/raid1/www/Hosts/bankrupt/TCRAP_Public/170714.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
Friday, July 14, 2017, Vol. 20, No. 139
Headlines
A U S T R A L I A
ALERTFORCE PTY: Second Creditors' Meeting Set for July 21
AUSTRADIA PTY: Myer Closes 17 Topshop Concessions
JUST THINK: First Creditors' Meeting Set for July 24
MESOBLAST LIMITED: Plans to Sell $180M American Depositary Shares
P. B. DEMOLITION: First Creditors' Meeting Set for July 21
PUSETO PTY: Second Creditors' Meeting Set for July 20
TEXSKILL LIMITED: Second Creditors' Meeting Set for July 19
C H I N A
GEELY AUTOMOBILE: Moody's Puts Ba2 Ratings on Review for Upgrade
POWERLONG REAL: Moody's Rates Proposed Sr. Unsec. USD Notes B2
POWERLONG REAL: S&P Rates New Senior Unsecured USD Notes B-
SHANDONG ENERGY: S&P Assigns BB Long-Term CCR, Outlook Stable
SUNAC CHINA: Fitch Cuts IDR to BB-; Puts Rating on Watch Negative
SUNAC CHINA: Dalian Wanda Deal No Impact on Moody's B2 CFR
SUNAC CHINA: S&P Puts B+ Long-Term CCR on CreditWatch Negative
H O N G K O N G
SWING MEDIA: Suspends Trading After Demands From Creditors
I N D I A
AMBERTEX SEKHSARIA: CRISIL Reaffirms B+ Rating on INR6.35MM Loan
APL METALS: CRISIL Cuts Rating on INR57MM Cash Loan to 'C'
ASUTI TRADING: CRISIL Cuts Rating on INR40MM Loan to 'D'
B.S. SPONGE: CRISIL Lowers Rating on INR22MM Cash Loan to B
BHANDARI AGRO: CRISIL Assigns B+ Rating to INR2.71MM Term Loan
BRIGHTSTAR HEALTHCARE: CRISIL Assigns B Rating to INR30MM Loan
CHINSURAH COLD: CRISIL Reaffirms B+ Rating on INR4MM Cash Loan
CUBE INDIA: CRISIL Assigns B+ Rating to INR13.09MM Term Loan
DAMODAR TIMBER: CRISIL Raises Rating on INR8MM Loan to B
DEVRISHI FOODS: CRISIL Assigns B+ Rating to INR3MM Cash Loan
DEWAN HOUSING: S&P Affirms Then Withdraws 'BB' ICR
DN PAPER: CRISIL Hikes Rating on INR3MM Cash Loan to B+
EVEREST KANTO: CRISIL Raises Rating on INR368.2MM Term Loan to C
EXCEED CROP: CRISIL Hikes Rating on INR4.92MM Loan to B+
GANESH STEEL: CRISIL Cuts Rating on INR7MM Cash Loan to B
GEORGE MAIJO: CRISIL Reaffirms 'B' Rating on INR25MM Cash Loan
LANCO INFRATECH: CRISIL Reaffirms 'D' Rating on INR1.6BB Loan
MARIGOT AGRO: CRISIL Assigns 'B' Rating to INR4.6MM LT Loan
MAYAR INFRA: CRISIL Reaffirms B Rating on INR115.68MM Term Loan
PRAGATI INGOTS: CRISIL Ups Rating on INR6.2MM Cash Loan to B+
QUEST INFOSYS: CRISIL Assigns B+ Rating to INR5MM Term Loan
SHREE HAZARILAL: CRISIL Reaffirms B+ Rating on INR4.71MM Loan
SHREE VIJAYASHREE: CRISIL Reaffirms B+ Rating on INR6MM Loan
SHRI BANKE: CRISIL Assigns B+ Rating to INR6.5MM Term Loan
SHRIRAM TRANSPORT: S&P Puts B Short-Term ICR on CreditWatch Dev.
SURYA FOODS: CRISIL Assigns 'B' Rating to INR7MM Loan
VRC AGRO: CRISIL Assigns B+ Rating to INR6.7MM Cash Loan
J A P A N
TAKATA CORP: Adds 2.7 Million More Vehicles to air bag recall
TOSHIBA CORP: U.S. Court Orders to Allow WD's Access to Database
TOSHIBA CORP: Landis+Gyr Unit Aims to Raise Up to $2.49BB in IPO
P H I L I P P I N E S
MIGHTY CORP: To Settle Tax Liabilities Through Asset Sale
S I N G A P O R E
FALCON ENERGY: Seeks Extension for SGD50MM Notes Due Sept. 2017
INFINIO GROUP: Auditor Raises Going Concern Doubt
MERCATOR LINES: Judicial Manager Back on Search for Investors
S O U T H K O R E A
INDUSTRIAL BANK: Fitch Rates Basel III AT1 Notes 'BB+(EXP)'
KUMHO TIRE: Employees Hold Rally to Oppose Sale to Qingdao
SHINSEGAE: To Spend KRW300BB in Loss-Making Convenience Stores
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A U S T R A L I A
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ALERTFORCE PTY: Second Creditors' Meeting Set for July 21
---------------------------------------------------------
A second meeting of creditors in the proceedings of AlertForce Pty
Ltd has been set for July 21, 2017, at 9:00 a.m., at the offices
of Woodgate & Co., Level 8, 6 - 10 O'Connell Street, in Sydney,
NSW.
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 20, 2017, at 9:00 a.m.
Richard James Rowley of Woodgate & Co was appointed as
administrator of AlertForce Pty on June 20, 2017.
AUSTRADIA PTY: Myer Closes 17 Topshop Concessions
-------------------------------------------------
Melissa Singer at The Sydney Morning Herald reports that
department store chain operator Myer Pty Ltd. has closed its 17
Topshop concessions as negotiations continue to save the
Australian arm of the UK fast-fashion business from total
collapse.
SMH says visitors to Myer stores hoping to pick up a Topshop
garment this week would have likely been met with scant signage
and zero trace of the brand on the shop floor.
At Myer's Melbourne store, signs pointing to Topshop are still in
place on the ground level and there is one signage pillar in the
basement, otherwise there is almost no evidence of the brand on
the shop floor, which has been filled with other youth brands, the
report says.
As negotiations continue to save the Australian franchise, which
entered voluntary administration in May, administrators Ferrier
Hodgson have closed a number of Topshop stores, including the
flagship on Melbourne's Chapel Street and at Chatswood in Sydney,
according to SMH.
SMH relates that Myer took a 20% stake in the Australian Topshop
franchise in 2015, four years after the business launched locally.
On July 6, the department store's website was still showing
Topshop was available in 17 of its stores nationally, the report
says.
Myer declined to comment on the future of the concessions or its
stake in the Topshop business, SMH notes.
About Topshop
Austradia Pty Ltd (trading as 'Topshop/Topman'), one of
Australia's best known fast fashion retailers, was placed into
voluntary administration on May 24.
Ferrier Hodgson partners James Stewart, Jim Sarantinos, and Ryan
Eagle were appointed voluntary administrators by the company's
board of directors.
Topshop and Topman are the foundational brands of Arcadia Group
Ltd, a British multinational fashion retailer. The separately
owned and operated Australian franchise, Topshop/Topman, opened
locally in 2011.
When it went into voluntary administration on May 25, Topshop
Australia had debts totalling $35 million, SMH discloses.
JUST THINK: First Creditors' Meeting Set for July 24
----------------------------------------------------
A first meeting of the creditors in the proceedings of Just Think
Property NSW Pty Ltd, trading as Just Think Real Estate, will be
held at the offices of Helm Advisory, Suite 4, Level 35, 50 Bridge
Street, in Sydney, NSW, on July 24, 2017, at 3:00 p.m.
Stephen Wesley Hathway of Helm Advisory was appointed as
administrator of Just Think on July 12, 2017.
MESOBLAST LIMITED: Plans to Sell $180M American Depositary Shares
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Mesoblast Limited filed with the Securities and Exchange
Commission a Form F-3 registration statement relating to the
offering of ordinary shares in the form of American Depositary
Shares, or ADSs, from time to time in one or more offerings in
such amounts, at prices and on terms to be determined at or prior
to the time of the offering, with a proposed maximum aggregate
offering price of $180,000,000.
The Company may offer the ADSs through underwriting syndicates
managed or co-managed by one or more underwriters or dealers,
through agents or directly to investors, on a continuous or
delayed basis. The supplement to this prospectus for each
offering of ADSs will describe in detail the plan of distribution
for that offering.
The ADSs are listed on the Nasdaq Global Select Market under the
symbol "MESO". The Company's ordinary shares are listed on the
Australian Securities Exchange under the symbol "MSB".
