/raid1/www/Hosts/bankrupt/TCRAP_Public/170713.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, July 13, 2017, Vol. 20, No. 138
Headlines
A U S T R A L I A
ACQUIRE LEARNING: Administrators Probe AUD25MM Shareholders Loans
ALINTA ENERGY: S&P Withdraws BB Corporate Credit Rating
AUSTINDO COMMUNICATIONS: First Creditors' Meeting Set for July 19
BONDSTRONG PTY: Second Creditors' Meeting Set for July 19
HAYCOLEC INDUSTRIES: Second Creditors' Meeting Set for July 19
HYGRADE GROUP: Second Creditors' Meeting Set for July 20
LANDBRIDGE GROUP: Darwin Port Owner to Sell Melbourne Property
LIBERTY FUNDING: Moody's Assigns (P)Ba3 Rating to Cl. F Notes
REID GROUP: First Creditors' Meeting Set for July 19
ROTOMECH PTY: In Liquidation; Creditors to Meet on July 19
SPC & CO: First Creditors' Meeting Set for July 20
C H I N A
LEECO: Listed Unit's Market Value to Fall $2.5BB, Funds Estimate
LIONBRIDGE CAPITAL: Moody's Assigns B2 Rating to New USD Notes
WISDOM GLORY: Moody's Assigns Ba3 Rating to USD Perpetual Notes
H O N G K O N G
BANK OF EAST: S&P Affirms BB Rating on Stapled Securities
I N D I A
A.V.R.N. HOTELS: CRISIL Reaffirms B- Rating on INR27MM Term Loan
BEST FOODS: CRISIL Reaffirms 'D' Rating on INR1.50BB Cash Loan
BHAGATPUR TEA: ICRA Reaffirms B Rating on INR6.44cr Cash Loan
BLG CONSTRUCTION: ICRA Reaffirms B+ Rating on INR5.80cr Loan
CLASSIC CORRUGATIONS: ICRA Reaffirms B Rating on INR6.11cr Loan
DARSHAN SAGAR: ICRA Reaffirms B+ Rating on INR15cr Loan
EAST COAST ENERGY: ICRA Reaffirms D Rating on INR4927cr Term Loan
GMR VEMAGIRI: ICRA Reaffirms B Rating on INR60cr Cash Loan
GOLDEN ALLIANCE: CRISIL Assigns B Rating to INR8MM LT Loan
GREENKO ENERGY: S&P Affirms B+ LT CCR, Outlook Revised to Stable
GUPTA SOLVENT: ICRA Assigns B+ Rating to INR6.0cr Cash Loan
GVR BEHARI: Ind-Ra Assigns 'C' Rating to INR1086.9MM Term Loans
GVR PANA: Ind-Ra Rates Assigns 'C' Rating to INR870.7MM Loans
HIMGHAR UDYOG: CRISIL Reaffirms B+ Rating on INR4.8MM Term Loan
ICON DEVELOPERS: CRISIL Assigns B+ Rating to INR10MM LT Loan
INSTITUTE OF MODERN: Ind-Ra Rates New INR100MM Bank Loans 'B'
JAI AMBEY: CRISIL Assigns B+ Rating to INR5.5MM Cash Loan
KOHINOOR HATCHERIES: Ind-Ra Assigns 'BB+' LT Issuer Rating
KLM INFRA: ICRA Reaffirms B+ Rating on INR29.28cr LT Loan
LOTUS CHOCOLATE: CRISIL Reaffirms B Rating on INR25MM Cash Loan
MILANO PAPERS: Ind-Ra Assigns BB LT Issuer Rating; Outlook Stable
N.B. COTEX: CRISIL Assigns B+ Rating to INR5.50MM Cash Loan
N.N. SAHA: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
PAREKH ALUMINEX: CRISIL Reaffirms 'D' Rating on INR345MM Loan
RAJ RAJENDRA: CRISIL Lowers Rating on INR10MM Term Loan to B-
SEVEN STAR: CRISIL Assigns 'B' Rating to INR22MM Cash Loan
SAIBABA SOLVENT: Ind-Ra Assigns BB- LT Issuer Rating
SKYLINE MILLARS: ICRA Reaffirms 'D' Rating INR3.50cr Loan
SHAJAN JACOB: CRISIL Assigns B+ Rating to INR4.5MM Cash Loan
SHRADDHA SYNTHETICS: ICRA Reaffirms B Rating on INR4cr LT Loan
SIRI BUILDERS: CRISIL Assigns B+ Rating to INR11MM LT Loan
SOMNATH COLD: CRISIL Reaffirms B+ Rating on INR8.50MM Loan
SONHIRA SAHAKARI: ICRA Revises Rating on INR75cr Loan to B
SRI PARAMESWARA: CRISIL Reaffirms D Rating on INR19MM Cash Loan
SRS HEALTHCARE: ICRA Reaffirms 'D' Rating on INR115cr Loan
SRS LIMITED: ICRA Reaffirms 'D' Rating on INR360cr LT Loan
TRANSPORT SOLUTIONS: CRISIL Reaffirms D Rating on INR20MM Loan
TRT BUILDERS: ICRA Reaffirms C+ Rating on INR6.50cr Cash Loan
VIVEK ENTERPRISE: ICRA Assigns B- Rating to INR10cr Cash Loan
J A P A N
TOSHIBA CORP: In Talks with Western Digital, Foxconn Over Sale
M A L A Y S I A
1MALAYSIA DEVELOPMENT: Singapore Banker Admits Money Laundering
P A K I S T A N
PAKISTAN: Moody's Affirms B3 Issuer Rating; Keeps Outlook Stable
X X X X X X X X
* Moody's Asian Liquidity Stress Index Weakens to 25.6% in June
- - - - -
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A U S T R A L I A
=================
ACQUIRE LEARNING: Administrators Probe AUD25MM Shareholders Loans
-----------------------------------------------------------------
Sarah Danckert at The Sydney Morning Herald reports that
administrators of Acquire Learning are investigating AUD25
million in loans to shareholders and a business run by managing
director John Wall.
According to SMH, the debts were revealed in a recent Supreme
Court of Victoria judgment after administrators from Cor Cordis
won an extension so it could complete its investigations into the
group.
SMH relates that the judgment showed Acquire Learning group has
debts of AUD88.5 million with more than half owed to related
parties.
The fresh insight into the failed group's finances comes as a
group of former directors are working to rebirth the company
through its CareerOne subsidiary, the report says.
However, the proposed draft deed of company arrangement will be
delayed as Cor Cordis' Barry Wight, Sam Kaso and Bruno Secatore
pore over the group's finances, SMH adds.
According to SMH, the judgment showed Mr. Wall's horseracing
website G1X owes Acquire nearly AUD11 million. Shareholders to
the group owe a further AUD14 million, according to the judgment.
Acquire was a deeply successful company that owned a call centre
that referred job applicants to training courses and some
education colleges. It was also well known for its association
with former AFL chief Andrew Demetriou who is a small shareholder
in Acquire Learning & Careers.
Mr. Demetriou was also on the group's advisory board but was not
involved in the day to day business of the company, the report
says.
His nephew Tim Demetriou is a former director and current
shareholder of Acquire.
SMH notes that Acquire ran into trouble after the federal and
Victorian state government cracked down on dodgy vocational
education providers and court action by the Australian
Competition and Consumer Commission.
Acquire and its related companies, including the Glenn Wheatley
backed EON Sports Radio, was placed into administration in May
this year, SMH discloses.
Barry Wight, Bruno A Secatore & Sam Kaso of Cor Cordis Chartered
Accountants were appointed as administrators on May 12, 2017.
ALINTA ENERGY: S&P Withdraws BB Corporate Credit Rating
-------------------------------------------------------
S&P Global Ratings said that it had withdrawn its corporate
credit rating on Alinta Energy Finance Pty Ltd. (Alinta, BB/Watch
Dev/--) at the company's request. The rating was on CreditWatch
with developing implications at the time of withdrawal, where it
was placed on March 16, 2017, following the acquisition of Alinta
by Hong Kong-based conglomerate, Chow Tai Fook Enterprises Ltd.
(CTFE, not rated).
S&P is unable to form an informed view on the parent and resolve
the CreditWatch before the ratings withdrawal, due to limited
publicly available information on the unrated CTFE group. Alinta
has represented that it is debt-free at the time of the ratings
withdrawal.
AUSTINDO COMMUNICATIONS: First Creditors' Meeting Set for July 19
-----------------------------------------------------------------
A first meeting of the creditors in the proceedings of Austindo
Communications Pty Ltd will be held at the Len Buckeridge Room,
Adina Apartment Hotel, 138 Barrack Street, in Perth, WA, on
July 19, 2017, at 10:30 a.m.
Giovanni Maurizio Carrello of BRI Ferrier Western Australia on
July 10, 2017.
BONDSTRONG PTY: Second Creditors' Meeting Set for July 19
---------------------------------------------------------
A second meeting of creditors in the proceedings of Bondstrong
Pty Ltd has been set for July 19, 2017, at 2:00 p.m., at the
offices of Auxilium Partners, Level 2, 949 Wellington Street, in
West Perth, WA.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by July 18, 2017, at 4:00 p.m.
Robert Jacobs of Auxilium Partners was appointed as administrator
of Bondstrong Pty on June 14, 2017.
HAYCOLEC INDUSTRIES: Second Creditors' Meeting Set for July 19
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Haycolec
Industries Pty Limited and Waynelec Pty Limited has been set for
July 19, 2017, at 3:00 p.m., at the offices of Australian
Institute of Company Directors Melbourne, Optus Centre, Level 26,
367 Collins Street, in Melbourne, Victoria.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by July 18, 2017, at 4:00 p.m.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Haycolec Industries
on June 14, 2017.
HYGRADE GROUP: Second Creditors' Meeting Set for July 20
--------------------------------------------------------
A second meeting of creditors in the proceedings of:
-- Hygrade Group Pty Ltd
-- Hygrade Cutting Formes Co. Proprietary Limited
-- Hygrade Management & Software Pty Ltd
has been set for July 20, 2017, at 10:00 a.m., at the offices of
Pitcher Partners, Level 19, 15 William Street, in Melbourne,
Victoria.
The purpose of the meeting are (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the
Company be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by July 19, 2017, at 4:00 p.m.
David Raj Vasudevan and Andrew Reginald Yeo of Pitcher Partners
were appointed as administrators of Hygrade Group on June 15,
2017.
LANDBRIDGE GROUP: Darwin Port Owner to Sell Melbourne Property
--------------------------------------------------------------
Simon Johanson at The Sydney Morning Herald reports that the
heavily-indebted Chinese owner of Darwin Port, who is struggling
to make payments on money borrowed to pay for the port lease, is
offloading two large development sites in Melbourne worth AUD40
million.
According to the report, the port's new owner Landbridge Group
and its billionaire founder Ye Cheng has put a massive corner
block in Melbourne's Southbank precinct up for "immediate private
sale".
SMH relates that the quick sale of the two neighboring sites with
a planning permit for 780 apartments and retail outlets is a
further sign the company may be in financial stress.
A Fairfax Media analysis of the finances of Landbridge Group and
Mr. Cheng revealed last week that the company was over-extended
and scrambling from one loan repayment to the next, in some cases
paying interest up to 12 per cent.
Landbridge purchased the 99-year port lease two years ago from
the Northern Territory government for AUD506 million in a
controversial deal that saw president Barack Obama express
concern about the facility, used extensively by American marines
on rotation through Darwin, being owned by Chinese interests,
says SMH.
Landbridge Group is understood to have instructed agents to sell
its Melbourne properties, although title records show the two
blocks, one at 127-129 Kavanagh Street and the other at 63-83
Kings Way, are owned by Mr. Cheng's wife, Jingxia Liu, SMH
relates.
SMH relates that the agent handling the sale, Savills Australia's
Clinton Baxter, said he was in negotiations with several buyers
for around AUD40 million.
At that price, Landbridge is likely to end up out of pocket, the
report notes.
Fairfax's analysis of Landbridge's accounts showed the company
was also exposed to refinancing risks in China's volatile debt
markets.
The company is also struggling to secure a new debt facility
after having promised to spend AUD35 million upgrading the port
over the next five years and fund a new AUD200 million hotel on a
nearby site, SMH adds.
LIBERTY FUNDING: Moody's Assigns (P)Ba3 Rating to Cl. F Notes
-------------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to the Notes to be issued by Liberty Funding Pty Ltd:
Issuer: Liberty Funding Pty Ltd in respect of the Liberty Series
2017-3 Trust
-- AUD70.0 million Class A1a Notes, Assigned (P)Aaa (sf)
-- AUD165.0 million Class A1b Notes, Assigned (P)Aaa (sf)
-- EUR150.0 million Class A1c Notes, Assigned (P)Aaa (sf)
-- AUD163.8 million Class A2 Notes, Assigned (P)Aaa (sf)
-- AUD34.3 million Class B Notes, Assigned (P)Aa2 (sf)
-- AUD14.0 million Class C Notes, Assigned (P)A2 (sf)
-- AUD7.0 million Class D Notes, Assigned (P)Baa2 (sf)
-- AUD6.3 million Class E Notes, Assigned (P)Ba1 (sf)
-- AUD5.6 million Class F Notes, Assigned (P)Ba3 (sf)
The AUD14.0 million Class G Notes are not rated by Moody's.
The ratings address the expected loss posed to investors by the
legal final maturity.
RATINGS RATIONALE
The transaction is an Australian prime and non-conforming RMBS
secured by a portfolio of residential mortgage loans. A portion
of the portfolio consists of loans extended to borrowers with
impaired credit histories (1.7%) or made on alternative or
limited documentation basis (4.6%).
This is the 23rd non-conforming RMBS transaction sponsored by
Liberty Financial Pty Limited.
The ratings take account of, among other factors:
- Class A1a, Class A1b and Class A1c Notes benefit from 35.0%
credit enhancement (CE) and Class A2 Notes benefit from 11.6%
CE, while Moody's MILAN CE assumption - representing the loss
that Moody's expects the portfolio to suffer in the event of a
severe recession scenario - is at 11.3%. Moody's expected loss
for this transaction is 1.2%. The subordination strengthens
the ratings stability, should the pool experience losses above
Moody's expectations.
- A liquidity facility provided by Commonwealth Bank of
Australia (CBA, Aa3/P-1/Aa2(cr)/P-1(cr)), with a required
limit equal to 3.0% of the aggregate invested amount of the
Notes less the redemption fund balance. The facility is
subject to a floor of AUD600,000. If the facility provider
loses its P-1(cr) counterparty risk assessment, it must within
30 days either: (1) procure a replacement facility provider;
or (2) deposit an amount of the undrawn liquidity commitment
at the time into an account with a P-1 rated bank.
- The guarantee fee reserve account is unfunded at closing and
will build up to a limit of 0.30% of the issued notional from
proceeds paid to Liberty Credit Enhancement Company Pty Ltd as
Guarantor, from the bottom of the interest waterfall prior to
interest paid to the Class G noteholders. The reserve account
will firstly be available to meet losses on the loans and
charge-offs against the Notes. Secondly, it can be used to
cover any liquidity shortfalls that remain uncovered after
drawing on the liquidity facility and principal. Any reserve
account balance used can be reimbursed to its limit from
future excess income.
- The experience of Liberty in servicing residential mortgage
portfolios.
- Interest rate mismatch arises when the movements of the 30-day
BBSW are not (simultaneously) passed on to the variable rate
loans. To mitigate the basis risk, the threshold rate
mechanism obligates the Servicer to set interest rates on the
mortgage loans at a minimum rate above 1mBBSW, or higher if
the trust's income is insufficient to cover the obligations of
the Trustee under the transaction documents.
- A currency swap mitigates the cross-currency risk associated
with the EUR-denominated Class A1c Notes. According to the
current form of the swap documentation, swap linkage has no
present rating impact on the Class A1c Notes. This is because
the linkage between the note ratings and the rating of the
provider of any of the swaps is mitigated by an obligation to
post cash collateral and novate the swap upon downgrade below
A3(cr).
The key transactional and pool features are:
- The notes will initially be repaid on a sequential basis
until, amongst other stepdown conditions, the payment date
falls on or after the payment date in July 2019 and absence of
charge offs on any notes. Upon satisfaction of all stepdown
conditions Class A1b, Class A1c, Class A2, Class B, Class C,
Class D, Class E, and Class F Notes will receive a pro-rata
share of principal payments (subject to additional
conditions). The Class A1a will receive principal prior to any
other notes at all times, unless there is an event of default.
The Class G Notes do not step down and will only receive
principal payments once all other notes have been repaid.
- The principal pay-down switches back to sequential pay across
all notes, once the aggregate loan amount falls below 20.0% of
the aggregate loan amount at closing, or on or following the
payment date in July 2021.
- The weighted average scheduled loan to value of the pool is at
75.6%.
- The portfolio is geographically well diversified due to
Liberty's wide distribution network.
- The portfolio contains 1.7% exposure with respect to borrowers
with prior credit impairment (default, judgement or
bankruptcy). Moody's assesses these borrowers as having a
significantly higher default probability.
- 4.4% of loans were extended on an alternative documentation
basis and 0.2% of the loans were extended on a no
documentation basis. For the alternative documentation loans
Liberty performs additional verification checks over and above
the typical checks for low documentation products. These
checks include a declaration of financial position and six
months of bank statements, two quarters of Business Accounting
Statements or GST returns. Liberty's alternative documentation
loans have stronger arrears performance when compared to
traditional low documentation loans. Given the additional
verification checks and the stronger arrears performance,
Moody's says that these alternative documentation loans
demonstrate a lower default frequency than standard low
documentation loans.
- Investment and interest only loans represent 31.8% and 30.0%
of the pool respectively. Both the proportion of investor and
interest only loans are below the Australian mortgage market
average, and both are lower than the recent Liberty
transactions but higher than pre-2016 Liberty transactions.
Moody's assesses that investor buyers have a higher
probability of default compared to borrowers who live in the
property that serves as security for that loan. Similarly,
Moody's MILAN analysis has factored in a higher default
probability for loans with interest-only periods than loans
amortising from loan origination without interest-only
periods.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
September 2016.
Factors that would lead to an upgrade or downgrade of the
ratings:
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could
lead to an upgrade of the ratings. Moody's current expectations
of loss could be better than its original expectations because
of fewer defaults by underlying obligors or higher recoveries on
defaulted loans. The Australian job market and the housing
market are primary drivers of performance.
A factor that could lead to a downgrade of the Notes is worse-
than-
expected collateral performance. Other reasons for performance
worse
than Moody's expects include poor servicing, error on the part
of
transaction parties, a deterioration in credit quality of
transaction counterparties, fraud and lack of transactional
governance.
Moody's Parameter Sensitivities:
Parameter Sensitivities are designed to provide a quantitative
calculation of how the initial rating might change if key input
parameters used in the initial rating process - here the MILAN CE
and mean expected loss - differed. The analysis assumes that the
deal has not aged. Parameter Sensitivities only reflect the
ratings impact of each scenario from a quantitative/model-
indicated standpoint.
