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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
Monday, November 10, 2014, Vol. 17, No. 222
Headlines
A U S T R A L I A
AL'S PLACE: In Administration; 1st Meeting Set For Nov. 18
NEXUS ENERGY: Former Directors Join Battle vs. Seven Takeover
O'CONNOR HAULAGE: First Creditors' Meeting Slated For Nov. 17
TOUSHI PTY: First Creditors' Meeting Set For November 17
C H I N A
CHINA FISHERY: Moody's Revises B2 CFR Outlook to Negative
I N D I A
A. B. V. GOVINDU: CRISIL Reaffirms B Rating on INR80MM Cash Loan
A.K. BUILDERS: CRISIL Ups Rating on INR100MM Cash Loan to 'B'
AKSHAR COTTON: ICRA Reaffirms B+ Rating on INR10.5cr Cash Credit
BHARATH REDDY: ICRA Cuts Rating on INR5.3cr Term Loan to 'D'
CHAITANYA EDUCATIONAL: ICRA Cuts Rating on INR24cr Loan to 'D'
DEMPO SHIPBUILDING: ICRA Cuts Rating on INR75cr Loan to 'B+'
FAVOURITE AGENCY: ICRA Cuts Rating on INR60cr Loan to 'D'
GENIX AUTOMATION: CRISIL Cuts Rating on INR70MM LOC to 'D'
HARSHA LINERS: CRISIL Assigns B+ Rating to INR39.6MM LT Loan
HEERA RICE: ICRA Assigns B+ Rating to INR7.5cr Cash Credit
JANKI RICE: ICRA Reaffirms B Rating on INR15cr Cash Credit
JINDAL STEEL: ICRA Suspends C+ Rating on INR7.5cr Cash Credit
K.T.C FOODS: ICRA Revises Rating on INR62.16cr FB Limit to B+
KESHAVA EDUCATIONAL: ICRA Cuts Rating on INR9.85cr Loan to 'D'
KESHAVA REDDY: ICRA Cuts Rating on INR3.5cr Overdraft to 'D'
LANCO SOLAR: ICRA Reaffirms D Rating on INR940cr Fund Based Loan
MAHALAXMI ASSOCIATES: ICRA Rates INR6cr Cash Credit at 'B+'
MAHALAXMI INDIA: ICRA Assigns B+ Rating to INR4cr Cash Credit
MODEST INFRASTRUCTURE: ICRA Cuts INR55cr Cash Credit Rating to D
PREMIER CARWORLD: ICRA Suspends C+ Rating on INR13.5cr Loan
RAJAMAHAL INT'L: ICRA Puts B- Rating on INR5.0cr Fund Based Loan
SHRI GAUTAM: CRISIL Reaffirms B+ Rating on INR122.5MM Bank Loan
SRI KANAKADURGA: ICRA Cuts Rating on INR10cr Term Loan to 'D'
SRI KESHAVA: ICRA Cuts Rating on INR25cr Term Loan to 'D'
SRI MAHANANDEESWARA: ICRA Cuts Rating on INR23.3cr Term Loan to D
STEEL PRODUCTS: ICRA Cuts Rating on INR11.5cr Cash Loan to C-
SUBAM PAPERS: CRISIL Reaffirms B+ Rating on INR350MM Term Loan
VIRENDER SINGH: ICRA Assigns 'B+' Rating to INR7cr Term Loan
I N D O N E S I A
BERAU COAL: Moody's Downgrades Corporate Family Rating to B3
BUMI RESOURCES: To Delay Interest Payment Bonds to End of Nov.
VALE INDONESIA: S&P Lowers CCR to 'BB'; Outlook Stable
M O N G O L I A
MONGOLIA: Moody's Says Growth Potential Supports B2 Bond Rating
N E W Z E A L A N D
CAN BUILD: Goes Into Liquidation; 12 Jobs Axed
P H I L I P P I N E S
CYCLONE COMMERCIAL: BIR Shuts 7 Motor Parts Shops
SYNERGY RURAL: Placed Under PDIC Receivership
T A I W A N
TAIWAN HIGH: Bankruptcy is Imminent, Transportation Minister Says
V I E T N A M
VIETNAM: Moody's Rates USD-Denominated Bond Offering at (P)B1
VIETNAM: S&P Assigns 'BB-' Rating to US$-Denom. Sr. Bond Issue
- - - - -
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A U S T R A L I A
=================
AL'S PLACE: In Administration; 1st Meeting Set For Nov. 18
----------------------------------------------------------
Con Kokkinos & Paul Burness of Worrells Solvency & Forensic
Accountants were appointed as administrators of Al's Place Pty Ltd
on Nov. 7, 2014.
A first meeting of the creditors of the Company will be held
Worrells Solvency & Forensic Accountants, Level 12a, 45 William
Street, in Melbourne, on Nov. 18, 2014, at 3:00 p.m.
NEXUS ENERGY: Former Directors Join Battle vs. Seven Takeover
-------------------------------------------------------------
Leo Shanahan at The Weekend Australian reports that former Nexus
Energy directors have joined the legal fight with other
shareholders against the takeover of the company by Seven Group
Holdings as details of millions already spent by administrators
emerge.
The Weekend Australian says three former Nexus directors, Ian
Bosiero, Michael Fowler and Michael Arnett, have joined a group of
high-profile investors, representing more than 22 per cent of the
company stock, in the legal action objecting to the takeover.
The Weekend Australian also says that lawyers for shareholders
will attempt to issue subpoenas to Seven Group Holdings and Nexus
this week.
According to the report, commercial law barrister Alan Myers QC
has been briefed by the group, which includes Liberal Party
president Richard Alston, Azure Capital chairman John Poynton,
Andrew Greig of Betchel Corporation, Karoon Gas chairman Bob
Hosking and the managing director of the Victor Smorgon Group,
Peter Edwards.
This comes on the back of revelations last week that Seven Group
Holdings made an earlier, conditional offer to Nexus shareholders
worth almost three times the 2 cents offer eventually made to
shareholders, The Weekend Australian notes.
The report notes that the original Seven Group proposal, signed by
executive director Bruce McWilliam, was made on February 14, and
labelled by Seven Group as a "non-binding indicative proposal" to
offer one Seven Group share for every 150 Nexus shares.
The offer of 5.3 cents a share was made just three days before
Seven managing director Don Voelte stood down as Nexus chairman on
February 18, with the offer lapsing to shareholders the day before
he stood down, the report recalls.
The dual role of Mr Voelte in the lead-up to the bid by Seven has
been the focus of complaints by shareholders to ASIC, which has
yet to approve the takeover, The Weekend Australian notes.
The Nexus Energy buyout forms a major part of Seven's and Kerry
Stokes's expanding investment in the resources sector.
According to the report, the Seven Group's offer will see
shareholders get nothing for their shares, after they rejected a 2
cents per share offer by Seven in June after it purchased Nexus's
senior debt.
The Weekend Australian notes that shareholders rejected the offer
because the company's share price was at 7.7 cents at the time Mr
Voelte stepped down from Nexus, just six weeks before the Seven
offer was made. Following that rejection, Nexus went into
administration.
Seven then made another AUD180 million offer for Nexus that would
pay out creditors and employees but leave shareholders empty-
handed, the report relates.
The Weekend Australian says administrators McGrathNicol have
already drawn down AUD31.7 million of a AUD130 million dollar-
facility provided to administrators by Seven.
According to McGrathNicol, AUD15 million has been spent on
"establishment fees," the report relays.
Nexus Energy Limited (ASX:NXS) is a Melbourne-based, Australian
Stock Exchange listed oil and gas company. In 2009, Nexus
transitioned from explorer to producer with the start up of the
Longtom gas project. The company holds interests in eight permits
located offshore Australia. Operations are focused on the
Gippsland Basin, offshore Victoria and the Browse Basin, offshore
Western Australia.
McGrathNicol announced on June 12, 2014, that partners
Matthew Caddy, Tony McGrath, and Jason Preston have been appointed
joint and several Voluntary Administrators to Nexus Energy
Limited.
O'CONNOR HAULAGE: First Creditors' Meeting Slated For Nov. 17
-------------------------------------------------------------
Michael John Morris Smith -- mikes@smithhancock.com.au -- of Smith
Hancock was appointed as administrator of O'CONNOR HAULAGE (ACT)
PTY LTD on Nov. 6, 2014.
A first meeting of the creditors of the Company will be held at
the offices of Smith Hancock Chartered Accountants, Level 4, 88
Phillip Street, in Parramatta, New South Wales, on Nov. 17, 2014,
at 10:00 a.m.
TOUSHI PTY: First Creditors' Meeting Set For November 17
--------------------------------------------------------
John Kukulovski -- JohnK@jirschsutherland.com.au -- of Jirsch
Sutherland was appointed as administrator of Toushi Pty Ltd on
Nov. 5, 2014.
A first meeting of the creditors of the Company will be held at
Jirsch Sutherland, Melbourne, Level 12, 460 Lonsdale Street, in
Melbourne, on Nov. 17, 2014, 10:00 a.m.
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C H I N A
=========
CHINA FISHERY: Moody's Revises B2 CFR Outlook to Negative
---------------------------------------------------------
Moody's Investors Service has changed to negative from stable the
outlook on China Fishery Group Limited's (CFG)'s B2 corporate
family rating and the outlook on the senior unsecured bond rating
on the notes issued by its subsidiary -- CFG Investment S.A.C.
At the same time, Moody's has affirmed CFG's B2 corporate family
rating and the B2 senior unsecured rating for its guaranteed
subsidiary CFG Investment S.A.C.
Ratings Rationale
"The outlook revision reflects the increased refinancing risk on
the $250 million notes at Copeinca," says Lina Choi, a Moody's
Vice President and Senior Analyst.
CFG has made repeated efforts to resolve the subordination issue
on its bank borrowings -- which is one of the conditions of the
credit agreement -- since it acquired Corporacion Pesquera Inca
S.A.C. (Copeinca, B2 stable) in August 2013. Most recently, in
July 2014, the company sought consent solicitation from Copeinca's
bondholder for the upstream guarantees from Copeinca and Copeinca
ASA (unrated), but it has been unsuccessful.