A full-text copy of the preliminary prospectus is available at:
https://is.gd/lP5TnA
About Mesoblast Ltd.
Melbourne, Australia-based Mesoblast Limited (ASX:MSB;
Nasdaq:MESO) develops cell-based medicines. The Company has
leveraged its proprietary technology platform, which is based on
specialized cells known as mesenchymal lineage adult stem cells,
to establish a broad portfolio of late-stage product candidates.
Mesoblast's allogeneic, 'off-the-shelf' cell product candidates
target advanced stages of diseases with high, unmet medical needs
including cardiovascular diseases, immune-mediated and
inflammatory disorders, orthopedic disorders, and
oncologic/hematologic conditions.
Mesoblast reported a loss before income tax of $90.82 million for
the year ended June 30, 2016, compared to a loss before income tax
of $96.24 million for the year ended June 30, 2015.
As of Dec. 31, 2016, Mesoblast had $660.9 million in total
assets, $150.4 million in total liabilities, and $510.51 million
in total equity.
PricewaterhouseCoopers, in Melbourne, Australia, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2016, citing that the Company has
suffered recurring losses from operations that raise substantial
doubt about its ability to continue as a going concern.
P. B. DEMOLITION: First Creditors' Meeting Set for July 21
----------------------------------------------------------
A first meeting of the creditors in the proceedings of
P. B. Demolition & Asbestos Removal Pty Ltd will be held at the
offices of SV Partners, Level 17, 200 Queen Street, in Melbourne,
Victoria, on July 21, 2017, at 11:00 a.m.
Michael Carrafa and Peter Gountozs of SV Partners were appointed
as administrators of P. B. Demolition on July 11, 2017.
PUSETO PTY: Second Creditors' Meeting Set for July 20
-----------------------------------------------------
A second meeting of creditors in the proceedings of Puseto Pty
Ltd, trading as Jax Spinning Wheel Tyres, has been set for
July 20, 2017, at 10:00 a.m., at the offices of BDO, Level 11,
1 Margaret St, in Sydney, NSW.
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 5:00 p.m.
Andrew Sallway of BDO was appointed as administrator of Puseto Pty
on March 30, 2017.
TEXSKILL LIMITED: Second Creditors' Meeting Set for July 19
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Texskill
Limited has been set for July 19, 2017, at 10:30 a.m., at Level
12, 460 Lonsdale Street, in Melbourne, Vic.
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 5:00 p.m.
Malcolm Kimbal Howell and Liam William Paul Bellamy of Jirsch
Sutherland were appointed as administrators of Texskill Limited on
June 14, 2017.
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C H I N A
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GEELY AUTOMOBILE: Moody's Puts Ba2 Ratings on Review for Upgrade
----------------------------------------------------------------
Moody's Investors Service has placed on review for upgrade Geely
Automobile Holdings Limited's Ba2 corporate family rating and
senior unsecured rating.
RATINGS RATIONALE
"The review reflects Geely's gain in market share, its improvement
in profitability in terms of EBITA margin net of subsidies, its
consistent low debt leverage, and its strong liquidity positions,
as evidenced by its latest business updates," says Gerwin Ho, a
Moody's Vice President and Senior Analyst.
On July 10, 2017, Geely announced that it expects that its
consolidated net profit for the six months ending June 30, 2017
will rise over 100% from RMB1.9 billion for the corresponding
period of 2016.
The expected rise in profit is mainly attributable to the
significant increase in sales revenue, a result stemming in turn
from the large rise in overall sales volumes, which grew 89% year-
on-year to 530,627 units, and the improvement in the company's
product mix during the period.
Based on an 89% year-on-year growth in units sold in the five
months between January and May 2017 - which outpaced the 4% growth
registered by China's auto industry over the same period - the
company's market share rose to 4.0% during this period from 2.7%
for all of 2016.
Moody's forecasts Geely's profitability, in terms of EBITA margin
net of subsidies, will expand from 5.8% in 2016 to trend towards
7.0% in the next 12-18 months, reflecting greater operating
leverage as the company's revenue scale grows.
During the review, Moody's will focus on: (1) Geely's plan to
maintain sales growth and to grow its market share in China's auto
market; (2) the company's plan to improve its competitiveness in
the medium and long term; and (3) the likelihood of the company
maintaining its strong financial profile in the medium to long
term.
The principal methodology used in these ratings was Automobile
Manufacturer Industry published in June 2017.
Geely Automobile Holdings Limited is one of the largest privately
owned, local brand automakers in China. It develops, makes and
sells passenger vehicles that are sold in China and overseas. Its
chairman and founder, Mr. Li Shufu, and his family held a 44.2%
stake in the company at end-of 2016. The company is incorporated
in the Cayman Islands and listed on the Hong Kong Stock Exchange.
POWERLONG REAL: Moody's Rates Proposed Sr. Unsec. USD Notes B2
--------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to Powerlong
Real Estate Holdings Limited's proposed senior unsecured USD
notes. The rating outlook is stable.
Powerlong plans to use the proceeds from the proposed notes mainly
to refinance existing debt.
RATINGS RATIONALE
"The proposed bond issuance will support Powerlong's liquidity
profile and will not materially affect its credit metrics, as it
will use the proceeds mainly to refinance existing debt," says
Anthony Lee, a Moody's Analyst.
Powerlong's B1 corporate family rating reflects its: (1) track
record of developing and selling commercial and residential
properties; (2) ability to generate non-development revenue, which
improves the stability of its debt servicing; and (3) expansion
into higher-tier cities where demand for its properties is more
favorable.
However, its credit profile is constrained by execution risk, the
high level of capital demand associated with its business
strategy, and high debt leverage, as measured by revenue/debt.
Moody's expects that Powerlong's adjusted EBIT/interest will
improve to around 3.0x over the next 12-18 months from 2.8x in
2016, and its adjusted debt/adjusted capitalization will stay at
55% over the same period, from 54% in 2016.
Moody's also expects Powerlong's rental income will register
another 25% - 30% in growth to RMB750 -- RMB800 million in the
next 12-18 months, as it will open five retail malls to reach a
total of 36 malls by end-2017.
As a result, Powerlong's adjusted rental income/interest coverage
will improve to 0.4x-0.5x in the next 12-18 months from 0.3x in
2016.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Powerlong Real Estate Holdings Limited is a Chinese developer
focused on building large-scale integrated residential and
commercial properties in China.
At end-2016, its land bank for development totaled around 10.7
million sqm in GFA under development and for future development,
as well as 2.5 million sqm of malls in operation.
The company listed on the Hong Kong Exchange in October 2009. The
founding Hoi family held an aggregate 65.46% stake in Powerlong at
end-2016.
POWERLONG REAL: S&P Rates New Senior Unsecured USD Notes B-
-----------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating and
'cnB+' long-term Greater China regional scale rating to a proposed
issue of U.S. dollar-denominated senior unsecured notes by
Powerlong Real Estate Holdings Ltd. (Powerlong: B/Positive/--;
cnBB-/--). The issue rating is one notch below the long-term
corporate credit rating on Powerlong to reflect the structural
subordination risk. Powerlong intends to use the net proceeds to
refinance existing debt and for general corporate purposes. The
issue rating is subject to our review of the final issuance
documentation.
S&P said, "The positive outlook on Powerlong reflects our view
that the company will increase its recurring rental income to
cover a substantial portion of its interest expense in 2017
following the expansion of its investment portfolio. We also
expect the company will continue to notably improve its leverage.
In our view, Powerlong will likely continue to have steady sales
growth in 2017, while profitability will remain largely stable.
For the first six months, sales increased by 20.7% to Chinese
renminbi (RMB) 9 billion. This was mainly propelled by higher
sales prices, offsetting the 5.1% decline in gross floor area."
SHANDONG ENERGY: S&P Assigns BB Long-Term CCR, Outlook Stable
-------------------------------------------------------------
S&P Global Ratings said it assigned its 'BB' long-term corporate
credit rating to Shandong Energy Group Co. Ltd. The outlook is
stable. S&P said, "We also assigned our 'BB' long-term issue
rating to the company's proposed guaranteed senior unsecured
notes. At the same time, we assigned our 'cnBBB-' long-term
Greater China regional scale rating to the company and the notes."
Shandong Energy is the largest coal miner in China's Shandong
province, and has other businesses including trading, machinery
manufacturing, chemicals production, and power generation.
S&P's ratings on the notes are subject to its review of the final
issuance documentation.
S&P said, "The ratings reflect Shandong Energy's 'b' stand-alone
credit profile (SACP) and our view of a high likelihood that the
government of Shandong province would extend timely and sufficient
extraordinary support to the company in case of financial
distress."
S&P views Shandong Energy as a government-related entity (GRE).