Based on the current structure, if the MILAN CE losses were to
increase to 16.95% from 11.3%, and the mean expected loss were to
increase to 1.8% from 1.2%, the model-indicated rating for the
Class A2 Notes would drop one notch to Aa1. Using these same
assumptions, the ratings on the Class B Notes will drop two
notches, and the ratings on the Class C and Class D Notes will
drop three notches. The Class A1a, Class A1b and Class A1c Notes
are not sensitive to any rating migration using these same
assumptions.
Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks have not been addressed, but
may have a significant effect on yield to investors. Moody's
ratings are subject to revision, suspension or withdrawal at any
time at Moody's absolute discretion. The ratings are expressions
of opinion and not recommendations to purchase, sell or hold
securities. Moody's issues provisional ratings in advance of the
final sale of securities and these ratings reflect Moody's
preliminary credit opinion regarding the transaction. Upon a
conclusive review of the final versions of all the documents and
legal opinions, Moody's will endeavour to assign a definitive
rating to the transaction. A definitive rating may differ from a
provisional rating.
REID GROUP: First Creditors' Meeting Set for July 19
----------------------------------------------------
A first meeting of the creditors in the proceedings of Reid Group
Pty Ltd will be held at the Chartered Accountants Australia and
New Zealand, Level 11, 2 Mill Street, in Perth, WA, on July 19,
2017, at 11:00 a.m.
Robert Michael Kirman and Robert Conry Brauer of McGrathNicol
were appointed as administrators of Reid Group on July 7, 2017.
ROTOMECH PTY: In Liquidation; Creditors to Meet on July 19
----------------------------------------------------------
Daniel Lopresti of Clifton Hall was appointed as Liquidator of
Rotomech Pty Ltd on July 7, 2017.
A meeting of creditors will be held at 10:30 a.m. on July 19,
2017, at Clifton Hall, Level 3, 431 King William Street, in
Adelaide.
SPC & CO: First Creditors' Meeting Set for July 20
--------------------------------------------------
A first meeting of the creditors in the proceedings of SPC & Co
Pty Ltd will be held at Level 1, 305-307 Kingsway, in Caringbah,
NSW, on July 20, 2017, at 12:00 p.m.
Darren John Vardy and Jason Lloyd Porter of SVP were appointed as
administrators of SPC & Co on July 11, 2017.
=========
C H I N A
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LEECO: Listed Unit's Market Value to Fall $2.5BB, Funds Estimate
----------------------------------------------------------------
Reuters reports that struggling Chinese conglomerate LeEco could
see the market value of its listed unit fall around $2.5 billion
should its shares resume trading, showed estimates from three
mutual fund investors, as the unit extended a trading suspension.
In separate revaluation statements, Harvest Fund Management Co
Ltd, China Post & Capital Fund Management Co Ltd and E Fund
Management Co Ltd said they expect shares of Leshi Internet
Information & Technology Corp Beijing to fall nearly 30 percent
once investors get the chance to react to latest developments,
Reuters relates.
LeEco founder Jia Yueting resigned as chairman of Leshi on
July 6, hours after making a public plea for patience, Reuters
says. He had previously said LeEco had grown too quickly from
video streaming into consumer electronics and electric vehicles,
leading to a cash crunch that has seen a court freeze some
assets.
Reuters relates that Jia also resigned as Leshi's chief executive
during the trading suspension, which Leshi requested from
April 17 due to possible restructuring. On July 7, the firm said
it would extend the suspension for as long as another three
months.
The revaluation illustrates the impact on investors of China's
lengthy trading suspensions - a major concern of foreign
investors, the report notes.
"One thing portfolio managers hate is suspension of trade,"
Anthony Cragg, senior portfolio manager at Wells Fargo Asset
Management and China veteran, told Reuters on July 5. "You can
tolerate losing money, but you cannot tolerate not being able to
trade. Suspending a stock is a big no-no."
Harvest Fund and China Post, both with heavy exposure to Leshi,
in separate statements on July 7 said they would adjust their
valuation of Leshi shares to CNY22.37, 27 percent lower than
their last pre-halt closing price of CNY30.68, Reuters relays.
E Fund on July 7 said it would revalue Leshi shares at
CNY22.05, or 28 percent lower, the report notes.
Other major investors included Dacheng Fund Management Co Ltd,
Penghua Fund Management Co Ltd and Guangfa Fund Management Co, as
per Leshi's first-quarter earnings report released at the end of
April, Reuters discloses.
In August, Harvest Fund, China Post and Caitong Fund Management
Co Ltd bought 81.8 billion privately placed Leshi shares for
CNY45.01 apiece. As of the last market price, their investments
had fallen by 32 percent, adds Reuters.
China-based LeEco makes smartphones, entertainment platforms,
set-top boxes, and smart TVs.
LIONBRIDGE CAPITAL: Moody's Assigns B2 Rating to New USD Notes
--------------------------------------------------------------
Moody's Investors Service has assigned a B2 long-term backed
senior unsecured rating to the USD-denominated notes to be issued
by New Lion Bridge Co., Ltd. and to be guaranteed by Lionbridge
Capital Co., Limited (Lionbridge Capital, B1, stable).
The rating outlook is stable.
New Lion Bridge was incorporated under the laws of the British
Virgin Islands on June 27, 2017. It is a fully owned subsidiary
of Lionbridge Capital.
RATINGS RATIONALE
The B2 long-term backed senior unsecured rating for New Lion
Bridge's guaranteed senior notes takes into account the
unconditional and irrevocable guarantee from Lionbridge Capital.
The guarantee will rank at least pari passu with Lionbridge
Capital's all other unsecured and unsubordinated indebtedness.
The one-notch difference between Lionbridge Capital's B1
corporate family rating and the notes' B2 rating reflects the
fact that most of Lionbridge Capital's assets reside at its fully
owned onshore operating entity, Lionbridge Financing Leasing
(China) Co., Ltd. (Lionbridge Leasing), and that a large
proportion of Lionbridge Leasing's assets are encumbered for
secured borrowings. Lionbridge Capital's senior unsecured
obligations are structurally subordinated to Lionbridge Leasing's
secured indebtedness and senior unsecured indebtedness.
The proceeds from the offering will be used to repay and/or
refinance Lionbridge Capital's existing indebtedness and to
supplement its working capital as well as for other general
corporate purposes.
WHAT COULD CHANGE THE RATING -- UP
The rating of the notes could be upgraded if Lionbridge Capital's
corporate family rating is upgraded.
WHAT COULD CHANGE THE RATING -- DOWN
The rating of the notes could be downgraded if: (1) Lionbridge
Capital's corporate family rating is downgraded; or (2)
Lionbridge Capital and its subsidiaries' structurally senior
and/or secured debt increases materially.
The principal methodology used in this rating was Finance
Companies published in December 2016.
Lionbridge Capital Co., Limited reported consolidated total
assets of RMB9,533 million (approximately USD1,374 million) at
end-2016.
WISDOM GLORY: Moody's Assigns Ba3 Rating to USD Perpetual Notes
---------------------------------------------------------------
Moody's Investors Services has assigned a Ba3 backed senior
unsecured rating to the proposed USD senior perpetual capital
securities to be issued by Wisdom Glory Group Limited and
irrevocably and unconditionally guaranteed by Greentown China
Holdings Limited (Ba3 stable).
The outlook on the rating is stable.
The proposed USD senior perpetual capital securities will be
supported by a letter of support provided by Greentown's major
shareholder, China Communications Construction Group (Limited)
(CCCG, unrated).
Greentown plans to use the proceeds of the new USD notes issuance
to refinance existing debt and for general working capital
purposes.
RATINGS RATIONALE
"Moody's expects that the proposed perpetual securities will
extend Greentown's debt maturity profile and will not have a
material impact on its credit metrics, because the proceeds will
mainly be used for refinancing," says Franco Leung, a Moody's
Vice President and Senior Credit Officer.
Moody's considers the proposed perpetual securities as pure debt
instruments and accordingly, does not apply any equity treatment
to these securities.
The Ba3 rating for the perpetual securities reflects the
following factors:
(1) The perpetual securities are irrevocably and unconditionally
guaranteed by Greentown;
(2) The securities are ranked pari passu with all other present
and
future unsecured, unconditional and unsubordinated
obligations
of Greentown;
(3) Moody's expectations that Greentown will receive
extraordinary
financial support from CCCG in times of financial distress.
Greentown's Ba3 corporate family rating reflects the company's
standalone credit strength and a two-notch uplift from CCCG.
The two-notch rating uplift reflects CCCG's status as Greentown's
largest shareholder - with a 28.9% stake at end-2016 - and the
significant influence that CCCG has over Greentown; as indicated
by the fact that CCCG occupies five of the seven executive
director seats on the Greentown's board of directors.
Greentown's standalone credit profile reflects its well-
established market position in property development in Hangzhou
city and Zhejiang Province. The company exhibits a long operating
track record, sound brand name, quality products and a large land
bank.
The company's standalone credit profile also considers its weak
credit metrics, such as its high debt leverage. Greentown's
growth through joint ventures (JVs) also results in lower
corporate transparency and challenges in managing JV cash flow.
The stable outlook on Greentown's Ba3 corporate family rating
reflects Moody's expectations that the company will maintain its
sales execution, stable financial profile and adequate liquidity
over the next 12-18 months. The outlook also reflects Moody's
expectations that Greentown will continue to receive support from
CCCG.
Downward rating pressure could emerge if Greentown's: (1)
liquidity position weakens, such that its ratio of cash to short-
term debt falls below 70%; (2) gross profit margin further
contracts to below 15%-20%; or (3) ratio of EBIT to interest
(including JV contributions) remains below 1.00x-1.25x for a
sustained period.
Any evidence of weakening support from CCCG will also negatively
affect Greentown's ratings.
On the other hand, upward rating pressure could emerge if
Greentown: (1) strengthens its liquidity profile by exercising
prudence in its financial management, as well as its land
acquisition strategy; (2) lowers its debt leverage, such that the
ratio of revenue to adjusted debt - including JV contributions -
is above 70%-75%; or (3) maintains a ratio of EBIT to interest -
including JV contributions - of above 2x for a sustained period.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Greentown China Holdings Limited is one of China's major property
developers, with a primary focus in Hangzhou City and Zhejiang
Province. At end-2016, the company had 85 projects with a total
gross floor area of 29.12 million sqm, of which, 13.33 million
sqm were attributable to the company.
China Communications Construction Co. Ltd. (A3 stable) is a core
subsidiary of CCCG and accounted for the majority of its total
revenue and assets at end-2016.
================
H O N G K O N G
================
BANK OF EAST: S&P Affirms BB Rating on Stapled Securities
---------------------------------------------------------
S&P Global Ratings took several rating actions on Hong Kong-based
The Bank of East Asia Limited (BEA) and its Chinese subsidiary,
The Bank of East Asia (China) Limited (BEA China) and its various
debts. S&P also took rating actions on some subordinated debt of
Standard Chartered Bank (Hong Kong).
S&P lowered its issuer credit ratings as follows:
The Bank of East Asia Limited
The Bank of East Asia (China) Limited
To From
Counterparty Credit Rating A-/Stable/A-2 A/Watch Neg/A-1
Greater China Regional Scale cnAA/---/cnA-1 cnAA+/Watch
Neg/cnA-1
S&P lowered its issue ratings on BEA's debt as follows:
To From
Senior Unsecured A- A/Watch Neg
Senior Unsecured cnAA cnAA+/Watch Neg
Commercial Paper A-/---/A-2 A/Watch Neg/A-1
Commercial Paper cnAA/---/cnA-1 cnAA+/Watch
Neg/cnA-1
S&P lowered its ratings on the non-Basel III compliant
nondeferrable subordinated debt (NDSD) (legacy Tier 2)
instruments, i.e. the US$600 million 6.125% subordinated notes
due 2020 and the Singapore dollar 800 million 4.25% medium-term
notes series 9 due 2022, issued by BEA as follows:
To From
Subordinated (legacy Tier 2) BBB A-/Watch Neg
Subordinated (legacy Tier 2) cnA cnAA/Watch Neg
S&P also lowered its ratings on Standard Chartered Bank (Hong
Kong)'s legacy Tier-2 debt instruments, i.e. the US$750 million
5.875% lower Tier-2 medium-term notes series 42 due 2020, as
follows:
Standard Chartered Bank (Hong Kong)
To From
Subordinated (legacy Tier 2) A- A/Watch Neg
Subordinated (legacy Tier 2) cnAA cnAA+/Watch Neg
S&P removed all these ratings from CreditWatch, where they were
placed with negative implications on April 25, 2017.
In addition, S&P affirmed its ratings on the following other
subordinated debt issued by BEA:
Basel III Compliant Tier 2 BBB-
Basel III Compliant Tier 2 cnA-
Basel III Compliant Additional Tier 1 BB
Basel III Compliant Additional Tier 1 cnBBB
Stapled Securities (legacy hybrid Tier 1) BB
Stapled Securities (legacy hybrid Tier 1) cnBBB
S&P said, "Our rating actions reflect that we now consider the
Hong Kong government to be supportive rather than highly
supportive in terms of its tendency to provide extraordinary
support to private sector commercial banks in an event of
distress. This follows Hong Kong's resolution legislation,
Financial Institutions (Resolution) Ordinance (FIRO), becoming
effective on July 7, 2017. We also believe that under the new
resolution framework, Hong Kong regulators can require holders of
NDSD instruments issued by Hong Kong banks to absorb losses, i.e.
"bail-in," without triggering a default on senior debts."
GOVERNMENT SUPPORTIVENESS
FIRO vests Hong Kong financial authorities with powers to effect
the orderly resolution of nonviable systematically important
financial institutions. S&P said, "We believe the implementation
of FIRO reduces, but doesn't altogether remove, the likelihood of
the Hong Kong government using taxpayers' money to support
failing banks in a crisis.
"With the implementation of FIRO, we believe Hong Kong regulators
now have the power to enforce stabilization options, including
"bail-ins," where senior unsecured creditors could be required to
absorb losses in a bank resolution. That said, we still expect
the government to maintain its full discretion to bail-out a bank
without asking senior unsecured creditors to absorb losses if
it thinks that's necessary to ensure financial system stability.
We take into consideration the Hong Kong government's financial
strength, track record, and the Exchange Fund Ordinance remaining
in place.
"Accordingly, we lowered our issuer credit ratings on BEA and BEA
China by one notch to reflect a reduced level of potential
extraordinary support from the Hong Kong government in times of
distress."
BEA AND BEA CHINA
S&P's ratings on BEA and BEA China reflect the group's
established franchise in Hong Kong and fairly prudent
underwriting standards. They also reflect the group's adequate
capital buffer to withstand credit risks in the markets in which
it operates. Counterbalancing factors include the group's
concentration in the property sector, and substantial exposure to
mainland China where S&P considers economic risk is higher than
Hong Kong. Counterbalancing factors also include profitability
that is under pressure due to narrowing interest margins and
rising credit costs. The ratings also incorporate a now one-notch
uplift, from the previous two-notch, to reflect government
support. S&P continues to see the BEA group as having a moderate
systemic importance in Hong Kong.
S&P said, "We expect the group to maintain adequate
capitalization, with its risk-adjusted capital (RAC) ratio
remaining 9.0%-10.0% over the next two years. The RAC ratio was
9.9% at the end of 2016. We expect the group's capitalization to
further improve in the near-term from its: (1) US$500 million
additional tier-1 hybrid capital issuance; and (2) about Hong
Kong dollar 3.05 billion one-off profit from the sale of its
shares of Tricor Holdings Ltd. and its subsidiaries. The issuance
and sale of shares were both completed in the first half of 2017.
However, we also expect a negative impact on capitalization from
some moderate pick-up in the bank's loan growth and an ongoing
pressure on earnings from continually rising credit costs amid
mainland China's economic rebalancing and the economy's close
linkage to Hong Kong.
"The stable outlook on BEA reflects our view that the group will
likely maintain adequate capital buffer to withstand rising
credit costs stemming from heightening economic risks in Hong
Kong and mainland China in the coming two years. At the same
time, we also expect the group to maintain prudent underwriting
standards, stringent collateral requirements, and a controlled
risk appetite in dealing with its risky exposures. We think
economic risks in mainland China have been increasing mainly due
to its debt overhang issue, and subsequently in Hong Kong given
its strong economic ties with mainland China.
"The stable outlook also reflects our expectation that the group
would retain its moderate systemic importance in Hong Kong and
that the Hong Kong government should be able to provide
extraordinary support to BEA as needed. This is despite our
current negative outlook on our ratings on Hong Kong.
"Our stable outlook on BEA China reflects our stable outlook on
BEA. We expect BEA China to remain a core subsidiary to the group
over the next two years. As a core subsidiary, we expect the
ratings on BEA China to move in tandem with those on BEA.
"We could lower our ratings if we consider that the economic
risks in mainland China and Hong Kong have significantly
heightened and the group's loan exposure to mainland China
increases materially, for example, to 50% of its total loans. We
could also lower our ratings if BEA's credit costs rise sharply
and loan quality deteriorates more severely than the respective
industry average in Hong Kong and mainland China.
"We may upgrade BEA if we believe the bank can: (1) sustain a
much stronger capital buffer with a RAC ratio above 10% even
under scenarios of heighted economic risks in China and Hong
Kong; and (2) improve its asset quality with lower credit costs.
We think this scenario is unlikely in the near-term."
NONDEFERRABLE SUBORDINATED DEBT
S&P now regards legacy NDSD (legacy Tier-2 instruments) as a
hybrid capital instrument under Hong Kong's new resolution
framework. S&P believes that the implementation of FIRO
introduces situations where Hong Kong regulators could require
holders of these legacy NDSD instruments issued by Hong Kong
banks to absorb losses, i.e. "bail-in," without triggering a
default on senior debts. Based on the current forms of the
resolution legislation and rules, S&P believes that NDSD
instruments would not be "protected" from potential write-offs or
conversions under resolution.
Accordingly, the starting point for the notching of S&P's issue
ratings on these instruments is now the issuer's stand-alone
credit profile (SACP), rather than the issuer credit rating (ICR)
previously. This reflects S&P's view that extraordinary
government support -- which S&P factors in as rating uplift to
derive the ICR -- does not accrue to hybrid capital instruments.
S&P continues to apply one notch of downward adjustment from the
starting point to reflect the contractual subordination of these
instruments.
S&P said, "We would typically rate these instruments one notch
higher than our ratings on Basel III-compliant NDSD instrument
issued by the same Hong Kong bank. We consider that these
instruments would unlikely bear incremental default risks of
write-off or conversion prior to the issuing bank entering into
resolution. Under the current law and regulation, we do not think
Hong Kong authorities have the statutory power to force such
losses prior to resolution. In contrast, we consider that typical
Basel III-compliant NDSD in Hong Kong includes contractual terms
such as the non-viability contingent capital clause, which could
lead to conversions or write-off before the bank's entry into
resolution.