The company had reported cash of $132 million at 28 June 2014 and
a further $120 million cash repatriation expected from its Russian
suppliers in the next 12 months. But its liquidity position will
remain at risk if it is unable to refinance the Copeinca bond or
obtain a waiver from the banks to remove the subordination issue.
Although CFG is seeking other measures to address the
subordination issue, its ability to do so in a timely manner
remains uncertain.
If it fails to make meaningful progress in the refinancing within
the next 2-3 months, this will increase the downward pressure on
its B2 ratings.
"The negative outlook also factors in an expected weakening in
CFG's cash flow and financial leverage, driven by the negative
impact of the El Nino weather on its operations," says Choi.
Moody's expects the company's adjusted debt/EBITDA to increase to
5.5x-6.0x over the next 12 months from 4.8x in 2013. This level of
leverage weakly positions the company at the B2 rating level.
The B2 ratings continue to reflect the enlarged scale of CFG's
Peruvian fishmeal followings its acquisition of Copeinca and the
progressive integration of the latter.
On the other hand, the rating is constrained by its high liquidity
risk, business concentration and climate risks associated with the
fishing season that severely affect the group's earnings.
Upward rating pressure is unlikely in the near term, given the
negative outlook. However, the rating could return to stable if
(1) CFG successfully resolves the liquidity issue by redeeming the
outstanding bond at Copeinca; and (2) the company maintains
adjusted debt/EBITDA below 5.5x and EBITDA/interest above 2.5x.
The ratings will be downgraded if: (1) CFG experiences continued
difficulty in raising new funds to repay the Copeinca bond for an
extended period of time; (2) the lending banks of the club loan
request immediate repayment, escalating the liquidity issue; or
(3) its operations are disrupted, negatively affecting CFG's
financial profile, as indicated by adjusted debt/EBITDA above
5.5x-6.0x and EBITDA/interest below 2.5x.
The principal methodology used in these ratings was Global Protein
and Agriculture Industry published in May 2013.
China Fishery Group Ltd is headquartered in Hong Kong and listed
in Singapore. It is engaged in the Peruvian fishmeal and fish oil
business and fishing fleet operations. China Fishery is 46.5%
effectively owned by the Pacific Andes group, through Pacific
Andes International Holdings Ltd (PAIH, unrated), a Hong Kong-
listed integrated fish and seafood products processor. The Carlyle
Group, a global alternative asset management firm, holds an 11.1%
stake in the company.
=========
I N D I A
=========
A. B. V. GOVINDU: CRISIL Reaffirms B Rating on INR80MM Cash Loan
----------------------------------------------------------------
CRISIL's rating on the long term bank facilities of A. B. V.
Govindu continue to reflect ABVG's weak financial risk profile,
marked by high gearing, below-average debt protection metrics and
modest net worth.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 80 CRISIL B/Stable (Reaffirmed)
The rating also reflects the company's small scale of operations
in the highly fragmented civil construction industry and
geographical concentration in revenues. These rating weaknesses
are partially offset by the proprietor's extensive experience in
the civil construction industry and ABVG's healthy order book.
Outlook: Stable
CRISIL believes that ABVG will continue to benefit from its
proprietor's extensive industry experience over the medium term.
The outlook may be revised to 'Positive' in case the firm
significantly improves its scale of operations and profitability,
leading to better than expected cash accruals, while managing its
working capital requirements efficiently. Conversely, the outlook
may be revised to 'Negative' if low cash accruals, or large
working capital requirements or debt-funded capital expenditure
constrains the firm's liquidity.
ABVG is a sole proprietorship firm set up in 1983 by Mr. Govindu
and is headquartered in Palghar (Maharashtra). The firm is a
'Class 1-B' civil contractor and executes contracts for various
Maharashtra government departments; the contracts include
construction of dams and reservoirs, canals and other projects
related to irrigation. ABVG derives its entire revenues from
Maharashtra.
A.K. BUILDERS: CRISIL Ups Rating on INR100MM Cash Loan to 'B'
-------------------------------------------------------------
CRISIL has upgraded its ratings on the long term bank facilities
of A.K. Builders to 'CRISIL B/Stable ' from 'CRISIL C' and has
reaffirmed the ratings on the short term bank facilities at
'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 80 CRISIL A4 (Reaffirmed)
Cash Credit 100 CRISIL B/Stable (Upgraded
from 'CRISIL C')
The rating upgrade reflects timely servicing of equipment debt
(not rated by CRISIL) by AKB over the past six months through
October 2014, driven by improvement in liquidity and backed by
increase in net cash accruals on account of improvement in scale
of operations.
AKB also has an average financial risk profile, marked by a small
net worth, high gearing. Moreover, the firm has high geographic
and revenue concentration in its revenue profile. However, AKB
benefits from the extensive experience of its promoters in the
civil-construction industry.
Outlook: Stable
CRISIL believes that AKB will continue to benefit over the medium
term from its promoter's extensive industry experience and its
moderate order book. The outlook may be revised to 'Positive' in
case the company reports better than expected cash accruals and
also if it improves its capital structure, most likely through
equity infusion by its promoter. Conversely, the outlook may be
revised to 'Negative' if AKB's liquidity weakens significantly,
most likely because of less-than-expected cash accruals, or if the
company undertakes a larger-than-expected, debt-funded capital
expenditure programme, leading to further weakening in its capital
structure.
AKB was set up by Mr. Ashok Sharma, as a proprietorship firm in
2000. The firm undertakes road construction projects in Punjab and
Sikkim.
AKSHAR COTTON: ICRA Reaffirms B+ Rating on INR10.5cr Cash Credit
----------------------------------------------------------------
ICRA has reaffirmed the long term rating of [ICRA]B+ to the
INR10.50 crore (enhanced from INR7.00 crore) cash credit facility
and INR0.92 crore (reduced from INR1.24 crore) term loan facility
of Akshar Cotton Industries.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash Credit 10.50 [ICRA]B+ reaffirmed
Fund Based-Term Loan 0.92 [ICRA]B+ reaffirmed
The reaffirmation of rating continues to factor in Akshar Cotton
Industries's (ACI) modest scale of operations and weak financial
position characterised by stretched liquidity. This is due to high
utilization levels, highly leveraged capital structure and weak
coverage indicators. ICRA also takes note of the highly
competitive and fragmented industry structure with the limited
value additive nature of operations which leads to pressure on
profitability. The rating further incorporates the vulnerability
of margins to adverse movements in raw material prices, which in
turn is linked to the seasonal nature of the cotton industry and
government regulations on MSP and export. Also, being a
partnership firm, any substantial withdrawal by the partners can
have an adverse impact on the capital structure of the firm.
The rating, however, continues to factor in the favorable location
of the firm giving it easy access to high quality raw cotton. The
rating also considers the increased operating income in FY14
driven by increased volume and realization.
Akshar Cotton Industries was established in August 2011 as a
partnership firm. The firm is promoted and managed by Mr.
Ashokbhai Dudhagara, Mr. Hashmukhbhai Pansuriya and Mr.
Narendrabhai Virani. It is engaged in raw cotton ginning and
pressing. The manufacturing unit is located at Kalavad, Jamnagar,
Gujarat. It has 18 double roller ginning machines and one pressing
machine with installed capacity of producing 230 cotton bales per
day (24 hours).
Recent Results
In FY14, the firm reported an operating income of INR64.52 crore
and net profit of INR0.40 crore against an operating income of
INR42.59 crore and net profit of INR0.31 crore in FY13.
BHARATH REDDY: ICRA Cuts Rating on INR5.3cr Term Loan to 'D'
------------------------------------------------------------
ICRA has downgraded the long-term rating for the INR5.30 crore
term loan facilities and INR0.20 crore proposed facilities of
Bharath Reddy Educational Society from [ICRA]B+ to [ICRA]D. The
rating downgrade takes into account the recent delays in debt
servicing by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 5.30 [ICRA]D; downgraded
Proposed Facilities 0.20 [ICRA]D; downgraded
Bharath Reddy Educational Society was established in 2009 and runs
one school in Mahboobnagar, Andhra Pradesh. BRES is part of
Keshava Reddy group of educational institutions which was started
in the year 1993 by Mr. N. Keshava Reddy. For the first 15 years
of operation the group ran it's schools only in Kurnool, AP but
since 2008 the group has been undertaking major expansion and has
spread across several locations in Andhra Pradesh. The group
presently has close to 100,000 students studying in 38 schools
under the guidance of ~5000 teachers in 14 different locations in
Andhra Pradesh. The school imparts education from KG to class X as
per the Andhra Pradesh state curriculum.
CHAITANYA EDUCATIONAL: ICRA Cuts Rating on INR24cr Loan to 'D'
--------------------------------------------------------------
ICRA has revised the long-term rating assigned to INR30.00 crore
fund based limits and INR5.00 crore unallocated limits of
Chaitanya Educational Society to [ICRA]D from [ICRA]B+.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term loans 24.00 [ICRA]D revised
Cash credit 6.00 [ICRA]D revised
Unallocated limits 5.00 [ICRA]D revised
The revision in rating primarily factors in the delays in term
loan repayments owing to delayed receipt of fees from Andhra
Pradesh government under the fee reimbursement scheme for
engineering colleges. The rating continues to be constrained by
small scale of operations of the society with revenues of INR18.22
crore for FY2014; leveraged capital structure owing to debt funded
capital expansion in the recent past and high intensity of
competition among private engineering colleges in the state of
Andhra Pradesh. The rating however favourably factors in the long
track record of the society in the field of education and strong
growth in the revenues over the last five years albeit on a low
base.
Going forward, the ability of the society to pay term loan
obligations on a timely manner and and the timely receipt of the
fee reimbursements from the government of Andhra Pradesh will
remain as key rating sensitivities from credit perspective.
Chaitanya Educational Society was established in the year 2001, by
Dr. K.V.V Satyanarayana Raju and his family. The society forayed
into the field of education with setting up of "Chaitanya
Engineering College" in Vishakhapatnam in 2002. This was followed
by setting up of another engineering college "Sri Chaitanya
Engineering College" in 2009 at Vishakhapatnam.
Recent Results
The society recorded revenues of INR18.22 crore and surplus of
INR1.79 crore in FY2014 (provisional and unaudited) as compared to
revenues of INR17.20 crore and surplus of INR1.61 crore in FY2013.