S&P's assessment of the likelihood of extraordinary government
support is based on following characteristics:
* A very strong link with the Shandong provincial government.
Shandong provincial government wholly owns Shandong Energy via
Shandong State-owned Asset Supervision and Administration
Commission (SASAC, shareholding 70%) and the Shandong
Province Council for Social Security Fund (30% shareholding).
Shandong SASAC appoints the company's board members and senior
management. In S&P's view, the local government has a strong
influence on the company's strategy and business plans and has
procedures in place to continuously monitor the company.
Additionally, Shandong Energy transformed into a state-owned
capital investment company in 2015, partly shouldering the
responsibility of Shandong SASAC, including the supervision of
state-owned assets and the conservation or increase in the
value of state-owned assets. S&P believes that a considerable
deterioration in the creditworthiness of Shandong Energy Group
would significantly affect the Shandong government's
reputation. It would also negatively affect other GREs
controlled by the local government to access the debt capital
market.
* An important role to the Shandong provincial government.
Shandong Energy operates as a profit-seeking entity in the
competitive coal industry. It is the third-largest coal
producer in China in 2016 and the largest one in Shandong. As
one of the first coal companies that expanded outside of
China, it plays an important role in helping the government to
secure more coal resources worldwide. Moreover, Shandong
Energy is one of the coal companies identified by the Shandong
government to be a consolidator of the fragmented coal
industry. The Shandong government controls around 20 major
state-owned enterprises (SOEs). In 2016, Shandong Energy was
the largest SOE in Shandong by revenue, the second-largest by
asset size, and the third-largest by profit. As such, S&P
views Shandong Energy's credit standing to be important for
the Shandong government. S&P believes a credit stress or
default by the company would have an important impact on the
coal sector.
Shandong is a coastal province, with above-average GDP per capita
at US$10,000 in 2015-2016. S&P said, "We expect the economy will
expand by 7.0%-7.5% over the next two to three years, faster than
international peers and China's national average growth. This
growth rate will contribute to robust revenue growth; the
provincial government's operating revenues increased by an average
rate of 6.5% over 2014-2016."
SS&P views the intergovernmental regime between Shandong and the
central government as evolving and unbalanced. This system heavily
influences Shandong's financial management, with the central
government appointing experienced members to senior leadership
positions. Overall, Shandong continues to navigate a fine line
between maintaining strong economic growth and adhering to the
central government's tightening stance on borrowings by local and
regional governments.
Although Shandong's fiscal system is largely predictable, it is
characterized by revenue and expenditure imbalances, and weak
transparency and accountability. Shandong's key credit weaknesses
include its very high debt burden and very high contingent
liabilities. However, the province has strong budgetary
flexibility, and exceptional liquidity, which supports Shandong's
individual credit profile.
S&P said, "The SACP of Shandong Energy mainly reflects our view of
the company's coal mining business. We expect this business to
contribute to 70%-80% of the company's profit in the next two to
three years. Shandong Energy has rich coal reserves, long mine
life, large operational scale, and a mid-level cost position. We
see good growth potential for the company in the next two to three
years. These strengths are partly offset by Shandong Energy's
dependence on a single commodity, limited geographical and product
diversity, high debt leverage, and negative free cash flows.
"We expect the company to further enlarge its operational scale
and to speed up the development of its overseas projects in the
next two to three years. Shandong Energy plans to add 40.0 million
tons of new capacity by 2019, while closing 22.0 million tons of
mostly idled capacity in the 13th five-year period that ends in
2020. The company also plans to start the construction of its 2.0
million-ton coking coal mining project in Australia in 2017 and
targets to finish construction by end-2019. We expect the cost of
the new mines to be in line with, or lower than, that of existing
mines and to increase the proportion of higher-priced coking coal
in the sales mix.
"We believe the coal industry will experience more balanced supply
and demand in the next one to two years, benefiting from industry
de-capacity in China. We therefore expect coal prices will remain
stable during the period, despite potential weakness in the short-
term with increasing supply.
"We forecast Shandong Energy's leverage ratios will gradually
improve in the next two to three years due to stable coal prices
and increasing sales volume. Nonetheless, we expect the company's
leverage will remain high during the period to support its coal
capacity addition and expansion in the chemicals and power
businesses. We also expect the company to continue to have high
working capital outflows mainly due to increasing accounts
receivables. We estimate Shandong Energy's debt-to-EBITDA ratio to
be at 5.7x-6.5x in 2017-2019 and its ratio of discretionary cash
flow to debt to remain negative during the period.
"We equalize our ratings on the proposed guaranteed senior
unsecured notes to the ratings on Shandong Energy, even though the
company's priority debt to total assets ratio exceeds our notching
down threshold of 20%. Shandong Energy owns multiple operating
entities to manage different mines, and it allocates the proceeds
from notes issuances to its operating subsidiaries. These, in our
view, should help to reduce the structural-subordination risk
associated with debt at the parent company level. The issuer
Shandong Energy Australia Pty Ltd. is wholly owned by Shandong
Energy Group. It intends to use the issuance proceeds for debt
repayment and for other general corporate use. Shandong Energy
Group provides an unconditional and irrevocable guarantee to the
notes.
"The stable outlook on Shandong Energy reflects our view that the
Chinese coal industry will experience a more balanced supply and
demand in the next one to two years, benefiting from industry de-
capacity. We therefore forecast that Chinese and international
coal prices will remain stable during the period. We expect
Shandong Energy's financial position to improve over the next 12-
24 months owing to stable coal prices and increasing sales volume
but still remain highly leveraged because of the company's hefty
debt and high capital spending.
"We could lower the ratings on Shandong Energy if the company's
financial leverage deteriorates in the next two to three years.
This may happen if coal prices are 15%-20% below our expectation.
We could also lower the ratings on Shandong Energy if the
likelihood of extraordinary government support weakens, which we
view as unlikely in the near term.
"We may upgrade Shandong Energy if its financial leverage
materially improves for a sustained period. An indication of such
improvement is that the company's debt-to-EBITDA ratio falls below
5.0x, which could happen due to higher-than-expected coal price or
lower-than-anticipated capex."
SUNAC CHINA: Fitch Cuts IDR to BB-; Puts Rating on Watch Negative
-----------------------------------------------------------------
Fitch Ratings has downgraded Sunac China Holdings Limited's
(Sunac) Long-Term Foreign-Currency Issuer Default Rating (IDR),
its senior unsecured rating and the rating on its outstanding
USD400 million 8.75% senior notes due 2019 to 'BB-' from 'BB'.
Fitch has also put all the ratings on Watch Negative.
Sunac's ratings have been downgraded to reflect the company's
acquisitive business approach, which will make its financial
profile more volatile. Current industry dynamics, where land bank
expansion through project acquisition is prevalent, will likely
drive Sunac to continue making acquisitions. As a result,
leverage, as measured by net debt/adjusted inventory, is likely to
be changeable, after it jumped to 60% by end-2016, from 26% and
19% at end-2015 and end-2014.
Sunac's ratings are on Rating Watch Negative (RWN) because its
plan to acquire Dalian Wanda Commercial Property Co. Ltd.'s
(Wanda, BBB/Negative) assets will put pressure on Sunac's leverage
over the next 12 months. The acquisition price, including debt to
be acquired, according to Fitch estimates using Wanda's publicly
available 2016 financial reports, is almost as large as Sunac's
net adjusted debt of CNY89 billion at end-2016. The acquisition,
however, will enhance the business profile and profitability of
Sunac's property development business,
KEY RATING DRIVERS
Acquisitive Business Approach: Sunac's financial profile has
become less predictable as it continues to seek significant
acquisitions to boost business scale and build its land bank.
Sunac on July 10, 2017 agreed to acquire CNY63.17 billion of
property assets from Wanda, after it purchased CNY14 billion of
property assets from Legend Holdings in 2016. Prior to the planned
Wanda acquisition Fitch expected Sunac in 2017 to bring down its
high leverage.
Moderation of Sunac's financial profile following acquisitions is
now more uncertain in an environment where land bank expansion
through project acquisition is widely practiced across the
industry. Sunac's volatile financial profile, although in service
of significant business scale growth, is no longer commensurate
with a 'BB' rating.
Mixed Impact from Wanda Deal: Fitch believes Sunac's homebuilding
business will be strengthened by the Wanda deal and the pressure
on Sunac's leverage will eventually ease over time. Under the
agreement, Wanda will sell to Sunac a 91% stake in 13 Wanda City
projects for CNY29.6 billion (including assumption of project
debt) and 76 hotels for CNY33.6 billion. Both companies have
agreed to finalise the terms of the transaction by July 31, 2017;
and to complete the transactions, and asset and share transfers as
early as practicable.
