/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/130912.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 12, 2013, Vol. 16, No. 181 Headlines A U S T R A L I A 70 NICHOLSON: Development Firm Shut Down Over Unpaid Tax Bill AUSSIE WIDE: Caravan Maker Placed in Administration FLEXI ABS 2012-1: Moody's Eyes Upgrade for Four Note Classes LEARNING MEDIA: To Close its Doors After 75 Years C H I N A CIFI HOLDINGS: Fitch Rates USD Sr. Unsecured Notes at 'B+' * CHINA: Zombie Firms Emerging After Years of Solar Subsidies I N D I A ALLIED RECYCLING: CRISIL Lowers Ratings on INR300MM Loans to 'D' BHAGABATI BUILD: CRISIL Cuts Rating on INR55MM Cash Credit to 'B' FRISCHMANN PRABHU: CRISIL Assigns 'B+' Ratings to INR40.3MM Loans GANESH TRUCKS: CRISIL Assigns 'B+' Ratings to INR70MM Loans GHOSH BROTHERS: CRISIL Cuts Ratings on INR85MM Loans to 'D' GHOSH BROTHERS AUTO: CRISIL Cuts INR225MM Loan Ratings to 'D' GHOSH BROTHERS ELECTRONICS: CRISIL Cuts INR589MM Loan Rating to D GHOSH BROTHERS MOTORS: CRISIL Cuts Rating on INR350M Loans to 'D' G.V.: CRISIL Upgrades Rating on INR50MM Cash Credit to 'B+' HYDERABAD EXPRESSWAYS: CRISIL Cuts Rating on INR2.9B Loan to 'B+' JINDAL SOFT: CRISIL Cuts Ratings on INR175.3MM Loans to 'B' J.R.D. INT'L: CRISIL Ups Rating on INR85MM Cash Credit to 'B+' LANCO VIDARBHA: CRISIL Cuts Ratings on INR55.5BB Loans to 'D' MARINECRAFT ENGINEERS: CRISIL Ups Ratings on INR55M Loans to 'B+' PAL PRATEEK: CRISIL Assigns 'B-' Ratings to INR60MM Loans POWER MAX: CRISIL Downgrades Ratings on INR200MM Loans to 'D' REALLIANCE CONSTRUCTIONS: CRISIL Cuts INR120MM Loan Rating to 'D' VASUKI MINING: CRISIL Assigns 'D' Ratings to INR160MM Loans J A P A N HUMMINGBIRD SECURITISATION: S&P Puts B Rating on Watch Positive N E W Z E A L A N D BLACKTOP: Receivership 'Highlights Construction Margin Issues' * NEW ZEALAND: Four Finance Companies Not Worth Pursuing Says FMA - - - - - ================= A U S T R A L I A ================= 70 NICHOLSON: Development Firm Shut Down Over Unpaid Tax Bill ------------------------------------------------------------- Chris Vedelago at The Sydney Morning Herald reports that a development company backed by former nightclub owner Nick Meletsis and alleged money launderer Tom Karas has been shut down over an unpaid AUD151,000 land tax bill. SMH relates that Mr. Meletsis and Mr. Karas, an associate of convicted drug dealer Horty Mokbel, had made a bid to transform a Victorian terrace near Carlton Gardens into a 51-apartment development before the project apparently stalled two years ago. But the State Revenue Office has now tipped the company, 70 Nicholson St Pty Ltd, into insolvency over an old land tax bill, successfully petitioning the Supreme Court to call in a liquidator to recover the AUD151,436 in land tax and interest owed since late 2011, according to SMH. "I don't have anything to do with the company or the development," the report quotes Mr. Meletsis as saying. "I don't have anything else to say." SMH says Mr. Meletsis, formerly the company's director and secretary until mid-2012, remains its sole shareholder, according to ASIC records. Mr. Karas, who is married to Mr. Meletsis' sister Irene, resigned as secretary and director in May 2011, shortly before he was slugged with a AUD44 million income tax bill by the ATO. AUSSIE WIDE: Caravan Maker Placed in Administration --------------------------------------------------- Yolanda Redrup at SmartCompany reports that Aussie Wide Caravans, an Australian manufacturer of caravans, which once turned over more than AUD1 million, has collapsed owing creditors around AUD500,000. Aussie Wide Caravans manufactures custom-made caravans from scratch, but was placed in administration on September 9, 2013, says SmartCompany. Administrators Stephen Dixon and Andrew Hewitt from Grant Thornton were appointed, the report says. Mr. Dixon told SmartCompany the business's operations have ceased as fewer people have opted to spend their discretionary income on large, expensive vehicles. "It really has been caused because of the economic downturn and increased competitiveness in the sector," SmartCompany quotes Mr. Dixon as saying. "They build the caravans from the ground up and with the economic downturn Gen Y or the older community weren't buying caravans. Generally these generations are its target audience." The report notes that the company had manufactured caravans in four models and its main assets are a fully-functioning factory and an already-built caravan. "We're putting it up for sale and there has already been interest from the industry," Mr. Dixon told SmartCompany. FLEXI ABS 2012-1: Moody's Eyes Upgrade for Four Note Classes ------------------------------------------------------------ Moody's Investors Service has placed the ratings of the Classes B, C, D and E notes from Flexi ABS Trust 2012-1 on review for upgrade. The affected ratings are as follows: Issuer: Flexi ABS Trust 2012-1 AUD28.05M Class B Notes, Aa2 (sf) Placed Under Review for Possible Upgrade; previously on Aug 9, 2012 Definitive Rating Assigned Aa2 (sf) AUD11.47M Class C Notes, A2 (sf) Placed Under Review for Possible Upgrade; previously on Aug 9, 2012 Definitive Rating Assigned A2 (sf) AUD6.38M Class D Notes, Baa2 (sf) Placed Under Review for Possible Upgrade; previously on Aug 9, 2012 Definitive Rating Assigned Baa2 (sf) AUD5.1M Class E Notes, Ba2 (sf) Placed Under Review for Possible Upgrade; previously on Aug 9, 2012 Definitive Rating Assigned Ba2 (sf) Ratings Rationale: The review was prompted by the build-up in credit enhancement during the sequential pay period relative to the remaining losses expected to materialize in the pool. The transaction is a cash securitization of retail, point-of-sale receivables arising from the purchase of, for example, jewelry, fitness equipment, solar equipment, furniture and roofing. Since closing in August 2012, the pool has paid down very quickly. At end-June 2013, around 60% of the pool had been paid down. A gross default of 0.93% of the original pool balance has materialized. This level compares with Moody's mean default assumption of 2.6% for the life time of the whole pool. The notes were paid sequentially until February 2013, and are now paying down on a pro-rata basis. During the sequential pay period, credit enhancement built up substantially. Class B's credit enhancement increased to 22% at end-June 2013 from 14% in August 2012 when the transaction closed, Class C increased to 15% from 9.5%, Class D increased to 11% from 7%, and Class E increased to 7.9% from 5%. With the increased credit enhancement and expected performance, Moody's has put Classes B to E on review for upgrade. During the review period, Moody's will obtain data on the product mix of the outstanding receivables to determine if the default assumption needs to be revised. Moody's will run various sensitivities on default timing and loss assumption. Primary sources of assumption uncertainty are the loss ratio from the outstanding receivables. If a majority of them are originated from solar equipment contracts, Moody's expects their performance to be better than those originated from, for example, purchasing jewelry. This is because purchasers of solar equipment contracts are usually home-owners. The principal methodology used in this rating was "Moody's Approach to Rating Australian Asset-Backed Securities" published in July 2009. The cash flow model used to analyze the transaction was ABSROM 3.5, in which, substantially all default scenarios were considered. Therefore, Moody's analysis encompasses the assessment of stress scenarios. LEARNING MEDIA: To Close its Doors After 75 Years ------------------------------------------------- The Board of Learning Media has agreed with the Government that the