"We expect Hong Kong regulators to provide further clarity on
subsidiary rules and regulations later in the year. These include
total loss-absorbing capacity requirements and potential lead-in
or transitional arrangements. We will assess any further
potential rating impact once these additional details become
available."
=========
I N D I A
=========
A.V.R.N. HOTELS: CRISIL Reaffirms B- Rating on INR27MM Term Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of A.V.R.N. Hotels Private Limited (AHPL). CRISIL has been
consistently following up with AHPL for obtaining information
through letters and emails dated February 6, 2017 and March 06,
2017, among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 18 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 27 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of A.V.R.N.Hotels Private
Limited. This restricts CRISIL's ability to take a forward
looking view on the credit quality of the entity. CRISIL believes
that the information available for A.V.R.N.Hotels Private Limited
is consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL B Rating
category or Lower'. Based on the last available information,
CRISIL has reaffirmed the rating at CRISIL B-/Stable.
Incorporated in 1992, AHPL operates a three-star hotel under the
brand, Vijay Park. The company's operations are managed by Mr. A
Vijayaraghavan. AHPL is currently constructing hotels in Alandur
and Kolathur in Chennai.
BEST FOODS: CRISIL Reaffirms 'D' Rating on INR1.50BB Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Best Foods Limited (Best Foods) at 'CRISIL D.'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1500 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 114.57 CRISIL D (Reaffirmed)
Proposed Short Term
Bank Loan Facility 20.97 CRISIL D (Reaffirmed)
Standby Line of
Credit 100 CRISIL D (Reaffirmed)
Term Loan 63.28 CRISIL D (Reaffirmed)
The rating continues to reflect delay in the servicing debt
obligations due to weak liquidity.
Key Rating Drivers & Detailed Description
Weakness
* Large working capital requirements: Best Foods business is
highly working capital intensive because of large inventory
holding requirements. The supply of paddy, the major raw
material, is possible only during the crop season (October to
December). Given the seasonal availability, companies procure
paddy during this period for their entire requirement during the
next year. Paddy is procured through mandis, and the maximum
credit period given by mandis is around 15 days from the date of
sale. The short credit period from suppliers is reflected in Best
Foods large working capital requirement. The company's debt has
increased to meet its incremental working capital requirement
leading to weak financial risk profile. CRISIL believes that Best
Foods financial risk profile will remain weak over the medium
term on account of large working capital requirements.
* Susceptibility to volatility in raw material prices and to
regulatory risks: Given the seasonal availability of paddy and
the need for large inventory holding requirement, Best Foods
remains exposed to inventory price risk. The company is also
exposed to the risk of limited availability of raw material in
case of a weak monsoon as basmati rice crop requires a large
quantity of water. Furthermore, the industry also faces
regulatory risk. Agricultural commodity exports, including rice,
which is a staple diet in the country, are highly regulated.
There is significant intervention by the Government of India
(GoI) in the market. GoI's policies governing rice export,
including basmati rice, are volatile. Indian basmati exports are
also largely concentrated towards the Middle Eastern countries,
such as Iran, the UAE, and Saudi Arabia. The company derives
large portion of its sales from exports to these Middle Eastern
countries. Thus, any adverse regulation by the governments of
these countries on agro commodity imports can have a material
impact on the export volumes of the company. CRISIL believes
that the company will remain exposed to any unforeseen changes in
government policies related to the rice industry, over the medium
term.
Strengths
* Established position in the basmati rice industry: Best Foods
is one of the largest exporters of basmati rice from India, with
exports constituting the majority of the company's sales. The
company has strong relations with large buyers in all the major
basmati rice importing countries. Best Foods also has presence in
the domestic market, and has consolidated all its brands under an
umbrella brand Best Foods. CRISIL believes that Best Foods will
maintain its established position in the export market, and
benefit from its presence in the domestic market, over the medium
term.
Set up by Mr. Mohinder Pal Jindal and his son, Mr. Dinesh Gupta,
in fiscal 2004 (refers to financial year, April 1 to March 31),
Best Foods (formerly, Best Food International Pvt Ltd) mills and
processes basmati rice for the global and domestic markets.
Processing units in Karnal, Haryana; Hamidpur, Delhi; and
Faridkot, Punjab, have total rice milling capacity of 101 tonne
per hour (tph) and sorting and grading capacity of 149 tph.
Best Foods reported a profit after tax (PAT) of INR54 crore on
total operating income of INR2738 crore in fiscal 2015, vis-a-vis
INR67 crore and INR2624 crore respectively in fiscal 2014. For
the nine months ended December 31, 2015, Best Foods reported a
PAT of INR38 crore on total operating income of INR1948 crore.
BHAGATPUR TEA: ICRA Reaffirms B Rating on INR6.44cr Cash Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]B
assigned to the INR0.06 crore term loan facility, and INR6.44-
crore cash credit facility of Bhagatpur Tea Company Limited. The
outlook on the long-term rating is stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-
Term Loan 0.06 [ICRA]B (Stable); Reaffirmed
Fund-based-
Cash Credit 6.44 [ICRA]B (Stable); Reaffirmed
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with BTCL, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings and also
had sent repeated reminders to the company for payment of
surveillance fee that became overdue, but despite repeated
requests by ICRA, the company's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA] B (Stable) ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
BTCL was acquired by the present management in October 2000 from
the erstwhile promoters. BTCL has a tea garden in the Jalpaiguri
district of West Bengal, with a total area of around 632 hectares
under plantation. The total production capacity of BTCL is around
20 lakh kg of tea.
BLG CONSTRUCTION: ICRA Reaffirms B+ Rating on INR5.80cr Loan
------------------------------------------------------------
ICRA Ratings has reaffirmed its long-term rating of [ICRA]B+ on
the INR5.80-crore fund based facilities and INR0.20 crore un-
allocated limits of BLG Construction Service Private Limited
(BLG) and has also reaffirmed its short-term rating of [ICRA]A4
on the INR9.00 crore non-fund based facility of BLG Construction
Service Private Limited (BLG) . The outlook on the long term
rating is "Stable".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based Limits 5.80 [ICRA] B+ (Stable); Reaffirmed
Non-Fund based Limits 9.00 [ICRA] A4; Reaffirmed
Un-allocated Limits 0.20 [ICRA] B+(Stable); Reaffirmed
Rationale
As part of its process and in accordance with its rating
agreement with BLG Construction Service Private Limited, ICRA has
been trying to seek information from the company so as to
undertake a surveillance of ratings, but despite multiple
requests; the company's management has remained non-cooperative.
In absence of requisite information ICRA's Rating Committee has
taken a rating view based on the best available information. In
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 01, 2016, the company's rating is now denoted as:
"[ICRA]B+(Stable)/[ICRA]A4; ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited or no updated information on the company's performance
since the time it was last rated.
Incorporated in 1997, BLG Construction Services Private Limited
(BLG) is a Jodhpur (Rajasthan) based consulting entity in the
domain of civil engineering including Design, Investigation,
third party inspection construction supervision, this apart BLG
also undertakes construction work for hospitals, railways and
other varied government entities. The foundation of the company
was laid back in 1997 by Mr. Varshney in the name of BLG
Construction Services which was later converted in a private
limited company in 2005.
CLASSIC CORRUGATIONS: ICRA Reaffirms B Rating on INR6.11cr Loan
---------------------------------------------------------------
ICRA Ratings has reaffirmed the long term rating assigned to the
INR6.00 crore cash credit facility, INR6.11 crore term loans and
INR0.39 crore unallocated limits of Classic Corrugations Private
Limited at [ICRA]B. The outlook on the long-term rating is
'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 6.00 [ICRA]B (Stable) Reaffirmed
Term Loans 6.11 [ICRA]B (Stable) Reaffirmed
Unallocated 0.39 [ICRA]B (Stable) Reaffirmed
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with CCPL, ICRA has been trying to seek information from the
company so as to undertake a surveillance of the ratings and also
had sent repeated reminders to the company for payment of
surveillance fee that became overdue, but despite repeated
requests by ICRA, the company's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B (Stable) ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Classic Corrugations Pvt. Ltd. (CCPL) was incorporated in April
2011, and started its commercial operations from July 2013
onwards. The company is engaged in the business of
manufacturing kraft paper based corrugated boxes. CCPL has an
installed capacity to process ~18000 MTPA of kraft paper at its
sole manufacturing facility located in Daskroi area near
Ahmedabad, Gujarat.
The corrugated boxes are used for packaging purposes and find
their application in a wide range of industries including home
appliances, food products, liquor, kitchen ware, spare parts,
milk products, mobiles manufacturing, confectioneries,
pharmaceutical and personal care. CCPL is a closely held entity
with the members of the Todi family being the key stakeholders.
DARSHAN SAGAR: ICRA Reaffirms B+ Rating on INR15cr Loan
-------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B+ for
the INR15.00- crore bank facilities of Darshan Sagar Developers.
The outlook on the long term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based limits 15.00 [ICRA]B+(Stable); Re-affirmed
Rationale
The rating action is based on the best available information. As
a part of its process and in accordance with its rating agreement
with Darshan Sagar Developers, ICRA has been trying to seek
information from the company to undertake a surveillance of
ratings and had sent repeated reminders to the company for
payment of surveillance fee that became overdue; but despite
multiple requests, the company's management has remained non-
cooperative. In the absence of the requisite information, ICRA's
Rating Committee has taken a rating view based on the best
available information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B+(Stable); ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited information or no
updated information on the company's performance since the time
it was last rated.
Key Rating Drivers
Credit strengths
* Established track record of the promoters in the real estate
business for ten years, having completed more than 10 lakh
square feet
* Clear land title and key regulatory approvals are in place
* Minimal funding risk since promoters have infused 100% of
the committed capital and bank funding has been fully
disbursed
Credit weaknesses
* Significant project cost is to be met through customer
advances which is contingent on timing of booking and
healthy collection efficiency
* Competition from upcoming real estate projects in the
Vicinity
* Risk of capital withdrawal associated with partnership
nature of the entity
Description of key rating drivers:
M/s Darshan Sagar Developers is currently undertaking the
development of Platinum Heritage at Hiranandani Estate, Thane
consisting of 2 towers of G+14 storeys each consisting of 1.5BHK
(saleable area of 916sq ft), 2BHK (saleable area of 1117sq ft)
and 2.5BHK (saleable area of 1244 sq ft) apartments.
The total construction area is 1.68 lakh sq ft and the saleable
area is 1.43 lakh sq ft consisting of 224 residential units and
11 commercial shops. The project is located at Hiranandani
Estate, Thane having an area of 9300 sq m which was acquired for
a consideration of INR39.09 crore and was completely funded by
the promoter's funds.
The total project cost is INR104.48 crore (which includes land
cost of INR39.09 crore) of which INR75.75 crore (75% of the total
project cost) has been incurred till date on account of land
cost, approvals and construction cost. The total project cost is
funded by bank funding under rating of INR15 crore, promoters'
contribution of INR43.69 crore and the remaining INR45.79 crore
will be funded through customer advances.
Mumbai based Darshan Sagar Developers, a joint venture between
Mr. Sanjeev Malik promoted Soham Group and Mr. Jitendra Mehta of
JVM Spaces, was incorporated in the year 2011. Mr. Sanjeev Malik
independently as also with other JVs has developed approximately
13 lakh sq ft in Mulund and Thane over the past 10 years and
currently he is developing ~10 lakh sq ft in Thane and Khandala.
Mr. Jitendra Mehta is the chief founder of JVM Spaces and had
been associated with Soham Group for ~10 years and served as the
chief executor in many projects.
EAST COAST ENERGY: ICRA Reaffirms D Rating on INR4927cr Term Loan
-----------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating assigned to the
INR4927 crore term-loan limits and INR668 crore non-fund based
limits of East Coast Energy Private Limited (ECEPL) at [ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans
(Long-term) 4927.00 [ICRA]D; reaffirmed
Non-fund Based
Bank Limits
(Long-term) 668.00 [ICRA]D; reaffirmed
Rationale
The rating action is based on the continued delays in the
company's debt servicing. As part of its process and in
accordance with its rating agreement with ECEPL, ICRA has been
trying to seek information from the company so as to undertake a
rating surveillance. Despite repeated requests by ICRA, the
company's management has remained non cooperative. Also, ICRA had
sent repeated reminders to the company for payment of
surveillance fee that became overdue, but the management has
remained non cooperative. In the absence of requisite
information, ICRA's Rating Committee has taken a rating view
based on the best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as "[ICRA]D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Land required for the main plant area has been completely
acquired and all major approvals are in place
* Long-term power purchase agreement (PPA) with Kerala State
Electricity Board Limited for 100 MW; project also emerged as
a L1 bidder for supply of 488.5 MW to Andhra Pradesh
distribution utilities for a period of 25 years
Credit weaknesses
* Delays in meeting interest obligations to lenders owing to
delays in project implementation caused by funding issues;
project has been stalled without any construction progress
over the past 18 months
* Delays in execution coupled with rupee depreciation against
dollar and escalation in works awarded post initial appraisal
have resulted in significant cost overruns for the project
* Funding risks remain high given the substantial portion of
the equity to be infused and pending tie up of debt for cost
overruns
* Project is exposed to fuel-supply risks given the pending tie
up of fuel supply agreement for domestic coal
* Off-take risks for the project remain high as firm PPAs are
yet to be tied up for 1220 MW of the 1320 MW capacity
Description of Key Rating Drivers
ECEPL has received all the required permits for the construction
of the plant, transmission line and water supply. The land
required for the main plant area has been acquired, while that
for water pipeline and railway corridor is yet to be purchased.
However, the project execution has been delayed, initially due to
environmental clearance related issues and subsequently due to
delay in tie up of equity and debt funding for cost overruns. In
July 2014, the lead lender approved revision in project cost from
INR6570 crore to INR9343.15 crore to be funded through debt and
equity of INR7006.65 crore and INR2336.50 crore, respectively.
However, the project has remained stranded without any
construction progress over the last 18 months due to delay in
funding tie up. The project's commissioning schedule is
uncertain.
ECEPL is developing a 1320 MW (2 X 660 MW) supercritical thermal
power project near Kakarapalli village in the Srikakulam district
of Andhra Pradesh. The project is promoted by Asian Genco Pte
Limited, Cobalt Power Private Limited (majorly held by Navayuga
group), Athena Energy Ventures Private Limited, Abir
Infrastucture Limited & Associates and PTC India Financial
Services Limited. The proposed fuel mix for the project is
domestic and imported coal in the ratio of 70:30, with the
company securing the letter of assurance from Mahanadi Coalfields
Limited (MCL) for domestic coal.
GMR VEMAGIRI: ICRA Reaffirms B Rating on INR60cr Cash Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating at [ICRA]B and
assigned the short-term rating of [ICRA]A4 for the INR200.00-
crore bank limits of GMR Vemagiri Power Generation Limited
(GVPGL). The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 60.00 [ICRA]B (stable) reaffirmed
Non fund Based
Limits 140.00 [ICRA]A4 assigned
Rationale
The rating reaffirmation takes into account the non-
operationalisation of the long term power purchase agreement
(PPA) with Andhra Pradesh and Telangana discoms owing to the
unavailability of domestic gas over the past several years. Due
to concerns over domestic gas availability, the plant had
intermittent operations during FY2014 and no operations in
FY2015. This, in turn, affected its financial performance. The
plant was operational during FY2016 and H1 FY2017 under the
scheme for utilisation of gas-based power generation capacity2.
However, the scheme was discontinued from April 2017 onwards and
the plant became non-operational since October 2016. As a result,
the company's plant is kept under preservation mode and timely
support from parent company GMR Energy Limited (GEL) for the same
would be critical.
The ratings, however, take into account the change in ownership
of GEL as Tenaga Nasional Berhad (Tenaga), Malaysia purchased a
30% equity stake (for USD 300 million) in the company during
November 2016. While the company's term sheet with GAIL for the
supply of natural gas (from deep-water fields) is expected to
mitigate the fuel-availability constraints to a certain extent,
the consent from the Andhra Pradesh and Telengana discoms to use
the fuel under PPA terms is pending and remains a key rating
sensitivity.
Key Rating Drivers
Credit strengths
* Equity investment by Tenaga Nasional Berhad, Malaysia
reduced overall debt levels of the parent company
* Retirement of external project loans resulting in no
external fixed debt-servicing obligations for GVPGL
* Term sheet signed with GAIL for natural gas supply is
expected to mitigate fuel-availability constraints
Credit weaknesses
* Non-operationalisation of the PPA signed with Andhra
Pradesh and Telangana discoms; ability of the company to
timely restore the same is crucial
* Subdued PLF levels over the last four to five years; plant
is non-operational since October 2016 and is kept under
preservation
* Considerable annual expenses incurred for keeping the
plant under preservation; minimal cash balance, the funding
for the preservation of the plant is contingent on the
ability of the parent company to timely infuse funds
* Negative net-worth of the company owing to net losses
reported over the last few years
Description of key rating drivers
Though the company's term sheet with GAIL for supply of domestic
natural gas (from deep-water fields) is expected to mitigate the
fuel-availability constraints to some extent, the consent for the
same from the Andhra Pradesh and Telangana discoms to use the
fuel under the PPA terms is pending. As a result, the company's
ability to re-operate the same in the near to medium term remains
highly critical and is a key rating sensitivity. Furthermore, the
plant is currently kept under preservation mode and with limited
cash balances available, GVPGL's ability to meet the expenses
towards the same will remain subject to the timely infusion of
funding by the parent company.
GVPGL, which is 100%-owned by GMR Energy, has a combined cycle
gas based project with a capacity of 388.5 MW near KG Basin in
Andhra Pradesh. The construction of the plant was completed in
June 2006 and was likely to be commissioned in September 2006.
However, the plant remained nonoperational due to non-
availability of gas till January 2008. From February 2008, the
plant had been operating intermittently on gas diverted from
other power plants as per the directive of the Andhra Pradesh
Government. Subsequently, it received gas pursuant to an Fuel
Supply Arrangement (FSA) with RIL since April 2009 till March
2013.
However, the decline in domestic gas production led to a scarcity
of domestic gas. As a result, the plant has mostly been non-
operational. The intermittent operations during FY2014 were based
on RLNG supplied by APTRANSCO. The plant had no operations during
FY2014-15 and resumed operations in August 2015 after bidding
successfully under the scheme for utilisation of gas-based power
generation capacity. The plant operated at muted capacity
utilisation levels in FY2016 and H1 FY2017 and has been non-
operational and under preservation since October 2016. In FY2016,
GVPGL reported an operating income of INR399.68 crore and a net
loss of INR31.85 crore.
For the nine-month period of FY2017, the company recorded an
operating income of INR166.62 crore and net loss of INR49.77
crore.
GOLDEN ALLIANCE: CRISIL Assigns B Rating to INR8MM LT Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Golden Alliance Hospitalities
Private Limited (GAHPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B/Stable
Long Term Loan 8 CRISIL B/Stable
The rating reflects geographical concentration in revenue,
project related risks and susceptibility to cyclicality and
intense competition. These weaknesses are partially offset by the
company's established brand and extensive experience of promoters
in the hotel industry.