This large acquisition by Sunac will have limited impact on its
liquidity position, but will lead to a significant increase in its
net debt position. This will, however, be mitigated by Sunac's
slower land acquisition in 2017, the higher profit margin of the
acquired Wanda City projects than Sunac's current portfolio, and
possible faster pace of sales of the Wanda City projects. The
transaction will cause a spike in Sunac's leverage in 2017 and
possibly subsequent years, depending on the final terms of the
transaction.
No Benefit from Hotels Acquired: Sunac's acquisition of Wanda's
hotel assets, however, will not bring immediate enhancement to
Sunac's business profile nor financial profile, as the hotel
business in China generally has a low return on investment because
they are typically developed as part of larger mixed-use projects
to get the approval of local governments. In addition, the EBITDA
margin of these hotels is likely to be lower than that of Sunac's
existing business.
Diversification and Business Synergies: Sunac's property
development business may benefit from this transaction with Wanda.
The addition of the Wanda City land bank will increase by more
than 80% Sunac's land bank of 50 million square metres (sqm) in
attributable gross floor area (GFA) at end-2016, by Fitch
estimates. Sunac's geographical diversification will also improve
as the majority of the Wanda City projects are in provincial
capitals in new Tier 2 cities.
Post-Acquisition Financial Profile: The resolution of the RWN will
depend on whether this transaction is completed; and if it does,
Sunac's financial profile in the 12 to 24 months following the
completion of the transaction. The possible outcomes following the
resolution of the RWN are discussed in the Rating Sensitivities.
DERIVATION SUMMARY
Sunac's homebuilding business scale, geographical diversification,
project execution track record, and churn rates are comparable to
Country Garden Holdings Co. Ltd. (BB+/Stable); and comparable or
superior to Beijing Capital Development Holding (Group) Co., Ltd.
(BBB-/Stable; standalone BB/Stable), and Guangzhou R&F Properties
Co. Ltd's (BB/Stable). However, Sunac has a more volatile
financial profile than these companies. Its financial profile is
more comparable with those of lower rated issuers like Greenland
Holding Group Company Limited(BB/Negative, standalone BB-
/Negative) and China Evergrande Group (B+/Stable); even though its
2016 leverage is lower than those of Greenland and Evergrande.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- Sunac maintaining a land replenishment rate (GFA acquired/GFA
sold) of around 1.5x-2.0x for long-term development
- Margin pressure to increase from 2018 onwards, with EBITDA
margin dropping to between 15% and 20%
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action:
- If the transaction takes place and after reviewing transaction
information, the ratings may be downgraded if net
debt/adjusted inventory exceeds 50% on a sustained basis and
attributable contracted sales/total adjusted debt falls below
0.8x on a sustained basis
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action:
- If the transaction takes place and after reviewing transaction
information, the ratings may be affirmed with a Negative
Outlook if net debt/adjusted inventory exceeds 50% over the
next 12 months but Fitch expects the ratio to be sustained
below 50% thereafter
- If transaction does not take place, the ratings may be
affirmed with a Stable Outlook
LIQUIDITY
Liquidity Likely to Remain Adequate: Fitch believes Sunac has
sufficient cash to pay for the Wanda deal following strong
contracted sales in 1H17, when its attributable contracted sales
rose by 107% to CNY75 billion. This will materially increase its
end-2016 cash balance of CNY69 billion by end-June 2017.
SUNAC CHINA: Dalian Wanda Deal No Impact on Moody's B2 CFR
----------------------------------------------------------
Moody's Investors Service said that Sunac China Holdings Limited's
(B2 negative) proposed acquisition of assets from Dalian Wanda
Commercial Properties Co., Ltd. (Baa3 negative), if completed,
will keep Sunac's debt leverage elevated. However, the proposed
transaction will not immediately impact Sunac's B2 corporate
family rating, its B3 senior unsecured rating or the negative
outlook on the ratings.
"The proposed acquisition -- Sunac's largest ever, equivalent to
81% of its gross land bank at end-2016 -- will substantially
increase its operating scale and land bank. However, the
transaction will also raise its financial risk and keep its debt
leverage elevated, as it plans to partly fund the transaction with
debt," says Franco Leung, a Moody's Vice President and Senior
Credit Officer.
Sunac's negative outlook reflects its high-growth business
strategy that exposes it to financial risk. The company's ratings
could come under pressure if it liquidity deteriorates materially
or if its debt leverage remains elevated.
If the acquisition is successfully completed, Sunac's debt
leverage - as measured by revenue to adjusted debt and including
adjustments for its joint ventures and associates - is expected to
deteriorate to 30%-38% over the next 1-2 years, from 40%-45%
forecast by Moody's previously. Its debt leverage was around 31%
in 2016 and 64% in 2015 -- levels that are weak for its B2
corporate family rating.
Moody's expects that Sunac will assume a sizable amount of debt as
part of the acquisition, including a RMB29.6 billion 3-year loan
from Wanda and consolidation of debt at the project company level.
"The proposed transaction does not immediately affect Sunac's
rating, as the company should have sufficient liquidity to support
the acquisition and its high-growth business strategy," adds
Leung.
Sunac will need to pay around RMB33.6 billion in cash to Wanda
within 90 days upon signing the definitive agreement, or
approximately 48% of Sunac's cash balance of about RMB69.8 billion
at end-2016.
Nevertheless, Moody's expects Sunac has sufficient liquidity to
support the acquisition. Its cash balance as of June 2017 should
have further increased from end-2016, supported by its strong
sales execution and operating cash flow. The company achieved 89%
year-on-year growth in gross sales amount to RMB111.8 billion for
the first half of 2017, after robust 121% year-on-year growth to
RMB155.3 billion for the full year 2016.
Sunac will also be able to generate operating cash flow from the
cultural and tourism projects upon transaction completion, and
will have the flexibility to sell some of Wanda's hotel assets
upon completion of the transaction, providing it with an
alternative source of liquidity.
Moody's expects Sunac's adjusted EBIT/interest - after adjustments
for its joint ventures and associates - will remain around 2x over
the next 12-18 months, largely unchanged from 2016. This is
because the expected improvement in its gross profit margins will
offset the higher interest burden associated with its increased
debt.
On July 11, Sunac announced that it had entered into a framework
agreement with Wanda for the acquisition of a 91% equity interest
in 13 cultural and tourism project companies, and a 100% interest
in 76 hotels from Wanda for a total consideration of around
RMB63.2 billion. These project companies and hotels are currently
wholly owned by Wanda.
The 13 cultural and tourism projects have a total gross floor area
(GFA) of approximately 58.97 million square meters (sqm). The 76
city hotels have a total GFA of approximately 3.249 million sqm
with 22,920 rooms.
The transaction, if completed, would represent the largest
acquisition among Moody's rated Chinese developers as measured by
total consideration.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in April 2015.
Listed on the Hong Kong Stock Exchange on October 7, 2010, Sunac
China Holdings Limited is an integrated residential and commercial
property developer with projects in China's main economic regions
such as the Beijing region, North China region, Shanghai region,
Southwestern China region, Southeastern China region, Guangzhou-
Shenzhen region, Central China region and Hainan region. At end-
2016, its gross land bank totaled 72.9 million square meters, and
its attributable land bank totaled approximately 49.7 million
square meters.
SUNAC CHINA: S&P Puts B+ Long-Term CCR on CreditWatch Negative
--------------------------------------------------------------
S&P Global Ratings said it placed its 'B+' long-term corporate
credit rating and 'cnBB-' long-term Greater China regional scale
rating on Sunac China Holdings Ltd. (Sunac) on CreditWatch with
negative implications. S&P also placed its 'B' long-term issue
rating and 'cnB+' long-term Greater China regional scale rating on
the Chinese property developer's outstanding senior unsecured
notes on CreditWatch with negative implications.
S&P said, "We place the rating on CreditWatch with negative
implications to reflect our view that Sunac's financial leverage
could further deteriorate following the large land acquisitions
and expansion in the non-core segments. This is in contrast to our
previous forecast of moderate leverage improvement this year,
supported by strong sales growth and controlled land acquisition."
Sunac announced on Monday that it had agreed to buy 13 cultural
and tourism projects and 76 hotels for a total of Chinese renminbi
(RMB) 63.2 billion from Dalian Wanda Commercial Properties Co.
Ltd. S&P said, "We await further details on the funding plan, cash
flow impact, and future capital investment required to assess the
credit impact on the company."
Sunac has extended its aggressive expansion appetite from 2016.
