.97 million of net revenues for the year
ended Dec. 31, 2011.
The Company's balance sheet at Dec. 31, 2012, showed US$50.19
million in total assets, US$44.89 million in total liabilities and
US$5.29 million in total shareholders' equity.
Finesse CPA, P.C., in Chicago, Illinois, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2012. The independent auditors noted that
the Company has a working capital deficiency, accumulated deficit
from recurring net losses for the current and prior years, and
significant short-term debt obligations currently in default or
maturing in less than one year. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
A copy of the Form 10-K is available for free at:
http://is.gd/ZKPfUq
About Sunrise Real Estate
Headquartered in Shanghai, the People's Republic of China, Sunrise
Real Estate Group, Inc. was initially incorporated in Texas on
Oct. 10, 1996, under the name of Parallax Entertainment, Inc. On
Dec. 12, 2003, Parallax changed its name to Sunrise Real
Estate Development Group, Inc. On April 25, 2006, Sunrise Estate
Development Group, Inc., filed Articles of Amendment with the
Texas Secretary of State, changing the name of Sunrise Real Estate
Development Group, Inc. to Sunrise Real Estate Group, Inc.,
effective from May 23, 2006.
The Company and its subsidiaries are engaged in the property
brokerage services, real estate marketing services, property
leasing services and property management services in China.
=========
I N D I A
=========
ANIMESH SILK: ICRA Reaffirms 'B' Ratings on INR9.6cr Loans
----------------------------------------------------------
ICRA has reaffirmed the long term rating of '[ICRA]B' assigned to
the INR9.60 Crore fund based bank facilities of Animesh Silk Mills
Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
LT Scale-Fund Based 3.85 [ICRA]B reaffirmed
Limit-Term Loan
LT Scale-Fund Based 5.00 [ICRA]B reaffirmed
Limit-Cash Credit
LT Scale-Fund Based Limit 0.75 [ICRA]B reaffirmed
Stand by Line of Credit
The rating reaffirmation continues to factor in ASM's modest size
of operations and inherently low profit margins due to limited
value addition in the embroidery business. The rating further
incorporates ASM's presence in the highly competitive textile
industry characterized by intense competition from organised and
unorganized players. The rating also takes into account its
leveraged capital structure following its debt-funded expansion
programme resulting into weak profitability and coverage
indicators. The rating however, takes into account the promoters
established experience in the textile industry and locational
advantage arising from its proximity to raw material sources.
Animesh Silk Mills Private Limited was incorporated in the year
2010 as a private limited company. The company is engaged in
business of manufacturing of embroidery polyester sarees and
marketing the same under the brand name "Animesh". The company has
its registered office and manufacturing unit at Surat, Gujarat.
Recent results:
ASM has recorded a profit before tax (provisional) of INR0.12
Crore on an operating income (provisional) of INR30.54 Crore for
FY 2013.
AVG LOGISTICS: ICRA Assigns 'BB' Rating to INR10.5cr LT Loan
------------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]BB' to the INR10.50
Crore fund based facilities of AVG Logistics Private Limited. ICRA
has also assigned a short term rating of '[ICRA]A4+' to the
INR0.50 crore non fund based facilities of AVGL. The outlook on
long term rating is stable.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Long Term Fund 10.50 [ICRA]BB (Stable) (Assigned)
Based Facilities
Short Term Non-Fund 0.50 [ICRA]A4+ (Assigned)
Based Facilities
The assigned rating derives strength from experienced promoter of
AVGL, whose long standing track record in transportation business
coupled with pan-India presence facilitates client acquisition and
repeat business for the company. The rating is also supported by
reputed client mix from consumer goods sector, which provides
stable business, reduces credit risk associated with receivables
and partially mitigates risk arising from inherent cyclicality in
transportation sector. However, this strength is partially offset
by high revenue concentration of AVGL towards Nestle India
Limited, which accounted for two thirds of turnover in 2012-13.