Key Rating Drivers & Detailed Description
Weakness
* Geographical concentration in revenue profile: The company has
only one property in a single location (Amritsar), which
exposes
revenue and profitability to any economic slowdown in Punjab.
* Susceptibility to cyclicality and intense competition: The
hotel industry is vulnerable to changes in both domestic and
global economies. During lean periods, revenue per available
room of premium hotels is likely to be affected more
significantly than that of mid-scale or economy hotels. While
cost of operating premium properties remains high even during
downtrends; cash flows from them are, therefore, more
susceptible to economic downturns. Occupancy is high during
wedding and tourist seasons (November-February). Moreover, high
proportion of tourists in customer profile exposes the company
to risks associated with global socio-economic and political
risks.
* Project related risks: Though the civil construction works has
been completed and works related to finishing and interior
decoration is under process, the risk of the project getting
completed in time and the demand risk of the project related to
occupancy levels of the hotel and banquet halls shall be there
during the initial years of operations of the company.
Strengths
* Established brand: GAHPL has entered into a contract with
Sarovar Hotels Pvt Ltd, under which it will operate the hotel
in
the Sarovar Portico brand. The same will allow the company to
have a stable cash flow with known brand in the industry.
* Experience of promoters: The promoters of the company have
experience of more than 5 years in the Hotel industry. The
brand
name of Sarovar Portico and the experience of the promoters is
expected to help the company build strong and lasting relations
with suppliers and customers.
Outlook: Stable
CRISIL believes GAHPL will benefit over the medium term from the
Sarovar Portico brand. The outlook may be revised to 'Positive'
if better occupancy translates into significant growth in revenue
and operating margin, thus improving cash accrual and hence
liquidity. The outlook may be revised to 'Negative' if
competition exerts pressure on occupancy and average room rate
and lowers debt-servicing ability, thus weakening liquidity.
Incorporated in 2012 and promoted by Mr. Kapil Chopra, Mr. Rajan
Chopra, Mr. Shyam Soni, and Mr. Raghav Soni, GAHPL is setting up
a 3-star hotel with more than 50 rooms, banquet, restaurant and
bar facilities in Amritsar. Operations are expected to commence
from September 2017.
GREENKO ENERGY: S&P Affirms B+ LT CCR, Outlook Revised to Stable
----------------------------------------------------------------
S&P Global Ratings revised its outlook on renewable energy
company Greenko Energy Holdings to stable from positive. At the
same time, S&P affirmed its 'B+' long-term corporate credit
rating on the company.
S&P said, "We also affirmed our 'B+' long-term issue rating on
the US$550 million 8% senior secured notes Greenko Dutch B.V.
issued and the US$500 million 4.875% senior secured notes Greenko
Investment Co. issued. Greenko guarantees the notes.
"We revised the outlook to stable because we believe the
improvement in Greenko's leverage will be slower than what we had
originally anticipated.
"In our view, weak operating performance and inherent resource
risk will delay Greenko's deleveraging from the current high
levels. The company's ratio of debt to EBITDA is likely to stay
above 5x for more than 12 months, unless weather patterns are
more favorable, thus improving operating performance. Greenko's
fast expansion in the past few years stemmed from accelerated
organic growth of its wind projects and acquisition of Sun
Edison's solar assets in India. As a result, cash flow generation
from completed projects went toward expansion rather than
deleveraging. Thus, the leverage for fiscal 2017 (as of March
2017) was higher than we previously anticipated, with debt-to-
EBITDA ratio of about 12x. EBITDA for full-year 2017 was about
US$160 million--75% of our projection for fiscal 2017. Greenko's
debt-to-EBITDA ratio has been well above 5x over the past three
years."
S&P expects the company's financial strength in the next 12-18
months to be underpinned by its operating performance, rather
than corporate actions from management and majority shareholder
GIC Pte. Ltd. Greenko's ability to control leverage will depend
more on operating performance given S&P assumes minimal growth in
capital expenditure (capex). Thus, S&P believes Greenko needs to
demonstrate a stronger operational track record given its
inherent resource risk. The company's operating performance has
been subdued in the past few years, partly due to unfavorable
weather patterns in India.
S&P said, "We expect higher contribution from solar capacity and
reducing dependence on hydroelectric power will improve Greenko's
earnings diversity and help moderate seasonality and volatility
in its overall portfolio cash flows. We project fiscal 2019's
revenue contribution from hydro (30%, as of March 2017) and wind
(currently 50%) will fall to about 20% and 40%, respectively,
with solar accounting for 40%."
Greenko's solar assets acquired from Sun Edison have regulated
feed-in tariff (FIT), which allows cost pass-through, fixed
tariffs, and priority offtake on power grids. Furthermore, these
power purchase agreements (PPAs) with FIT are mainly with NTPC
Ltd. S&P said, "(BBB-/Stable/--), an offtaker (power generator)
that we consider to have good credit quality and sound payment
history. We expect Greenko's proportion of EBITDA derived from
PPAs with FIT to increase to 80% from 65%, further supporting
earnings stability. Despite the new competitive bidding framework
in India, we believe Greenko's exposure to regulated FIT
contracts will remain stable in the next 24 months at least,
given the company's large pipeline of new projects secured under
FIT PPAs. Also, Greenko demonstrates relatively better collection
record in comparison to some peers. The company has lower
exposure to Indian states such as Maharashtra and Tamil Nadu,
which have delayed payments to some other renewable energy
companies.
"The stable outlook reflects our expectation that Greenko's more
diversified asset portfolio and limited capital expenditure
requirements will result in ratio of FFO to debt of about 8% and
EBTIDA interest coverage of more than 1.75x in the next 12 months
and the company will exercise financial discipline in pursuing
growth.
"We may lower the rating if Greenko's EBTIDA interest coverage
sustainably falls below 1.5x. This can happen due to Greenko's:
(1) higher-than-expected debt-funded capex; or (2) weak
operational efficiency because of lower plant load factor.
"We may raise the rating if we believe Greenko will reduce its
leverage, such that the FFO to debt is sustainably above 9%. This
can happen if: (1) Greenko's operating performance is strong,
closer to P75 estimates (meeting expected power generation
amounts at least 75% of the time), supported by disciplined
execution of new capacity additions and favorable weather
patterns; and (2) Greenko's board (led by GIC) appropriately
adjusts the company's capital structure or capex to ensure
leverage remains within the above tolerance levels."
GUPTA SOLVENT: ICRA Assigns B+ Rating to INR6.0cr Cash Loan
-----------------------------------------------------------
ICRA Ratings has assigned its long-term rating of [ICRA]B+ to the
INR9.50 crores fund based limits of Gupta Solvent Private Limited
(GSPL). The outlook on the long term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based
Limits-Cash
Credit 6.00 [ICRA]B+ (Stable); assigned
Fund Based Limits
Term Loans 3.50 [ICRA]B+ (Stable); assigned
Rationale
ICRA's ratings are constrained by the moderate scale of GSPL's
operations and limited track record of operations. During its
first eight months of operations, GSPL's plant operating at 40%
utilisation levels, though it is expected to improve going
forward. The ratings also factor in the fragmented nature of the
edible oil industry, which leads to intense competition, exerting
pressure on the profitability of the company. However, the
ratings positively factor in the extensive experience of
promoters in edible oils & oil seeds business with strong
presence in the state of Madhya Pradesh through associate
concerns and favourable demand prospects for the edible oil
industry in general and soybean products in particular due to the
high nutritional value.
Going forward, the ability of the company to increase sales
volumes while achieving higher capacity utilisation along with
improvement its profitability will be the key rating
sensitivities.
Key Rating Drivers
Credit strengths
* Significant management expertise of promoters in the edible
oil industry by virtue of the group companies involved in
the same line of business
* Favorable demand prospects for the edible oil industry in
general and soybean products in particular due to the high
nutritional value
Credit weaknesses
* Limited track record of operations; low capacity
utilization of 40% in first eight months of operations
* Inherently low profitability in the oil processing business
due to intense competition, especially in the bulk segment;
moreover, limited product differentiation restricts pricing
flexibility
* Susceptibility of profitability to volatility in edible
oil prices; additionally, the raw materials being an
agricultural produce, availability and prices of the same
remain exposed to agro-climatic conditions
Description of key rating drivers:
The promoters have a long and established track record of over 20
years in the edible oil industry, indicating the promoters'
exposure to the cyclicality in the business. The group concerns
are engaged in the trading and manufacturing of mustard oil and
cake and cotton seed oil and cake. The group has presence in the
MP, Bihar and Jharkhand through its brand names 'Tiger,
'Ghoonghat' and 'Balak'.
GSPL has an installed refining capacity of 45,000 TPA; the
capacity utilization of GSPL was moderate in 8M FY2017 at 40%
being the first year of operations. The domestic edible oil
industry is characterized by intense competition and
fragmentation, with the presence of large number of players due
to low entry barriers. As such, the market is intensely price
competitive, leading to pressures on profit margins. This coupled
volatility in raw material prices has led to thin operating
margin with OPM of 3.37% and NPM of 0.44% in FY2017.
Analytical approach: To arrive at the ratings, ICRA has taken
into account the standalone financials along with key operational
developments in the first 8 months of operations from August 2016
to March 2017.
Gupta Solvent Private Limited (GSPL) was incorporated in 2007 and
commenced commercial manufacturing of edible oils from July 2016.
The company is engaged in refining of Soya Oil, Palm oil and
Cottonseed oil. The company's plant, located in Morena, Madhya
Pradesh with total refining capacity of 150 tonnes per day (TPD)
translating into annual refining capacity of 45,000 MTPA.
From the period of August'2016-March'2017, the company reported
an operating income of INR40.30 crore and a net profit after tax
of INR0.18 crore.
GVR BEHARI: Ind-Ra Assigns 'C' Rating to INR1086.9MM Term Loans
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated GVR Behari Hanumana
Tollway Private Limited's (GBHTPL) term loans is:
-- INR1086.9 mil. Term loans due on October 2025 assigned with
IND C rating
KEY RATING DRIVERS
The rating reflects GBHTPL's low operating income on account of
insignificant toll income, and annuities withheld due to non-
completion of punch list items. Despite having the entire land
and right of way in place as per the management, there is a delay
in completion of the project. The project achieved provisional
commercial completion certificate in March 2014 The rating is
also constrained by GBHTPL's weak coverage ratios of less than 1x
in FY17 and a substantial depletion of debt service reserve
account (DSRA) to INR7 million in June 2016 (April 2016: INR123
million).
Given the current level of revenue including toll collection and
annuity (FY17: INR140.4 million, FY16: INR141.6 million), the
DSRA could be completely wiped-off by FY18. Moreover, the project
has failed to create a major maintenance reserve.
As per FY16 annual report, the company had delayed servicing
interest payments in FY16; however, it has met debt obligations
in FY17 and 1QFY18 as per the management certificate provided by
the company to Ind-Ra.
RATING SENSITIVITIES
Positive: Sustained traffic improvement resulting in coverages
better than Ind-Ra's expectation and DSRA as per covenants would
be positive for the ratings.
COMPANY PROFILE
GBHTPL has been granted a 15-year design-build-fund-operate-
transfer concession by Madhya Pradesh Road Development
Corporation for the two-laning of the Behari-Hanumana section
from 110km of NH-75(E) to 243km of NH-7. The project received
toll income of INR18.40 million in FY17 (FY16: INR18.14 million).
It has been receiving annuity receipts with an average a delay of
130 days.
The sponsor, GVR Infra Projects Limited is under the Sustainable
Structuring of Stressed Assets Scheme.
GVR PANA: Ind-Ra Rates Assigns 'C' Rating to INR870.7MM Loans
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has rated GVR Panna Amanganj
Tollway Private Limited's (GPATPL) term loans:
-- INR870.7 mil. Term loans due on November 2025 assigned with
IND C rating
KEY RATING DRIVERS
The rating reflects GPATPL's low operating income on account of
insignificant toll income, and annuities withheld due to non-
completion of punch list items. Despite having the entire land
and right of way in place as per management, there is a delay in
completion of the project. The project achieved provisional
completion certificate in March 2014.
The rating is also constrained by GPATPL's weak coverage ratios
of less than 1.0x in FY17 and a substantial depletion of debt
service reserve account (DSRA) to INR17.5 million in December
2016 (October 2016: INR38.5 million). Given the current level of
revenue including toll collection and annuity (FY17: INR119.04
million, FY16: INR128.95 million), Ind-Ra believes the DSRA could
be completely wiped-off by FY18. Moreover, the project has failed
to create a major maintenance reserve.
As per annual report for FY16, the company had delayed servicing
of interest payments in FY16; however, it has met debt
obligations in FY17 and 1QFY18 as per the management certificate
provided by the company to Ind-Ra.
RATING SENSITIVITIES
Positive: Sustained traffic improvement resulting in coverages
better than Ind-Ra's expectation and DSRA as per covenants would
be positive for the ratings.
COMPANY PROFILE
GPATPL has been granted a 15-year design-build-fund-operate-
transfer concession by Madhya Pradesh Road Development
Corporation for two-laning of the Panna-Amanganj section of SH-47
for a length of 58.18km. The project received toll income of
INR18.44 million in FY17 (FY16: INR23.01 million). It has been
receiving annuity receipts with an average delay of 46 days. The
sponsor, GVR Infra Projects Limited is under the Sustainable
Structuring of Stressed Assets Scheme.
HIMGHAR UDYOG: CRISIL Reaffirms B+ Rating on INR4.8MM Term Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on
the bank facilities of Himghar Udyog Pvt Ltd (HUPL; part of the
Somnath group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Reaffirmed)
Term Loan 4.8 CRISIL B+/Stable (Reaffirmed)
Working Capital
Loan .89 CRISIL B+/Stable (Reaffirmed)
Working Capital
Term Loan .09 CRISIL B+/Stable (Reaffirmed)
The rating reflects the Group's below-average financial risk
profile because of small net worth and exposure to risks related
to the highly regulated and fragmented nature of the West Bengal
cold storage industry. These rating weaknesses are partially
offset by the extensive experience of the company's promoters in
the cold storage industry.
Analytical Approach
CRISIL has combined the business and financial risk profiles of
HUPL; Somnath Cold Storage Pvt Ltd (SCPL), Chinsurah Cold Storage
- Bansidhar Agarwalla and Co Pvt Ltd (CCS) and Shree Hazarilal
Cold Storage Pvt Ltd (SHCSPL). This is because these companies,
together referred to as the Somnath group, have common promoters
and management, and financial fungibility. Also, CRISIL has
treated unsecured loans, received from the promoters and their
relatives, as neither debt nor equity as these loans will remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptible to regulatory changes, and intense competition in
the West Bengal cold-storage industry: The regional potato
cold
storage industry is regulated by the West Bengal Cold Storage
Association. Fixed rentals limit the company's ability to
generate profit, based on strengths and geographical
advantages.
Furthermore, intense competition restricts the pricing power of
players, who are forced to offer discounts to ensure healthy
utilisation of their storage capacity.
* Small networth: Networth, estimated at INR5.3 crore as on
March
31, 2017, remains constrained by minimal accretion to reserves,
and limits financial flexibility of the group. Networth is
unlikely to improve significantly in the medium term, in the
absence of any planned equity infusion.
Strengths
* Extensive experience of the promoters: The four decade-long
experience of the promoters in the cold storage industry, and
their longstanding association with farmers and traders, ensure
healthy utilisation of storage capacity for potatoes, and will
continue to support the business risk profile.
Outlook: Stable
CRISIL believes the Somnath group will continue to benefit from
the extensive experience of its promoters. The outlook may be
revised to 'Positive' if substantial cash accrual or infusion of
capital by promoters, strengthens the capital structure and
liquidity. The outlook may be revised to 'Negative' if any delay
in repayments of loans/advances by farmers, considerably low cash
accrual, or significant, debt-funded capital expenditure, weakens
liquidity.
The Somnath Group is promoted by the Kolkata-based Agarwal
family, which has been engaged in providing cold storage
facilities to potato farmers and traders, since 1963. The group
comprises four companies, SCPL, CCS, HUPL and SHCSPL. CCS
(incorporated in 1963), SCPL (1984), HUPL (1986), and SHCSPL,
(2003), have their cold storage facilities at Chinsurah, Burdwan,
Bankura and Dhupguri, respectively (all in West Bengal).
On a consolidated basis, the group has reported profit after tax
(PAT) of INR5 lakhs on operating income of INR14.21 crores in
fiscal 2016, against net losses of INR4 lakhs on operating income
of INR11.67 crores in the previous fiscal.
ICON DEVELOPERS: CRISIL Assigns B+ Rating to INR10MM LT Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Icon Developers - Guntur (IC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 10 CRISIL B+/Stable
The rating reflects the extensive experience of its promoters in
real estate development and instituted debt service reserve
account (DSRA) mechanism for debt contracted. These strengths are
partially offset by exposure to implementation, funding, and
demand risks related to ongoing project, and susceptibility to
risks and cyclicality inherent in the real estate industry.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to implementation, funding, and sales risks related to
ongoing project: Though project location is advantageous,
timely bookings and receipt of advances are critical for
project
completion.
* Susceptibility to risks and cyclicality inherent in the real
estate industry: The real estate sector is cyclical and
affected by volatile prices, opaque transactions, and a highly
fragmented market structure because of many regional players.
Moreover, multiplicity of property laws and non-standardised
regulations across states are likely to affect tenure of
project
implementation. Furthermore, any macroeconomic changes such as
high interest costs and weak economic sentiments may impact
bookings for players such as IC over the medium term.
Strengths
* Extensive experience of promoters: Managing Partner, Mr. M
Narayana Swamy, has been in the residential real estate segment
for over two decades and has executed over 20 projects
comprising 20 lakh square feet in Bengaluru.
* Adequate liquidity buffer: There is an instituted DSRA for two
months for principle and interest.
Outlook: Stable
CRISIL believes IC's credit risk profile will continue to benefit
over the medium term from the extensive experience of its
promoters and escrow and instituted DSRA mechanism for debt
contracted. The outlook may be revised to 'Positive' if healthy
bookings and timely receipt of customer advances lead to higher-
than-expected cash inflow and hence improved liquidity. The
outlook may be revised to 'Negative' if delays in receipt of
customer advances, time or cost overruns in ongoing projects, or
increase in funding requirement due to other large projects being
undertaken simultaneously weaken liquidity.
Established in 2016 as a partnership firm by Mr. M Narayana Swamy
and Ms. P T Venkayamma (equal ownership), IC undertakes
residential real estate development in Bengaluru.
INSTITUTE OF MODERN: Ind-Ra Rates New INR100MM Bank Loans 'B'
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has undertaken the following
ration action on Institute of Modern Studies' (IMS) bank
facilities:
-- INR100 mil. Proposed bank loans* assigned with Provisional
IND B/Stable rating
* The rating is provisional and shall be confirmed upon the
sanction and execution of loan documents for the above facility
by IMS to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The rating reflects a weak operational performance of IMS,
indicated by a fall in enrolments for engineering courses over
four consecutive years ended FY16. The fall was due to intense
competition. This is a significant credit rating concern.