DEMPO SHIPBUILDING: ICRA Cuts Rating on INR75cr Loan to 'B+'
------------------------------------------------------------
ICRA has revised the long-term rating to the INR8.00 crore fund-
based bank facilities and the INR75.00 crore non-fund based bank
facilities of Dempo Shipbuilding and Engineering Private Limited
to [ICRA]B+ from [ICRA]BB. ICRA has reaffirmed the short-term
rating to the INR75.00 crore short-term fund based/non-fund based
working capital facilities of DSEPL at [ICRA]A4. The short term
fund based/non-fund based bank facilities of INR75.00 crore are
sub-limit of the long term non-fund based facilities of INR75.00
crore.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term, fund- 8.0 Revised to [ICRA]B+
based limits from [ICRA]BB (Stable)
Long-term, non- 75.0 Revised to [ICRA]B+
fund based limits from [ICRA]BB (Stable)
Short-term, fund 75.0 [ICRA]A4 reaffirmed
based/non-fund
based Sub-limits
The revision of long term rating takes into consideration the
weakened business and financial profile in 2013-14 as reflected by
company's loss making operations owing to slowdown in the
shipbuilding industry and severe deterioration of the credit
profile of the subsidiary company viz. Modest Infrastructure
Limited (rated [ICRA]B-/[ICRA]A4 in October 2013) in 2013-14, to
which DSEPL has extended large loans and corporate guarantees,
which adversely impacts the overall financial risk profile of
DSEPL. The ratings also factor in the deteriorated coverage
indicators on account of loss making operations and increased debt
levels; long execution cycle which exposes DSEPL to the risk of
increase in operational costs and exposure to cyclicality inherent
in the shipbuilding sector, which is likely to make the company's
cash flows volatile. Nevertheless, the ratings favourably factor
in the company's status as being a part of the Dempo group in Goa,
which provides managerial and financial support to DSEPL and the
long experience of the promoters in the shipbuilding industry.
DSEPL is a wholly owned subsidiary of V S. Dempo Holdings Private
Limited, which is an investment company of the Dempo group. The
company currently has two shipbuilding yards: one at Old Goa on
the banks of Mandovi river and the other at Undir on the banks of
the Zuari river. DSEPL can undertake new construction of 10-12
vessels per annum of up to 4000 Deadweight Tonnage (DWT) and carry
out repair work on around 36 vessels of 350- 2000 DWT.
In July 2012, DSEPL had received approval of Gujarat Maritime
Board for acquisition of a majority stake in Modest Infrastructure
Limited (MIL, rated [ICRA]B- / [ICRA]A4 in October 2013), and
consequently, MIL became a subsidiary of DSEPL. MIL is a ship-
building and repairing company, which undertakes projects of
building small to medium sized product tankers, bulk carriers and
offshore survey vessels in addition to executing ship- repairing
activities from its shipyard facility at Ramsar in Bhavnagar
(Gujarat).
Recent Results
In 2012-13, DSEPL reported a net profit of INR2.65 crore on an
operating income of INR91.28 crore. As per the provisional results
for 2013-14, DSEPL reported a net loss of INR8.78 crore on an
operating income of INR25.86 crore.
FAVOURITE AGENCY: ICRA Cuts Rating on INR60cr Loan to 'D'
---------------------------------------------------------
ICRA has revised the short-term rating assigned to the INR60 Crore
Non-fund based bank facility of Favourite Agency Private Limited
to [ICRA]D from [ICRA]A4 assigned to the firm.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Fund Based 60.00 Revised to [ICRA]D
Limit (LC) from [ICRA]A4
The rating revision reflects delays in debt servicing by the
company on account of stretched liquidity position.
Favorite Agency Private Limited was incorporated in 2008, and
started its operations since June 2012. The company is involved
into trading of copper and copper related products, mainly copper
cathode, used for manufacturing of copper conductors.
GENIX AUTOMATION: CRISIL Cuts Rating on INR70MM LOC to 'D'
----------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of
Genix Automation Pvt Ltd to 'CRISIL D/ CRISIL D'' from 'CRISIL
BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 30 CRISIL D (Downgraded from
'CRISIL A4+')
Cash Credit 50 CRISIL D (Downgraded from
Letter of Credit 70 CRISIL D (Downgraded from
'CRISIL A4+')
Working Capital 60 CRISIL D (Downgraded from
Term Loan 'CRISIL BB/Stable')
The rating downgrade reflects deterioration in GAPL's liquidity;
with its cash credit limit remaining overdrawn for more than 30
days consecutively. Inability to pass on input cost increases
entirely to customers has translated into large operational losses
and strained liquidity. The debt funding of the losses has
resulted in the cash credit limit being overdrawn.
GAPL has a weak financial risk profile marked by a weak capital
structure and inadequate debt protection metrics. Working capital
intensity in operations adds to the strain on its liquidity.
However, the company continues to benefit from its promoters'
extensive experience in setting up assembly lines for bodybuilding
and assembly of four wheelers which aids in winning contracts.
GAPL was set up in September 2006 by Mr. JJ Kim and Mr. Hiren
Desai. It designs, manufactures and installs assembly lines and
its ancillary automation equipment and process equipment,
primarily for automobile companies. The company caters only to
original equipment manufacturers; its major customers include Tata
Motors Ltd, FIAT India Automobile Ltd, and Renault Nissan India.
GAPL's registered office and factory are in Pune (Maharashtra).
The company also has a branch office-cum-factory at Chennai (Tamil
Nadu).
HARSHA LINERS: CRISIL Assigns B+ Rating to INR39.6MM LT Loan
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the long-term
bank facilities of Harsha Liners Pvt Ltd (HLPL; part of the
Kusalava group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 20 CRISIL B+/Stable
Long Term Loan 39.6 CRISIL B+/Stable
The rating reflects HLPL's modest scale of operations and its weak
financial risk profile marked by high gearing and low net worth.
These weaknesses are partially offset by the fungible cash flows
between the Kusalava group companies, which supports HLPL's
financial risk profile.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of HLPL and its parent Kusalava
International Ltd (KIL; rated 'CRISIL BBB/Stable/CRISIL A3+');
HLPL and KIL are together referred to herein as the Kusalava
group. This is because these entities share a common management,
and have significant operational linkages and fungible cash flows.
Outlook: Stable
CRISIL believes that the Kusalava group will benefit over the
medium term from its promoters' extensive industry experience and
its comfortable capital structure. The outlook may be revised to
'Positive' if the group increases its revenue and profitability on
a sustainable basis, while it maintains its comfortable capital
structure. Conversely, the outlook may be revised to 'Negative' if
the Kusalava group's financial risk profile weakens further, most
likely because of a decline in its revenue and profitability, or
larger-than-expected debt-funded capital expenditure, resulting in
deterioration in its capital structure.
The Kusalava group was set up in 1964 as a small foundry by its
current chairman, Mr. Kusalava Rao, to supply automotive
components to original equipment manufacturers in the automotive
industry in Vijayawada (Andhra Pradesh). KIL was set up in April
1992 as a private limited company; in March 1998, it was
reconstituted as a public limited company. The group manufactures
products such as cylinder liners, aluminum block liners, piston
rings, valve seats and guides, centrifugal castings, scraps, and
pallets.
KIL completed 100 per cent acquisition of HLPL in June 2014. HLPL
manufactures liners.
HEERA RICE: ICRA Assigns B+ Rating to INR7.5cr Cash Credit
-----------------------------------------------------------
ICRA has assigned the long term rating of [ICRA]B+ to INR7.5 crore
(enhanced from INR17.50 to INR25) Cash Credit Limits, INR1.81
crore (enhanced from nil) Term Loan and INR1.19 crore (enhanced
from nil) Long Term Unallocated Limit of Heera Rice Mills.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit Limit 7.5 [ICRA]B+; assigned/outstanding
Term Loan 1.81 [ICRA]B+; assigned
Long Term Unallo-
cated Limit 1.19 [ICRA]B+; assigned
The rating assigned to HRM is constrained by its moderate scale of
operations in the fragmented and competitive rice industry, weak
profitability metrics, high gearing levels and consequently weak
debt protection indicators. The rating is also constrained by
HRM's stretched liquidity as reflected in the high utilisation of
its bank limits due to high inventory levels. The rating further
takes into account the risks inherent in a partnership firm like
limited ability to raise equity capital, risk of dissolution etc.
However, the rating favourably factors in the extensive experience
of HRM's promoters who have a long track record in the rice
milling industry, proximity of the mill to a major rice growing
area which results in easy availability of paddy and stable demand
outlook given that India is a major consumer and exporter of rice
HRM is a partnership firm, formed in 2008 and is engaged in
milling, processing and sale of basmati rice. The firm's fully
automated plant at Karnal (Haryana) has a milling capacity of 8
tonnes per hour and has one sortex machinery with a capacity of 8
tonnes per hour. The by-products of basmati rice viz husk, rice
bran and 'phak' are sold in the domestic market. At present, there
are four partners in the firm Mr. Ishwar Dass, Mr. Satish Kumar,
Mr. Suresh Kumar and Mr. Satish Kumar, each having a share in
profit of 25%.
Recent results
The company reported a net profit of INR0.10 crore on an operating
income of INR61.35 crore in 2013-14 as against a net profit of
INR0.05 crore on an operating income of INR47.85 crore in the
previous year.
JANKI RICE: ICRA Reaffirms B Rating on INR15cr Cash Credit
-----------------------------------------------------------
ICRA has reaffirmed [ICRA]B rating assigned to the INR18.30 crore
(enhanced from INR12.87 crore) long term fund based facilities of
Janki Rice & Solvent Industries Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 3.30 [ICRA]B reaffirmed
Cash Credit 15.00 [ICRA]B reaffirmed
The reaffirmation of the rating takes into account the low profit
margins and weak return indicators of the company due to the
inherently low value addition in the business and stretched
capital structure. The rating further takes into account the
highly competitive and fragmented nature of the industry and
vulnerability of profit margins to volatility in paddy prices
which are exposed to seasonality, variations in crop harvest and
regulatory risks.
The rating, however, continues to positively consider the
longstanding experience of the promoters in the rice milling and
trading business and the strategic location of the plant which
provides easy access to raw material.