S&P said, "We estimate the company has spent RMB120 billion
(including the latest acquisition from Wanda Commercial) so far in
2017 on buying land through public auction and mergers and
acquisitions, and investing in non-core businesses, including
Leshi companies, and Homelink. The expenditure exceeded the total
contracted sales, including sales from joint ventures, of RMB108.9
billion in the first six months. Given the heavy spending on land
acquisitions and expansion, and growing expenditure for
construction, we forecast the cash flow from operations will
remain negative and the company will rely on further debt to
support its expansion. That will increase Sunac's leverage."
In addition, the recent asset acquisition from Wanda Commercial
and substantial investment in Leshi also reflect Sunac's
aggressive financial stance, given that these heavy investments
and expenditures will further pressure the developer's already
high financial leverage and increase the burden on future cash
flow. S&P currently assesses the financial discipline of Sunac as
negative.
S&P said, "We expect to resolve the CreditWatch status within the
next one to two months after assessing the credit impact of the
acquisition from Wanda Commercial. We will also discuss with
Sunac's management on the growth appetite and leverage expectation
for the coming 12 months.
"We may lower the rating if we assess that the high growth and
expansion appetite will persist and the company's financial
leverage is unlikely to improve in the coming 12 months. This is
despite our assumption of material sales growth of over 30% to
RMB225 billion in 2017.
"We may affirm the rating with a negative outlook if we believe
the financial leverage of Sunac will improve this year despite the
large investment and acquisition. This could happen if Sunac's
contracted sales are significantly larger than our forecast and
the company has clear plans to deleverage."
================
H O N G K O N G
================
SWING MEDIA: Suspends Trading After Demands From Creditors
----------------------------------------------------------
Cai Haoxiang at The Business Times reports that Swing Media
Technology, a Singapore-listed Hong Kong company, which makes
DVDs, among other things, has converted its trading halt on
July 6 into a suspension.
This is after its subsidiaries received creditor demands from two
banks amounting to a total of HK$58.3 million (SGD10.3 million),
failing which winding-up petitions will be presented, according to
The Business Times.
According to the report, the company requested for the suspension
"in view of the material uncertainty and doubt on the group's and
the company's ability to continue as going concerns".
It said it is negotiating with the relevant banks as well as other
financiers to settle the demands and other potential defaults
arising from them, the report relates.
It said it will make further announcements to keep shareholders
updated, the report adds.
Based in Hong-Kong, Swing Media Technology Group Limited is an
investment holding company. The Company is a manufacturer and
supplier in the data storage industries. The Company's products
include digital versatile disc-recordable (DVD-R), compact disc-
recordable (CD-R), stampers and chemical dyes. The Company's
operating segments include Manufacturing and trading of CD-Rs (CD-
R), Manufacturing and trading of DVD-Rs (DVD-R), Trading of
plastic resins and packing materials (Trading) and Leasing of
machineries (Leasing). The Company's products also include video
cassette housing, audio cassette housing, music CD, video CD, DVD,
business card CD, irregularly-shaped CD, CD jewel box, Norelco box
and library case. The Company distributes its products to the
People's Republic of China and various parts of Asia. The
Company's subsidiaries include Swing Studio Ltd, Yat Lung
Industrial Ltd and Smart East Industrial Limited.
=========
I N D I A
=========
AMBERTEX SEKHSARIA: CRISIL Reaffirms B+ Rating on INR6.35MM Loan
----------------------------------------------------------------
CRISIL's ratings on bank facilities of Ambertex Sekhsaria Exports
(ASE) continues to reflect the firm's modest scale of operations
in an intensely competitive industry, large working capital
requirement, and below-average financial risk profile because of
small networth and high total outside liabilities to adjusted
networth (TOLANW) ratio. These weaknesses are partially offset by
the extensive experience of its proprietor in the ready-made
garments segment.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Bill
Discounting 6.35 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 1.00 CRISIL B+/Stable (Reaffirmed)
Packing Credit 5.50 CRISIL A4 (Reaffirmed)
CRISIL had upgraded its ratings on bank facilities of ASE to
'CRISIL B+/Stable/CRISIL A4' from 'CRISIL B/Stable/CRISIL A4' on
May 19, 2017.
Analytical Approach
Unsecured loans of INR0.41 crore have been treated as neither debt
nor equity since these are from the proprietor and are expected to
remain in business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With revenue of INR36.23 crore in
fiscal 2016, scale remains small, which restricts bargaining
power with customers and suppliers.
* Working capital-intensive operations: Gross current assets
have been in the 140-150 days' range in the two years ended
March 31, 2017.
* Below-average financial risk profile: Financial risk profile
has deteriorated on account of capital withdrawals. Networth
was small at INR3.17 crore while TOLANW ratio deteriorated to
4.22 times as on March 31, 2016 from 2.74 times in the previous
year.
Strengths
* Extensive experience of proprietor: The proprietor has around
two decades of experience in the ready-made garments segment
and has developed a healthy understanding of market dynamics.
Outlook: Stable
CRISIL believes ASE will benefit over the medium term from its
proprietor's extensive experience. The outlook may be revised to
'Positive' if more-than-expected accrual improves networth, while
diversifying clientele and improving working capital management.
The outlook may be revised to 'Negative' if substantially low
accrual, debt-funded capital expenditure, or weak working capital
cycle adversely affects financial risk profile.
Set up in 1996 as a proprietorship firm by Mr. Sunil Sekhsaria,
ASE manufactures and exports ready-made garments, primarily shirts
and ladies' tops. Facility is in Valsad, Gujarat.
Profit after tax (PAT) was INR0.97 crore on net sales of INR36.23
crore in fiscal 2016, against PAT of INR0.95 crore on net sales of
INR35.18 crore in fiscal 2015.
APL METALS: CRISIL Cuts Rating on INR57MM Cash Loan to 'C'
----------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long-term bank
facilities of APL Metals Limited (APL; formerly Associated
Pigments Ltd) to 'CRISIL C' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 30 CRISIL C (Downgraded from
'CRISIL B-/Stable')
Cash Credit 57 CRISIL C (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects irregularities by APL in servicing the debt
on unrated facilities, availed from a non-banking finance company.
The company's representation for settlement of these loans is
under process, and the loans are not being serviced currently.
The rating also reflects the below-average financial risk profile,
stretched liquidity and working capital-intensive nature of
operations. These weaknesses are partially offset by the extensive
experience of the promoter in the industry, and established
relationships with a reputed clientele.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: Financial risk profile is
marked by accumulated losses of INR3.5 crore and high debt of
INR100 crore as on March 31, 2017. Debt protection metrics were
also weak, with interest coverage and net cash accrual to total
debt ratios, at 1.3 times and 0.03 time, respectively, for fiscal
2017.
* Stretched liquidity: Liquidity remains constrained by the high
bank limit utilisation, large debt obligation and modest cash
accrual, though partly aided by unsecured loans of around INR19
crore extended by the promoters in the second half of fiscal 2017.
* Working capital-intensive operations: Estimated gross current
assets of 108 days as on March 31, 2017, reflect moderate working
capital intensity in operations.
Strengths
* Extensive experience of the promoter and healthy relationships
with reputed clientele: The two decade-long experience of the
current managing director, Mr Sanjiv Nandan Sahaya, in the lead
industry, and the company's established track record of six
decades, have helped maintain healthy relationships with key lead
battery manufacturers.
APL, promoted by the late Mr DN Sahaya, was incorporated in 1948,
for carrying on business of lead oxides, white lead, antimonial
lead, lead salts, zinc dust, and zinc oxide. Operations are
managed by his grandson, Mr SN Sahaya, also the managing director
of the company.
During fiscal 2017, the company had profit after tax of INR0.5
crore on net sales of INR328 crore against INR 0.4 crore and
INR326 crore respectively, in the previous financial year.
ASUTI TRADING: CRISIL Cuts Rating on INR40MM Loan to 'D'
--------------------------------------------------------
CRISIL Ratings has been consistently following up with Asuti
Trading Private Limited (ATPL) for obtaining information through
letters and emails dated March 9, 2017 and March 22, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
CRISIL gave this rating:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 40 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
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 Asuti Trading 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 Asuti Trading 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 downgraded the rating at 'CRISIL D'.
ATPL, based in Mumbai, is owned by Mr. Sidharth M Bagrecha, Mr.
Binod Kumar Agarwal and Mr. Vimal Agarwal. The company trades in
steel and iron products, such as hot-rolled coils, cold-rolled
coils, sheets, sponge iron fines/lumps, and pig iron.
B.S. SPONGE: CRISIL Lowers Rating on INR22MM Cash Loan to B
-----------------------------------------------------------
CRISIL Ratings has been consistently following up with B.S. Sponge
Private Limited (BSPL) for obtaining information through letters
and emails dated January 24, 2017 and February 13, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
CRISIL gave this rating:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 22 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BB+/Stable')
Letter of credit 0.5 CRISIL A4 (Issuer Not
& Bank Guarantee Cooperating; Downgraded from
'CRISIL A4+')
Proposed Long Term 2.92 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL BB+/Stable')
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 B.S. Sponge 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 B.S. Sponge 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 downgraded the rating at 'CRISIL B/Stable/CRISIL A4'.