However, student headcount marginally improved to 2,239 in FY17
(FY16: 2,207; FY15: 2,320; FY14: 2,337). Overall capacity
utilisation was about 62.72% in FY17.
The rating also reflects IMS's small scale of operations and a
continued fall in income since FY14. IMS's income declined to
INR107.12 million in FY16 from INR135.17 million in FY15. The
decline was due to a 4.87% yoy fall in student headcount.
The rating is constrained by a weak operating margin, which has
declined since FY13. The decline in income eroded operating
profitability. Operating margin was 1.28% in FY16 (FY15: 11.91%).
A higher fall of 20.63% yoy in operating revenue compared with an
11.05% yoy fall in operating expenditure led to a lower operating
margin in FY16.
In FY16, interest coverage ratio was 3.34x (FY15: 468.69x) and
interest and finance charges were INR0.46 million (FY15: INR0.04
million). Ind-Ra expects debt servicing to weaken in the near
term, if IMS avails a debt for capex, until the upcoming campus
in FY19-FY20 report better operating profitability. IMS had nil
debt over FY12-FY16. IMS plans to incur a capex of INR135 million
on the construction of additional academic blocks. The capex is
likely to be funded by a mix of debt (75%) and equity/internal
accruals (25%). Towards this, IMS plans to avail a loan INR100
million during FY18-FY20. Ind-Ra expects credit metrics to
deteriorate due to high debt-funded capex during FY18-FY19.
The rating, however, is supported by a moderate liquidity
profile. Available funds/operating expenditure were 34.15%.
RATING SENSITIVITIES
Negative: A fall in student enrolment leading to deterioration in
operating profitability affecting debt serving capability may
trigger a negative rating action.
Positive: An increase in operating margin and scale of operations
on a sustained basis could positively affect the rating.
COMPANY PROFILE
IMS was formed in 1981 under the West Bengal Societies
Registration Act 1961. IMS manages Saroj Mohan Institute of
Technology, a 1999-established engineering college, which offers
degree courses in engineering, management and computer
application and diploma courses in different disciplines of
engineering.
JAI AMBEY: CRISIL Assigns B+ Rating to INR5.5MM Cash Loan
---------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating on the
long term bank facilities of Jai Ambey Distributors (JAD).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5.5 CRISIL B+/Stable
The ratings reflect Working capital intensive nature of
operations and below average financial risk profile marked by
high capital structure. However these weaknesses are partially
offset by the extensive experience of promoter in the agriculture
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Working capital intensive nature of operations: The operations
of the firm is working capital intensive marked by gross
current assets of around 98 days due moderate receivable cycle
of about 30 days and high inventory of about 70 days as on
March
2017.
* Below average financial risk profile: Modest networth and
moderate total outstanding liabilities to total net worth
(TOL/TNW) (INR2.2 crore and 3.16 times as on March 31, 2017)
represent below average financial risk profile. Debt protection
metrics is subdues marked by net cash accruals to adjusted debt
and interest coverage ratio of 0.03 and 1.72 times for fiscal
2017.
Strengths
* Extensive experience of promoters in the industry: JAD's
proprietor has extensive experience of around two decades in
the
trading industry. The promoter's extensive experience has
enabled the firm to establish strong relationship with its
customers and key principals.
Outlook: Stable
CRISIL expects that JAD will maintain its business risk profile
backed by promoters' extensive industry experience and their
established relationship with suppliers. The outlook may be
revised to 'Positive' if JAD reports more-than-expected increase
in its scale of operations and profitability or improved working
capital cycle management resulting in improved financial risk
profile particularly liquidity. The outlook may be revised to
'Negative' in case the company reports a decline in its revenues
or profitability margins, or further stretch in working capital
cycle or undertakes any large debt-funded capital expenditure
programme, thereby affecting its capital structure.
Based out of Lucknow, JAD was established in 1997 as
proprietorship firm and is distributor for LG Electronics'
products, Tata Sky Ltd. Dish TV and recharges, Reliance
Communication, Vodafone and ITZ recharges.
Profit after tax (PAT) was INR0.28 crore on total revenue of
INR32.33 crore for fiscal 2017 (Provisional), against a PAT of
INR0.18 crore on total revenue of INR20.82 crore for fiscal 2016
KOHINOOR HATCHERIES: Ind-Ra Assigns 'BB+' LT Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Kohinoor
Hatcheries Private Limited (KHPL) a Long-Term Issuer Rating of
'IND BB+'. The Outlook is Stable.
The instrument-wise rating actions are:
-- INR251.12 mil. Long-term loans due on July 2023 assigned with
IND BB+/Stable rating; and
-- INR411.00 mil. Fund-based facilities assigned with IND
BB+/Stable/IND A4+ rating
Ind-Ra has taken a consolidated view of KHPL and Kohinoor group
companies Kohinoor Clean Energy Private Limited, Rithwik Power
Projects Limited, Satyamaharshi Power Corporation Limited,
Transafrican Farms and Foods Limited and Rohini Green Energy
Private Limited. The group entities have operational and legal
inter linkages in the form of common directors, cross-holdings,
corporate guarantees and fungibility of funds.
KEY RATING DRIVERS
The ratings reflect consolidated moderate credit metrics.
According to provisional financials for FY17, net leverage (total
Ind-Ra-adjusted net debt/operating EBITDA) was 5.4x (FY16: 5.8x)
and EBITDA interest cover (operating EBITDA/gross interest
expense) was 2.20x (1.94x). Moreover, EBITDA margin contracted to
18.9% in FY17 from 19.4% in FY16. However, absolute EBITDA
increased to INR292 million (FY16: INR267 million).
The ratings also reflect a tight standalone liquidity position,
indicated by almost full utilisation of fund-based facilities
during the 12 months ended May 2017. Meanwhile, consolidated net
working capital cycle, albeit improved, was elongated at 209 days
in FY17 (FY16: 318 days), indicating the working capital-
intensive nature of the group's business. The improvement in the
cycle was driven by a decline in the consolidated inventory
holding period (FY17: 130 days; FY16: 278 days).
However, the ratings are supported by strong growth in
consolidated revenue (moderate scale of operations) and an
established track record. Revenue expanded at a CAGR of 22.1% to
INR1,544 million over FY14-FY17, on account of favourable market
demand for poultry and improved income generation from 15MW
biomass plants and 3MW windmill. The group has over 20 years of
experience in the poultry and renewable energy generation
business. Ind-Ra expects revenue to grow on account of the group
entering the poultry feed production business, which came online
in April 2017.
RATING SENSITIVITIES
Negative: Any deterioration in EBITDA margin leading to sustained
deterioration in credit metrics and/or liquidity could be
negative for the rating.
Positive: A significant rise in revenue and EBITDA margin leading
to sustained improvement in credit metrics could be positive for
the rating.
COMPANY PROFILE
Hyderabad-based KHPL was established in 1991 by Mr D Raghava Rao.
The company is engaged in the poultry breeding business.
On a standalone basis, KHPL's revenue was INR1,001 million in
FY17 (FY16: INR683 million), EBITDA margin was 19% (17%),
interest coverage was 2.0x (1.0x) and net leverage was 5.0x
(9.0x).
KLM INFRA: ICRA Reaffirms B+ Rating on INR29.28cr LT Loan
---------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B+ for
the INR29.28 crore term loan facility and the INR3.72 crore
unallocated limits of KLM Infra. The long-term rating has a
'Stable' outlook.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund
Based: Term Loan 29.28 [ICRA]B+(Stable); Re-affirmed
Long Term:
Unallocated Limits 3.72 [ICRA]B+(Stable); Re-affirmed
Rationale
The rating action is based on best available information. As part
of its process and in accordance with its rating agreement with
KLM Infra, ICRA has been trying to seek information from the
company to undertake a surveillance of the rating; but despite
multiple requests, the company's management has remained non-
cooperative. In the absence of the requisite information, ICRA's
Rating Committee has taken a rating view based on the best
available information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA]B+(Stable); ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited information or no
updated information on the company's performance since the time
it was last rated.
Key rating drivers
Credit strengths
* Long experience of partners in the real estate business
Credit weaknesses
* Likely delays in project execution as only 73% construction
work complete as on December 31, 2016 and planned completion
date was March 31, 2017
* Exposure of operations to cyclicality inherent in the
commercial real estate sector
* Geographical concentration risks, since all ongoing projects
are located in the same area, i.e., Surat and Bharuch, in
Gujarat.
* Risks associated with partnership nature of firm, wherein any
substantial withdrawal from capital account would impact net
worth, and thereby the capital structure.
KLM Infra (KLM) is engaged in construction of a residential-cum-
commercial project -- Sapphire 8 -- at Parvat-Magob in Surat. The
firm is part of the KLM Group which has developed ~7 lakh square
feet of residential and commercial complexes in Surat and Bharuch
over last 15 years. The project comprised of two phases. The
phase I of the project comprised of 7 towers (A-F & H)
constituting 272 residential flats and 35 shops representing
total saleable area of 5,56,540 sq.ft, while the phase II
comprised one tower - G - constituting 46 residential flats and 9
shops representing total saleable area of 90,960 sq.ft. As on
December 31, 2016; 73% of the construction work was complete
while construction for towers E, F and H was still underway. Of
the total estimated construction cost of INR49.54 crore, INR36.40
crore (~73%) was incurred as on December 31, 2016. The planned
completion date for the project was March 31, 2017; which ICRA
believes to have been delayed considering significant pending
construction work as on December 2016.
KLM Infra (KLM) was established in 2013 as a partnership firm
based in Surat, Gujarat. The firm is engaged in construction of a
residential-cum-commercial project - Sapphire 8 - at Parvat -
Magob in Surat. The partners have almost 15 years of experience
in the real estate business through the KLM Group, which is
actively engaged in real estate construction in Bharuch,
Ahmedabad and Surat.
LOTUS CHOCOLATE: CRISIL Reaffirms B Rating on INR25MM Cash Loan
---------------------------------------------------------------
CRISIL's rating on the long-term bank facility of Lotus Chocolate
Company Limited (LCCL) continues to reflect the company's below-
average financial risk profile marked by a negative net worth.
The rating also factors in a modest scale of operations, subdued,
though improving, operating efficiencies, and susceptibility to
volatility in cocoa bean prices. These rating weaknesses are
partially offset by Lotus's long track record in the cocoa
industry, and its promoters' ability to extend financial support
in case of exigencies.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL B/Stable (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Despite having commenced
operations
in 1988, LCCL remains a moderate-size player in the cocoa and
chocolate industry. The seasonal nature of its key raw
material,
cocoa beans, and the conservative stance towards debt reliance
for building cocoa bean reserves in the off-season has resulted
in low capacity utilisation. However, with plans to expand into
new product segments and gradual improvement in existing
capacity utilization, CRISIL believes that LCCL's revenues will
grow at a CAGR of 5-6% over the medium term. Nevertheless, LCCL
will still remain a moderate-size player in the cocoa and
chocolate products industry.
* Limited pricing power, and susceptibility to volatile cocoa
bean
prices: Operating margin is susceptible to volatility in cocoa
beans price. Intense industry competition along with modest
scale of operations does not allow to fully pass on the
increase
in cost to customers which has resulted in moderate operating
profitability of 2-4% over the past three fiscals. CRISIL
believes that while LCCL operating profitability will benefit
from the expected ramp up in operations over the medium term,
it
will nevertheless remain susceptible to volatility in cocoa
bean
prices and limited pricing power.
* Weak financial risk profile: LCCL has a weak financial risk
profile marked by negative networth of INR10.7 crore estimated
as on March 31, 2017, due to accumulated losses of INR 30.2
crore. LCCL incurred PAT losses of INR 46 lakh in fiscal 2017
as
a result of which debt protection metrics such as net cash
accrual to total debt and interest coverage ratios deteriorated
to 0.03 time and 1.28 times, respectively, in 2017, as compared
to 0.11 time and 3.25 times, respectively, in fiscal 2016.
However, LCCL will continue to benefit from funding support
from
its promoters which in the past has resulted in minimal
reliance
on bank borrowing.
Strengths
* Extensive experience in the cocoa and chocolate products
industry, and established association with key customers: LCCL
has an established market position and extensive experience in
the cocoa and chocolate products industry. Over the past 25
years, LCCL has established strong relationships with reputed
customers such as Mondelez India Foods Ltd (CIL; formerly
Cadbury India Ltd), ITC Ltd (FMCG division), and Parle Products
Pvt Ltd. CRISIL believes that LCCL will continue to benefit
from
its established association with key customers and would not
face any difficulties in tying up orders for the expected
increase in volumes over the medium term.
Outlook: Stable
CRISIL believes LCCL will continue to benefit over the medium
term from its long track record in the industry and established
relationship with key customers, and support from promoters. The
outlook may be revised to 'Positive' in case of higher-than-
expected revenue and profitability, leading to substantial
increase in cash generation, along with improvement in key credit
metrics. Conversely, the outlook may be revised to 'Negative' in
case of a steep decline in operating cash flows or in case of
significant stretch in working capital cycle, or large, debt-
funded capex, impacting financial risk profile. Timely and
adequate support from promoters to tide over any funding
requirements will also remain a key rating sensitivity factor.
LCCL, incorporated in 1988, processes cocoa beans into cocoa
powder and cocoa butter, and also sells chocolates (under the
brand name Lotus). The company is headquartered in Hyderabad and
its manufacturing unit is in Medak (Andhra Pradesh). LCCL is
promoted by Mr. Prakash Pai, managing partner of Puzzolana
Machinery Fabricators (Hyderabad) LLP (rated, 'CRISIL
A+/Stable/CRISIL A1'), along with his brother Mr. Ananth Pai.
In fiscal 2017, net loss was INR 46 lakh on net sales of INR66.5
crore, as against a net profit after tax of INR1.3 crore on net
sales of INR65.4 crore in fiscal 2016.
MILANO PAPERS: Ind-Ra Assigns BB LT Issuer Rating; Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Milano Papers
Private Limited (MPPL) a Long-Term Issuer Rating of 'IND BB'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR8.8 mil. Term loans I due on March 2018 assigned with IND
BB/Stable rating;
-- INR15.2 mil. Term loans II due on April 2018 assigned with
IND BB/Stable;
-- INR150 mil. Fund-based working capital facilities saaigned
with IND BB/Stable/IND A4+;
-- INR12 mil. Non-fund-based facilities assigned with IND A4+
Rating.
KEY RATING DRIVERS
The ratings reflect MPPL's moderate credit metrics and scale of
operations. According to provisional financials for FY17,
interest coverage (operating EBITDA/gross interest expense) was
2.98x (FY16: 2.1x) and net financial leverage (total adjusted net
debt/operating EBITDA) was 2.68x (2.63x). The improvement in
interest coverage was mainly due to a decrease in interest
expenses. In FY17, revenue was INR1,351 million (FY16: INR1,336
million). The rise in revenue was primarily driven by an increase
in orders executed.
The ratings also reflect a fluctuating EBITDA margin of 3.3%-
12.7% over FY13-FY17. EBITDA margin was flat on a year-on-year
basis at 6.9% in FY17. The fluctuation was primarily due to raw
material (waste papers) price volatility and foreign exchange
rates in the absence of any firm hedging policy. Ind-Ra expects
EBITDA margin to remain volatile in the near future due to
continued raw material price fluctuations.
The ratings are constrained by MPPL's tight liquidity position,
indicated by an average fund-based working capital facility
utilisation of 98.88% during the 12 months ended May 2017.
The ratings, however, are supported by the promoters' decade-long
experience in duplex paper manufacturing.
RATING SENSITIVITIES
Negative: Any decline in revenue and EBITDA margin leading to a
sustained deterioration in the credit profile will be negative
for the ratings.
Positive: An increase in revenue and EBITDA margin leading to a
rise in the credit profile will be positive for the ratings.
COMPANY PROFILE
Incorporated in 2011, MPPL manufactures duplex paper with varying
grammage specifications, from 200 grams per square metre (GSM) to
450GSM, and 14-15 and burst factor specifications. The company is
promoted by Mr Bachubhai Agola, along with his relatives and
friends. Its 36,000-metric-ton-per-annum manufacturing facility
is located in Morbi, Gujarat.
N.B. COTEX: CRISIL Assigns B+ Rating to INR5.50MM Cash Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of N. B. Cotex Private Limited (NBCPL;
part of the Krishna group). The rating reflects an average
financial profile because of high gearing and low debt protection
metrics, modest operating profitability, and exposure to intense
competition and to volatility in raw material prices. These
rating weaknesses are partially offset by the extensive
experience of the promoters in the cotton industry, and proximity
to the cotton growing belt in Gujarat.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility .51 CRISIL B+/Stable
Cash Credit 5.50 CRISIL B+/Stable
Long Term Loan 1.49 CRISIL B+/Stable
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of NBCPL, H. N. Cotex Private Limited
(HNCPL), and Krishna Natural Fibres Pvt Ltd (KNFPL). That's
because these companies, together referred to as the Krishna
group, are under the same management and have business and
financial linkages.
Key Rating Drivers & Detailed Description
Weakness
* Low operating margin: The operating margin was 1-2% for the
three fiscals through 2017.
* Average financial profile: The gearing was high at 2.35 times
as on March 31, 2017, and the debt protection metrics modest
with interest coverage and net cash accrual to total debt
ratios
at 1.99 times and 0.07 time in fiscal 2017.
* Susceptibility to volatility in the price of cotton: The price
of cotton is highly volatile as yield of the crop depends on
the
monsoon. Inability to pass on any increase in cotton price to
customers because of intense competition compounds the risk.
Strengths
* Extensive industry experience of the promoters: The promoters
have an experience of over four decades in the cotton industry,
leading to an established relationship with customers.
* Proximity to the cotton growing belt in Gujarat: This results
in easy availability of raw cotton directly from farmers.
Outlook: Stable
CRISIL believes the Krishna group will continue to benefit from
the extensive industry experience of its promoters, and the
proximity to Gujarat's cotton-growing belt. The outlook may be
revised to 'Positive' in case of sustained and a significant
increase in the scale of operations and profitability, leading to
higher cash accrual, and/or significant improvement in the
financial profile largely through strengthening of the capital
structure. The outlook may be revised to 'Negative' if a decline
in profitability, a stretch in the working capital cycle, or
large, debt-funded capital expenditure weakens the financial risk
profile, especially liquidity.
The Krishna group is promoted by Mr. N B Jani, supported by his
brother Mr. Harshad B Jani and his sons Mr. Haresh Jani and Mr.
Bhargav Jani. All the three group companies gin and press raw
cotton. KNFPL, incorporated in 1999, has its facility in Kadi,
Gujarat; it is currently setting up a unit in Telangana. NBCPL,
incorporated in 2011, has its manufacturing facility in
Maharashtra. It has a branch office in Kadi. HNCPL, incorporated
in 2013, has its manufacturing facility in Kadi.