Janki Rice & Solvent Industries Private Limited was incorporated
in 2008 by Ramwani and Vaghela families and is engaged in the
business of milling par boiled rice. The promoters have around two
decades of experience in the rice milling industry and operate
other associate concerns engaged in similar business. The company
operates from its plant located at Sanand (near Ahmedabad,
Gujarat) and started commercial production in FY10. The company's
production capacity stands at 192 TPD (Tonne per Day).
Recent Results
For the financial year 2013-14, the company reported an operating
income of INR87.74 crore and profit after tax of INR0.52 crore as
against an operating income of INR67.64 crore and profit after tax
of INR0.29 crore for the financial year 2012-13.
JINDAL STEEL: ICRA Suspends C+ Rating on INR7.5cr Cash Credit
-------------------------------------------------------------
ICRA has suspended the [ICRA]C+ rating assigned to the INR7.50
crore cash credit facility & the [ICRA]A4 rating assigned to the
INR4.50 crore non fund based bank guarantee facility of Jindal
Steel Products Limited. The suspension follows ICRA's inability to
carry out a rating surveillance in the absence of the requisite
information from the company.
K.T.C FOODS: ICRA Revises Rating on INR62.16cr FB Limit to B+
-------------------------------------------------------------
ICRA has revised its long term rating on the INR62.16 crore fund
based bank facilities and INR24.84 crore proposed limits of K.T.C
Foods Private Limited to [ICRA]B+ from [ICRA]B.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based limits 62.16 [ICRA]B+; revised
from [ICRA]B
Unallocated 24.84 [ICRA]B+;revised
(Proposed Limits) from [ICRA]B
The rating revision is driven by an improvement in the company's
financial risk profile marked by improvement in cash accruals,
providing increased cushion against repayment obligations, and
significant financial support received from the promoters in the
form of equity as well as unsecured loans. The rating revision
also factors in the robust growth in operating income; led by
volume growth, as the company has recently enhanced its milling
capacity. Further, the rating continues to factor in the extensive
experience of the promoters in the rice industry, proximity of the
mill to major rice growing areas, which results in easy
availability of paddy and stable demand outlook, with rice being
an important part of the staple Indian diet.
However, the rating continues to be constrained by agro climatic
risks which can affect the availability of paddy in adverse
conditions, which coupled with high intensity of competition in
the industry, has led to pressures on profitability.
Going forward the ability of the company to maintain healthy
growth in revenues and profitability while maintaining a prudent
capital structure and optimum working capital intensity will be
the key rating sensitivities.
KTCF, established in 2010, is primarily engaged in the milling of
paddy, with an installed capacity of 24 tonnes per hour. The
company has a sortex machine with a capacity of 24 tonnes per
hour. The company sells rice in Punjab, Haryana, UP, Rajasthan,
Delhi and many southern and eastern states. The company
differentiates itself by selling broken rice under its own brand
name 'Barfi' in the southern states.
Recent Results
KTCF reported a profit after tax (PAT) of INR1.80 crore on an
operating income of INR371.23 crore in 2013-14 as against a PAT of
INR0.35 crore on an operating income of INR164.30 crore in the
previous year. For the current year, till August 2014, on a
provisional basis, the company reported an operating income of
INR273.30 crore and profit before tax of INR1.52 Crore.
KESHAVA EDUCATIONAL: ICRA Cuts Rating on INR9.85cr Loan to 'D'
--------------------------------------------------------------
ICRA has downgraded the long term rating for the INR9.85 crore
term loan facilities of Keshava Educational Society from [ICRA]B+
to [ICRA]D. The rating downgrade takes into account the recent
delays in debt servicing by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 9.85 [ICRA]D; downgraded
Keshava Educational Society was established in 2006 and runs
twelve schools in Chittoor, Kurnool and Kadapa districts of Andhra
Pradesh. KES is part of Keshava Reddy group of educational
institutions which was started in the year 1993 by Mr. N. Keshava
Reddy. For the first 15 years of operation the group ran it's
schools only in Kurnool, AP but since 2008 the group has been
undertaking major expansion and has spread across several
locations in Andhra Pradesh. The group presently has close to
100,000 students studying in 38 schools under the guidance of
~5000 teachers in 14 different locations in Andhra Pradesh. The
school imparts education from KG to class X as per the Andhra
Pradesh state curriculum.
KESHAVA REDDY: ICRA Cuts Rating on INR3.5cr Overdraft to 'D'
-------------------------------------------------------------
ICRA has downgraded the long term rating for the INR3.00 crore
term loan facilities and INR3.50 crore overdraft facilities of
Keshava Reddy Educational Trust from [ICRA]B+ to [ICRA]D. The
rating downgrade takes into account the recent delays in debt
servicing by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 3.00 [ICRA]D; downgraded
Overdraft 3.50 [ICRA]D; downgraded
Keshava Reddy Educational Trust was established in 2007 and runs
two schools in Anantapur, Andhra Pradesh. KRET is part of Keshava
Reddy group of educational institutions which was started in the
year 1993 by Mr. N. Keshava Reddy. For the first 15 years of
operation the group ran it's schools only in Kurnool, AP but since
2008 the group has been undertaking major expansion and has spread
across several locations in Andhra Pradesh. The group presently
has close to 100,000 students studying in 38 schools under the
guidance of ~5000 teachers in 14 different locations in Andhra
Pradesh. The school imparts education from KG to class X as per
the Andhra Pradesh state curriculum.
LANCO SOLAR: ICRA Reaffirms D Rating on INR940cr Fund Based Loan
----------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the INR940
crore fund based facilities of Lanco Solar Private Limited at
[ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 940.00 [ICRA]D; reaffirmed
The rating takes into account the continued delay in servicing of
interest payments by the company on bank loans mobilized for
partially funding its polysilicon and wafer manufacturing project.
The project time lines for execution has been extended due to
change in scope and size of the project and now the company has
proposed the new COD ie Oct'16 revised from Oct'14. Due to the
delayed COD the lenders have released only IDC portion and not
released the disbursements towards the civil and procurement of
Plant and Machinery. ICRA notes that the project being set up by
LSPL has witnessed both time and cost overruns. Further, ICRA also
notes that LSPL has yet not tied up the additional bank borrowing
to fund the project cost overrun thereby increasing the promoter
contribution which increases the funding risk for the project.
Lanco Solar Private Limited (LSPL) established in July 2008 is a
100% subsidiary of Lanco Solar Energy Private Limited (LSEPL),
which in turn is a 100% subsidiary of Lanco Infratech Limited
(LITL). LSPL is setting up 1800 Metric Tonne per annum (MTPA)
(increased from initially envisaged capacity of 1250 MTPA)
Polysilicon manufacturing capacity and 100 MW (increased from
initially envisaged capacity of 80 MW) solar wafer manufacturing
capacity and 75 MW of Module Manufacturing Plant. While
polysilicon finds application in the semiconductor and
photovoltaic (PV) industry (for manufacturing of solar wafers),
solar wafers are used to manufacture solar cells, several solar
cells are further arranged to form PV modules which are used in
generation of solar power. LSPL has been allotted 250 acres of
land in District Rajnandgaon of Chhattisgarh for the
implementation of the project. The said land has been notified a
Special Economic Zone (SEZ). LSPL also set up a 75 MW of
crystalline silicon module manufacturing facility at the same
project site in FY 2012. The capex on the module manufacturing
facility was fully funded through fresh equity infusion and no
additional external debt was raised for the same. The company has
been sourcing solar cells from China and the modules manufactured
have so far been largely supplied to Lanco Solar Energy Private
Limited which is the parent company of LSPL and a solar EPC
contractor and during the last period of FY 13-14 the company
started it export turnover also.
The total capital cost for the polysilicon and wafer manufacturing
capacity has increased from initially envisaged level of
INR1343.11 Crore to INR1698.06 Crore on account of change in size
and scope of the project. The COD has been further shifted from
October, 2014 to October, 2016.
As per the financials for FY 2014 the company witnessed an
operating income of INR19.68 Crore and a net loss of INR22.52
crore.
MAHALAXMI ASSOCIATES: ICRA Rates INR6cr Cash Credit at 'B+'
-----------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B+ to the INR6.00
crore cash credit facility of Mahalaxmi Associates Private
Limited. ICRA has also assigned a short term rating of [ICRA]A4 to
the INR10.00 crore non-fund based bank facilities of MAPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limit- 6.00 [ICRA]B+ assigned
Cash Credit
Non Fund Based 10.00 [ICRA]A4 assigned
Limit - FLC/ILC/ILG
The assigned ratings take into account MAPL's weak financial
profile characterized by thin net profitability and return
indicators, leveraged capital structure and depressed coverage
indicators, small scale of current operations, and declining top-
line over the past two years. The ratings are also constrained by
the highly fragmented nature of the coal trading business along
with intense competition among a number of unorganised players,
which keep margins under pressure, and exposure to the risks in
relation to availability and fluctuation in prices of coal in the
domestic market, which may get further accentuated with the recent
regulatory developments in the coal mining sector. The ratings,
however, positively factor in the experience of the promoters in
the coal trading business with an established presence of MAPL's
group entities in similar line of business, and the company's
proximity to coal mines, which aids to an extent in sourcing of
coal.
Incorporated in 1998, MAPL is engaged in trading of coking and
non-coking coal primarily in the Northern and North-Eastern
states. The company has its registered office at Beltola,
Guwahati, and branches at Ludhiana (Punjab), Kutch (Gujarat) and
Paradip (Odisha). The company has a number of group entities
including Mahalaxmi India Private Limited (MIPL, rated at [ICRA]B+
& [ICRA]A4), which are also engaged in coal trading business.
Recent Results
The company reported a net profit of INR0.16 crore (provisional)
on an operating income of INR34.71 crore (provisional) in 2013-14,
as compared to a net profit of INR0.17 crore on an operating
income of INR37.09 crore in 2012-13.
MAHALAXMI INDIA: ICRA Assigns B+ Rating to INR4cr Cash Credit
-------------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B+ to the INR4.00
crore cash credit facility of Mahalaxmi India Private Limited.