Incorporated in 2000 in Kolkata, BSPL is promoted by Mr. P
Agarwal, who manages the company along with his son, Mr. Ashish
Agarwal. The company commenced commercial production in 2004 and
has capacity to manufacture 90,000 tonnes of sponge iron per
annum.
BHANDARI AGRO: CRISIL Assigns B+ Rating to INR2.71MM Term Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long term bank facilities of Bhandari Agro (BA). The ratings
reflect risk of timely ramp-up in sales amidst intense industry
competition and susceptibility to government policies and raw
material fluctuations. These weaknesses are partially offset by
the extensive experience of promoters in the edible oil refining
industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2.5 CRISIL B+/Stable
Term Loan 2.71 CRISIL B+/Stable
Key Rating Drivers & Detailed Description
Weaknesses
* Risk of timely ramp-up in sales amidst intense industry
competition: The edible oil business is highly fragmented, with
numerous small-scale unorganized players catering to local
demands, which may impact ramp-up in sales and profitability
margins.
* Susceptibility to government policies and raw material
fluctuations: BA is exposed to the risk of sudden pressure on
margins as the prices of edible oils are linked to domestic
oilseed prices, which are determined by the production level and
minimum support price fixed by the Government, and by
international price trends.
Strengths
* Extensive experience of promoters in the edible oil refining
industry: Promoters' experience of more than 3 decades in the
edible oil industry, their understanding of the dynamics of the
local market, anticipating price trends and calibrating purchasing
and stocking decisions will benefit BA over the medium term.
Outlook: Stable
CRISIL believes that BA will benefit over the medium term from the
extensive experience of its promoters. The outlook may be revised
to 'Positive' if timely and successful commissioning of the
project leads to higher than expected revenue and profitability
and hence better financial risk profile. Conversely, the outlook
may be revised to 'Negative' if delay in commissioning of the
project or any significant cost over runs, weakens financial risk
profile, particularly liquidity.
BA, promoted in 2014 by the Bhandari family, is setting up a plant
for manufacturing of groundnut oil in Sangamner, Maharashtra. Its
a partnership firm of Mr. Onkarnath Bhandari, Mr. Rameshwar
Bhandari and Mr. Samrat Bhandari.
BRIGHTSTAR HEALTHCARE: CRISIL Assigns B Rating to INR30MM Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank loan facility of Brightstar Healthcare Private
Limited (BHPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 30 CRISIL B/Stable
The rating reflects the company's exposure to risks related to
implementation of its project, and to timely completion,
stabilisation, and commensurate ramp-up in occupancy and revenue
during its initial phase of operations. The rating also factors
expectation of an average financial risk profile because of the
debt-funded project. These weaknesses are partially offset by the
extensive experience of its promoters in the healthcare industry,
and their funding support.
Analytical Approach
For arriving at the rating, CRISIL has treated unsecured loans
received from the directors, as neither debt nor equity, as the
loans are sub-ordinated to bank debt and are expected to remain in
the business over the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Exposure to risks related to project implementation, and
stabilisation of operations
The company's upcoming hospital is expected to commence commercial
operations in April 2018. Timely completion of the project,
stabilisation of operations, and commensurate ramp-up in occupancy
and revenue during the initial phase of operations remain
critical.
* Average financial risk profile
The financial risk profile may remain average on account of its
debt-funded project. The project gearing is expected at 3 times.
Strengths
* Extensive experience of the promoters in the healthcare
industry:
The promoters are qualified group of doctors, with experience of
over a decade in the medical practice and consulting field. Their
experience and long standing presence in industry will support the
company's business risk profile in the initial phase of
operations.
* Promoters' fund support and long tenor of term loan:
Equity and unsecured loans from the promoters, and long tenure of
term loan (81 months) will support liquidity in the initial years
of operations.
Outlook: Stable
CRISIL believes BHPL will benefit from its promoters' extensive
industry experience and funding support. The outlook may be
revised to 'Positive' if timely implementation and stabilisation
of the project leads to anticipated revenue, profitability, and
cash accrual during the initial phase of operations. The outlook
may be revised to 'Negative' if delay in project implementation or
stabilisation of operations leads to lower-than-expected revenue
and cash accrual, or if any unanticipated, additional capex
weakens the financial risk profile and liquidity.
Incorporated in November 2012, BHPL is setting up a 200-bed
multispecialty hospital in Moradabad, Uttar Pradesh and its
commercial operations are expected to commence from April 2018.
CHINSURAH COLD: CRISIL Reaffirms B+ Rating on INR4MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on the
bank facilities of Chinsurah Cold Storage-Prop Bansidhar Agarwalla
& Company Pvt Ltd (CCS; part of the Somnath group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .45 CRISIL B+/Stable (Reaffirmed)
Term Loan .95 CRISIL B+/Stable (Reaffirmed)
Working Capital
Loan .96 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
CCS; Shree Hazarilal Cold Storage Pvt Ltd (SGCSPL); Somnath Cold
Storage Pvt Ltd (SCPL), 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.
CUBE INDIA: CRISIL Assigns B+ Rating to INR13.09MM Term Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Cube India Paper Mills Private
Limited (CIPM).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 13.09 CRISIL B+/Stable
Cash Credit 6.50 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 0.41 CRISIL B+/Stable
The rating reflects the company's modest scale of operations in a
fragmented industry and moderate liquidity. These weaknesses are
partially offset by the extensive experience of its promoters,
strong relationship with suppliers and customers.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Scale of operations remains small
due to intense competition in the kraft paper industry, in which
the unorganised segment accounts for 80% of the total market.
Also, limited product diversity exposes the company to slowdown
in end-user industries.
* Moderate liquidity: Liquidity is expected to remain modest due
to moderate dependence on working capital debt. Moreover, term
loan obligation is significant compared to net cash accrual
during initial years of operations.
Strengths
* Extensive experience of promoters and strong relationship with
suppliers and customers: Presence of around 15 years in various
industries has given the promoters insight into market dynamics
and helped them to identify price trends.
Outlook: Stable
CRISIL believes CIPM will benefit over the medium term from the
extensive experience of its promoters and their funding support.
The outlook may be revised to 'Positive' if better-than-expected
revenue and profitability due to timely ramp-up in operations
leads to significant cash accrual, and if financial risk profile
and working capital management improve. The outlook may be revised
to 'Negative' if lower-than-expected accrual, further
deterioration in working capital management, or large, debt-funded
capital expenditure weakens financial risk profile, especially
liquidity.
Incorporated in December 2014 and promoted by Mr. Hareesh
Chimaneni, Mr. Pothu Raju, and Mr. Motukari Laxman Kumar, CIPM
manufactures kraft paper at its facility in Narasaraopet, Guntur
district, Andhra Pradesh. Commercial operations began from
November 2016.
Revenue is INR6.67 crore and net profit is INR0.06 crore for
fiscal 2017 (provisional). There were no business operations
during fiscal 2016.
DAMODAR TIMBER: CRISIL Raises Rating on INR8MM Loan to B
--------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the bank facilities of
Damodar Timber Depot (DTD) to 'CRISIL B/Stable/CRISIL A4' from
'CRISIL D/CRISIL D.'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 10 CRISIL A4 (Upgraded from
'CRISIL D')
Overdraft 8 CRISIL B/Stable (Upgraded
from 'CRISIL D')
Term Loan 0.65 CRISIL B/Stable (Upgraded
from 'CRISIL D')
The upgrade reflects improvement in the firm's liquidity owing to
faster recovery of receivables enabling timely servicing of debt
obligation. Liquidity is expected to be maintained over the medium
term, driven by improving receivables' because of sales to limited
customers where payments are realised in a timely manner and need-
based funding support from promoters.
The ratings reflect the firm's modest scale of operations in the
intensively competitive timber and cashew trading businesses,
large working capital requirement, and susceptibility of
profitability to fluctuations in foreign exchange rates. However,
it benefits from the extensive industry experience of its
promoters, their funding support and moderate total outside
liabilities to tangible networth (TOLTNW) ratio.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in the intensively competitive timber
and cashew trading businesses: With operating income estimated
at INR30.07 crore for fiscal 2017, scale remains modest in the
highly fragmented and competitive timber and cashew trading
industries.
* Large working capital requirement: Operations are expected to
remain working capital intensive over the medium term's gross
current assets were estimated at 242 days as on March 31, 2017,
due to large receivables and inventory of 115 and 31 days,
respectively.