The rating is also supported by balanced business model deployed,
wherein about 40% fleet is owned by the Group, thereby resulting
in satisfactory fleet utilization and adequate return on invested
capital. The rating is however constrained by high growth
trajectory being pursued by the company, which in past has been
supported by large debt funded fleet expansion and working capital
borrowings, as a result of which the capital structure has been
highly levered as reflected in Net External Debt/Tangible Net
Worth of 2.8 times as on March 2013. Notwithstanding this steep
growth achieved over last two years, the scale of operations
continues to remain modest. Thus, if the Company continues to
pursue high revenue growth to achieve competitive scale of
operations, it might stretch the cash flows if not timely
supported with appropriate equity infusion. While the promoters
have historically supported the company by way of regular infusion
of unsecured loans and equity, however owing to high growth, the
liquidity profile has remained weak, as is evident by track record
of fully utilized working capital limits. While assessing the
credit profile, ICRA also notes the susceptibility of company's
profitability to increase in toll taxes/levies and unrecoverable
costs; and stringent delivery requirements of clients that are
critical to maintain high operational utilization of the fleet and
avoid transit delay charges.
Going forward, while the funding requirement for transportation
business will be a factor of growth pursued in this business
segment; however, given the intentions to move up the value chain
by offering warehousing service, the scale of expansion, timing
and funding used thereof will remain key rating sensitivity
bedsides AVGL's ability to diversify its client base while
maintaining profitability of operations.
Recent Results
As per provisional results for twelve month period ending March
2013, AVGL has achieved steep revenue growth, whereby Operating
Income (OI) has increased from INR52.75 crore in 2011-12 to
INR95.17 crore in 2012-13.This growth in OI has been accompanied
by similar growth in net profit as reflected in PAT of 2.17 crore
(as per provisional results for 2012-13) against PAT of INR1.05
crore reported in 2011-12.
DANAVARSHINI EXPORTS: CRISIL Cuts Ratings on INR218.8MM Loans
-------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Danavarshini Exports Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL
BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Foreign Discounting 75 CRISIL D (Downgraded from
Bill Purchase 'CRISIL A4+')
Long-Term Loan 37.1 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Packing Credit 75 CRISIL D (Downgraded from
'CRISIL A4+')
Proposed Long-Term 21.7 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL A4+')
The rating downgrade reflects instances of delay by DEPL in
servicing its term debt; the delays have been caused by the
company's weak liquidity. DEPL has weak liquidity because of
working capital intensive operations of the company.
DEPL also has a below-average financial risk profile, marked by a
high gearing, and is susceptible to volatility in input material
prices, exposure to revenue concentration risks and to intense
industry competition. However, the company benefits from its
promoters' extensive experience in the textiles industry.
Set up in 1995 in Tamil Nadu Mr. N Sreedhar, DEPL manufactures
hosiery and ready-made garments for women and primarily caters to
the export market.
DEPL reported a profit after tax (PAT) of INR1million on net sales
of INR707.4 million for 2011-12 (refers to financial year, April 1
to March 31), against a PAT of INR1.1 million on net sales of
INR488 million for 2010-11.
INTECH PHARMA: ICRA Rates INR2.83cr LT Loan at '[ICRA]B+'
---------------------------------------------------------
ICRA has assigned '[ICRA]B+' rating for the INR2.83 Crore long
term fund based facilities and '[ICRA]B+/[ICRA]A4' to INR4.70
Crore fund based and non-fund based facilities of Intech Pharma
India Private Limited. ICRA has also assigned '[ICRA] A4' rating
to the INR4.65 Crore short term non fund based facilities of IPPL.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
LT Fund Based
Facilities 2.83 [ICRA]B+ assigned
LT/ST Fund Based
Facilities 3.00 [ICRA]B+/[ICRA]A4 assigned
ST Non Fund Based
Facilities 4.65 [ICRA]A4 assigned
Unallocated 1.70 [ICRA]B+/[ICRA]A4 assigned
The rating factors in the experience of the promoters in the
fumigation services through the parent company (Pest Kare Private
Limited, PIPL) and high barriers to the industry in form of
license requirements and expertise for manufacturing sensitive
product. The ratings are, however, constrained by the company's
small scale of operations, and thus limited bargaining power. The
ratings are also constrained by the high working capital intensity
of operations on account of need to maintain high inventory
levels. While ICRA has factored in the funds infused by Trinity
Venture Capital (TVC), but the company's large capex plans over
the medium term that remain debt funded would limit the
improvement in financial risk profile.