company does not have a viable on-going business. Accordingly the company is to be wound down through a managed process. Projects currently underway will be delivered as scheduled and transition arrangements put in place for longer-term work programmes to ensure continuity. Learning Media was created in Wellington in 1939, when the School Publications Branch in the Department of Education was formed. It became a Crown Company in 1993 and a State Owned Enterprise in 2005. The company creates digital and print educational resources such as The School Journal and Te Wharekura and also provides professional development for teachers. The company employs 109 FTE staff, including editors, designers, project managers and software programmers. Learning Media chair Jenn Bestwick said the significant contribution Learning Media has made to New Zealand's education sector over many years is recognised by both the Government and Ministry of Education. A key priority as the company winds down is ensuring that the valuable skills and capability of Learning Media's staff are able to be retained within the sector. Ms. Bestwick said the company has operated in challenging market conditions. Declining revenues in traditional publishing have undermined the company's profitability and despite strategies to diversify into digital publishing and to develop products for other sectors and markets, the company has not been able to maintain a viable business. The Board is now in agreement with Cabinet that there is no realistic possibility of the company improving its financial position. "While it is disappointing that the company will no longer exist, it is heartening to know that the excellent work produced by the company, such as The School Journal, will continue to be provided to schools." Learning Media and the Ministry have commenced discussion about ways in which the valued expertise within the company can continue to benefit the sector. "Schools will receive all publications and continue to access online resources as expected and will not be affected by the wind- down of Learning Media," the Ministry of Education said in a statement. Deputy Secretary for Education, Andrew Hampton, says the Ministry is contacting schools to reassure them they will be receiving all curriculum resources they are expecting. ========= C H I N A ========= CIFI HOLDINGS: Fitch Rates USD Sr. Unsecured Notes at 'B+' ---------------------------------------------------------- Fitch Ratings has assigned Chinese property developer CIFI Holdings (Group) Co. Ltd's (CIFI, B+/Positive) proposed USD senior unsecured notes an expected rating of 'B+(EXP)'. The notes are to be issued as a tap to the USD275 million 12.25% notes due 2018 issued in April 2013, with the same terms and conditions. The final rating is contingent on the receipt of final documents conforming to information already received. The notes are rated at the same level as CIFI's Issuer Default Rating of 'B+' as they will represent direct, unconditional and unsecured obligations of the company. Separately, CIFI has announced its financial results for H113, which are generally in line with Fitch's expectation and therefore have no impact on the ratings. Key Rating Drivers Positive outlook: Fitch believes that CIFI is likely to grow to a scale commensurate with a 'BB-' profile within the next 12 months, with contracted sales to rise to over CNY14bn in 2013, based on its available-for-sale and estimated sell-through (sales/available for sale) ratio. CIFI achieved CNY7.2bn or 96% yoy growth in contracted sales in H113. High sales turnover: CIFI's credit profile has been improving since it standardised its product types and shifted its focus to mass-market housing in 2011. The agency expects this model to result in a rapid rise in sales turnover and contracted sales. CIFI's contracted sales/total debt was 1.1x in 2012, and Fitch estimates the ratio to improve to 1.3x in 2013. National presence: CIFI has a diversified presence in Bohai Economic Rim, Yangtze River Delta, and Central Western Region, reducing its exposure to uncertainties inherent in local policies and local economies while providing room to scale up. Fitch expects local demand to continue to be strong and its mass-market strategy to work well in high-tier cities. CIFI had around 86% of its land bank in first- and second-tier cities as of June 2013. Slower deleveraging: Net debt/adjusted inventory increased to around 36% at end-H113 from 30% at end-2012, which represents moderate leverage compared with peers. Nonetheless, the company's high growth target, together with its pipeline of more offshore bonds in H213, may limit its ability to deleverage in the next 12 months. Limited EBITDA margin: Fitch expects the company to achieve EBITDA margins in the high teens over the next two to three years, compared with 20%-25% for the past two years. The focus on mass- market housing also means that operating margins are lower than those of its peers. Rating Sensitivities Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- Delivery of contracted sales target in 2013 (2012: CNY9.5bn) -- Maintaining the current strategy of high cash flow turnover, such that contracted sales/total debt is sustained over 1.3x -- EBITDA margin over 18% on a sustained basis (H113: 19%) -- Net debt/adjusted inventory falling below 35% on a sustained basis Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- Failure to meet the above guidelines over the next 12-18 months, which would lead to the Outlook being revised to Stable * CHINA: Zombie Firms Emerging After Years of Solar Subsidies ------------------------------------------------------------- Bloomberg News reports that only five solar-power vendors remain in a space built for 170 at a sprawling complex of offices stacked three stories high outside Xinyu city in China's southeast. Bloomberg says locked doors and empty offices are what's left of the government's audacious plan to dominate the global solar industry. What happened in Xinyu is being replicated across China, which used subsidies and $47.5 billion of credit to wrest supremacy from Germany, Japan and the U.S., saddling an industry with losses for at least two years, according to Bloomberg. "There is definitely a slew of smaller zombie companies out there that are going to continue to fall one by one," the report quotes Angelo Zino, an analyst at S&P Capital IQ in New York, as saying. "You'll see 10 to 12 names here when it all shakes out. The remaining names will either go bankrupt or be consolidated." Bloomberg notes that government support created manufacturing giants such as LDK Solar Co. and Suntech Power Holdings Co. and made them dependent on financial aid from local authorities. As the price of PV products recovers, those companies remain crippled with debt and overcapacity, leaving a return to profits over the horizon. China's backing for the solar industry has left at least one factory producing photovoltaic products in half of the country's 600 cities, Bloomberg relays citing the China Renewable Energy Society in Beijing. Panel prices even after gains in the past six months are 60 percent lower than in November 2010 and have forced into bankruptcy dozens of those companies, including the largest unit of Suntech, once the industry's biggest producer. ========= I N D I A ========= ALLIED RECYCLING: CRISIL Lowers Ratings on INR300MM Loans to 'D' ---------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Allied Recycling Ltd to 'CRISIL D/CRISIL D' from 'CRISIL C/CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 150.0 CRISIL D (Downgraded from 'CRISIL C') Proposed Long-Term 10.0 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL C') Term Loan 130.0 CRISIL D (Downgraded from 'CRISIL