ICRA has also assigned a short term rating of [ICRA]A4 to the
INR12.00 crore non-fund based bank facilities of MIPL.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limit- 4.00 [ICRA]B+ assigned
Cash Credit
Non Fund Based 2.00 [ICRA]A4 assigned
Limit - Bank
Guarantee
Non Fund Based 10.00 [ICRA]A4 assigned
Limit - FLC/ILC/ILG
The assigned ratings take into account MIPL's financial profile
characterized by thin net profitability and return indicators, and
weak debt coverage metrics, small scale of current operations, and
volatile top-line in the past years. The ratings are also
constrained by the highly fragmented nature of the coal trading
business along with intense competition among a number of
unorganised players, which keep margins under pressure, and
exposure to the risks in relation to availability and fluctuation
in prices of coal in the domestic market, which may get further
accentuated with the recent regulatory developments in the coal
mining sector. The ratings, however, positively factor in the
experience of the promoters in the coal trading business with an
established presence of MAPL's group entities in similar line of
business, the company's proximity to coal mines, which aids to an
extent in sourcing of coal and a conservative capital structure,
as reflected by a gearing of 0.74 time as on March 31, 2014.
Incorporated in 1998, MIPL is engaged in trading of coking and
non-coking coal primarily in the Northern and North-Eastern
states. The company has its registered office at Beltola,
Guwahati, and branches at Ludhiana (Punjab), Kutch (Gujarat) and
Paradip (Odisha). The company has a number of group entities
including Mahalaxmi Associates Private Limited (MAPL, rated at
[ICRA]B+ & [ICRA]A4), which are also engaged in coal trading
business.
Recent Results
The company reported a net profit of INR0.10 crore (provisional)
on an operating income of INR30.24 crore (provisional) in 2013-14,
as compared to a net profit of INR0.08 crore on an operating
income of INR21.59 crore in 2012-13.
MODEST INFRASTRUCTURE: ICRA Cuts INR55cr Cash Credit Rating to D
-----------------------------------------------------------------
ICRA has revised the long-term rating from [ICRA]B- to [ICRA]D and
the short term rating from [ICRA]A4 to [ICRA]D assigned to the
INR55.0 crore fund based limits and INR195.00 crore non-fund based
limits of Modest Infrastructure Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based limit- 55.00 [ICRA]D downgraded
Cash Credit
Non-fund based 165.00 [ICRA]D downgraded
limit (Bank
Guarantee)
Non-fund based 30.00 [ICRA]D downgraded
limit (Letter
of Credit)
The downgrade of the long term rating factors delays in servicing
of scheduled debt repayments on account of cancellation of an
order. The ratings continue to factor in the weak financial
profile of the company owing to foreign exchange losses, claims
for liquidated damages and high interest costs. The company's
profitability remains vulnerable to input price variations owing
to fixed price nature of contracts. The company also remains
exposed to high client concentration risks in the order book and
high working capital requirements resulting in high utilisation
level of fund based limits by the company.
ICRA however takes into account the longstanding experience of the
promoters in the shipbuilding industry along with the financial
support from Dempo group in the form of unsecured loans to fund
the cash losses and meet liquidity requirements.
Modest Infrastructure Limited (MIL) is a ship-building and
repairing company, which undertakes projects of building small to
medium sized product tankers, bulk carriers and offshore survey
vessels in addition to ship- repairing activities. The company was
started as a shipping agency by Mr. Kishore Gambani in the name of
'Modest Offshore Services Pvt. Ltd.' and was enagaged in
management of vessels, repairing, dry docking of ships and other
ship-related services. In 2006, MIL ventured into shipbuilding
segment and currently has its shipyard facility at Ramsar in
Bhavnagar (Gujarat). The company is in the process of establishing
another shipyard at Ratanpar in Bhavnagar. In 2012; Goa-based
shipbuilding company - Dempo Shipbuilding & Engineering Private
Limited acquired 74% stake in MIL through share purchase/share
subscription agreement.
PREMIER CARWORLD: ICRA Suspends C+ Rating on INR13.5cr Loan
-----------------------------------------------------------
ICRA has suspended [ICRA]C+ rating assigned to the INR13.50 crore,
fund based bank facility of Premier Carworld Private Limited. The
suspension follows ICRA's inability to carry out a rating
surveillance in the absence of the requisite information from the
company.
RAJAMAHAL INT'L: ICRA Puts B- Rating on INR5.0cr Fund Based Loan
----------------------------------------------------------------
ICRA has assigned a long term rating of [ICRA]B- to INR5.0 crore
fund based limits and short-term rating of [ICRA]A4 to INR25.0
crore fund based/non-fund based limits and INR3.0 crores non fund
based limits of Rajamahal International Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund 5.0 [ICRA]B- assigned
based limits
Short term fund 25.0 [ICRA]A4 assigned
based/ non-fund
based limits
Short term non- 3.0 [ICRA]A4 assigned
fund based limits
Rating Rationale
ICRA's assigned ratings are constrained by the stretched financial
profile of RIPL characterized by high leveraged capital structure
and weak debt coverage indicators. The ratings are also
constrained by high working capital intensity of operations and
the vulnerability of RIPL's profitability to foreign exchange
fluctuations on export receivables; however the risk is partly
mitigated as RIPL enters into forward contracts. The ratings
however draw comfort from the long track record of the promoters
of more than 20 years in the marketing and trading of various
commodities, diversified portfolio of traded goods consisting of
silk wastes, fabrics, granites, iron ore etc and low long term
debt repayment obligations of the company as debt largely
comprises of working capital borrowings.
Rajamahal Group was established in the year 1991-92 and is
involved in the business of trading for the past 20 years. The
group is promoted and managed by Mr. Aslam Pasha who has rich
experience in mining and marketing activities. RIPL is engaged in
export of silk by-products, fabrics, granites, iron ore etc to
China, Japan, Italy & Thailand. The company is Head quartered at
Koramangla, Bangalore and has established offices at Hospet,
Sandur, Vizag & Karwar for the Export of products.
Recent Results
RIPL recorded an operating income of INR57.91 Crore and net profit
of INR0.24 Crore for FY2014 (provisional) as compared to an
operating income of INR10.37 Crore and net loss of INR1.53 crores
for FY2013.
SHRI GAUTAM: CRISIL Reaffirms B+ Rating on INR122.5MM Bank Loan
---------------------------------------------------------------
CRISIL's ratings on Shri Gautam Ship Breaking Ind. Private
Limited's bank facilities continue to reflect weak financial risk
profile, marked by a small net worth, and susceptibility to
cyclicality in ship-breaking industry and to volatility in steel
scrap prices and forex rates. These rating weaknesses are
partially offset by the benefits that SGSBIPL derives from its
promoters' extensive experience in the ship-breaking industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 40 CRISIL B+/Stable (Reaffirmed)
Letter of Credit 360 CRISIL A4 (Reaffirmed)
Proposed Long Term
Bank Loan Facility 122.5 CRISIL B+/Stable (Reaffirmed)
Outlook: Stable
CRISIL believes that SGSBIPL will maintain its credit risk profile
backed by its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if SGSBIPL's capital
structure improves, backed by higher-than-expected net worth,
primarily on account of healthy operating profitability or
infusion of equity. Conversely, the outlook may be revised to
'Negative' if the company's profitability or scale of operations
declines, caused most likely by slowdown in the ship-breaking
industry or by fluctuations in scrap prices, which could lead to
inadequacy in cash accruals and consequent pressure on debt-
servicing ability.
Update
For 2013-14 (refers to financial year, April 1 to March 31), the
company had closing inventory of around 9800 MT and purchased only
one ship namely-MV Irini of 8488 metric tonnes (MT) in May 2013.
For the 2013-14, SGSBIPL has sold around 31460 MT and booked sales
of around INR941 million. The average realization also improved in
the year of 2013-14 year on year (y-o-y) as the ships that the
company broke were having high content of stainless steel. SGSBIPL
will buy the ship dependent on the macroeconomic environment and
the lucrative cost of buying the ship and CRISIL expects the
turnover would improve at moderate pace of ~5-10% over the medium
term. The company's profitability in 2013-14 continues to be
susceptible to favourable price movement for scrap thereby
improving average realization and volatile forex movements. Going
forward, the margins are expected to remain susceptible to forex
movement and CRISIL expects the company to register margin at the
operating level in the range of 4.5 to 5.5 per cent over the
medium term. The total outside liabilities to tangible networth
(TOL/TNW) ratios continues to remain high at over 30 times as on
March 31, 2014 mainly as the company's TOL continues to remain
high vs. its modest networth in the year 2013-14. Over the medium
term, the TOL/TNW is expected to remain high over the medium term
however it remains susceptible to the further ship additions. Over
the medium term, the financial risk profile is expected to remain
below average with high leverage, strong debt protection metrics
and stretched liquidity.
SGSBIPL, set up in 1983, is in the ship-breaking business. It is
based in Alang (Gujarat), which is the leading ship-breaking and
recycling centre industry in Asia. The company buys old ships and
breaks them into steel plates, which it then supplies to rolling
mills in Gujarat. SGSBIPL was formed by Mr. Vinod Bhayani and his
family. Currently, his son, Mr. Samir Bhayani, who has around two
decades of experience in the ship-breaking industry, is looking
after the company.
SGSBIPL reported a profit after tax (PAT) of INR19.3 million on
net sales of INR933.5 million for 2013-14 (refers to financial
year, April 1 to March 31), against a PAT of INR26.9 million on
net sales of INR971.2 million for 2012-13.
SRI KANAKADURGA: ICRA Cuts Rating on INR10cr Term Loan to 'D'
-------------------------------------------------------------
ICRA has downgraded the long term rating for the INR10.00 crore
term loan facilities of Sri Kanakadurga Educational Society from
[ICRA]B+ to [ICRA]D. The rating downgrade takes into account the
recent delays in debt servicing by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 10.00 [ICRA]D; downgraded
Sri Kanakadurga Educational Society was established in 2009 and
runs one school in Guntur, Andhra Pradesh. SKES is part of Keshava
Reddy group of educational institutions which was started in the
year 1993 by Mr. N. Keshava Reddy. For the first 15 years of
operation the group ran it's schools only in Kurnool, AP but since
2008 the group has been undertaking major expansion and has spread
across several locations in Andhra Pradesh. The group presently
has close to 100,000 students studying in 38 schools under the
guidance of ~5000 teachers in 14 different locations in Andhra
Pradesh. The school imparts education from KG to class X as per
the Andhra Pradesh state curriculum.