Intech Pharma Private Limited was incepted in the year 1999, and
was involved in manufacturing of various chemicals which were
supplied across India. In 2004, IPPL began the commercial
production of Methyl Bromide, an Ozone depleting gas, which has
restrictions on its production and usage as per the Montreal
Protocol.
In 2007, the company was taken over by Mr. Navanshu Saharan and
Mr. Divyanshu Saharan at a consideration of around INR3.0 Cr from
the original promoters. In addition, the company has also received
early stage investment from Trinity Ventures Capital, a US based
venture capital firm with interests in agriculture, livestock,
equipments among others.
The company supplies Methyl Bromide in large cylinders for
international customers and in form of smaller canisters of 680
gms & 454 gms in order to fulfill the demand of small customers in
India.
IPPL is a subsidiary of Pest Kare (India) Private Limited (PIPL),
a company promoted by the Saharan family, which is involved in the
business of pest control and fumigation services. PIPL provides
services like Vessel On Board fumigation, Container fumigation,
Empty ship-hold fumigation, Bulk / Bagged commodity fumigation and
Factory / Plant fumigation. Pestkare has a diversified list of
clients comprising of food grains exporters, Exporters of de-oiled
cakes of Soyabean, Rapeseed and Castor, Guar gum Exporters,
handicraft exporters, wooden packaging material etc. Its major
client includes ADM, Olam International, Louis Dreyfus, Cargill
etc.
Recent Results
As per provisional financial for 2012-13, IPPL recorded an
operating income of INR14.3 Crore. The company recorded an
operating profit before depreciation, interest and tax of
INR3.1 Crore and Profit before Tax (PBT) of INR0.3 Crore.
LAHOTI MOTORS: CRISIL Assigns 'B' Ratings on INR120MM Loans
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Lahoti Motors Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 50 CRISIL B/Stable
Proposed Long-Term 5 CRISIL B/Stable
Bank Loan Facility
Bank Guarantee 15 CRISIL A4
Cash Credit 65 CRISIL B/Stable
The ratings reflect LMPL's below-average financial risk profile,
marked by a small net worth, high gearing, and weak debt
protection metrics. The rating also factors in the company's
modest scale of operations due to limited track record, amidst
intense competition in the automobile (auto) dealership business.
These rating weaknesses are partially offset by LMPL's established
relations with Maruti Suzuki India Ltd and its low exposure to
risks related to inventory and receivables.
Outlook: Stable
CRISIL believes that LMPL will continue to benefit from the
established relations of its promoters with Maruti. The outlook
may be revised to 'Positive' if the company improves its financial
risk profile, most likely due to a larger-than-expected increase
in scale of operations, coupled with an improvement in its
profitability, resulting in larger-than-expected cash accruals, or
a sizeable equity infusion by promoters. Conversely, the outlook
may be revised to 'Negative' if the company's financial risk
profile and liquidity deteriorate because of lower-than-expected
cash accruals, larger-than-expected working capital requirements,
or larger-than-expected debt-funded capital expenditure (capex)
programmes.
LMPL was incorporated in December 2010, by Mr. Srikant Lahoti and
his wife Mrs. Usha Lahoti. The company is an authorised dealer of
Maruti passenger cars for Gulbarga (Karnataka) and certain
adjoining areas. LMPL has two showrooms one in Gulbarga (opened in
2010) and another in Bidar (recently opened).
MNT BUILDCON: CRISIL Rates INR1.14BB Term Loan at 'B+'
------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facility of MNT Buildcon Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 1140.0 CRISIL B+/ Stable
The rating reflects MNT's exposure to risks related to completion,
funding, and saleability of its on-going projects; the large size
of the projects and their vulnerability to high demand-related
risk accentuate these risks. The rating also factors in MNT's
vulnerability to the cyclicality inherent in the Indian real
estate industry. These rating weaknesses are partially offset by
the extensive experience of MNT's promoters in real estate
development, and its brand visibility as the company's projects
bear Unitech Holdings Ltd's brand names-Signature Towers (office
space) and The Great India Place (commercial space)-which have
strong visibility across India. Furthermore, its sanctioned term
loan and promoters' funds mitigate the funding risks associated
with the projects.