* Susceptibility of profitability to fluctuations in foreign
exchange rates: Operating margin has remained susceptible to
fluctuations in foreign exchange rates as majority of raw
material requirement is imported as against no exports.
Strengths
* Extensive industry experience of partners and their funding
support: Longstanding presence in the timber and cashew
industries has enabled the partners to establish healthy
relationship with suppliers, which ensures high quality and
timely supplies. Furthermore, partner contribution in the form
of unsecured loans stood at INR3.83 crore as on March 31, 2017.
* Moderate TOLTNW ratio: Despite sizeable working capital
requirement, TOLTNW ratio has remained moderate at 1.35 times as
on March 31, 2017 due to limited reliance on external debt.
Outlook: Stable
CRISIL believes DTD will continue to benefit from the extensive
experience of its partners. The outlook may be revised to
'Positive' if ramp-up in revenue and profitability leads to
higher-than-expected cash accrual or if working capital management
is prudent. The outlook may be revised to 'Negative' if low cash
accrual, large working capital requirement or substantial capital
withdrawal weakens financial risk profile, particularly liquidity.
Established in 1977 by Mr. Devshi Patel, DTD trades in and saws
timber. The firm mainly imports teakwood and hardwood from
Myanmar, Latin America, and Africa. It also trades in cashews,
which accounts for 45% of its revenue.
For fiscal 2016, net profit was INR0.32 crore on net sales of
INR63.34 crore as against INR0.37 crore and INR49.47 crore for
fiscal 2015.
DEVRISHI FOODS: CRISIL Assigns B+ Rating to INR3MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Devrishi Foods Private Limited
(DFPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Packing Credit 3.4 CRISIL A4
Cash Credit 3 CRISIL B+/Stable
Foreign Discounting
Bill Purchase 1.4 CRISIL A4
The ratings reflect the company's small scale of operations in the
intensely competitive agro commodity trading industry, working
capital-intensive operations, and average financial risk profile
because of modest networth and weak debt protection metrics. These
weaknesses are partially offset by the extensive experience of its
promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: With net sales of INR22.84 crore in
fiscal 2017, scale remains modest in a competitive segment and
will continue to be so despite expected healthy revenue growth
over the medium term.
* Working capital-intensive operations: Gross current assets
(GCA) are estimated at 140 days as on March 31, 2017, due to
inventory and receivables of 77 days and 63 days, respectively.
Working capital requirement will remain large over the medium
term, with expected GCAs of 115-125 days.
* Average financial risk profile: Networth is estimated to be
small at INR2.96 crore as on March 31, 2017, while debt
protection metrics were weak, with estimated interest coverage
ratio of 1.34 times in fiscal 2017. However, total outside
liabilities to tangible networth ratio is estimated to be
moderate at 1.61 times on March 31, 2017. Financial risk profile
will remain average over the medium term, because of continued
low operating margin.
Strength
* Extensive experience of promoters: Presence of around 25 years
in the agro commodity trading industry has enabled the promoters
to establish healthy relationship with suppliers and customers.
Outlook: Stable
CRISIL believes DFPL will continue to benefit over the medium term
from its promoters' extensive experience. The outlook may be
revised to 'Positive' in case of a significant and sustained
improvement in revenue, operating profitability, and financial
risk profile. The outlook may be revised to 'Negative' if decline
in revenue or operating profitability, stretch in working capital
cycle, or any debt-funded capital expenditure further weakens
financial risk profile.
Incorporated in 2005 and promoted by Mr. Vipin Jain, Mr. Nikhil
Jain, and Mr. Rajiv Jain, DFPL trades in rice, wheat flour, besan,
and various grams such as moong dal, urad dal, rajma, chick peas,
and chana dal.
Profit after tax is estimated at INR0.13 crore on net sales of
INR22.84 crore for fiscal 2017, vis-a-vis INR0.10 crore and
INR26.58 crore, respectively, for fiscal 2016.
DEWAN HOUSING: S&P Affirms Then Withdraws 'BB' ICR
--------------------------------------------------
S&P Global Ratings said that it affirmed its 'BB' long-term issuer
credit rating on Dewan Housing Finance Corp. Ltd. (DHFL). S&P then
withdrew all the ratings at the company's request.
S&P said, "The affirmed rating at the time of withdrawal reflected
our expectation that the company's capitalization and risk
management practices would remain adequate. We expected DHFL's
pre-diversification risk-adjusted capital ratio to improve to
7.5%-8% over the next two years, from 6.5% as of Sept. 30, 2016,
primarily due to DHFL's sale of its stake in its life insurance
joint venture.
However, the company's high reliance on wholesale borrowing, small
size, and limited diversity, partly due to its single line of
business, continued to temper these strengths.
S&P said, "The stable outlook at the time of withdrawal reflected
our view that the company will maintain its financial performance
over the next 12-24 months."
DN PAPER: CRISIL Hikes Rating on INR3MM Cash Loan to B+
-------------------------------------------------------
CRISIL Ratings has upgraded its rating to the long-term bank
facilities of DN Paper Mill (DNPM) to 'CRISIL B+/Stable' from
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term
Bank Loan Facility 3 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 6 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects timely stabilization of operations with firm
achieving net sales of around 14.40 crore and reported healthy
EBITDA Margin in its first year of operations. It also reflects in
healthy debt protection metrics and sufficient cushion in net cash
accruals as against debt repayments.
The rating continues to reflect DNPM's modest scale of operations
in the highly fragmented and competitive paper industry and
susceptibility to fluctuations in waste paper prices. These
weaknesses are partially offset by advantageous location of plant
because of proximity to packaging industry, and promoters'
experience in the packaging industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Scale of operations remain moderate
in highly fragmented and competitive paper industry.
* Susceptibility to fluctuations in waste paper prices: Operating
efficiency remains susceptible to highly volatile waste paper
prices
Strengths
* Advantageous location: Proximity of the manufacturing plant to
packaging industry helps in easy access to both raw material and
customers
* Promoter's extensive experience in the paper industry: DNPM's
promoters have been in the kraft paper and packaging industry
for more than a decade. Mr. Nilesh Mungara, one of the
promoters, has experience of almost two and a half decade in the
packaging industry and is well-conversant with various aspects
of the business.
Outlook: Stable
CRISIL believes DNPM will benefit over the medium term from its
promoters' extensive industry experience. The outlook may be
revised to 'Positive' in case of timely stabilisation of
operations at the proposed plant, and higher-than-expected revenue
and profitability, leading to substantial cash accrual.
Conversely, the outlook may be revised to 'Negative' if there are
delays in commencement of operations, or if cash accrual is lower
than expected during the initial phase, resulting in pressure on
liquidity.
DNPM, established in 2015 by Mr. Nilesh Mungara and his family
members, is setting up a plant to manufacture kraft paper in
Rajkot with capacity of 19,500 tonne per annum. Commercial
production have started in May 2016.
EVEREST KANTO: CRISIL Raises Rating on INR368.2MM Term Loan to C
----------------------------------------------------------------
CRISIL Ratings has been consistently following up with Everest
Kanto Cylinder Limited (EKC; part of the Everest Kanto group) for
obtaining information through letters and emails dated April 7,
2017, and May 12, 2017 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 368.2 CRISIL C (Issuer Not
Cooperating; Upgraded
from 'CRISIL D')
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
CRISIL has upgraded its rating on the long-term bank facility of
EKC to 'CRISIL C' from 'CRISIL D'.
The rating action reflects prepayment of term loan till December
2018 and no current defaults on rated facility. Also, operating
profitability improved to 11.4% in fiscal 2017 from 1.1% in the
previous fiscal. Operating performance is expected to be
maintained over the medium term, backed by moderate revenue growth
and sustenance of profitability.
The rating reflects the Everest Kanto group's working capital-
intensive operations, susceptibility of revenue to macroeconomic
conditions, and pressure on cash accrual due to suboptimal
utilisation of large manufacturing capacities. However, the group
has an established market position in the high-pressure seamless
cylinder segment.
Analytical Approach
For arriving at its rating, CRISIL has combined the business and
financial risk profiles of EKC and its wholly owned subsidiaries
(including step-down entities), EKC International FZE, Dubai; EKC
Industries (Tianjin) Co Ltd, China; EKC Industries (Thailand) Co
Ltd, Thailand; EKC Hungary Kft, Hungary; Calcutta Compressions &
Liquefaction Engineering Ltd, India; EKC-Europe GmbH; and CP
Industries Holdings Inc, USA. This is because all these entities,
collectively referred to as the Everest Kanto group, have common
promoters and intra-group operational synergies including fungible
cash flows, and are in the same business.