SRI KESHAVA: ICRA Cuts Rating on INR25cr Term Loan to 'D'
----------------------------------------------------------
ICRA has downgraded the long term rating for the INR25.00 crore
term loan facilities of Sri Keshava Reddy Educational Society from
[ICRA]B+ to [ICRA]D. The rating downgrade takes into account the
recent delays in debt servicing by the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 25.00 [ICRA]D; downgraded
Sri Keshava Reddy Educational Society was established in 2010 and
runs two schools in Kurnool and Hyderabad in Andhra Pradesh. SKRES
is part of Keshava Reddy group of educational institutions which
was started in the year 1993 by Mr. N. Keshava Reddy. For the
first 15 years of operation the group ran it's schools only in
Kurnool, AP but since 2008 the group has been undertaking major
expansion and has spread across several locations in Andhra
Pradesh. The group presently has close to 100,000 students
studying in 38 schools under the guidance of ~5000 teachers in 14
different locations in Andhra Pradesh. The school imparts
education from KG to class X as per the Andhra Pradesh state
curriculum.
SRI MAHANANDEESWARA: ICRA Cuts Rating on INR23.3cr Term Loan to D
-----------------------------------------------------------------
ICRA has downgraded the long term rating for the INR23.30 crore
term loan facilities of Sri Mahanandeeswara Educational Society
from [ICRA]B+ to [ICRA]D. The rating downgrade takes into account
the recent delays in debt servicing by the company.
Sri Mahanandeeswara Educational Society was established in 2008
and runs three schools in Kurnool and one school in Hyderabad.
SMES is part of Keshava Reddy group of educational institutions
which was started in the year 1993 by Mr. N. Keshava Reddy. For
the first 15 years of operation the group ran it's schools only in
Kurnool, AP but since 2008 the group has been undertaking major
expansion and has spread across several locations in Andhra
Pradesh. The group presently has close to 100,000 students
studying in 38 schools under the guidance of ~5000 teachers in 14
different locations in Andhra Pradesh. The school imparts
education from KG to class X as per the Andhra Pradesh state
curriculum.
STEEL PRODUCTS: ICRA Cuts Rating on INR11.5cr Cash Loan to C-
-------------------------------------------------------------
ICRA has revised downwards the long term rating assigned to the
INR21.5 crore (reduced from INR33.85 crore) fund based and non
fund based bank limits of Steel Products Limited (SPL) from
[ICRA]C to [ICRA]C-. The short term rating assigned to the INR1.15
crore (reduced from INR2.5 crore) non-fund based bank limits has
been reaffirmed at [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Cash 11.50 [ICRA]C-; downgraded
Credit from [ICRA]C
Non Fund Based- 10.00 [ICRA]C-; downgraded
Bank Guarantee from [ICRA]C
Non Fund Based- 1.15 [ICRA]A4 re-affirmed
Letter of Credit
The revision in the long term rating and reaffirmation of the
short term rating take into account SPL's stretched liquidity
position as reflected by continuous over utilisation in the
working capital facility primarily on account of high working
capital intensity of business. ICRA notes that the company has
sold its loss making unit at Raipur, Chhattisgarh which has
resulted in substantial cash inflows for the company. The ratings
are also constrained by the weak financial performance of the
company as indicated by cash loss over the last two financial
years, unfavourable capital structure and depressed coverage
indicators. Additionally, the low capacity utilisation of its
facilities has adversely impacted the business return indicators.
The ratings, however, favourably factor in the experience of the
company in the transmission tower fabrication business as well as
its reputed client base comprising major engineering procurement
construction players in the industry. In ICRA's opinion, the
ability of the company to manage its working capital requirements
efficiently while improving its profitability would be a key
rating sensitivity going forward.
Incorporated in 1917, SPL is engaged in the manufacturing of tower
parts and steel structurals for transmission towers, telecom
towers and substation transmission systems. The company also
undertakes engineering procurement and construction (EPC) work to
lay optic fiber cables over the transmission towers. Post the
slump sale of its unit at Raipur, Chhattisgarh (installed capacity
of 24,000 MTPA), SPL currently, has two manufacturing units in
Howrah, West Bengal with a total installed capacity of 18,000
MTPA.
Recent Results
SPL reported a net loss of INR1.74 crore on an operating income of
INR79.97 crore during FY14, as against a net loss of INR2.13 crore
on an operating income of INR91.90 crore during FY13.
SUBAM PAPERS: CRISIL Reaffirms B+ Rating on INR350MM Term Loan
--------------------------------------------------------------
CRISIL's rating on the bank facilities of Subam Papers Pvt Ltd
continues to reflect its below-average financial risk profile,
constrained by high gearing and below-average debt protection
metrics; along with working-capital-intensive operations. These
rating weaknesses are partially offset by the promoters' extensive
industry experience and regular funding support.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 160 CRISIL B+/Stable
Term Loan 350 CRISIL B+/Stable
Outlook: Stable
CRISIL believes that SPPL will continue to benefit from the
extensive experience of its promoters in the segment. The outlook
may be revised to 'Positive' if the company improves its capital
structure and stabilises its incremental capacity, leading to
sizeable cash accruals. Conversely, the outlook may be revised to
'Negative' if SPPL's financial risk profile and liquidity
deteriorate with significantly low operating income or
profitability; or substantial working capital requirements or
debt-funded capital expenditure.
SPPL was founded by Mr. T Balakumar and his family in Tirunelveli
(Tamil Nadu) in 2004. The company manufactures kraft paper, and
has a manufacturing facility in Tirunelveli.
VIRENDER SINGH: ICRA Assigns 'B+' Rating to INR7cr Term Loan
------------------------------------------------------------
ICRA has assigned its [ICRA]B+ rating to the INR7.00 crore term
loan of Virender Singh Harinder Singh.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 7.00 [ICRA]B+; Assigned
The rating reflects VSHS' weak profitability metrics, high gearing
levels and consequently weak debt protection metrics. The rating
is also constrained by the firm's modest scale of operations, and
the fixed nature of the rentals (with no escalations being allowed
over the lease period) and the owner's responsibility towards
maintenance and upkeep of the warehouse to keep it storage-worthy.
The rating further takes into account the risks inherent in a
partnership firm like limited ability to raise equity capital,
risk of dissolution etc. However, the rating favourably factors in
the successful completion of the warehouse project and
commencement of lease rentals guaranteed for a period of 10 years.
M/s Virender Singh Harinder Singh is a partnership firm formed in
FY 2014, having two partners -- Mr. Virender Singh and Mr.
Harinder Singh, each having a share of 50% in the firm. The firm
has set up a scientific rural godown at Village Gorripur in
Karnal,Haryana with a storage capacity of 24,595 metric tonnes
(MTs). The firm has entered into an agreement with Haryana State
Cooperative Supply and Marketing Federation Limited (HAFED) under
the Private Entrepreneurs Guarantee (PEG) Scheme of Food
Corporation of India (FCI). The firm has rented out the godown for
10 years at a fixed monthly rental INR46.20 per MT. HAFED will use
it for storage of food grains procured during the harvesting
season for distribution through the public distribution system
throughout the year.
In FY 2013-14, the first year of the firm's operations, it
reported a net loss of INR0.06 crore on an operating income of
INR0.55 crore.
=================
I N D O N E S I A
=================
BERAU COAL: Moody's Downgrades Corporate Family Rating to B3
------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating of PT Berau Coal Energy Tbk (BCE) to B3 from B2 as well as
the senior secured ratings on the bonds issued by BCE and Berau
Capital Resources Pte Ltd, which are guaranteed by BCE.
At the same time, the rating agency has placed all ratings on
review for possible downgrade.
Ratings Rationale
"The downgrade of BCE's CFR to B3 reflects both its weakening
liquidity profile and our view that the persistent decline in
thermal coal prices will lead to a material earnings and cash flow
decline in 2015," says Brian Grieser, a Moody's Vice President and
Senior Analyst.
"BCE's deteriorating operating performance coupled with the change
in indirect control of voting rights at its parent, Asia Resource
Minerals plc (ARMS, unrated), and uncertainty around plans to
refinance its $450 million senior secured notes due July 2015 add
to its weakened credit profile," adds Grieser, who is also the
lead analyst for BCE.
In this year alone, the benchmark Newcastle thermal coal price
index has plummeted 25% to a five-year low of $63 per metric ton
due to weakening demand and chronic oversupply of coal
inventories.
Absent a material improvement in coal prices in coming months,
Moody's projects BCE's EBITDA to fall below $200 million in 2014
and approach $150 million in 2015, despite its success in reducing
its mining costs for both 2014 and 2015.
In a further complication, ARMS disclosed that its largest
shareholder Samin Tan -- who indirectly owns 47.6% of ARMS --
transferred the indirect control of 23.8% voting rights to
Raiffeisen Bank International AG (A3 negative). Moody's believe
the transfer of voting rights terminates the shareholder agreement
between Samin Tan and ARMS, which amongst other things allowed
Samin Tan-associated entities to nominate board members.
"This latest development at ARMS injects uncertainty over board
composition and corporate governance at the UK-listed entity which
had just put in place a new board and management team early this
year after its long-drawn separation from the Bakrie Group
(unrated)," says Grieser.
Against the backdrop of BCE's unsuccessful bond deal in August and
the ongoing coal price decline, the company faces heightened
refinancing risk in light of the upcoming maturity in July 2015.
"Moody's review will focus on BCE's ability to successfully
refinance the upcoming maturity and provide full recovery to
existing bondholders," says Grieser. "The review will likely be
completed over the next 60 to 90 days." Failure to produce a
refinancing plan within this timeframe will likely lead to further
downgrades.
Moody's believe the lack of information with regard to BCE's
refinancing plans, a weak operating environment and now renewed
uncertainty at the ARMS level make for a challenging refinancing
environment for BCE despite its large cash balances," adds
Grieser.
At 30 June 2014, BCE had cash balances of $343 million which will
provide some flexibility in its attempts to refinance its bond but
is insufficient to fully refinance the maturing bond.
If the bonds have not been refinanced in the review period, BCE
could face further downgrades. Moreover, Moody's could view a
refinancing strategy that does not meet BCE's original obligation
to bondholders as a distressed exchange under Moody's definition
of default.
Moody's will likely confirm BCE's ratings at B3, if BCE is able to
successfully access the bond or loan market, to fund a full
refinancing in accordance with its original obligation to pay. The
current rating triggers of adjusted debt/EBITDA of around 5.5x and
interest coverage of 1.5x will support a B3 rating confirmation.