Outlook: Stable
CRISIL believes that MNT's credit risk profile will remain
sensitive to the timely completion of, and inflow of customer
advances for, its on-going projects. The outlook may be revised to
'Positive' in case of better-than-expected booking of units and
saleable area and receipt of customer advances, resulting in
healthy cash inflows and hence to progress of the construction as
per the proposed schedule. Conversely, the outlook may be revised
to 'Negative' if MNT's liquidity deteriorates, most likely due to
delays in receipt of customer advances or any time or cost overrun
in the on-going projects, or because of other large projects
undertaken by the company.
MNT is a special-purpose vehicle set up by Collage Group
Infrastructures Pvt Ltd and Unitech Holdings Ltd, with equal
profit sharing. MNT has been floated for constructing a complex
comprising of a real estate-residential tower- The Residences,
office space- Signature Towers and commercial mall- The Great
India Place in Dehradun (Uttrakhand). The project is spread across
13.4 acres of land on Sahastradhara Road, Dehradun, and comprises
a residential project on one-third of the land and a
commercial/retail project on the remaining land.
NIMESH OILS: ICRA Assigns 'BB-' Ratings to INR20.60cr Loans
-----------------------------------------------------------
ICRA has upgraded the long-term rating for the INR20.00 crore
(enhanced from INR14.00 crore) cash credit limits and INR0.60
crore term loan facility of Nimesh Oils Private Limited (NOPL) to
'[ICRA]BB-' from 'ICRA]B+'. The outlook on long term rating is
'Stable'.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Cash Credit 20.00 [ICRA]BB-(Stable) upgraded
Term Loan 0.60 [ICRA]BB-(Stable) upgraded
The revision in the rating favorably factors in the robust growth
in operating income since inception reflecting the company's well-
established retail presence with multiple brands, and its
diversified product portfolio. The rating also takes into account
favorably the long experience of the promoters.
However, the rating continues to remain constrained by the low
profitability owing to the limited value addition in the business;
the weak liquidity position and moderate gearing level, although
the gearing has witnessed improvement in the last year remains
moderate supported by capital infusion. The rating further factors
in the vulnerability of earning to volatility in prices of edible
oil and agro-commodities, which are subject to global demand and
supply scenario as well as climactic risks.
Nimesh Oil Private Limited was incorporated in the year 2008 by
Mr. Manojbhai D. Kimtani and family, through consolidation of the
operations of its four different group entities, all operating in
Bhavnagar. NOPL is engaged in - i) packaging and marketing of
refined edible oil, ii) cleaning and packaging of wheat and bajra,
besides trading of other agro-commodities and iii) manufacturing
of wheat flour. Presently, the company has wheat cleaning machine,
oil packaging machine and wheat flour mill for its operation with
the capacity of 220 MT, 95 MT and 20 MT respectively.
Recent Results
During FY 2013, the company has reported an operating income of
INR410.98 crore and profit after tax of INR1.48 crore, as against
an operating income of INR291.86 crore and profit after tax of
INR0.99 crore for FY 2012.
PUDHUAARU FINANCIAL: ICRA Rates INR11.6cr Bonds at 'BB'
-------------------------------------------------------
ICRA has assigned the '[ICRA]BB' rating with a stable outlook to
the INR11.60 crore NCD/bonds programme of Pudhuaaru Financial
Services Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
NCDs/Bonds 11.60 [ICRA]BB (Stable), Assigned
The rating continues to factor in the status of the company being
part of the IFMR group, which provides it with the access to
operational, managerial and financial support from the group. The
rating also factors in good underwriting and monitoring mechanisms
put in place by the company, the management focus on MIS systems
and interconnectivity of branches which enables close portfolio
monitoring. ICRA has also taken note of the Company turning
profitable and maintaining healthy asset quality in JLG loans,
however, there has been some slippage in the larger ticket loans,
which ICRA expects the company to correct in the near term.
The business level restructuring undertaken by the group during
2011-12 and 2012-13 has resulted in the transition of the branch
ownership (previously with Kshetriya Grameen Financial Services
entities and PFSPL) and operations to IFMR Rural Channels and
Services Private Limited, PFSPL's Parent company, while loan
assets originated from these branches would be booked on PFSPL's
books on payment of a proportionate fee. Going forward, while PFSL
would take-up loan assets other than qualifying microfinance loans
on its books; a fellow subsidiary Ankur Securities Private Limited
(ASPL) would hold incremental microfinance loans classified as
qualifying assets. Also, all the major fee based businesses would
be directly under IRCS. Ability of the group to achieve
operational efficiency by achieving optimal capital and resource
allocation would be key rating drivers. As of now, financial
performance of the group continues to remain weak with high cost
to income ratio.