Revenue for the Krishna group, provisionally, was INR302.0 crore
and profit before tax (PBT) INR0.34 crore in fiscal 2017. Revenue
and PBT were INR212.0 crore and INR0.30 crore, respectively, in
fiscal 2016.
N.N. SAHA: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned N. N. Saha &
Sons Agro Private Limited (NNSPL) a Long-Term Issuer Rating of
'IND
BB-'. The Outlook is Stable. The instrument-wise rating action
is:
-- INR240 mil. Fund-based limit assigned with IND BB-/Stable
rating
KEY RATING DRIVERS
The ratings reflect NNSPL's moderate scale of operations and
credit profile. According to FY17 provisional financials, revenue
improved to INR1,260 million (FY16: INR1,132 million) on account
of an increase in the sales of rice. The credit metrics however
deteriorated in FY17 as reflected in its interest coverage of
1.4x (FY16: 1.8x) and net leverage of 6.4x (4.7x), due to a
decline in the operating EBITDA margins to 3.1% (4.1%) on account
of an increase in the overall expenses.
Moreover, the liquidity position of the company has been tight,
with instances of overutilisation in the working capital limits
during the 12 months ended May 2017, due to the interest charged
over the overdue account. The overuse was however regularised on
the next working day.
The ratings supported by the company's directors' more than two
decades of experience in the rice trading business.
RATING SENSITIVITIES
Positive: An improvement in the scale of operations along with
overall credit metrics will lead to a positive rating action.
Negative: Deterioration in the credit metrics will lead to a
negative rating action.
COMPANY PROFILE
Incorporated in 2008, NNSPL is engaged in the trading of basmati
and non-basmati rice in Kolkata, West Bengal.
The company is managed by Mr Nityananda Saha and his son Anirudha
Saha.
PAREKH ALUMINEX: CRISIL Reaffirms 'D' Rating on INR345MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL D/CRISIL D' ratings on
the bank facilities and non-convertible debentures of Parekh
Aluminex Limited (PAL). The ratings reflect classification of
PAL's account with the bank as a non-performing asset (NPA).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 345 CRISIL D (Reaffirmed)
Letter of Credit 55 CRISIL D (Reaffirmed)
Letter of credit
& Bank Guarantee 90 CRISIL D (Reaffirmed)
Proposed Long Term
Bank Loan Facility 855 CRISIL D (Reaffirmed)
Key Rating Drivers & Detailed Description
Weakness
* Delays in meeting debt obligation: PAL's account with the bank
is classified as a NPA. In past, cash flow mismatch driven by
suboptimal capacity utilisation and large working capital
requirement stretched liquidity. Efforts to resolve this
mismatch has not been successful since the demise of PAL's then
chairman and managing director, Mr Amitabh Arun Parekh, in
January 2013; he was the key management person supervising
operations.
Incorporated in 1994, PAL manufactures aluminium foil containers
(AFC), lids, covers, and allied products used in packaging food
items. Manufacturing units are in Dadra and Nagar Haveli. In
2005, PAL acquired a Singapore-based company to enter the
Southeast Asian markets. In 2008, its units acquired export
oriented-unit status. The company entered the retail space with
two brands, PAL and ME Foil, in fiscal 2011. It has annual
production capacities of 688 crore pieces of AFC, 3.96 crore
pieces of foil roll, and 179 crore pieces of foil lids.
PAL incurred loss of INR380 crore on net sales of INR1090 crore
for fiscal 2013, against profit after tax of INR84.66 crore on
net sales of INR1370 crore for fiscal 2012. No financials have
been released since June 2013.
RAJ RAJENDRA: CRISIL Lowers Rating on INR10MM Term Loan to B-
-------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the bank facility of
Raj Rajendra Realtors to 'CRISIL B-/Stable' from CRISIL B/Stable.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
The downgrade reflects weakening of liquidity because of lower-
than-expected offtake of units on the current project. Though
work for around 89% of the total project cost was completed till
March 2017, bookings and customer advances are low. Also, loan
repayment commences from fiscal 2018, adding to pressure on
liquidity over the medium term.
The rating reflects RRR's exposure to demand risks on the ongoing
project in Mumbai, and to cyclicality in the real estate
industry. These weaknesses are partially offset by the benefits
that RRR derives from the extensive experience of its promoters.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to demand risks on the ongoing project: Despite
incurring 89% of the total cost by March 2017, customer
advances
remain low. Demand risk is accentuated by competition from
other
developers in the vicinity. Furthermore, realisation and
advances are subject to fluctuation in real estate prices. Any
sharp correction in real estate prices will impact demand
adversely.
* Cyclicality in the Indian real estate industry: The real
estate
sector in India is cyclical and affected by volatile prices,
opaque transactions, and a highly fragmented market structure.
Business risk profile will also remain susceptible to risks
arising from any industry slowdown.
Strengths
* Extensive experience of the promoters: Benefits from the
three-
decade long experience of the promoters in real estate
development in Mumbai will continue to support business risk
profile.
Outlook: Stable
CRISIL believes RRR will continue to benefit over the medium term
from its promoters' extensive experience in the real estate
industry. The outlook may be revised to 'Positive' if significant
booking of units and receipt of customer advances on the ongoing
project, lead to better-than-expected cash flow and, therefore,
liquidity. Conversely, the outlook may be revised to 'Negative'
if low customer advances or significant cost overruns on the
project constrain liquidity.
RRR was set up in 2012 by Mr. Gumanmal Doshi, Mr. Narpatraj
Mehta, Mrs Jayamala Nahar, and Mr Anil Bhandari. The firm
develops real estate, and is currently re-developing a
residential building in Mumbai.
SEVEN STAR: CRISIL Assigns 'B' Rating to INR22MM Cash Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facility of Seven Star Grains Private Limited
(SGPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 22 CRISIL B/Stable
The rating reflects a weak financial risk profile because of high
gearing, a modest networth, and stretched liquidity, and a small
scale of operations. These weaknesses are partially offset by the
extensive experience of the promoters in the food processing
industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: The operating income was modest at
INR44 crore in fiscal 2016, and is estimated at around INR67
crore in fiscal 2017. That's due to geographical concentration
and a short track record, as operations commenced only in May
2015.
* Weak financial risk profile: The gearing was high at 10.77
times and the networth small at INR4.57 crore, as on March 31,
2016. With a modest scale of operations and high term loan
obligation, accretion to the networth is negligible. The debt
protection metrics were below average: the interest coverage
ratio was 1.13 times and the net cash accrual to adjusted debt
ratio 0.01 time, in fiscal 2016. High interest obligation and a
modest scale of operations result in the operating profit being
just enough to service debt obligation.
Strength
* Extensive industry experience of the promoters: The promoters
have an experience of around 20 years in the food processing
industry; this has resulted in operating revenue of INR44 crore
in the first 11 months of operations. The promoters have built
a
strong relationship with customers.
Outlook: Stable
CRISIL believes SGPL will continue to benefit from extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' in case of significant improvement in the scale of
operations and profitability, leading to a better financial risk
profile. The outlook may be revised to 'Negative' if there is any
deterioration in working capital management, or larger-than-
expected debt-funded capital expenditure, leading to further
weakening of the financial risk profile.
SGPL was incorporated in December 2013, promoted by Ms. Esha
Mahajan and Mr Gorav Mahajan, who are also the directors. The
company mills and markets varieties of rice. It started
operations in May 2015 at its facility in Jammu.
Operating income was INR44.00 crore and net loss of INR35.98 lakh
in fiscal 2016, the first year of operations.
SAIBABA SOLVENT: Ind-Ra Assigns BB- LT Issuer Rating
----------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Saibaba Solvent
Industries LLP (SSI) a Long-Term Issuer Rating of 'IND BB-'. The
Outlook is Stable. The instrument-wise rating actions are:
-- INR100.00 mil. Fund-based working capital limit assigned with
IND BB-/Stable rating;
-- INR86.99 mil. Term loan due on December 2023 assigned with
IND BB-/Stable rating;
-- INR0.73 mil. Non-fund-based working capital limit assigned
with IND A4+ rating
KEY RATING DRIVERS
The ratings reflect limited operational track record, as FY17 was
the company's first full year of operations. Moreover, SSI has a
moderate credit profile. According to provisional financials for
FY17, SSI's revenue was INR845.33 million, EBITDA margin was
5.86%, interest coverage (operating EBITDA/gross interest
expense) was 3.36x and leverage (total adjusted net
debt/operating EBITDAR) was 3.4x.
The ratings also reflect SSI's tight liquidity position,
indicated by a near full utilisation of working capital limits
during the 12 months ended May 2017. SSI had a long net cash
cycle of 49 days in FY17 owing to a high inventory holding period
and the seasonal nature of agro-based business.
The ratings, however, are supported by nearly four decades of
experience of one of the promoters in the rice milling business.
Moreover, the other promoter has over 10 years of experience in
the de-oiled cake trading business.
RATING SENSITIVITIES
Negative: Any deterioration in credit metrics and deterioration
in the overall liquidity profile could lead to a negative rating
action.
Positive: Maintaining credit metrics at the current level will be
positive for the ratings.
COMPANY PROFILE
Incorporated in July 2014, SSI is engaged in the manufacturing of
rice bran oil and de-oiled cakes in Nagpur. The company is
managed by Mr Santulal Kewalram Jamtani, Mr Pradeep Sushilkumar
Saraogi and Ms Lata Tulsidas Tajpuria.
SKYLINE MILLARS: ICRA Reaffirms 'D' Rating INR3.50cr Loan
---------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]D for
the INR6.00-crore cash credit and term loan facilities of Skyline
Millars Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 2.50 [ICRA]D; Reaffirmed
Fund-based-
Term Loan 3.50 [ICRA]D; Reaffirmed
Rationale
The rating action is based on the best available information. As
part of its process and in accordance with its rating agreement
with Skyline Millars Limited, ICRA has been trying to seek
information from the company so as to undertake a surveillance of
the ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of
requisite information, ICRA's Rating Committee has taken a rating
view based on best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA] D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Experienced promoters with established track record of
operations in the construction equipment business and in
the development of real estate in Mumbai
Credit weaknesses
* Small scale of operations with significant de-growth being
reported in revenues over the last two years; no prior
experience of the company in manufacturing and selling
concrete pipes and manhole system
* Heavy losses being incurred from FY2015 onwards on account
of decline in scale of operations and high overhead expenses
* Fragmented nature of industry with various organised and
unorganised players intensifying competition and exerting
pressure on the profitability front
Description of key rating drivers:
Skyline Millars Limited currently operates out of three business
segments: construction equipment; realty and manufacturing of
concrete pipeline, manhole systems and precast products. The
promoters of the group have an extensive track record in the
construction equipment and real estate development business in
Mumbai.
SML manufactures equipments which includes batching and mixing
plants, asphalt plants, pan mixers, etc. which find application
in the construction as well as glass industry. Due to an overall
slowdown in the infrastructure sector, the company is currently
engaged in servicing of old cranes and supplying spare parts for
the construction equipments.
Further, SML had ventured into manufacturing of Reinforced Cement
Concrete (RCC) pipes and manhole systems from December 2013 by
setting up its manufacturing facilities in Wada, Maharashtra.
However, limited experience of the company and its promoters in
the manufacturing and selling concrete pipes and manholes systems
coupled with small scale of operations and high overhead expenses
in a highly fragmented industry, resulted in the company
incurring losses at operational as well as net level since
FY2014.
Skyline Millars Limited was incorporated on November 28, 1919 by
the Walchand Group in the name of ACME Manufacturing Company
Limited. Mr. Ashok Patel acquired the shares from Walchand Group
and took over the management of the company in 1972. Its name was
changed to Millars India Limited on January 04, 2002 and later on
changed to Skyline Millars Limited on October 23, 2007 after sale
of 43% stake to the Skyline Group. The company currently operates
out of three business segments which are construction equipment,
realty and pipes. The manufacturing facility of the construction
equipment unit is located in Umreth Gujarat wherein the company
manufactures transit mixers, high speed pan mixers and batching
and mixing plants. However the company is currently engaged in
servicing of old cranes and supplying spare parts for the
construction equipments. SML is currently developing a
residential unit in Ghatkopar, Mumbai and a residential complex
in Karjat. The company is also into the manufacturing of concrete
pipes and manhole systems since December 2013 and has its
manufacturing unit at Wada, Maharashtra.
SHAJAN JACOB: CRISIL Assigns B+ Rating to INR4.5MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Shajan Jacob (SJ).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 3.5 CRISIL B+/Stable
Bank Guarantee 1 CRISIL A4
Cash Credit 4.5 CRISIL B+/Stable
The ratings reflect geographical concentration in revenue and
large working capital requirement. These weaknesses are partially
offset by a moderate operating margin and sufficient revenue
visibility because of strong order book.
Key Rating Drivers & Detailed Description
Weakness
* Geographical concentration in revenue: Since entire turnover is
derived from execution of projects for Public Works Department
(PWD), Kerala, the firm remains dependent on regional impetus
on
infrastructure development.
* Working capital-intensive operations: Gross current assets
(GCAs) were 276 days as on March 31, 2017, due to large
inventory. Though GCAs are expected to improve, they will
remain
high over the medium term.
Strengths
* Moderate operating margin: Profitability has been improving
over
the three fiscals through 2017 due to high-margin orders.
Margin
is expected to be sustained, leading to higher cash accrual
over
the medium term.
* Sufficient revenue visibility: Order book of INR25 crore, to be
executed over the next 18 months, provides medium-term revenue
visibility.
Outlook: Stable
CRISIL believes SJ will benefit over the medium term from its
healthy order book and experience of proprietor. The outlook may
be revised to 'Positive' in case of higher-than-expected revenue
and profitability and better working capital management, while
maintaining healthy capital structure. The outlook may be revised
to 'Negative' if delay in completion of ongoing projects or
receipt of payment from customers puts pressure on liquidity; or
in case of larger-than-expected debt contracted to fund future
projects.
Set up as a proprietorship firm in 2005 by Mr. Jacob, SJ
constructs buildings for Kerala PWD.
For fiscal 2017, provisional profit after tax (PAT) is INR0.4
crore on total income of INR7.32 crore; PAT was INR0.52 crore on
total income of INR8.17 crore for fiscal 2016.
SHRADDHA SYNTHETICS: ICRA Reaffirms B Rating on INR4cr LT Loan
--------------------------------------------------------------
ICRA Ratings has re-affirmed the long-term rating of [ICRA]B
assigned to the INR4.00 crore fund based facilities of Shraddha
Synthetics Private Limited. ICRA has also re-affirmed the short-
term rating of [ICRA]A4 assigned to the INR6.50 crore fund based
and INR04.10 crore non-fund based facilities of SSPL. The outlook
assigned on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term Fund
Based 4.00 [ICRA]B(Stable); Re-affirmed
Short-Term Fund
Based 6.50 [ICRA]A4; Re-affirmed
Short-Term Non
Fund Based 4.10 [ICRA]A4; Re-affirmed
Rationale
The rating action is based on best available information. As part
of its process and in accordance with its rating agreement with
Shraddha Synthetics Private Limited, ICRA has been trying to seek
information from the company to undertake a surveillance of
ratings; but despite multiple requests, the company's management
has remained non-cooperative. In the absence of the requisite
information, ICRA's Rating Committee has taken a rating view
based on the best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA]B(Stable)/[ICRA]A4
ISSUER NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Long experience of the management in the textile business
* Diversified product portfolio
* Support from the government in the form of Technological
Up-gradation Fund Scheme (TUFS) and other export incentives
Credit weaknesses
* Small scale of operations
* Highly fragmented business characterized by intense
competition from a large number of players in the domestic
as well as international market, leading to thin operating
profit margin
* Vulnerability of margins to foreign exchange fluctuations,
however forward contracts mitigate the risk to an extent
* Vulnerability of profitability to adverse movements in yarn
and fabric prices which may not be passed on to the customers
adequately
Description of key rating drivers:
In case of manufacturing of grey fabric, cotton and polyester
yarns are the major raw materials for the company which SSPL
procures entirely from the domestic market. As far as fabrics are
concerned, the company procures various fabrics from vendors pan
India. The procurement of fabric and yarns is majorly order
backed. Hence, the exposure to fluctuations in raw material
prices is limited.
The garment manufacturing business is a relatively low value
additive and labour intensive business, characterised by a highly
fragmented industry structure. Competitive pressures remain high,
since the company faces competition both from domestic as well as
overseas suppliers from Indonesia, Bangladesh and China owing to
the availability of cheap labour in these markets. However, the
Government of India, in an effort to boost textile exports from
India has launched various schemes such as the duty drawback
scheme, the interest equalization scheme and merchandise exports
from India scheme. These lend significant support to the
profitability of the company.
Shraddha Synthetics Private Limited was initially established as
a proprietorship concern by Mr. Sushil Kumar Beswala in 1987. The
firm was reconstituted as private limited company and renamed as
Shraddha Synthetics Private Limited in 1997. The company is in
the business of manufacturing of grey fabric and readymade
garments with major focus on ladies tops, shirts jeans and
blouses. Manufacturing of ladies readymade garments like tops,
shirts and blouses is outsourced entirely to job workers in the
domestic market whereas the manufacturing of grey fabric takes
place at its manufacturing facility in Bhiwandi, Maharashtra.
SIRI BUILDERS: CRISIL Assigns B+ Rating to INR11MM LT Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facility of Siri Builders and Developers (SBD).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 11 CRISIL B+/Stable
The rating reflects firm's exposure to implementation, funding
and offtake risks for the ongoing project, and susceptibility to
risks and cyclicality inherent in the Indian real estate
industry. These weaknesses are partially offset by the extensive
experience of partners in the real estate business.
Key Rating Drivers & Detailed Description
Weaknesses
* Exposure to implementation, funding and offtake risks related
to upcoming projects: SBD is exposed to implementation-related
risks associated with its ongoing project. Although the partners
have completed several projects in the past, SBD's current
project, Siri Green Jewel, is in early stages of construction.
Furthermore, project completion is highly dependent on customer
advances, and any slowdown in customer advances caused by
regional or project specific factors can severely impact the
project's timely execution.
* Susceptibility to risks and cyclicality inherent in Indian real
estate industry: The real estate sector in India is cyclical, and
marked by volatile prices, opaque transactions, and a highly
fragmented market structure because of the presence of several
regional players. Further, the multiplicity of property laws and
non-standardised regulations across states are likely to affect
tenure of project implementation. CRISIL believes that any
macroeconomic change such as high interest costs and weak
economic sentiments may impact bookings for players such as SBD
over the medium term.
Strength
* Partners' extensive experience: The partners have been in the
business of residential real estate for over two decades and have
constructed various ventures in Andhra Pradesh and have
constructed over 20 ventures, with total area of over 3 lakh
square feet.