C') Letter of Credit 10.0 CRISIL D (Downgraded from 'CRISIL A4') The downgrade reflects instances of delay by ARL in servicing its term debt over the six months through August 2013. The delays were driven by deterioration in ARL's liquidity, marked by full utilisation of bank lines on account of delays in realisation of debtors. Also, ARL has a weak financial risk profile marked by high gearing and weak debt protection metrics, and small scale of operations in the intensely competitive long steel products industry. However, ARL benefits from its promoter's extensive experience in the steel sector. Set up in 2003 by Mr. Vijay Kumar Abrol, ARL manufactures billets and wired rods at its facility in Ludhiana (Punjab). ARL also trades in hot-rolled and cold-rolled sheets; this business accounts for about 30 per cent of the company's turnover. BHAGABATI BUILD: CRISIL Cuts Rating on INR55MM Cash Credit to 'B' ----------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility of Bhagabati Build & Constructions Pvt Ltd to 'CRISIL B/Stable' from 'CRISIL B+/Stable'. The rating on the company's short-term facility has been reaffirmed at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 30 CRISIL A4 (Reaffirmed) Cash Credit 55 CRISIL B/Stable (Downgraded from 'CRISIL B+/Stable') The rating downgrade reflects the deterioration in BBCPL's liquidity, driven by increased working capital requirements, which have led to full utilisation of its bank lines. The company's gross current assets have increased to around 240 days as on March 31, 2013, from 142 days as on March 31, 2012, owing to an increase in inventory due to delay in projects as well as higher security and earnest money deposits following the sharp increase in its order book to about INR675 million as on September 30, 2013, from about INR275 million as on June 30, 2012. CRISIL believes that the increased working capital requirements will continue to constrain BBCPL's liquidity; the company's ability to raise the required funds in time for executing its current order book remains a key rating sensitivity factor. The ratings continue to reflect BBCPL's small scale of operations in the fragmented civil construction industry, geographical concentration in its revenue profile, and large working capital requirements. The ratings also factor in the company's below- average financial risk profile, marked by a small net worth and high gearing. These rating weaknesses are partially offset by the extensive experience of BBCPL's promoters in the civil construction industry in Odisha, its established relationships with government entities, and its moderate order book that gives near-term revenue visibility. Outlook: Stable CRISIL believes that BBCPL will continue to benefit over the medium term from its promoters' extensive industry experience. The outlook may be revised to 'Positive' if the company scales up its operations, and if it improves its liquidity, most likely by infusion of long-term funds and improvement in its working capital cycle. Conversely, the outlook may be revised to 'Negative' if BBCPL's financial risk profile, particularly its liquidity, weakens further, most likely due to larger-than-expected working capital requirements, delays in project execution and realisation of receivables, large debt-funded capital expenditure, or lower- than-expected net cash accruals. BBCPL was promoted in 2010 by Mr. Bibhuti Bhusan Routray and Mr. Bichitrananda Routray to take over the assets and liabilities of their partnership firm, Bhagabati Constructions. BBCPL took over the business of the firm with effect from September 30, 2010. The company undertakes civil construction contracts for roads and bridges mainly from government departments, such as the Rural Works Department and the Bhubaneswar Development Authority, in Odisha. For 2012-13 (refers to financial year, April 1 to March 31), BBCPL, on a provisional basis, reported a profit after tax (PAT) of INR7.2 million on net sales of INR187.7 million; it had reported a PAT of INR8.0 million on net sales of INR181.6 million for 2011-12. FRISCHMANN PRABHU: CRISIL Assigns 'B+' Ratings to INR40.3MM Loans ----------------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the bank facilities of Frischmann Prabhu (India) Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Standby Line of Credit 5.3 CRISIL B+/Stable Bank Guarantee 75.0 CRISIL A4 Cash Credit 35.0 CRISIL B+/Stable The ratings reflect FPIPL's modest scale of operations and susceptibility of its performance to receipt of orders and timely realisation of receivables. The rating is further constrained by its working capital intensive operations. These rating weaknesses are partially offset by the extensive experience of FPIPL's promoters in the project consultancy industry. Outlook: Stable CRISIL believes that FPIPL will continue to benefit over the medium term from its promoters' extensive experience in the project consultancy industry. The outlook may be revised to 'Positive' in case there is significant and sustained improvement in the company's revenue growth and profitability while improving its working capital cycle. Conversely, the outlook may be revised to 'Negative' in case of a significant decline in the company's revenues or profitability margins or further elongation of its working capital cycle thereby impacting its financial risk profile. FPIPL, incorporated in 1995 by UK based Pell Frischmann and Mumbai based Mr. Sudhakar Prabhu is a multidisciplinary consultancy firm. The company's operations comprise project management services like tender evaluation, quantity surveying, construction supervision, quality assurance and controls, commissioning and operations & maintenance (O&M) etc and detailed engineering designs including feasibility studies, physical surveys, economic analysis, environmental impact analysis, cost estimation, demand forecasting etc. For 2012-13 (refers to financial year, April 1 to March 31), FPIPL reported on a provisional basis a profit after tax (PAT) of INR7.1 million on net sales of INR385.6 million, as against a PAT of INR9.3 million on net sales of INR364.4 million for 2011-12. GANESH TRUCKS: CRISIL Assigns 'B+' Ratings to INR70MM Loans ----------------------------------------------------------- CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term bank facilities of Ganesh Trucks. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 20 CRISIL B+/Stable Proposed Long-Term 50 CRISIL B+/Stable Bank Loan Facility The rating reflects GT's weak financial risk profile marked by low networth, high TOL/TNW and modest debt protection metrics. The rating also reflects the firm's limited bargaining power with its principal and its exposure to intense competition which affects the firm's margins. These rating weaknesses are partially offset by the extensive experience of GT's partners' in the automotive dealership business. Outlook: Stable CRISIL believes that GT will continue to benefit over the medium term from its partners' extensive industry experience, its established relationship with its supplier, and dedicated network. The outlook may be revised to 'Positive' if the firm significantly expands its scale of operations and witnesses improvement in its operating profitability, resulting in higher-than-expected cash accruals. The outlook may also be revised to 'Positive' if GT improves its liquidity by managing its working capital requirements effectively. Conversely, the outlook may be revised to 'Negative' if the firm's scale of operations declines significantly, thus affecting its cash accruals adversely, or if its liquidity weakens on account of larger-than-expected working capital requirements or debt-funded capital expenditure. Established in September 2011, as a