The rating however takes note the weak financial profile of IRCS,
the parent company, modest growth in the portfolio during 2012-13
as the company was faced with difficulty in raising funds. ICRA
however notes that, PFSPL is expected to leverage upon the
branches established by IRCS for its business growth going
forward, which along with expected capital infusion (About
INR80 crore) into the parent company provides a favourable view on
funding availability to PFSPL. ICRA notes that the company has a
healthy asset quality presently with 180+ delinquencies at 0.28%
as in March 2013; however PFSPL's portfolio profile is still
evolving and, its ability to scale-up and achieve geographical
diversification, without adversely impacting the same still
remains to be demonstrated.
PFSPL's capitalisation is comfortable presently with gearing at
1.6 times (provisional) as on March 31, 2013; however, the company
would require regular equity infusion to maintain a prudent
capital structure considering its medium to long term growth plans
and moderate internal accruals; PFSPL reported a modest net profit
of INR0.27 crore (provisional) for 2012-13. Also, as the portfolio
profile is still evolving, going forward, it would be critical for
PFSPL to raise funds at favourable rates in line with the
expansion plans and control credit costs to maximise internal
generation.
Pudhuaaru Financial Services Private Limited is a non-deposit
taking Non-Banking Finance Company (ND- NBFC) engaged in providing
financial services to remote rural areas under the Kshetriya
Grameen Financial Services model of the IFMR group. PFSPL is
99.99% subsidiary of IFMR Rural Channels and Services Private
Limited.
R K PRODUCTS: CRISIL Assigns 'B' Ratings to INR100MM Loans
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long term
bank facilities of R. K. Products.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 15.6 CRISIL B/Stable
Cash Credit 50.0 CRISIL B/Stable
Proposed Cash 34.4 CRISIL B/Stable
Credit Limit
The rating reflects the firm's small scale of operations in a
fragmented industry and weak financial risk profile marked by high
gearing and small net worth. These rating weaknesses are partially
offset by the extensive experience of RKP's promoters in the wire
industry.
Outlook: Stable
CRISIL believes that RKP will continue to benefit from its
promoter's extensive experience. The outlook may be revised to
'Positive' if RKP significantly improves its scale of operations
and profitability, leading to improvement in its financial risk
profile. Conversely, the outlook may be revised to 'Negative' in
case the firm's financial risk profile deteriorates, on account of
debt funded capital expenditure or large working capital
requirements.
RKP was set up in 2011 as a proprietorship firm by Ms. Kusum
Mahajan, wife of Mr. Rakesh Mahajan. The firm manufactures steel
wires, Hard Bright wires, and springs wires. Its manufacturing
facility is in Kangra (Himacahal Pradesh).
RKP reported a book profit of INR4.8 million on net sales of
INR102.3 million for 2011-12 (refers to financial year, April 1 to
March 31), as against a book profit of INR4.5 million on net sales
of INR55.7 for 2010-11.
SWASTIK COPPER: ICRA Assigns 'B+' Rating to INR17.13cr Loans
------------------------------------------------------------
ICRA has assigned a long term rating of '[ICRA]B+' to the INR17.13
crore fund based facilities and proposed limits and a short term
rating '[ICRA]A4' to the INR33.00 crore non fund based facilities
of Swastik Copper (P) Limited.
Amount
Facilities (INR Cr) Ratings
---------- -------- -------
Fund based facilities 16.75 [ICRA]B+
Non-fund based 33.00 [ICRA]A4
Facilities
Unallocated (Proposed 0.38 [ICRA]B+
Limits)
The assigned ratings factor in risks arising on account of high
intensity of competition in the distribution transformers industry
and tender driven business, which results in low bargaining power
for players like SCL vis-a- vis both its customers and suppliers.
The ratings are also constrained by State Power Distribution
Companies comprising majority of the order book, which has led to
high receivables for SCL on account of weak financial health of
the discoms. The resultant weak financial profile of SCL as
evident by low profitability levels, stretched liquidity profile
and leveraged capital structure arising from debt funding of high
working capital requirements also constrain the ratings.