If the refinancing results in a material reduction in debt and
operating conditions support leverage of around 4.5x, Moody's
would consider taking a positive rating action.
The principal methodology used in these ratings was Global Mining
Industry published in August 2014.
BCE is an investment holding company listed on the Indonesian
Stock Exchange. It has a 90% interest in PT Berau Coal (unrated),
Indonesia's fifth-largest producer and exporter of thermal coal.
Berau operates three active mines -- Lati, Sambarata and Binungan
-- at a single site in East Kalimantan. It has estimated resources
of about 2.2 billion tons, with probable and proven reserves
estimated at 509 million tons (mt).
BUMI RESOURCES: To Delay Interest Payment Bonds to End of Nov.
--------------------------------------------------------------
Bloomberg News reports that Bumi Resources, Asia's most-indebted
coal miner, said it'll seek until the end of November to pay
interest on $700 million of dollar-denominated debt as a one-month
grace period ended on November 6.
The company didn't give a reason for the delay in its statement on
November 6 to the Jakarta stock exchange. The company missed the
$37.6 million semi-annual coupon payment when the 10.75 percent
interest on the October 2017 notes came due on Oct. 6, according
to Bloomberg.
The securities fell 0.51 cents to 35.11 cents on the dollar in
Hong Kong on November 6, according to prices compiled by
Bloomberg.
That's the lowest level since the notes were sold in 2010. They
have lost 13 percent in the past month, Bloomberg notes.
Indonesia's biggest thermal-coal exporter, which is controlled by
the Bakrie family, averted a default on $375 million of
convertible bonds in August after creditors agreed to a
restructuring, Bloomberg recalls.
Bumi had $7 billion of total liabilities at the end of June,
according to its financial reports. That included $3.6 billion of
debt related to its coal business, Director Dileep Srivastava said
in an e-mail cited by Bloomberg.
PT Bumi Resources Tbk (JAK:BUMI) -- http://www.bumiresources.com/
-- is an Indonesia-based company engaged in exploration and
exploitation of coal deposits, including coal mining, and oil
exploration activities. It has four core business segments: coal
mining, which comprises exploration and exploitation of coal
deposits, including mining and selling coal; services, which
represent marketing and management services; oil and gas, which
covers the exploration of oil and gas, and gold, which covers the
exploration of gold. The Company and its subsidiaries are
operating in Indonesia, the United Kingdom, Japan and Australia.
On July 17, 2008, the Company acquired the Australia-based Herald
Resources Limited.
As reported in the Troubled Company Reporter-Asia Pacific on
Aug. 15, 2014, Standard & Poor's Ratings Services lowered its
long-term corporate credit rating on Indonesia-based thermal coal
producer PT Bumi Resources Tbk. (Bumi) to 'SD' from 'CC'. S&P
also placed its 'CCC-' long-term issue rating on senior secured
notes that the company guarantees on CreditWatch with negative
implications. In addition, S&P lowered its ASEAN regional scale
rating on Bumi to 'SD' from 'axCC'.
The downgrade on Bumi comes after it did not repay the US$375
million principal on convertible bonds that matured Aug. 5, 2014;
a five-day grace period for repayment ended on Aug. 12, 2014. S&P
understands that Bumi is negotiating with bondholders to
restructure the bonds.
VALE INDONESIA: S&P Lowers CCR to 'BB'; Outlook Stable
------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on PT Vale Indonesia Tbk to 'BB' from 'BB+'. At the same
time, S&P affirmed its 'A-' issue-level rating on the company's
senior unsecured debt, which Vale S.A. (global scale: A-
/Negative/--; national scale: brAAA/Stable/--) guarantees. The
outlook remains stable.
The Indonesian government and Vale S.A. reached an agreement to
amend its Contract of Work (CoW) providing for the extension of
its mining concession up to 2045. As part of the agreement, Vale
S.A.(A-/Negative/-) and Sumitomo Corp (A/Stable/A-1) will have to
sell 15% and 5%, respectively, of PT Vale's shares within the next
five years, thus resulting in Vale S.A losing its control over the
company. Even though this change in ownership might not occur
immediately, the downgrade reflects S&P's belief that incentives
for Vale S.A. to provide financial support are less evident,
despite PT Vale's continuing status as a strategic asset.
"PT Vale continues to focus its efforts on reducing costs, as seen
in the recent start-up of operations of its coal conversion unit,
which significantly reduces fuel costs. As a result, the
company's EBITDA margins rose to 34.4% in the 12 months ended
Sept 2014 from 26.2% in the year-earlier period," said Standard &
Poor's credit analyst Marcus Fernandes. PT Vale has also
benefited from slightly better nickel prices, which S&P expects to
continue due to the tight supply-demand balance in the next couple
of years. Still, S&P views its asset and product concentration --
consisting of one mine and nickel production
-- relatively small scale, and the risks of operating in Indonesia
(BB+/Stable/B) result in a "weak" business risk profile.
================
M O N G O L I A
================
MONGOLIA: Moody's Says Growth Potential Supports B2 Bond Rating
---------------------------------------------------------------
Moody's Investors Service says that Mongolia's strong growth
potential, based on its abundant natural resources, support its B2
senior unsecured government bond and long term issuer ratings.
However, a fragile external liquidity position, growing debt
burden, and persistent inflationary pressures constrain the
country's credit profile.
The rating outlook is negative, reflecting the risk that
Mongolia's rundown in international reserves has increased its
vulnerability to external shocks and reduced its buffer to fiscal
risks.
Moody's conclusions were contained in its just-released credit
analysis "Mongolia", which looks at the country's credit profile
in terms of Economic Strength (assessed as "low (+)");
Institutional Strength ("very low"); Fiscal Strength ("moderate (-
)"); and Susceptibility to Event Risk ("high").
These represent the four main analytic factors in Moody's
Sovereign Bond Rating Methodology. The analysis constitutes an
annual update to investors and is not a rating action. Mongolia is
rated B2 with a negative outlook.
Although a relatively small economy, Mongolia in 2013 was amongst
the fastest growing of all sovereigns rated by Moody's.
However, growth has slowed steadily over the last two years, as
foreign investment has ebbed due to setbacks in key mining
projects. With a collapse in mining exports, the external payments
position encountered severe strain through 2013, depicted by a
sharp fall in foreign direct investment and plunging international
reserves.
Expansionary measures pursued by the Bank of Mongolia helped
mitigate the growth down-turn, but also spurred an increase in
credit growth, even while pressures on the balance of payments and
a sharp currency depreciation continued to keep prices high.
International reserves have, however, stabilized in recent months
on account of Mongolia's local currency swap line with the
People's Bank of China, a decline in imports, and a pick-up in
exports.
Moody's report further notes that recent government efforts to
reduce uncertainty in the investment regime and support growth
have yet to take hold. The yet-unresolved dispute between Rio
Tinto (Rio Tinto plc, A3 Stable and Rio Tinto Limited, A3 Stable)
and the government over the second phase of the Oyu Tolgoi copper
and gold mine project has also cast a shadow over the investment
regime.
Other credit constraints include fiscal imbalances and a rising
debt burden. Although expansionary fiscal and monetary policies
over the last two years are being gradually unwound, economic
imbalances have persisted.
Factors that could lead to an upgrade of Mongolia's rating
include: (1) a replenishment of international reserves, (2) a
strengthening of government finances, (3) greater price stability,
and (4) mineral resource development that bolsters the external
payments position, strengthens economic prospects, and facilitates
fiscal consolidation.
Triggers for a downward movement in the rating include: (1) a
decline in international reserves that significantly weakens
further the external payments position, (2) a further rise in
inflationary pressures, and (3) a continued rise in government
debt that results in heightened funding pressures.
====================
N E W Z E A L A N D
====================
CAN BUILD: Goes Into Liquidation; 12 Jobs Axed
----------------------------------------------
Blair Ensor at The Press reports that Can Build Ltd has gone into
liquidation owing up to NZ$2 million after it took on unfinished
projects of a failed rebuild firm.
The Press relates that the company was placed into voluntary
liquidation by its shareholders on November 4 leaving
subcontractors and suppliers in the lurch.
The company's 12 staff have been laid off, the report notes.
The Press says the company was working on three significant
projects at the time of its financial problems -- Bin Inn in
Addington, The Laboratory in Lincoln and Coastguard Waimakariri-
Ashley in Kaiapoi.
Sole director Roger Forde did not return calls from The Press.
According to the report, liquidator Malcolm Hollis of PwC, said
preliminary inquiries showed the firm owed up to NZ$2 million to
creditors. That figure could reduce significantly once assets,
including equipment and vehicles, were sold, Mr. Hollis said.
Can Build was launched in March and acquired assets from failed
rebuild firm South Steel Construction. It also employed South
Steel's directors, Kevin and Tammy Lynch, and took on many of the
company's unfinished projects.
Mr. Hollis said that in recent weeks, Forde had been under a
tremendous amount of pressure and chose to liquidate Can Build
rather than trying to trade out of trouble, according to The
Press.
"To his credit, he's stepped up and wanted to deal with the
situation," the report quotes Mr. Hollis as saying. "He hasn't
just run from this."
Can Build's links to South Steel was one of the major reasons it
had failed, he said, the report relays.
"The core issue is that [Forde] has not been able to resolve the
problems that the South Steel situation had," Mr. Hollis, as cited
by The Press, said. "It's been tainted by the history of the
projects and the people involved."
Kevin and Tammy Lynch were both bankrupted earlier this month, the
report adds.
=====================
P H I L I P P I N E S
=====================
CYCLONE COMMERCIAL: BIR Shuts 7 Motor Parts Shops
-------------------------------------------------
ABS-CBNnews.com reports that seven motorcycle parts and
accessories shops in Caloocan City were shuttered by the Bureau of
Internal Revenue (BIR) on November 7 over tax violations.
The seven shops were identified as Cyclone Commercial, 2 Wheelers
Motor Parts & Accessories, X Power Racing, Roldan Cyclemate Corp,
JCW Motor World, Suncrest Motor Place and Series Motorworx, which
are all located along 10th Avenue and M.H. Del Pilar Streets in
Caloocan City, ABS-CBNnews.com discloses.