partnership firm Ganesh Trucks (GT) is an authorised dealer and service centre of Ashok Leyland (AL) in the state of Tamil Nadu. The firm currently deals with the Light Commercial vehicle (LCV) segment of AL. It is currently managed by Mr. Ram Prakash. GHOSH BROTHERS: CRISIL Cuts Ratings on INR85MM Loans to 'D' ----------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Ghosh Brothers Auto Sales Pvt Ltd to 'CRISIL D' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 45.0 CRISIL D (Downgraded from 'CRISIL B/Stable') Proposed Long-Term 40.0 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL B/Stable') The downgrade reflects irregularities in the cash credit limit with utilisation exceeding 100 per cent continuously for over 30 days. The delays have been caused by the weakening of GBASPL's liquidity because of a decline in demand on account of slowdown in the auto sector. GBASPL has a weak financial risk profile, marked by modest net worth and debt protection metrics, exposure to intense competition in the auto industry, and working capital intensive operations. These rating weaknesses are partially offset by the company's established market position supported by it being one of the only two Honda Siel Cars India Ltd (Honda) dealers in Northeast India and the promoter's extensive industry experience. Incorporated in 2010, GBASPL, based in Guwahati (Assam), is an authorised dealer for sales and service of passenger cars of Honda in Dibrugarh (Assam). The company is part of the Ghosh group, promoted by Mr. Pranab Kumar Ghosh. The promoter also owns Ghosh Brothers Electronics Pvt Ltd and Ghosh Brothers Automobiles (India) Pvt Ltd, which are authorised dealers for Tata Motors Ltd, and Ghosh Brothers Motors Pvt Ltd, an authorised dealer for Honda for the Northeast region. The promoter has other group companies engaged in automobile dealership business, hospitality, real estate, and construction equipment. GBASPL currently has one showroom in Dibrugarh. GHOSH BROTHERS AUTO: CRISIL Cuts INR225MM Loan Ratings to 'D' ------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Ghosh Brothers Automobiles (India) Pvt Ltd to 'CRISIL D' from 'CRISIL B/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 150.0 CRISIL D (Downgraded from 'CRISIL B/Stable') Inventory Funding 25.0 CRISIL D (Downgraded from Facility 'CRISIL B/Stable') Rupee Term Loan 50.0 CRISIL D (Downgraded from 'CRISIL B/Stable') The downgrade reflects instances of delays in the repayment of debt obligations as well as irregularities in the cash credit limit, with utilisation exceeding 100 per cent continuously for over 30 days. Term loan obligations have been pending since April 2013. The delays have been caused by the weakening of GBAPL's liquidity because of a decline in demand on account of slowdown in the auto sector. GBAPL has a weak financial risk profile, marked by a modest net worth and debt protection metrics, exposure to intense industry competition, and working capital intensive operations. These rating weaknesses are partially offset by the company's established market position supported by the extensive experience of the promoter in the auto sector. Incorporated in 2010, GBAPL, located in Kolkata, West Bengal is an authorised dealer for sales and service for passenger cars of Tata Motors Ltd (Tata). The company is promoted by Mr. Pranab Kumar Ghosh and family. The company currently, has one showroom (12,500 square feet [sq ft]) and workshop (1,00,000 sq ft) in Jadhavpur, Kolkata. GHOSH BROTHERS ELECTRONICS: CRISIL Cuts INR589MM Loan Rating to D ----------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Ghosh Brothers Electronics Pvt Ltd to 'CRISIL D' from 'CRISIL BB+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 550.0 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Term Loan 35.2 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Proposed Long-Term 4.3 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL BB+/Stable') The downgrade reflects instances of delays in the repayment of debt obligations as well as irregularities in the cash credit, with utilisation exceeding 100 per cent continuously for over 30 days. Term loan obligations have been pending since April 2013. The delays have been caused by the weakening of GBEPL's liquidity because of a decline in demand on account of slowdown in the auto sector. GBEPL has exposure to intense competition in the auto industry, and working capital intensive operations. These rating weaknesses are partially offset by the company's established market position, supported by its promoter's extensive industry experience. Incorporated in 2000, GBEPL, based in Guwahati (Assam), is an authorised dealer for sales and service of passenger cars of Tata Motors Ltd (Tata) in Assam. Set up in 1981 as a proprietorship firm Ghosh Brothers Electronics (GBE), GBEPL was reconstituted as a private limited company with its current name in 2000. It is part of the Ghosh group, promoted by Mr. Pranab Kumar Ghosh. GBE has been retailing electronics and home appliances since 1981. GBEPL continues to retail electronics and currently has three retail showrooms (two on rent [5000 and 3000 square feet] and one owned [2500 square feet]) in Guwahati dealing in electronic products of leading manufacturers such as LG Electronics India Pvt Ltd (LG), Samsung India Pvt Ltd, Sony India Ltd, Whirlpool of India Ltd, and Godrej Consumer Products Ltd. The company took up the automobile dealership business in 2003. GBEPL currently owns four showrooms and workshops in Guwahati, Tezpur, Barteta, and Nagaon (all in Assam). GHOSH BROTHERS MOTORS: CRISIL Cuts Rating on INR350M Loans to 'D' ----------------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Ghosh Brothers Motors Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL BB+/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 300.0 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Rupee Term Loan 35.0 CRISIL D (Downgraded from 'CRISIL BB+/Stable') Bank Guarantee 15.0 CRISIL D (Downgraded from 'CRISIL A4+') The downgrade reflects instances of delays in the repayment of debt obligations as well as irregularities in the cash credit limit, with utilisation exceeding 100 per cent continuously for over 30 days. Term loan obligations have been pending since April 2013. The delays have been caused by the weakening of GBMPL's liquidity because of a decline in demand on account of slowdown in the auto sector. GBMPL has exposure to intense industry competition, and working capital intensive operations. These rating weaknesses are partially offset by the company's established market position supported by it being one of the only two Honda Siel Cars India Ltd (Honda) dealers in Northeast India and the promoter's extensive industry experience. Incorporated in 2007, GBMPL, based in Guwahati (Assam), is an authorised dealer for sales and service of passenger cars of Honda in Assam. The company is part of the Ghosh group, promoted by Mr. Pranab Kumar Ghosh. The promoter also owns Ghosh Brothers Electronics Pvt Ltd and Ghosh Brothers Automobiles (India) Pvt Ltd, which are authorised dealers for Tata Motors Ltd, and Ghosh Brothers Auto Sales Pvt Ltd, an authorised dealer for Honda in Northeast India. GBMPL currently has one showroom (20,000 square feet [sq ft]) and workshop (20,000 sq ft) in Guwahati. It does not have any major capital expenditure plans for the medium term. G.V.: CRISIL Upgrades Rating on INR50MM Cash Credit to 'B+' ----------------------------------------------------------- CRISIL has upgraded its long-term ratings on the bank facilities of G.V. (God Vishnu) Rice Unit (GVRNU) to 'CRISIL B+/Stable' from 'CRISIL B/Stable and short term rating is reaffirmed at CRISIL A4. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 50 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Packing Credit 370 CRISIL A4 (Reaffirmed) Proposed Short-Term 80 CRISIL A4 (Reaffirmed) Bank Loan Facility The rating upgrade reflects CRISIL's belief that GVRNU's credit risk profile will improve over the medium term, driven by its improving scale of operations, while sustaining its profitability levels, which is likely to lead to higher cash accruals. CRISIL's expects the scale of operations of the firm to increase significantly to around INR2.0-2.2 billion on account of increase in the proportion of trading of rice and expected improvement in capacity utilization levels in 2012-13. The upgrade also factors CRISIL's expectation of marginal correction in the capital structure of the firm as a result of higher accretion to reserves due to improving cash accruals. The debt protection metrics however is expected to remain average with interest coverage ratio likely to remain in the range of 1.8-2.0 times on account of simultaneous increase in external borrowings due to increase in scale of operations. The rating continues to reflect GVRNU's high gearing, large working capital requirements, and moderate scale of operations in the intensely competitive rice processing industry. The ratings also factor in the firm's exposure to risks related to changes in regulatory policies, and to volatility in raw material prices because of high dependence on the monsoon. These rating weaknesses are partially offset by GVRNU's increasing scale of operations, extensive experience of its promoters in the rice business, and benefits expected from the healthy growth prospects for the basmati rice industry. Outlook: Stable CRISIL expects GVRNU to maintain its established presence in the rice industry over the medium term on the back of its promoters' extensive industry experience. The outlook may be revised to 'Positive' if there is a substantial and sustained improvement in the firm's profitability margins, while maintaining its healthy revenue growth or there is substantial increase in net-worth on the back of equity infusion from promoters. Conversely, the outlook may be revised to 'Negative' if the firm is not able to sustain the improvement in its scale of operations or there is a significant deterioration in its capital structure on account of larger-than-expected working capital requirements or large debt- funded capex. GVRNU is a partnership firm set up by the Bansal family in 1987. The Bansal family has been in the rice industry for three generations, with the father of the late Mr. Som Prakash Bansal setting up a processing unit in the 1940s. Currently, Mr. Som Prakash Bansal's wife Mrs. Nirmala Devi and sons Mr. Sureinder Bansal, Mr. Promod Bansal, and Mr. Vinit Bansal are partners in GVRNU with each holding a share of 25 per cent in the firm's profit. GVRNU mills, processes, and sells rice in the export and domestic markets. Its focus is to export basmati rice to the Middle East and Iran, where there is high demand for the same. Over 90 per cent of the firm's revenues is derived from exports. GVRNU is also engaged in trading: it procures rice (unsorted) from other small mills, sorts it at its plant, and then exports the same. GVRNU has one rice milling, grading, and sorting unit in Karnal (Haryana) with capacities of 7 tonnes per hour (tph) for milling and 9 tph for sorting. HYDERABAD EXPRESSWAYS: CRISIL Cuts Rating on INR2.9B Loan to 'B+' ----------------------------------------------------------------- CRISIL has downgraded its rating on the bank facilities of Hyderabad Expressways Ltd to 'CRISIL B+/Stable' from 'CRISIL BB+/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 2,900.0 CRISIL B+/Stable (Downgraded from 'CRISIL BB+/Stable') The rating downgrade reflects the continued support extended by HEL to group entity Cyberabad Expressways Ltd (CEL; rated 'CRISIL D'), adversely affecting HEL's financial flexibility and liquidity. The loans and advances extended by HEL to CEL increased to INR237 million as on March 31, 2013, from INR124 million as on March 31, 2012; HEL did not have any exposure to any group company as on March 31, 2011. Any substantial change in the loans and advances extended by HEL to its group companies will remain a key rating sensitivity factor. The rating continues to reflects HEL's low debt service coverage ratio and exposure to operational and maintenance risks. These rating weaknesses are partially offset by the benefits HEL derives from the annuity nature of its build, operate, and transfer (BOT) project. Outlook: Stable CRISIL believes that HEL's liquidity will remain constrained over the medium term by substantial loans and advances extended to its group company, and by its modest cash balance limiting its financial flexibility to meet any exigency. The outlook may be revised to 'Positive' if HEL realizes a substantial portion of its loans and advances given to CEL or there is a large equity infusion by its promoters thereby augmenting its financial flexibility. Conversely, the outlook may be revised to 'Negative' if HEL extends further funding support to its group companies or faces significant delays in receipt of annuity payments leading to deterioration in its liquidity. HEL, a special purpose vehicle, was promoted to build and maintain the 13-kilometre Bongulur to Tukkuguda section of the eight-lane outer ring road in Hyderabad on a BOT basis. HEL completed the project in August 2010. Gayatri Projects Ltd holds a 50.0 per cent stake in HEL, IL&FS Engineering & Construction Company Ltd owns 42.7 per cent, and Terra Projects Pvt Ltd owns 7.3 per cent stake. As per the concession agreement, HEL will receive a semi-annual annuity of INR304.9 million from Hyderabad Growth Corridor Ltd for 15 years until December 2022. The annuity has to be deposited in an escrow account and appropriations from the account have to be as per the concession agreement. JINDAL SOFT: CRISIL Cuts Ratings on INR175.3MM Loans to 'B' ----------------------------------------------------------- CRISIL has downgraded its ratings on the bank facilities of Jindal Soft Italia Seating Pvt. Ltd. to 'CRISIL B/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 65 CRISIL B/Stable (Downgraded from 'CRISIL BB-/Stable') Corporate Loan 20 CRISIL B/Stable (Downgraded from 'CRISIL A4+') Letter of credit & 10 CRISIL A4 (Downgraded from Bank Guarantee 'CRISIL A4+') Term Loan 54 CRISIL B/Stable (Downgraded from 'CRISIL BB-/Stable') Proposed Long-Term 36.3 CRISIL B/Stable (Downgraded Bank Loan Facility from 'CRISIL BB-/Stable') The rating downgrade reflects Jindal Soft's constrained business risk profile, marked by lower-than-expected ramp up in operations post the capacity enhancement in2010-11 and 2011-12 (refers to financial year, April 1 to March 31). The offtake was lower than expected primarily on account of discontinuation of orders from Lear Automotive India Pvt Ltd (which supplies to Volkswagen India Ltd and Diamler Chrysler India). This has resulted in high customer concentration with Bajaj Auto Ltd (BAL) contributing to more than 87 per cent to Jindal Soft's total revenue in 2012-13. Low offtake and limited capacity utilization have resulted in low cash accruals of INR27 million in 2012-13. However, Jindal Soft is diversifying its customer base by procuring larger orders from Piaggeo Vehicles Pvt Ltd and Kawasaki Motors Corp. CRISIL believes that the company's efforts to diversify its customer base will strengthen its business risk profile significantly over the medium term; however, the same shall remain susceptible to demand for vehicles sold by its key customer BAL and this will remain a key rating sensitivity factor over the medium term. Jindal Soft's lower-than-expected cash accruals due