The rating however derives comfort from the established track
record and long presence of promoters in the transformers business
and positive demand outlook for distribution transformers as
reflected by repeated orders from various discoms. The ratings
also draw support from moderate order book position (0.82 times
the turnover of FY13) and in- built price variation clause which
provides some cushion to the profit margins of SCL against any
adverse movement in commodity prices. Going forward, SCL's ability
to secure adequate orders, timely execution of current pending
order book and timely realization of debtors will be the key
rating sensitivities.
Swastik Copper (P) Ltd. was incorporated in 1995 as Private
Limited Company. The Company is promoted by Mr. Sandeep Jain who
has more than 15 years of experience in transformers line
business. SCPL is involved in the business of manufacturing wide
range of transformers catering to Discoms and few private players.
The company supplies transformers to electricity boards/power
distribution companies in Uttar Pradesh (UP), Uttarakhand,
Rajasthan, Chhatisgarh (CG), and Madhya Pradesh (MP). SCL has
manufacturing unit located at Jaipur Industrial Area, Rajasthan.
Recent Results
As per the provisional results of financial year 2012-13, the
Company reported a profit after tax (PAT) of INR1.01 crore on an
operating income of INR134.39 crore as against PAT of INR1.01
crore on an operating income of 142.60 crore in FY12 (Audited
Financials).
=========
J A P A N
=========
* JAPAN: Non-Life Insurers' Underwriting Profits Bottomed Out
-------------------------------------------------------------
Fitch Ratings said Japanese non-life insurers' underwriting
profits have bottomed out based on the results for the financial
year ending March 2013 (FYE13). On the other hand, the agency also
notes that the combined ratio of their core automobile business
lines remained above 100%.
Fitch believes continuous pricing adjustments are key to improving
profitability, as non-life insurers' earnings will be impacted by
the planned consumption tax hike scheduled from April 2014.
The five non-life insurers reviewed in this commentary are Tokio
Marine & Nichido Fire Insurance Co., Ltd (TMNF, IFS, AA-/Stable),
Mitsui Sumitomo Insurance Company, Limited (MSI; A+/Stable) Sompo
Japan Insurance Inc. (Sompo Japan; A/Positive), Nipponkoa
Insurance Company, Limited (Nipponkoa; not rated) and Aioi Nissay
Dowa Insurance Co., Ltd, (ADI; not rated).
Growth in net premiums written (NPW) are likely to continue in
FYE14, as non-life insurers continue to increase rates of their
automobile business lines which account for about half of NPW. All
of the five non-life insurers raised or are planning to raise
premiums for their automobile business lines this fiscal year. NPW
excluding compulsory auto liability business lines rose 3.1% yoy
in FYE13. The loss ratio of automobile business lines excluding
catastrophe losses improved in FYE13 compared with the previous
fiscal year, facilitated by upward pricing adjustments. Therefore,
underwriting losses narrowed to JPY13bn in FYE13 from JPY257bn at
FYE12.
The consumption tax increase has a greater negative impact on the
non-life insurers compared with the life insurers, as auto and
other repair costs are also taxable in addition to agency
commissions. Fitch expects the insurers to make upward adjustments
to premiums to offset the negative impact of the consumption tax
hike, although the agency notes that non-life insurers have yet to
make any announcements on their pricing strategy from 2014. The
consumption tax is scheduled to be raised from current 5% to 8% in
April 2014 and to 10% in October 2015.
Non-life insurers' capitalisations are improving in line with
Fitch's expectations. Average statutory solvency margin ratios
(SMR) of the five major non-life insurers improved to 627% at
FYE13 from 533% at FYE12, due largely to the surge in unrealised
gains on securities and - to a lesser extent - the issuance of
subordinated debt. According to Fitch's estimates, improvement in
SMR would have been only about 20 percentage points - if the
impact of the financial markets' strong performance was excluded.
On the other hand, the increase in financial leverage was moderate
and remained low at 13% at FYE13, compared with 9% at FYE12.
Vulnerability to a stock market downturn remains the major credit
challenge for non-life insurers, along with the occurrence of a
major catastrophe that could deplete the capital buffer. Non-life
insurers unloaded more than JPY400bn of cross-held shares in FYE13
to reduce investment risk. However, share investments to
shareholder's equity (102% in FYE13 versus 105% at FYE12) remained
high compared to the levels expected for their respective ratings.