Outlook: Stable
CRISIL believes SBD will benefit over the medium term from its
promoters' extensive experience in the real estate business. The
outlook may be revised to 'Positive' if healthy bookings of units
in ongoing project, and timely receipt of customer advances lead
to higher-than-expected cash inflows and in turn, improved
liquidity. The outlook may be revised to 'Negative' if delays in
receipt of customer advances, time or cost overruns in ongoing
projects, or increase in funding requirement due to other large
projects being undertaken simultaneously, weaken liquidity.
Set up in 2016, SBD, a Vijayawada (Andhra Pradesh)-based
partnership between Mr Venkata Ramana Rao and Mr Santaram Koneru,
undertakes development of residential real estate in Guntur,
Andhra Pradesh. The firm is constructing a residential real
estate project, Siri Green Jewel, in Guntur.
SOMNATH COLD: CRISIL Reaffirms B+ Rating on INR8.50MM Loan
----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Somnath Cold Storage Private Limited
(SCPL; part of the Somnath group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .44 CRISIL A4 (Reaffirmed)
Cash Credit 8.50 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 2 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .13 CRISIL B+/Stable (Reaffirmed)
Working Capital Loan 1.79 CRISIL B+/Stable (Reaffirmed)
The rating reflects the Group's below-average financial risk
profile because of small net worth and exposure to risks related
to the highly regulated and fragmented nature of the West Bengal
cold storage industry. These rating weaknesses are partially
offset by the extensive experience of the company's promoters in
the cold storage industry.
Analytical Approach
CRISIL has combined the business and financial risk profiles of
SCPL, Unit Chinsurah Cold Storage - Bansidhar Agarwalla and Co
Pvt Ltd (CCS); Shree Hazarilal Cold Storage Pvt Ltd (SHCSPL), and
Himghar Udyog Pvt Ltd (HUPL). This is because these companies,
together referred to as the Somnath group, have common promoters
and management, and financial fungibility. Also, CRISIL has
treated unsecured loans, received from the promoters and their
relatives, as neither debt nor equity as these loans will remain
in the business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Susceptible to regulatory changes, and intense competition in
the West Bengal cold-storage industry: The regional potato cold
storage industry is regulated by the West Bengal Cold Storage
Association. Fixed rentals limit the company's ability to
generate profit, based on strengths and geographical
advantages.
Furthermore, intense competition restricts the pricing power of
players, who are forced to offer discounts to ensure healthy
utilisation of their storage capacity.
* Small networth: Networth, estimated at INR5.3 crore as on March
31, 2017, remains constrained by minimal accretion to reserves,
and limits financial flexibility of the group. Networth is
unlikely to improve significantly in the medium term, in the
absence of any planned equity infusion.
Strengths
* Extensive experience of the promoters: The four decade-long
experience of the promoters in the cold storage industry, and
their longstanding association with farmers and traders, ensure
healthy utilisation of storage capacity for potatoes, and will
continue to support the business risk profile.
Outlook: Stable
CRISIL believes the Somnath group will continue to benefit from
the extensive experience of its promoters. The outlook may be
revised to 'Positive' if substantial cash accrual or infusion of
capital by promoters, strengthens the capital structure and
liquidity. The outlook may be revised to 'Negative' if any delay
in repayments of loans/advances by farmers, considerably low cash
accrual, or significant, debt-funded capital expenditure, weakens
liquidity.
The Somnath Group is promoted by the Kolkata-based Agarwal
family, which has been engaged in providing cold storage
facilities to potato farmers and traders, since 1963. The group
comprises four companies, SCPL, CCS, HUPL and SHCSPL. CCS
(incorporated in 1963), SCPL (1984), HUPL (1986), and SHCSPL,
(2003), have their cold storage facilities at Chinsurah, Burdwan,
Bankura and Dhupguri, respectively (all in West Bengal).
On a consolidated basis, the group has reported profit after tax
(PAT) of INR5 lakhs on operating income of INR14.21 crores in
fiscal 2016, against net losses of INR4 lakhs on operating income
of INR11.67 crores in the previous fiscal.
SONHIRA SAHAKARI: ICRA Revises Rating on INR75cr Loan to B
----------------------------------------------------------
ICRA Ratings has revised the long term rating for the INR75 crore
bank lines of Sonhira Sahakari Sakhar Karkhana Limited to [ICRA]
B from [ICRA]B+. The outlook on the long term is stable. ICRA has
also reaffirmed the short term rating for INR200 crore bank lines
at [ICRA]A4.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Loan 75.00 Revised to [ICRA]B/Stable
from [ICRA]B+
Short Term Loan 200.00 Reaffirmed at [ICRA]A4
The rating action is based on best available information. As part
of its process and in accordance with its rating agreement with
SSSKL, ICRA has been trying to seek information from the company
so as to undertake a surveillance of the ratings, but despite
repeated requests by ICRA, the company's management has remained
non-cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 01, 2016, the
company's rating is now denoted as: "[ICRA]B/Stable/A4
(pronounced as ICRA B / Stable / A four) ISSUER NOT COOPERATING".
The lenders, investors and other market participants may exercise
appropriate caution while using this rating, given that it is
based on limited or no updated information on the company's
performance since the time it was last rated.
Incorporated in 2000, Sonhira Sahakari Sakhar Karkhana Limited
(SSKL) is involved in the manufacturing of sugar and its allied
products. The company operates a sugar mill of 5000 TCD (tonnes
crushed per day) installed capacity which is forward integrated
with distillery unit of 30 KLPD (kilo litres per day) and co-
generation unit of 22 MW (mega watt). The manufacturing
facilities of the company are located at Mohanrao Kadamnagar in
Sangli district of Maharashtra.
SRI PARAMESWARA: CRISIL Reaffirms D Rating on INR19MM Cash Loan
---------------------------------------------------------------
CRISIL Ratings has been consistently following up with M/s. Sri
Parameswara Poultry Farm Private Limited (SPPL) for obtaining
information through letters and emails dated February 06, 2017
and March 22, 2017, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 19 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Long Term Loan 4.75 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Short Term Loan 3.8 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of M/s. Sri Parameswara Poultry
Farm Private Limited. This restricts CRISIL's ability to take a
forward looking view on the credit quality of the entity. CRISIL
believes that the information available for M/s. Sri Parameswara
Poultry Farm Private Limited is consistent with 'Scenario 1'
outlined in the 'Framework for Assessing Consistency of
Information with CRISIL B rating category or lower. Based on the
last available information, CRISIL has reaffirmed the rating at
'CRISIL D/CRISIL D'.
SPPL was set up in 2010 by Mr. B Siva Babu and his family
members. The company is engaged in the production of commercial
eggs. It is proposing to undertake a capital expenditure of
INR700 million towards expanding its capacity; 80 per cent would
be funded by debt. It is based in Shadnagar (Telangana).
SRS HEALTHCARE: ICRA Reaffirms 'D' Rating on INR115cr Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term and short-term ratings
of [ICRA]D for the INR115.00-crore proposed bank facilities of
SRS Healthcare and Research Centre Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/Short-
Term-unallocated 115.00 [ICRA]D/[ICRA]D; Reaffirmed
Rationale
The rating action takes into account the continued delays in debt
servicing. As part of its process and in accordance with its
rating agreement with SRS Healthcare, ICRA had sent repeated
reminders to the company for payment of surveillance fee that
became overdue; however despite multiple requests; the company's
management has remained non-cooperative. ICRA's Rating Committee
has taken a rating view based on best available information3. In
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating is now denoted as: "[ICRA]
D ISSUER NOT COOPERATING". The lenders, investors and other
market participants may exercise appropriate caution while using
this rating, given that it is based on limited or no updated
information on the company's performance.
Incorporated in May 2013, SRS Healthcare is a part of Faridabad-
based SRS Group that is present in various sectors, such as
jewellery, real estate, multiplexes and e-commerce.
Approximately, 85% stake in SRS Healthcare is owned by BTL
Holding Company Limited, which is the holding company of SRS
Limited.
SRS Healthcare was set up with the objective of venturing into
hospitals business. For this purpose, the Company entered into an
operations and management agreement (OMA) with a charitable trust
-- Bharadwaj Welfare Trust (BWT) -- for a hospital in Sector 16A
Faridabad (Haryana). Thereafter, it commenced a major renovation
of the hospital while also expanding its bed capacity to 285 beds
from 210 beds earlier. The renovation project has, however, been
stalled given the funding constraints.
SRS LIMITED: ICRA Reaffirms 'D' Rating on INR360cr LT Loan
----------------------------------------------------------
ICRA Ratings has reaffirmed the long-term and short-term ratings
of [ICRA]D for the INR835.00-crore bank facilities of SRS Limited
(SRS). ICRA has also reaffirmed the medium-term rating of MD for
the INR225.00-crore bank facilities of SRS.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term fund-
based bank
facilities 360.00 [ICRA]D; Reaffirmed
Short-term non-
fund based bank
facilities 238.00 [ICRA]D; Reaffirmed
Long-term/short-
Term-fund-based/
non-fund based
bank facilities 237.00 [ICRA]D; Reaffirmed
Medium-term fixed
deposit programme 225.00 MD; Reaffirmed
Rationale
The rating action takes into account continued delays in debt
servicing due to stretched liquidity profile resulting from
delays in realisation of receivables. As part of its process and
in accordance with its rating agreement with SRS, ICRA had sent
repeated reminders to the company for payment of surveillance fee
that became overdue; however despite multiple requests; the
company's management has remained non-cooperative. ICRA's Rating
Committee has taken a rating view based on best available
information3. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA] D ISSUER NOT
COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance.
Key rating drivers
Credit weaknesses
* Irregularities in debt servicing due to stretched liquidity
profile resulting from delays in realisation of receivables
* Unsustainable debt level, particularly considering
declining scale of operations amid pressures on liquidity
* Vulnerability of profitability to fluctuations in gold
Prices
* Exposure to regulatory changes as witnessed in the past
(for instance, transitory restriction on availability of
gold for domestic sales)
Description of key rating drivers:
While SRS has presence across diverse businesses such as
jewellery, cinemas, food and beverages, and retail, jewellery
segment used to account for more than 90% of company's sales and
profits till FY2016.
During Q4 FY2016, the company witnessed significant deterioration
in its receivables position, from overseas customers as well as
domestic customers which were affected due to strikes by
jewellers. The impact was severe considering high customer
concentration in the company's jewellery operations, with
sizeable repeat sales to few wholesale customers in Delhi
National Capital Region (NCR) as well as in Middle-Eastern
countries.
The delay in realisation of debtors and corresponding
deterioration in ageing profile adversely impacted the company's
liquidity profile and debt servicing ability, in turn affecting
its ability to sustain operations. Consequently, the company
reported a 72% decline in its operating income to ~Rs. 876 crore
in 9M FY2017 from INR3221 crore in 9M FY2016 (with share of
jewellery business declining to ~71% in 9M FY2017) making the
debt levels unsustainable.
In ICRA's view, the company's ability to ramp up its scale of
operations will be crucial for its debt-servicing ability.
Recovery in scale of operations in-turn remains dependent upon
improvement in liquidity through infusion of long-term funds and
collection of overdue receivables. Further, company's ability to
manage risks associated with volatilities in gold prices as well
as regulatory changes will remain crucial for its credit profile.
Analytical approach: For arriving at the rating, ICRA has applied
its policy for default recognition, which is applicable when a
rated entity fails to meet its debt servicing obligations in a
timely manner.
SRS was incorporated as SRS Commercial Company Limited in August
2000. It was renamed to SRS Limited in July 2009. The company
manufactures as well as undertakes retail/ wholesale sale of
jewellery, besides operating a chain of modern format retail
stores and a chain of cinemas.
TRANSPORT SOLUTIONS: CRISIL Reaffirms D Rating on INR20MM Loan
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Transport
Solutions India Private Limited (TSIPL; part of the TSI group)
for obtaining information through letters and emails dated
January 19, 2017, and February 9, 2017, among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 20 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term
Bank Loan Facility 5 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Transport Solutions India
Private Limited. This restricts CRISIL's ability to take a
forward looking view on the credit quality of the entity. CRISIL
believes that the information available for Transport Solutions
India Private Limitedis consistent with 'Scenario 1' outlined in
the 'Framework for Assessing Consistency of Information with
CRISIL B rating category or Lower'. Based on the last available
information, CRISIL has reaffirmed the rating at 'CRISIL D'.
For arriving at the rating, CRISIL has combined the business and
financial risk profiles of HLM India Pvt Ltd (HIPL), Lohr India
Automotive Pvt Ltd (LIAPL), and TSIPL. This is because the three
companies, together referred to as the TSI group, are in similar
lines of business and have significant intercompany transactions.
Also, TSIPL has extended corporate guarantee for bank loan
facilities of LIAPL and HIPL.
The TSI group was established in 2006 and manufactures carriers
used in logistic services. It manufactures tippers and trailers
under TSIPL, car and truck carriers under LIAPL, and refrigerated
carriers under HIPL. Its promoters have industry experience of
over four decades.
TRT BUILDERS: ICRA Reaffirms C+ Rating on INR6.50cr Cash Loan
-------------------------------------------------------------
ICRA Ratings has reaffirmed the long-term rating of [ICRA]C+ to
the INR6.50-crore cash credit of TRT Builders and Constructions
(India) Private Limited (TRT Builders). ICRA has also reaffirmed
the short-term rating of [ICRA]A4 to the INR4.00-crore non-fund
based limits of the company.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Cash
Credit 6.50 [ICRA]C+ Reaffirmed
Non-fund Based 4.00 [ICRA]A4 Reaffirmed
The rating action is based on the best available information -
FY2015 audited numbers and other information. As part of its
process and in accordance with its rating agreement with TRT
Builders, ICRA has been seeking information from the company so
as to assess the ratings. However, the company's management has
remained non-cooperative despite repeated requests by ICRA. In
the absence of requisite information, ICRA's Rating Committee has
taken a rating view based on the best available information. In
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, the company's rating is now denoted as
"[ICRA]C+/[ICRA]A4 ISSUER NOT COOPERATING". The lenders,
investors and other market participants may exercise appropriate
caution while using this rating, given that it is based on
limited or no updated information on the company's performance
since the time it was last rated.
TRT Builders and Constructions (India) Private Limited was
incorporated in the year 2011 as a private limited company
promoted by Mr. Sundareshan, Mr Nizamudeen and Mr Robin P Alex.
The company is prequalified to undertake Public Works projects of
up to INR25 crore and has undertaken six projects till date of
which four are completed and others are in different stages of
completion. The day to day activities of the company are managed
by Mr. Sundareshan who has more than 35 years of experience in
the construction industry. All three promoters of the firm are
registered class A contractors in Kerala with more than two
decades of experience in the construction industry each under
their personal capacities.
Mr. Sundareshan, Mr. Nizamudeen and Mr Robin P Alex own under
their personal capacities firms M/s Trio Builders, M/s Thoppil
Builders and M/s Sreyas Builders respectively with all three
firms operating in the construction segment in different regions
of Kerala.
VIVEK ENTERPRISE: ICRA Assigns B- Rating to INR10cr Cash Loan
-------------------------------------------------------------
ICRA Ratings has assigned the long-term rating of [ICRA]B- to the
INR11.50 crore long-term fund based facilities of Vivek
Enterprise (VE). The outlook on the long-term rating is 'Stable'.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 10.00 [ICRA]B- (stable); Assigned
Term Loan 1.15 [ICRA]B- (stable); Assigned
Unallocated limits 0.35 [ICRA]B- (stable); Assigned
Rationale
The assigned rating is constrained by the firm's weak financial
profile characterised by thin profitability, adverse capital
structure and weak coverage indicators. The rating further takes
into account the high competitive intensity in the agro commodity
business, resulting from low entry barriers and seasonality
associated with crop harvest. ICRA also notes that as VE is a
proprietorship firm, any significant withdrawals from the capital
account by the proprietor could adversely affect its net-worth,
and thereby its capital structure. The rating, however,
favourably considers the extensive experience of the promoter in
the agro commodities industry. ICRA notes VE's favourable
location in proximity to raw material sources and steady increase
in operating income over the past three fiscals.
Key rating drivers
Credit strengths
* Extensive experience of the proprietor in the agro commodities
Sector
* Locational advantage from proximity to raw material sources
* Steady increase in operating income over past three fiscals
Credit weaknesses
* Weak financial profile characterised by thin profit margins,
adverse capital structure and weak coverage indicators
* Operations depend upon seasonality of various agro products
as well as the crop harvest
* Low entry barriers leading to intense competition and
limited pricing flexibility in agro commodities business
* Proprietorship nature of firm exposes it to substantial
withdrawal from capital account that could impact the net-
worth and thereby the capital structure
Description of key rating drivers:
VE is engaged in processing and trading of agro commodities for
more than a decade wherein trading remains major business
operations with limited exposure to groundnut processing. In
current fiscal, the firm is undertaking a capital expenditure
(capex) of INR1.58 crore for setting up groundnut processing
machinery at its existing premise. The installation of machinery
is completed and the commercial production is expected to start
from July 2017. VE's operating income has steadily increased from
INR15.30 crore in FY2014 to INR80.69 crore in FY2017 mainly due
to increased traded volumes. Higher working capital requirements
to fund the increased scale of operations coupled with small net-
worth base has resulted into adverse capital structure as
reflected by gearing at 12.19 times as on March 31, 2017. Low
profitability coupled with high debt has resulted into weak
coverage indicators. Commoditised nature of the business, intense
competition and contingency associated with crop harvest has
resulted into thin operation margins in the range of ~0.50% to
1.19% during the past six fiscals.
Going forward, the firm's ability to improve its profit margins
while maintaining its scale of operations and improve the capital
structure would remain key rating sensitivities. Furthermore,
timely completion and stabilisation of new groundnut capacities
to derive adequate cash flows for timely repayment of debt
obligations will remain important from credit perspective.
Established in 2005 as a proprietorship concern, Vivek Enterprise
is involved in the processing and trading of agro-commodities
such as grains, oil seeds and spices. VE's processing facility is
located at Junagadh in Gujarat and the firm is promoted by Mr.
Jignesh Desai, who has more than a decade of experience in the
agro commodity sector.
=========
J A P A N
=========
TOSHIBA CORP: In Talks with Western Digital, Foxconn Over Sale
--------------------------------------------------------------
The Japan Times reports that Toshiba Corp. told its creditor
banks it is in talks with Western Digital Corp. and Taiwan's
Foxconn over the $18 billion sale of its prized chip unit in
addition to its preferred bidder, banking sources familiar with
the matter said on July 11.
According to the report, the crisis-wracked conglomerate later
confirmed it was in talks with other suitors as it had not been
able to reach an agreement by its self-imposed deadline of June
28. It did not name the suitors, the report says.
Toshiba's preferred bidder group includes the state-backed fund
Innovation Network Corp. of Japan, the Development Bank of Japan,
U.S. private equity firm Bain Capital and South Korean chipmaker
SK Hynix Inc, the report discloses.
But talks have struggled to progress due to what sources say are
proposals by SK Hynix that its financing be done via convertible
bonds - a step that would provide it with a path toward an equity
interest in the world's No. 2 NAND chip maker, The Japan Times
says.