to the de growth in scale of operations, along with the large term loan availed for enhancing facilities, have led to weakening of its financial risk profile, particularly its liquidity. This is reflected in depressed cash accruals against significantly high debt repayments. However, Jindal Soft's financial flexibility is largely supported by enhancement in the working capital limits. CRISIL believes that the company's liquidity profile will continue to be supported by its moderate average bank limit utilization; however, the financial risk profile will be constrained by large debt repayments due over the medium term. CRISIL's ratings on the bank facilities of Jindal Soft also reflect the company's average financial risk profile marked by modest net worth, and low cash accruals, modest scale of operations, and customer concentration. These weaknesses are offset by the extensive experience of Jindal Soft's promoters in the automobile seat manufacturing and seating system industry, and established relationship with key customer. Outlook: Stable CRISIL believes that Jindal Soft's business risk profile will continue to be supported by its established relationship with BAL. The outlook may be revised to 'Positive' if there is a substantial improvement in its sales and profitability, leading to larger- than-expected cash accruals and consequent improvement in its liquidity. Conversely, the outlook may be revised to 'Negative' if the company's liquidity comes under significant pressure, caused most likely by less-than-expected cash accruals or larger-than- expected, debt-funded capital expenditure programme. Incorporated in 2006, Jindal Soft is a 74:26 joint venture between the Madan Jindal group and Soft Italia of Italy. Jindal Soft manufactures seats and seating systems for automobiles. Its managing director is Mr. Madan Jindal. Jindal Soft has a manufacturing unit at Chakan in Pune (Maharashtra). The company supplies to BAL's two-wheelers division and to Piaggeo Vehicles Pvt Ltd. Jindal Soft provisionally reported a profit after tax (PAT) of INR9 million on net sales of INR295 million for 2012-13; the company reported a PAT of INR11 million on net sales of INR336 million for 2011-12. J.R.D. INT'L: CRISIL Ups Rating on INR85MM Cash Credit to 'B+' -------------------------------------------------------------- CRISIL has upgraded its rating on the bank facilities of J.R.D. International Ltd (part of the J R group) to 'CRISIL B+/Stable' from 'CRISIL B-/Stable'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 85 CRISIL B+/Stable (Upgraded from 'CRISIL B-/Stable') The rating upgrade reflects CRISIL's belief that JRDIL's credit risk profile will improve over the medium term, driven by improving scale of operations and cash accruals. The rating upgrade also underscores improvement in JRDIL's liquidity, marked by its sufficient cash accruals against maturing term debt over the medium term. The rating reflect the JR group's below-average financial risk profile, marked by high gearing and weak debt protection metrics, and exposure to risks relating to un-favorable government policies, vagaries in monsoons, and customer concentration, and to project risk on its large, debt-funded capital expenditure (capex; in JRDIL). The project risk will remain a key monitorable over the medium term. These weaknesses are partially offset by the J R group's established presence and promoter's extensive experience in the rice industry and improving operating efficiency. For arriving at the rating, CRISIL has combined the business and financial risk profiles of J R Agrotech Pvt Ltd and JRDIL. This is because both companies are in the same line of business and have the same promoters, and there are significant operational linkages between the two companies, especially in sale and purchase of rice. Outlook: Stable CRISIL believes that the J R group will benefit over the medium term from its established position in the rice industry and improving operating efficiency. However, the group's financial risk profile is expected to remain below average, marked by high gearing and weak debt protection metrics, on account of large working capital requirements and moderate profitability. The outlook may be revised to 'Positive' if JRDIL commissions its ongoing capex within the set timelines and budgeted cost, and leads to improvement in cash accruals. A significant improvement in capital structure and debt protection metrics may also lead to a revision in outlook to positive. Conversely, the outlook may be revised to 'Negative' if JRDIL's financial risk profile deteriorates, due to time and cost over runs in the ongoing capex or if the group's revenue and profitability decline, resulting in weakening of debt protection metrics and liquidity The J R group, comprising JRA and JRDIL, is into milling, processing and selling of rice in India and abroad. JRA, incorporated in 1998 by Mr. Raman Aggarwal and his brother, Mr. Krishan Kumar Aggarwal, mills, processes and sells rice in both domestic and export market. JRDIL was incorporated in 2010 by Mr. Raman Aggarwal and his son, Mr. Raghav Aggarwal and is engaged in trading of rice that is largely procured from JRA. J R group reported a profit after tax (PAT) of INR80.9 million on net sales of INR4.6 billion for 2012-13, against a PAT of INR35.3 million on net sales of INR3.0 billion for 2011-12. LANCO VIDARBHA: CRISIL Cuts Ratings on INR55.5BB Loans to 'D' ------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Lanco Vidarbha Thermal Power Ltd to 'CRISIL D' from 'CRISIL BB/Negative'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Long-Term Loan 55,490 CRISIL D (Downgraded from 'CRISIL BB/Negative') Proposed Long-Term 10 CRISIL D (Downgraded from Bank Loan Facility 'CRISIL BB/Negative') The downgrade reflects instances of delay by Lanco Vidarbha in servicing its interest payments; the delays have been caused by the company's weak liquidity, which has, in turn, been the result of inadequate cash accruals, delays in commissioning of project, and absence of timely support from Lanco Vidarbha's parent, Lanco Infratech Ltd (LITL; rated 'CRISIL D/ CRISIL D'). The rating reflects Lanco Vidarbha's exposure to risks related to time and cost overruns in its ongoing project, and to tariff being competitively bid, resulting in costs higher than the bid-level not being pass-through in nature. The rating weaknesses are partially offset by expectation of stable revenue inflows for Lanco Vidarbha because of its long-term power purchase agreement (PPA) for offtake of 55 per cent of the total power generation capacity of 1320 megawatt (MW) with Maharashtra State Electricity Distribution Company Ltd. Lanco Vidarbha, owned by LITL and its subsidiaries and associates, is implementing a 1320-MW coal-based power project in Wardha District (Maharashtra). The project will have two supercritical units of 660 MW each. The project cost, estimated at around INR69.4 billion, is being funded in a debt-to-equity ratio of 80:20. In addition to the PPA with MSEDCL for offtake of 55 per cent of its capacity, Lanco Vidarbha has also signed a PPA with National Energy and Trading Services Ltd (rated 'CRISIL BBB/Negative/CRISIL A3+') for offtake of 25 per cent of capacity, on a best-effort basis. Lanco Vidarbha has awarded the engineering-procurement-and-construction (EPC) contract to LITL. The boiler package for the project will be supplied by Dongfang Electric Company, China, and the turbine package by Harbin Turbine Company, China. Lanco Vidarbha's annual coal requirement is estimated at around 6.61 million tonnes. The company has a letter of assurance from South Eastern Coalfields Ltd for around 5.5 million tonnes per annum (mtpa) of coal; sourcing of the remainder amount of