According to the report, the BIR said the shops were padlocked
because of their failure to issue receipts and to register as VAT
taxpayer, as well as substantial underdeclaration of sales of more
than 30% of the correct taxable income.
Based on BIR registration records, the shops were registered as
non-VAT taxpayers with the representation that their annual sales
did not exceed the threshold amount of PHP1,919,500, However,
officers of BIR Revenue District Office no. 27 of Caloocan
conducted surveillance activities and verification of sales, which
showed their gross sales exceeded PHP1.91 million, relates ABS-
CBNnews.com.
ABS-CBNnews.com adds that the shops had also failed to comply with
the requirements specified in the 48-hour Notice and 5-day VAT
Compliance Notice through a Closure Order signed by BIR Deputy
Commissioner for Operations Group Nelson M. Aspe.
Under Section 115 of the Tax Code, the BIR is authorized to
suspend or close the business operations of a taxpayer for a
period of not less than five days for failure to: (1) register;
(2) issue VAT official receipts or sales invoices; (3) file
correct VAT returns; or (4) pay the correct VAT, the report notes.
SYNERGY RURAL: Placed Under PDIC Receivership
---------------------------------------------
ABS-CBNnews.com reports that the Philippine Deposit Insurance
Corporation (PDIC) on November 7 said it has taken over Synergy
Rural Bank, a single-unit rural bank in Batangas.
ABS-CBNnews.com relates that the PDIC said that as of Sept. 30,
2014, the bank had 3,839 accounts with total deposit liabilities
of PHP45.72 million.
A total of 3,835 deposit accounts or 99.90 percent of the accounts
have balances of PHP500,000 or less and are fully covered by
deposit insurance. Estimated total insured deposits amounted to
PHP42.45 million or 92.85 percent of the total deposits.
The PDIC said that upon takeover, all bank records will be
gathered, verified and validated. It assured depositors that all
valid deposits shall be paid up to the maximum deposit insurance
coverage of PHP500,000, ABS-CBNnews.com relays.
The Monetary Board placed Synergy Rural Bank under the
receivership of the PDIC by virtue of MB Resolution No. 1753 dated
Nov. 6, 2014. PDIC took over the bank on November 7,
ABS-CBNnews.com reports.
The PDIC said it will conduct the Depositors-Borrowers Forums on
Nov. 17, 2014 to inform depositors of the requirements and
procedures for filing deposit insurance claims, ABS-CBNnews.com
adds.
===========
T A I W A N
===========
TAIWAN HIGH: Bankruptcy is Imminent, Transportation Minister Says
-----------------------------------------------------------------
Ted Chen at The China Post reports that Minister of Transportation
and Communications (MOTC) Yeh Kuang-shih on November 5 stated that
deteriorating finances at the Taiwan High Speed Rail Corporation
may result in imminent bankruptcy in March next year.
As of June this year, the THSR had accumulated losses of
NT$47 billion, and is currently embroiled in 39 lawsuits relating
to redemption of preferred shares by its investors, The China Post
notes.
Most notably, reports suggest that the outlook of four of the 39
preferred shares lawsuits appear to be especially grim as judges
have ruled in favor of investors in the court of first instance,
the report states. According to the China Post, the Taiwan High
Speed Rail Corp. may be required to furnish NT$53.3 billion to pay
off investors as they exercise their option to redeem holdings of
preferred shares, backed by order of the courts. Under tremendous
financial strain, the THSR may buckle as soon as March of next
year, the report says.
Once bankruptcy is declared, the THSR is expected to go under
government receivership, wiping out the fortunes vested in the
company by its five founding shareholders and more than 60,000
members of the investing public, the China Post notes. In
addition, losses incurred by the THSR are likely to be covered by
the nation's taxpayers, says the China Post.
Meanwhile, the China Post reports that efforts at turning around
the THSR's troubled finances have yet to yield tangible
improvements. Citing three inevitable factors, the THSR had once
urged the government to provide the ailing rail service with funds
of NT$397.4 billion.
The China Post relates that a government takeover of THSR is
expected to cost more than NT$390 billion. In addition to the
challenges of providing alternative employment for the rail
service's 3,500-strong staff, reports suggest that it may take as
long as 59 years to repay interest costs and principal from loans
taken on by the THSR, the China Post notes.
According to the report, a recent financial improvement plan
submitted by the THSR called to expend NT$39.2 billion to meet
preferred share redemption obligations, followed by a NT$39.1
billion capital reduction, then a NT$30 billion cash injection to
enable government-affiliated stakeholders to control 41 percent of
THSR.
The China Post says the MOTC also approved the extension of the
concession period for the THSR from the current 35 years to 75
years. The Taiwan High Speed Rail Corp., however, will no longer
be able to hike its prices without the approval of governing
bodies. The China Post relates that although the newly proposed
THSR pricing structure warranted a 7.5-percent reduction, with the
price for a trip from Taipei to Kaohsiung set to be decreased from
NT$1,630 to NT$1,530, the adjusted price still exceeds the
NT$1,490 recorded prior to a price hike initiated in October last
year, drawing the ire of opposition party lawmakers during the
Legislative Yuan session on November 5. In response, Mr. Yeh noted
that forthcoming fare adjustments have not been finalized.
About THSRC
Taiwan High Speed Rail Corporation is principally engaged in the
construction, development and operation of the high-speed railway
system in Taiwan. The Company is also involved in other high-
speed railway transportation-related businesses and the
development and usage of train station sites. The Company's high-
speed railway transportation-related businesses include shopping
malls, special stores located in travel agencies, car leasing and
parking lots, among others. The Company developed train station
sites for hotel, restaurant, entertainment, department store,
financial service, tourism service, communication service and
other uses.
=============
V I E T N A M
=============
VIETNAM: Moody's Rates USD-Denominated Bond Offering at (P)B1
-------------------------------------------------------------
Moody's Investors Service has assigned a provisional rating of
(P)B1 to the Government of Vietnam's announced U.S. dollar-
denominated bond offering.
Ratings Rationale
Vietnam's B1 government bond rating reflects robust growth
performance relative to peers and high government debt
affordability. In turn, these strengths are balanced against low
GDP per capita, contingent risks posed by fragilities in the
banking system, and financial stress in the state-owned enterprise
sector.
In July 2014, Moody's upgraded Vietnam's rating to B1 from B2 to
reflect the country's recent track record of macroeconomic
stability, the strengthening of its balance of payments, and the
easing of contingent risks in its banking sector.
Vietnam has started to emerge from a history of periodic bouts of
high inflation and balance of payments stress, and is now in its
third consecutive year of broad macroeconomic stability. While
growth over this period has declined from its historical trend, it
remains strong when compared with rating peers. Notably, inflation
has been kept at a historically low level, driven in part by weak
domestic demand. At the same time, the export-oriented, foreign-
owned sector of the economy has remained robust, helping sustain
overall economic activity.
The strengthening of Vietnam's balance of payments has been
underpinned by a diversification in the structure of its exports.
Combined with weak imports, this situation has resulted in the
current account shifting from a deficit to a healthy surplus. The
current account surplus in turn contributed to the accumulation of
foreign exchange reserves to an all-time high of $35.9 billion in
April 2014, as well as to the stability of the exchange rate.
Macroeconomic stability has provided an enhanced operating
environment for the banking sector, supporting the recovery in
their asset quality and improving liquidity. These factors
contributed to a number of positive rating actions among rated
Vietnamese banks in September 2014. However, these banks still
face considerable credit challenges, including poor loss-
absorption capacity owing to low loan-loss provisions and
relatively low levels of capital, as well as weak profitability.
Other credit challenges include an erosion of the government's
fiscal position over the past few years, driven by weaker revenue
performance. In addition, weaknesses in governance and
transparency constrain Moody's assessment of institutional
strength. The high proportion of the government debt stock
denominated in foreign currency also renders Vietnam particularly
susceptible to exchange rate shocks.
GDP per capita (PPP basis, US$): 5,295 (2013 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 5.4% (2013 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 6.0% (2013 Actual)
Gen. Gov. Financial Balance/GDP: -5.4% (2013 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: 5.5% (2013 Actual) (also known as
External Balance)
External debt/GDP: 37.0% (2013 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or
loans) has been recorded since 1983.
The principal methodology used in this rating was Sovereign Bond
Ratings published in September 2013.
The weighting of all rating factors is described in the
methodology used in this rating action, if applicable.
VIETNAM: S&P Assigns 'BB-' Rating to US$-Denom. Sr. Bond Issue
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to a
proposed benchmark size U.S.-dollar-denominated global senior
unsecured bond issue by the Socialist Republic of Vietnam (BB-
/Stable/B; axBB+/axB). The bonds mature in Nov. 2024.
The bonds will constitute the direct, unconditional, and unsecured
general obligations of the sovereign, and will rank at least
equally with all other present and future unsecured and
unsubordinated external debt of Vietnam. Proceeds of the proposed
debt issue are intended partly for general budget financing, and
partly for a liability management exercise aimed at improving the
tenor and cost structure of Vietnam's external debt.
The sovereign credit ratings on Vietnam reflect the country's low-
income economy, underdeveloped monetary framework and capital
markets, and the risks posed by an evolving policy and
institutional setting amid rapid structural transformations in the
economy and financial sector. Vietnam's strengthening external
profile, with its rising foreign exchange reserves and modest net
narrow external debt, supports the rating.
The stable outlook on the sovereign ratings reflects S&P's
expectation that Vietnam's policy stance will ensure macroeconomic
stability, cementing the economic improvements and gains in policy
credibility. The outlook also incorporates S&P's expectations
that the government's key reform objectives targeting the banking
sector and state-owned enterprises will continue, and the risks
and inefficiencies posed by these sectors will reduce.
S&P may lower the ratings if macroeconomic imbalances reemerge,
with a marked deterioration in one or more key credit metrics.
S&P may raise the ratings if there are indications that Vietnam is
able to generate per capita real GDP growth of more than 5.5% in
the next five to 10 years without causing macroeconomic
imbalances. S&P may also raise the ratings on signs of improved
institutional and governance effectiveness, likely based on
greater macroeconomic policy consistency and tangible progress in
structural reforms.
*********
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.
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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, and Peter A. Chapman,
Editors.
Copyright 2014. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
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without prior written permission of the publishers.
Information contained herein is obtained from sources believed
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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 202-362-8552.
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