According to the report, Toshiba is keen for its South Korean
rival to have no equity or management influence in the chip unit
- a stance it has taken to satisfy a government that wants the
business to remain under domestic control and for key technology
to be kept out of the hands of foreign rivals.
The banking sources on July 11 declined to be identified as they
were not authorized to speak on the matter, the report notes.
About Toshiba
Toshiba Corporation (TYO:6502) -- http://www.toshiba.co.jp/-- is
a Japan-based manufacturer involved in five business segments.
The Digital Products segment offers cellular phones, hard disc
devices, optical disc devices, liquid crystal televisions, camera
systems, digital versatile disc (DVD) players and recorders,
personal computers (PCs) and business phones, among others. The
Electronic Device segment provides general logic integrated
circuits (ICs), optical semiconductors, power devices, large-
scale integrated (LSI) circuits for image information systems and
liquid crystal displays (LCDs), among others. The Social
Infrastructure segment offers various generators, power
distribution systems, water and sewer systems, transportation
systems and station automation systems, among others. The Home
Appliance segment offers refrigerators, drying machines, washing
machines, cooking utensils, cleaners and lighting equipment. The
Others segment leases and sells real estate.
As reported in the Troubled Company Reporter-Asia Pacific on
June 19, 2017, S&P Global Ratings said it has kept its 'CCC-'
long-term and 'C' short-term ratings on Japan-based capital goods
and diversified electronics company Toshiba Corp. on CreditWatch
with negative implications. The long- and short-term ratings on
Toshiba have remained on CreditWatch with negative implications
since December 2016, when S&P also lowered the long-term ratings
because of a likelihood that the company might recognize massive
losses in its U.S. nuclear power business. S&P kept them on
CreditWatch negative when it lowered the long- and short-term
ratings in January 2017 and when S&P lowered the long-term
ratings in March 2017.
The ratings remain on CreditWatch, reflecting S&P's view that
creditor banks' support for Toshiba together with the company's
liquidity levels warrant continued close monitoring because its
plan to sell its memory business has yet to materialize and
additional losses or financial burdens might still arise in
connection with its U.S. nuclear power business. S&P continues
to hold the view that without unanticipated, significantly
favorable changes in Toshiba's circumstances, the company might
become unable to fulfill its financial obligations in a timely
manner or might undertake a debt restructuring S&P classifies as
distressed in the next six months.
===============
M A L A Y S I A
===============
1MALAYSIA DEVELOPMENT: Singapore Banker Admits Money Laundering
---------------------------------------------------------------
Andrea Tan and Chanyaporn Chanjaroen at Bloomberg News report
that Yeo Jiawei, a former banker serving the longest jail term in
Singapore's probes linked to 1Malaysia Development Bhd., admitted
to charges including money laundering.
Yeo, who also pleaded guilty July 12 to cheating his former
employer, agreed to help with Singapore's money-laundering
investigation, which prosecutors described as the largest in the
country's history, Bloomberg says. He was sentenced to 54 months
in jail by a Singapore state court. The former BSI SA wealth
planner was handed a 30-month term in December on charges of
trying to tamper with witnesses in the probe.
According to Bloomberg, Principal District Judge Ong Hian Sun
said on July 12 that the courts must take an "uncompromising
stance"to safeguard the integrity of Singapore's financial
system.
Yeo's admission of guilt came after the Monetary Authority of
Singapore wrapped up a two-year probe into flows related to the
Malaysian investment fund, according to Bloomberg. Prosecutors
named him as a central figure linked to Malaysian financier Low
Taek Jho, who was identified by Singapore police as a "key person
of interest"in their probe. Low has also been characterized by
U.S. investigators as the controller of a plan to drain billions
from 1MDB, Bloomberg relates.
Bloomberg says the Malaysian fund, at the heart of several money
laundering and corruption probes across the globe, has
consistently denied any wrongdoing. Low has previously described
his role with 1MDB as informal consulting that didn't break any
laws.
Yeo had referred to Low as "boss" and spent at least one night at
his house, according to earlier court proceedings, Bloomberg
relays. Yeo previously said it was a misunderstanding that he
worked for Low.
Singapore has imposed a total of SGD29.1 million ($21 million) in
penalties on eight banks as part of its 1MDB probes, Bloomberg
discloses. Credit Suisse Group AG and United Overseas Bank Ltd.
were among the firms that paid penalties, while BSI and Falcon
Private Bank Ltd. were also ordered to shut their local
operations, Bloomberg notes that notes. Five people, including
Yeo, have been convicted in Singapore, the only country so far to
have criminally charged bankers.
Yeo accumulated a net worth of SGD23.9 million through "secret
profits"in the 15 months after he left BSI in June 2014,
prosecutors said in an earlier hearing, Bloomberg relays. Yeo had
said the money was earned legitimately.
Yeo's lawyer Derek Kang said July 12 that his client came from a
humble background and had "no chance"of working again in the
finance industry. Yeo will give up the profits he made from the
offenses, Kang said, Bloomberg relays.
About 1MDB
Kuala Lumpur-based 1Malaysia Development Bhd (1MDB) operates as a
government agency. The Company offers financial assistance,
analysis, and advice through investors, corporations, and
consultants to startups and growth companies. 1MDB focuses on
investments with strategic value and high multiplier effects on
the economy, particularly in energy, real estate, tourism, and
agribusiness.
As reported in the Troubled Company Reporter-Asia Pacific on
July 23, 2015, Reuters said Singapore Police Force has frozen two
bank accounts to help with an investigation in to Malaysia's
troubled state-owned investment fund 1Malaysia Development Bhd
(1MDB), which is being probed by authorities in Malaysia for
financial mismanagement and graft. Reuters said the freezing of
the Singapore bank accounts follows a similar move in Malaysia
where a task force investigating 1MDB said earlier in July that
it had frozen half a dozen bank accounts following a media report
that nearly $700 million had been transferred to an account of
Malaysia's Prime Minister Najib Razak.
The Wall Street Journal reported on July 3, 2015, that
investigators looking into 1MDB had traced close to US$700
million of deposits moving through Falcon Bank in Singapore into
personal bank accounts in Malaysia belonging to Najib.
The TCR-AP, citing Bloomberg News, reported on Nov. 26, 2015,
that 1MDB agreed to sell its power assets to China General
Nuclear Power Corp. for MYR9.83 billion ($2.3 billion) as the
state investment company moved one step closer to winding down
operations after its mounting debt raised investor concern.
Bloomberg related that the company faced cash-flow problems after
a planned initial public offering of Edra faced delays amid
unfavorable market conditions, President Arul Kanda said Oct. 31,
2015. The listing plan was later canceled as the company opted
for a sale of the assets, Bloomberg noted.
The TCR-AP, citing The Wall Street Journal, reported on April 27,
2016, that the company defaulted on a $1.75 billion bond issue,
triggering cross defaults on two other Islamic notes totaling
MYR7.4 billion ($1.9 billion).
Asian Nikkei Review reported in June 2016 that Malaysia has
replaced the board of 1Malaysia Development Berhad with treasury
officials, paving the way for the dissolution of the troubled
state investment fund.
===============
P A K I S T A N
===============
PAKISTAN: Moody's Affirms B3 Issuer Rating; Keeps Outlook Stable
----------------------------------------------------------------
Moody's Investors Service has affirmed the Government of
Pakistan's B3 issuer and senior unsecured ratings, and maintained
a stable outlook.
The decision to affirm the rating balances credit-supportive and
-constraining factors.
Pakistan's medium-term growth outlook is strong, supported by the
China-Pakistan Economic Corridor (CPEC) project to address
critical infrastructure constraints, and the continuing effects
of macrostability-enhancing reforms started under the
International Monetary Fund (IMF)'s Extended Fund Facility (EFF)
program in 2013-16.
However, the government's debt burden is high and fiscal deficits
remain relatively wide, driven by a narrow revenue base that also
restricts development spending. In addition, foreign exchange
reserve adequacy, albeit stronger than a few years ago, would
still be vulnerable to any significant increase in imports.
Domestic politics and geopolitical risk also continue to
represent a significant constraint on the rating.
The decision to maintain the stable outlook on Pakistan's B3
rating reflects broadly balanced risks related to these two sets
of factors
Concurrently, Moody's has affirmed the B3 foreign currency senior
unsecured ratings for The Second Pakistan Int'l Sukuk Co. Ltd and
The Third Pakistan International Sukuk Co Ltd.
Pakistan's Ba3 local currency bond and deposit ceilings remain
unchanged. The B2 foreign currency bond ceiling and the Caa1
foreign currency deposit ceiling are also unchanged. These
ceilings act as a cap on the ratings that can be assigned to the
obligations of other entities domiciled in the country.
RATINGS RATIONALE
GREATER MACROECONOMIC STABILITY AND ROBUST GROWTH DYNAMICS
SUPPORT ECONOMIC STRENGTH
The outlook for growth has strengthened as a result of increased
macroeconomic stability due to reforms started during the three-
year IMF EFF program and following the launch of the CPEC project
in 2015.
In the fiscal year ended June 2016 (FY2016), real GDP growth
reached 4.5%, up from 4.1% in both FY2015 and FY2014. Moody's
expects such growth rates to be maintained or exceeded in the
next few years. By contrast, the median rate of growth for B-
rated sovereigns was just 2.7% in 2016.
From a macroeconomic stability perspective, the IMF program
succeeded in fostering fiscal deficit reduction, more rigorous
inflation management and the rebuilding of foreign exchange
reserves. While further progress will be challenging, as fiscal
metrics remain weak and reserve adequacy is relatively fragile,
Moody's baseline assumption is that the steps that the
authorities have taken in the last 3-4 years will not be
reversed. Continued government commitment to reform
implementation will help to reinforce fiscal and monetary
discipline, preserving recent macroeconomic stability gains.
Moody's expects that real GDP growth will rise towards 6% over
the next few years, as the economic benefits of the CPEC
gradually materialize and past policy reforms continue to support
economic potential. The CPEC will increase Pakistan's
competitiveness and lift potential GDP growth by relieving
supply-side constraints, particularly in power and transport
infrastructure, and by catalyzing private sector investment.
However, security related issues and a weak track record of
public project implementation suggest the pace of project
execution will be relatively slow. Therefore, while the CPEC will
support Pakistan's credit profile, Moody's expects the economic
impact to materialize more slowly than the government envisions,
resulting in real GDP growth closer to 5.5% over the next two
years, compared to government forecasts for 6.0% growth in
FY2018, rising to 7.0% by FY2020.
VERY NARROW REVENUE BASE AND HIGH DEBT BURDEN RESTRICT FISCAL
STRENGTH
Despite relatively robust GDP growth, weak government revenue
generation poses fiscal constraints. It limits growth potential
by curbing the government's capacity to spend on physical and
social infrastructure development.
General government revenues were equivalent to only 15.5% of GDP
in FY2016, lower than most of Pakistan's rating peers. This
reflects the government's narrow tax base, linked to very low
per-capita incomes, along with weak tax compliance and
administration, despite some improvements related to IMF program
reforms.
At 67.6% of GDP in FY2016, the government's debt burden is
materially higher than the B-rated median of 52.6%. Moody's
expects the debt burden to remain broadly stable over the next
two years.
Further fiscal consolidation, after the deficit narrowed to 4.4%
of GDP in FY2016 from 8.1% of GDP in FY2013, will be challenging.
The government had set fiscal deficit targets of 3.8% of GDP for
FY2017 and 3.5% for FY2018. However, despite relatively
disciplined spending, revenue collection has fallen short of the
target in the first half of this fiscal year. As a result, in
June 2017, the government revised its FY2017 and FY2018 deficit
targets to 4.2% and 4.1% of GDP, respectively.
Moody's expects the fiscal deficit to widen to about 4.7% of GDP
in FY2017 and 5.0% in FY2018 despite the government's intention
to advance fiscal consolidation. The government's revenue
projections for FY2018 are based on GDP growth projections that
Moody's considers to be optimistic. Meanwhile, development
spending -- particularly related to CPEC power infrastructure
investments -- combined with political pressure ahead of the 2018
general election to maintain power subsidies, which are currently
budgeted for about PKR103 billion, will weigh on the public
finances.
Large fiscal deficits and a reliance on short-term debt have also
contributed to very high gross borrowing requirements. At about
32.0% of GDP, Pakistan's projected gross borrowing need for 2017
is one of the highest among rated sovereigns. Meanwhile, with
nearly 31% of outstanding government debt in foreign currency in
FY2016, Pakistan is exposed to marked changes in the cost of
refinancing debt, should the local currency weaken abruptly.
In addition, debt affordability metrics, which include interest
payments as a percentage of revenues and GDP, are very weak for
Pakistan relative to its peer group. At around 28% of revenues in
2016, Pakistan spends nearly three times as much revenue on
interest payments as the median of B-rated sovereigns at about
10%.
FOREIGN EXCHANGE RESERVE ADEQUACY REMAINS FRAGILE
Although foreign exchange reserve buffers have increased nearly
fourfold since the onset of the IMF program and cover more than
the full amount of external debt payments, they are still low in
relation to current account payments and have been declining
since their recent peak around September 2016. As of April 2017,
import coverage had fallen from a high of about five months in
mid-2016 to below four months. This is only slightly above the
IMF's three-month minimum adequacy level.
As a net oil importer, Pakistan has benefited from lower global
oil prices, but the uptick in prices last year, combined with an
increase in imported CPEC capital goods, widened the trade
deficit. In addition, worker remittance inflows from abroad,
which amount to nearly 7.0% of GDP, have declined. As a result,
the current account deficit has widened and external pressures
are building. Moody's expects the current account deficit to grow
to about 2.7% of GDP in FY2017 and 2.9% in FY2018 from 1.2% in
FY2016.
In response to mounting external pressure, in March 2017, the
central bank introduced a 100% cash margin requirement on certain
imported consumer goods. Meanwhile, on July 5, 2017, after nearly
two years of stability, the Pakistani rupee depreciated by about
3% following foreign exchange market intervention by the central
bank. The intervention responded to mounting external pressures
and deterioration of export competitiveness, following persistent
real effective exchange rate appreciation. The Pakistani rupee
has retraced much of its recent depreciation.
Greater exchange rate flexibility would contribute to a more
durable accumulation of foreign exchange reserves over time,
which would help to strengthen external buffers and export
competitiveness. The resulting reduction in external
vulnerabilities would support Pakistan's credit profile. However,
while Moody's believes this to be the central bank's medium-term
objective, Moody's expects any shift in exchange rate management
to be gradual, as the government will likely want to avoid abrupt
currency and other price movements, in particular in advance of
the 2018 general election.
RATIONALE FOR MAINTAINING THE STABLE OUTLOOK
The stable outlook represents Moody's expectations of balanced
upside and downside risks to the sovereign credit profile.
Support from multilateral and bilateral lenders has bolstered
Pakistan's foreign currency reserves and progress on economic
reforms, and there is potential for further strengthening in
growth and policy effectiveness beyond Moody's current
expectations.
Meanwhile, successful implementation of the CPEC project has the
potential to transform the Pakistani economy by removing
infrastructure bottlenecks, and stimulating both foreign and
domestic investment.
However, downside risks also exist. In particular, the economic
benefits of CPEC are still highly uncertain and power supply may
continue to constrain growth to a greater extent than Moody's
currently envisage. Moreover, the fiscal costs related to the
project and, more generally, development spending could raise
Pakistan's debt burden more rapidly and significantly than
Moody's expects. In addition, recent indications of renewed
increases in external pressure could develop into greater
external vulnerability.
Meanwhile, political event risk remains high in Pakistan, due to
recurrent terrorist attacks.
WHAT COULD CHANGE THE RATING UP
Upward triggers to the rating would stem from sustained progress
in structural reforms that would significantly reduce
infrastructure impediments and supply-side bottlenecks. This
would improve Pakistan's investment environment and eventually
aid a shift to a sustained higher growth trajectory.
A lasting strengthening in the external liquidity position or
meaningful reduction in the government deficit and debt burden
would also be credit positive.
WHAT COULD CHANGE THE RATING DOWN
Moody's would views a stalling of the government's post-IMF
program reform agenda, including revenue reforms and the
strengthening of monetary policy and central bank independence,
to be credit negative. Any material widening of the fiscal
deficit, renewed weakening of the external payments position,
loss of multilateral/bilateral financial support, or significant
escalation in political tensions would also weigh on Pakistan's
credit profile.
GDP per capita (PPP basis, US$): 5,106 (2016 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 4.5% (2016 Actual) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 3.2% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -4.4% (2016 Actual) (also known
as Fiscal Balance)
Current Account Balance/GDP: -1.2% (2016 Actual) (also known as
External Balance)
External debt/GDP: 26.5% (2016 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.
On July 10, 2017, a rating committee was called to discuss the
rating of the Pakistan, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially increased. The
issuer's fiscal or financial strength, including its debt
profile, has not materially changed. The issuer has become
increasingly susceptible to event risks. Other views raised
included: The issuer's institutional strength/ framework, have
not materially changed. The issuer's governance and/or
management, have not materially changed. The systemic risk in
which the issuer operates has not materially changed.
The principal methodology used in these ratings was Sovereign
Bond Ratings published in December 2016.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.
===============
X X X X X X X X
===============
* Moody's Asian Liquidity Stress Index Weakens to 25.6% in June
---------------------------------------------------------------
Moody's Investors Service says that its Asian Liquidity Stress
Index (Asian LSI) weakened in June, rising to 25.6% from 25.2% in
May 2017.
The Asian LSI measures the percentage of high-yield companies
with SGL-4 scores as a proportion of high-yield corporate family
ratings (CFRs) and decreases when speculative-grade liquidity
improves.
"The June figure ends six months of continuous improvement, and
the reading now remains just above the long-term average of
22.9%, highlighting that weak liquidity is still a concern for
many companies in Asia," says Brian Grieser, a Moody's Vice
President and Senior Credit Officer.
Moody's analysis is contained in its just-released monthly report
titled "Asian Liquidity Stress Index: Asian LSI increases to
25.6% in June from 25.2% in May," and is authored by Grieser.
The Moody's report points out that the liquidity stress sub-index
for North Asian high-yield companies increased to 26.2% in June
from 24.7% in May, and within this portfolio, the Chinese sub-
index rose to 27% from 25.4%.
Meanwhile, the Chinese high-yield property sub-index remained at
7.5% in June, an all-time low. The Chinese high-yield industrials
sub-index also increased to 50% from 48.4%.
The South and Southeast Asian liquidity stress sub-index also
improved to 24.4% in June from 26.1% in May, and the Indonesian
sub-index decreased to 19% from 22.7%, the lowest level since
November 2015.
Moody's further notes that the strong momentum seen in high-yield
issuance this year continued in June. Rated high-yield issuance
totaled $5.4 billion in the month, driven by China Evergrande
Group's (B2 stable) issuance of $3.8 billion of new notes.
June's total also raised year-to-date issuance to $21.6 billion,
which is near the $23.3 billion issued in 2013, the strongest
level in the past five years.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro and
Peter A. Chapman, Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***