coal is yet to be tied up. The first unit (660 MW) of the project is scheduled to be commissioned by April 2014, and the second unit by August 2014. MARINECRAFT ENGINEERS: CRISIL Ups Ratings on INR55M Loans to 'B+' ----------------------------------------------------------------- CRISIL has upgraded its rating on the long-term bank facilities of Marinecraft Engineers Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL B/Stable, while reaffirming its short-term rating at 'CRISIL A4'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Bank Guarantee 10 CRISIL A4 (Reaffirmed) Cash Credit 30 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Standby Line of Credit 4.5 CRISIL B+/Stable (Upgraded from 'CRISIL B/Stable') Proposed Long-Term 20.5 CRISIL B+/Stable (Upgraded Bank Loan Facility from 'CRISIL B/Stable') The rating upgrade reflects CRISIL's belief that MEPL's credit risk profile will improve over the medium term, driven by the company's improving scale of operations. MEPL's revenues improved in the last two years, wherein the company achieved a turnover of INR135.6 million in 2012-13 (refers to financial year, April 1 to March 31) as compared to a turnover of INR17.3 million in 2010-11. The company also has an unexecuted order book of INR150 million as of August 2013 to be executed by 2013-14. Also, despite the company's large working capital requirements, its liquidity has improved in the absence of any debt-funded capital expenditure (capex) plans or term debt repayments, low but stable accruals, and large unencumbered investments in mutual funds. The ratings reflect MEPL's intensive working capital requirements and modest scale of operations. These rating weaknesses are partially offset by the extensive experience of the company's promoters in the ship repairing and maintenance business. Outlook: Stable CRISIL believes that MEPL will benefit over the medium term from its promoters' extensive experience in ship maintenance and repair business. The outlook may be revised to 'Positive' in case more tenders are awarded to the company, thus improving revenue visibility and cash accruals over the medium term or better working capital management, leading to improvement in its overall financial risk profile. Conversely, the outlook may be revised to 'Negative' in case of deterioration in the company's business risk profile due to low order book reducing revenue visibility over the medium term or in case its overall financial risk profile on account of stretched working capital or any significant debt- funded capex. MEPL was established in 1978 as a proprietorship concern by Mr. Udoy Sekhar Ghose. The firm was reconstituted as MEPL in 1996. The entity started as a subcontractor for other established companies engaged in shipbuilding. Since the last five or six years, the company has been undertaking ship repairing and engineering projects mostly for Indian Coast Guard, Kolkata Port Trust and Garden Reach Shipbuilders & Engineers Ltd (GRSEL). MEPL's profit after tax (PAT) and net sales are estimated at INR6.4 million and INR135.6 million, respectively, for 2012-13; the company reported a PAT of INR6.9 million on net sales of INR115.1 million for 2011-12. PAL PRATEEK: CRISIL Assigns 'B-' Ratings to INR60MM Loans --------------------------------------------------------- CRISIL has assigned its 'CRISIL B-/Stable' rating to the bank facilities of Pal Prateek Auto Sales Pvt Ltd. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 10 CRISIL B-/Stable Electronic Dealer 50 CRISIL B-/Stable Financing Scheme(e-DFS) The rating reflects PASL's weak financial risk profile marked by a high gearing and weak debt protection metrics, small scale of operations, and short track record of business with its principal Nissan Motors India Pvt Ltd. These rating weaknesses are partially offset by the extensive experience of PASL's promoters in the automobile dealership business and the funding support that it is expected to receive from them if the need arises. Outlook: Stable CRISIL believes that PASL will continue to benefit over the medium term from its promoters' extensive experience and the funding support that it is expected to receive from them if the need arises. The outlook may be revised to 'Positive' if the company improves its financial risk profile, most likely because of higher-than-expected ramp up in its scale of operations and improvement in its operating margin, or if it benefits from equity infusion by its promoters. Conversely, the outlook may be revised to 'Negative' in case PASL's financial risk profile deteriorates, most likely because of lower-than-expected cash accruals, larger- than-expected working capital requirements, or further debt-funded capital expenditure. PASL, established in 2012, is an authorised dealer for NMPL's passenger cars in the Kumaon region (Uttarakhand). It currently operates one showroom and authorised service station at Haldwani in Nainital (Uttarakhand). The company is promoted by Mr. Suresh Pal and his wife, Mrs. Meera Pal. PASL commenced operations in August 2012. PASL's net loss is estimated at INR0.15 million on net sales of INR100 million for 2012-13 (refers to financial year, April 1 to March 31). POWER MAX: CRISIL Downgrades Ratings on INR200MM Loans to 'D' ------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facilities of Power Max (India) Pvt Ltd to 'CRISIL D' from 'CRISIL BB+/Negative'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Cash Credit 130 CRISIL D (Downgraded from 'CRISIL BB+/Negative') Working Capital 70 CRISIL D (Downgraded from Demand Loan 'CRISIL BB+/Negative') The downgrade reflects instances of delays in the repayment of debt obligations as well as irregularities in the cash credit limit, with utilisation exceeding 100 per cent continuously for over 30 days. The delays have been caused by the weakening of its liquidity owing to delays in payments from customers and delays in execution of projects. The ratings continue to reflect Power Max's below-average financial risk profile, marked by high gearing and average debt protection metrics, large working capital requirements, modest scale of operations, and susceptibility to intense competition in the engineering services industry. These rating weaknesses are partially offset by the experience of its promoters in the engineering services industry, and the company's strong customer profile. Power Max, formed in 1977 by Mr. Dilip Kumar Bose, provides turnkey services in the engineering industry in segments such as mechanical; engineering, procurement, and construction; design and engineering; civil, structural, and architectural; electrical; instrumentation; and infrastructure development. Power Max reported a profit after tax (PAT) of INR17 million on net sales of INR810 million for 2012-13 (refers to financial year, April 1 to March 31), against a PAT of INR20 million on net sales of INR891 million for 2011-12. REALLIANCE CONSTRUCTIONS: CRISIL Cuts INR120MM Loan Rating to 'D' ----------------------------------------------------------------- CRISIL has downgraded its rating on the long-term bank facility Realliance Constructions to 'CRISIL D' from 'CRISIL C'. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Term Loan 120 CRISIL D (Downgraded from 'CRISIL C') The rating downgrade reflects instances of delay by RC in servicing its term debt; the delays have been caused by the firm's weak liquidity. RC has weak liquidity because of its subdued customer advances and low demand for its on-going projects. RC is also exposed to risks related to completion, funding, and saleability of its projects, and is vulnerable to inherent risks and cyclicality in the Indian real estate industry. However, RC benefits from the established track record of its management in the construction industry. RC, a proprietorship firm, was established in 2009 by Mrs. Kavita Kadam. Its day-to-day operations are looked after by Mr. Aanand Kadam, husband of Mrs. Kavita Kadam. The firm undertakes residential real estate project development. RC is currently developing three residential projects in Karjat (Maharashtra): Coral Lake, comprising 240 units; Mohili Meadows, comprising 263 units; and Ten Square, comprising 258 units. RC's profit after tax (PAT) and net sales are estimated at INR29.8 million and INR209.2 million, respectively, for 2011-12 (refers to financial year, April 1 to March 31); the firm reported a PAT of INR7.6 million on net sales of INR37.3 million for 2010-11. VASUKI MINING: CRISIL Assigns 'D' Ratings to INR160MM Loans ----------------------------------------------------------- CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank facilities of Vasuki Mining and Minerals Pvt Ltd. The ratings reflect instances of delay by VMMPL in servicing its debt; the delays have been caused by the company's weak liquidity. Amount Facilities (INR Mln) Ratings ---------- --------- ------- Working Capital 24.2 CRISIL D Term Loan Term Loan 73.0 CRISIL D Bank Guarantee 2.8 CRISIL D Cash Credit 60.0 CRISIL D VMMPL also has small scale of operations in the intensely competitive stone crushing industry, and a below-average financial risk profile marked by a small net worth and weak debt protection metrics. However, VMMPL benefits from its promoter's extensive experience in the mining, stone crushing industries. VMMPL, incorporated in 2008, is involved in the business of stone crushing, and trading in steel structural products. The company's day-to-day activities are managed by its director, Mr. Palash K Srivastava. ========= J A P A N ========= HUMMINGBIRD SECURITISATION: S&P Puts B Rating on Watch Positive --------------------------------------------------------------- Standard & Poor's Ratings Services said that it has placed its rating on one Japanese synthetic collateralized debt obligation (CDO) transaction on CreditWatch with positive implications. The CreditWatch positive placement reflects the tranche's synthetic rated overcollateralization (SROC) level, which exceeded 100% with a sufficient SROC cushion at a higher rating than the current rating as of Aug. 31, 2013. S&P intends to review this tranche by the end of this month. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATING PLACED ON CREDITWATCH POSITIVE Hummingbird Securitisation Ltd. Series 2 loan To From Amount B (sf)/Watch Pos B (sf) JPY3.0 bil. ==================== N E W Z E A L A N D ==================== BLACKTOP: Receivership 'Highlights Construction Margin Issues' -------------------------------------------------------------- Tony Mortensen at voxy.co.nz reports that the recent receivership of Blacktop Construction has served to highlight margin issues for construction companies, a University of Canterbury business expert said. UC MBA Director Tony Mortensen said the Auckland company was responsible for a number of major projects, including the resurfacing of the Auckland Harbour Bridge, a contract it had been involved with for several years, according to voxy.co.nz. The report relates that Mr. Mortensen said other similar companies may face financial hardships in the coming months if contractors do not do their tender pricing homework. "I think there is often too much emphasis on securing a contract and not always enough attention on ensuring that the tender will be profitable," Mr. Mortensen said, the report notes. "What receiverships like Blacktop tell us is that companies are either not crunching the numbers correctly to start with or not building enough fat into their pricing to cover unforeseen events and changes in costs. "Contract margins for standard construction jobs are getting thinner and therefore the only way to get a return on investment is often through economies of scale. "This pushes contractors to trim pricing margins to get contracts that could help them achieve lower marginal costs and higher asset utilization. This is not always successful and can often leave the company exposed," Mr. Mortensen added, notes the report. The report discloses that sensitivity analysis is critical when quoting, factoring in changes in all critical costs and potential additional costs due to delays including debtor receipts and unforeseen events. Contractors also need to be careful they don't drive prices down so low that no one makes any money. It's the basic rule of plan for the worst and hope for the best, the report relays. "While it might appear that the customers are benefitting from these highly competitive tender bids the fact is that no one wins when a contractor gets into financial difficulty. We learnt this yet again recently from Mainzeal," the report quoted Mr. Mortensen as saying. "This might also act as a good warning for those involved in the tender selection process, in that the lowest bid is not always the best, nor the cheapest in the long run. Pricing is a science that needs critical attention by management and even more so in this highly competitive and still somewhat uncertain economic environment," Mr. Mortensen said, the report notes. The report discloses that the two biggest drivers of construction growth in New Zealand are the rebuild of Christchurch and the continued positive population growth in Auckland. Mr. Mortensen has produced a study of the New Zealand construction climate which has appeared in The Journal, published by the New Zealand Institute of Chartered Accountants. * NEW ZEALAND: Four Finance Companies Not Worth Pursuing Says FMA ----------------------------------------------------------------- Radio New Zealand News reports that the Financial Markets Authority (FMA) has decided not to take legal action against four finance companies because it says it would not have been worth pursing them. The companies are Allied Nationwide Finance, Equitable Mortgages, LDC Finance and Irongate Property, which are all in receivership or liquidation, according to Radio New Zealand News. The report relates that Financial Markets Authority Chief Executive Sean Hughes said his organization found some evidence that the companies had breached the Securities Act, and the directors have been formally warned. Better disclosure should have been made by the companies to ensure investors were aware of the risks of investing in them, Mr. Hughes said, the report discloses. But the FMA had to weigh up the likelihood of success, existing returns to investors and the use of public resources to pursue the cases, the report relays. "We've looked at our resources, we've looked at the strength of the cases and we've asked ourselves 'what new messages would they send if we were to take them on, leaving aside questions of adequacy of evidence. . . . At the end of the day, we've made the hard decision -- and I emphasize it is a hard decision -- that these cases do not merit further expenditure of public funds. . . . They don't merit us taking on the risk of running an action that may not be successful and further diversion of our resources and time away from actions and issues that are happening in the market today," the report quoted Mr. Hughes as saying. The report notes that the FMA had successfully prosecuted 32 finance company directors in the past few years. The companies involved included Five Star, Nathans and Bridgecorp. The four cases it had decided not to proceed with "simply don't stack up" against that list, Mr. Hughes said, the report relates. Investors in the companies would get most of their money back through the retail guarantee deposit scheme, the report adds. ********* 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 ***