Non-life insurers are seeking to reduce their equity exposure in
this current fiscal year by roughly the same amount as in FYE12.
====================
N E W Z E A L A N D
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AWATERE VALLEY: Chinese Investors Gets OK to Buy Vineyards
----------------------------------------------------------
Kat Pickford at Malborough Express reports that Overseas
Investment Office has approved the sale of more than 300 hectares
of Awatere Valley land to a Chinese company.
Documents from the office show O:TU Investments, owned by Min Jia
and Xiumei Lin of China, bought 336 hectares of land in
Marlborough from Otuwhero Estates, Otuwhero Estate Wines, Otuwhero
Estates No 3 and Tui Concepts, according to Malborough Express.
The report relates that the sale was approved on April 7, and the
price was withheld as confidential.
The report notes that the land acquisition included a 256 hectares
established vineyard called Main Block, and a 79 hectares block of
land, called Donaldson Block.
The report relates that the Overseas Investment Office decision
said O:TU intended to convert the Donaldson Block to a vineyard
and further develop the Main Block to produce wine for the O:TU
label.
The report relays that the Otuwhero Marlborough wine group was put
in receivership in 2010, owing US$29.93 million.
Since then, it has been managed by Deloitte partners Grant Jarrold
and Shari Carter, the report notes.
The report discloses that Mr. Jarrold said on May 31 the firm that
bought the land also bought the O:TU brand and has produced,
marketed and sold the wine in New Zealand since the 2011 vintage.
The report says that the O:TU 102 Single Vineyard Sauvignon Blanc
2012 and O:TU Sauvignon Blanc 2012 were two of 20 Marlborough
wines to receive a gold medal at the International Wine Challenge
in London last month.
The report relays that Mr. Jarrold said the Donaldson Block was a
separate transaction to the Main Block sale. Main Block had been
subject to the receivership.
The report adds that the latest receiver's report, filed in
January, showed all amounts owed to preferential creditors were
settled, but there were no funds for the more than 40 other
creditors.
DORCHESTER PACIFIC: Asks Major Shareholders to Sell Down Shares
---------------------------------------------------------------
BusinessDesk reports that Dorchester Pacific investors have
exercised more options than the financial services firm was
expecting and it has asked major shareholders whether they are
willing to sell down their stakes in a placement.
BusinessDesk relates that Dorchester said about 134 million
options were converted to shares at 12.5 cents apiece, or
NZ$16.75 million, out of a total 150 million.
That was ahead of the 120 million to 125 million expected, and
means the pool for a proposed placement of up to 30 million shares
may be smaller than anticipated. The conversion price is a 58
percent discount to Dorchester's 30 cent trading price, the report
relays.
"We are now working with major shareholders to see if some of
their holdings can be made available as a small secondary pool to
go towards meeting placement demand," the report quotes chief
executive Paul Byrnes as saying. "As previously advised, the
total of new shares issued through the exercise of options and the
share placement will be limited to 150 million shares."
The conversion of the options and share placement are expected to
boost Dorchester's shareholder funds to $61 million by July from
$29 million as at March 31, and will give it headroom to look at
acquisition opportunities.
BusinessDesk notes that the options were part of a 2010
recapitalisation plan led by the Bakery Business, where some 7,200
investors owed about NZ$84 million agreed to convert their
debenture stock for four different types of security to keep the
firm afloat.
About Dorchester Pacific
Headquartered in Auckland, New Zealand, Dorchester Pacific
Limited (NZE:DPC)-- http://www.dorchester.co.nz-- is a financial
solutions provider, offering complementary products and services
across finance, insurance, savings and investments. The Finance
division provides investment opportunities through secured
debenture stock and subordinated unsecured notes, and financing
solutions for the property, business, equipment, motor vehicle
and personal finance sectors. Its insurance and savings
division provides a range of savings, life insurance, reverse
annuity mortgages, home equity release loans and other financial
products and services. The Investment Service division includes
equity investment advisers and sharebrokers, MoneyOnline and NZ
Investor Magazine, which provide professional, independent
investment advice, sharebroking and financial planning services.
*********
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., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2013. 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. 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
Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***