Key Rating Drivers & Detailed Description
Weaknesses
* Susceptibility of revenue to macro-economic conditions:
Operating performance is affected by cyclicality in the end-user
industry. Subdued growth in the industrial sector adversely
affected demand for the group's product. Operating performance
was also affected by the geopolitical situation in the Middle
East, one of the major contributor to revenue and profitability.
* Working capital-intensive operations: Gross current assets were
over a year of sales, which impairs cash flow. Working capital
cycle is stretched mainly on account of sizeable inventory of
180 days.
* Weak cash accrual due to suboptimal capacity utilization: The
group has aggressively expanded production capacities and
introduced new technologies to manufacture high-pressure
seamless gas cylinders. High interest cost and overhead
expenses, coupled with revenue de-growth, severely constrained
cash accrual and debt protection metrics.
Strength
* Established market position in the high-pressure seamless
cylinders segment: The group is the market leader in the
compressed natural gas (CNG) cylinder segment with widespread
geographic presence, and exports to over 20 countries (accounted
for 72% of total revenue in fiscal 2017). It pioneered
manufacture of high-pressure seamless cylinders in India in 1978
and currently has global presence with manufacturing facilities
in India, Dubai, the US, and China; and marketing offices in
Thailand and Germany.
Promoted by Mr. P K Khurana in 1978, the Everest Kanto group
manufactures high-pressure seamless CNG and industrial cylinders.
The gas cylinders are used by automobile original equipment
manufacturers, retrofitters, and gas distribution companies; the
industrial cylinders are used in the healthcare, fire-fighting,
and food and beverages segments. Manufacturing units have total
capacity of 1.3 million cylinders per annum. The group also has
marketing offices in Thailand and Germany.
For fiscal 2017, profit after tax was INR78.69 crore on an
operating income of INR567 crore, against a net loss of INR124
crore on an operating income of INR505 crore for fiscal 2016.
EXCEED CROP: CRISIL Hikes Rating on INR4.92MM Loan to B+
--------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Exceed Crop Science Private Limited (ECSPL) to
'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2.08 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Long Term Loan 4.92 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The rating upgrade reflects CRISIL's expectation improvement in
scale of operations of the company marked by successful
commencement of its operations. The revenues of the company
improved to around INR23 crores in 2016-17 as compared to INR11
crores in 2015-16. The company generated modest revenues in the
first 2 years of its operations as there were certain delays in
setting up of its manufacturing facilities. Since 2016-17, the
full-fledged operations commenced which can be seen in the
improvement in the revenues of the company. Modest scale of
operations amid intense industry competition will continue to
constrain the rating of the company.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in regulated fertiliser industry and
exposure to risks related to off take from its recently commenced
manufacturing operations of nitrogen, phosphorus, and potassium
(NPK) fertilizer: The fertiliser industry is of strategic
importance, and hence, closely regulated by the Government of
India's (GoI's), which has influenced the extent of investments in
the industry, degree of competition, and marketing and
distribution strategies of players. ECSPL's business operations
are expected to be largely governed by the GoI's approval or
license, including the area of operations and grades of products
to be sold. The government has introduced an NBS policy for
complex fertilisers in place of the earlier product-based nutrient
policy resulting in a significant alteration in the farm-gate
prices of most complex fertilisers. GoI policies regulate the
prices of ECSPL's key raw material, urea. Timely availability of
raw material will impact the company's operations. Furthermore,
demand directly depends on the monsoons; thus, erratic rainfall
can adversely affect the company's operations. CRISIL believes
that ECSPL will remain exposed to risks related to GoI's
regulations for the fertiliser industry and erratic rainfall.
ECSPL operates on a small scale, with its operating revenue of
about INR11 crores for 2015-16 (refers to financial year, April 1
to March 31). The company is expected to record revenue of about
INR23 crores in 2016-17.
* Below-average financial risk profile because of its recent debt-
funded capital expenditure (capex) and large working capital
requirement: ECSPL had a small net worth of about INR0.3 crores as
on March 31, 2016. However, besides equity, the promoters extended
unsecured loans of INR3 crores to support the past capex. CRISIL
believes that ECSPL's net worth will remain small over the medium
term, considering its small net worth and expected small accretion
to reserves. With high dependence on bank debt for past capex and
incremental working capital requirements along with bulk of
promoter contribution in the form of unsecured loans (treated as
NDNE), CRISIL believes that ECSPL's gearing will remain high over
the medium term.
Strengths
* Extensive experience of promoters in fertiliser industry and
committed funding support: The promoters have extensive experience
across entire value chain in fertilizer industry. The key promoter
Mr. M P Nagaraj is a soil scientist and has experience of over 15
years in marketing fertilisers and seeds in North and Central
Karnataka. Furthermore, its other promoters Mr. Suresh Bagawade,
Mr. Chandrashekhar Bagawade and Mr. Suresh Hosur have experience
of more than 10 years in trading in fertilisers through their
firms. Over these years the promoters have established
relationships in value chain involving suppliers and customers in
North and Central Karnataka. The company can leverage upon this
established distribution network and procurement ties in early
ramp-up of its operations from its new unit. Further, the
promoters have good understanding of demand-supply trends in
market, which enables company in taking pricing decisions. CRISIL
believes that ECSPL will continue to benefit from its promoters'
extensive industry experience over the medium term in ramp up of
its operations.
Outlook: Stable
CRISIL believes ECSPL will benefit over the medium term from the
extensive industry experience of its promoters. The outlook may be
revised to 'Positive' in case of successful stabilisation of
manufacturing operations leading to a significant ramp-up in its
revenue and cash accrual. Conversely, the outlook may be revised
to 'Negative' if financial risk profile, particularly liquidity,
weakens because of delay in ramp-up of operations and low cash
accrual, or stretched working capital cycle.
Incorporated in 2013 and based in Hubli (Karnataka), ECSPL
manufactures and trades in granulated fertilisers, mainly NPK
mixtures and soil conditioners. The company commenced
manufacturing operations of NPK fertilizer in April 2016.
During 2015-16 (refers to financial year April 1 to March 31),
ECSPL reported revenues of INR11.91 crore with Profit after Tax
(PAT) of INR0.06 crore as compared to revenues of INR11.54 crores
with PAT of INR0.14 crores in 2014-15.
GANESH STEEL: CRISIL Cuts Rating on INR7MM Cash Loan to B
---------------------------------------------------------
CRISIL Ratings has been consistently following up with Ganesh
Steel and Alloys Limited (GSAL) for obtaining information through
letters and emails dated January 24, 2017, and February 13, 2017,
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.55 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 7 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
Proposed Fund-Based
Bank Limits 0.3 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB-/Stable')
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 Ganesh Steel and Alloys
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 Ganesh Steel and Alloys 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
downgraded the rating at 'CRISIL B/Stable/CRISIL A4'.
GSAL, incorporated in 1999, manufactures ingots at its facility in
Serampore (West Bengal). The company is managed by Mr. Navratan
Mal Baid and his family.
GEORGE MAIJO: CRISIL Reaffirms 'B' Rating on INR25MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the bank facilities of
George Maijo Automobiles Pvt Ltd (GMAPL) at 'CRISIL B/Stable'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 25 CRISIL B/Stable (Reaffirmed)
Line of Credit 6 CRISIL B/Stable (Reaffirmed)
Long Term Loan 13.51 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect GMAPL's below-average financial
risk profile, marked by modest net worth and below-average debt
protection metrics, and exposure to implementation-related risks
associated with its project. These rating weaknesses are partially
offset by the promoter's extensive entrepreneurial experience.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: Financial risk profile was
below-average marked by modest net worth estimated at INR3.63
crore and high gearing levels. Gearing is expected remain over 4
times over the medium term with debt funded capex plans. Debt
protection metrics are weak with net cash accruals to total debt
and interest coverage estimated around 0.02 times and 1.7 times,
respectively in fiscal 2017.
* Exposure to implementation related risks associated with its
ongoing project: Though GMAPL has low funding risk for its
project, as it has received the required funding, the company is
exposed to high implementation risk as the project is in the
nascent stage. Any significant delay in the construction could
lead to cost overruns and adversely affect the business and
financial profiles.
Strengths
* Extensive experience of promoters in the industry: GMAPL is
promoted by Mr. Maijo Joseph and his family. The promoter family
has extensive entrepreneurial experience and have business
interest in various industries including Seafood, outboard motors,
and automobile among others.
Outlook: Stable
CRISIL believes GMAPL would continue to benefit from the extensive
entrepreneurial experience of promoters over the medium term. The
outlook may be revised to 'Positive', if the operations of the
company stabilizes with improved its scale of operations and
profitability, while maintaining its working capital management.
Conversely, the outlook may be revised to 'Negative' in case of
delays in stabilization of operations or if the company undertakes
a large debt funded capital expenditure plan affecting liquidity.
GMAPL was incorporated in 2016 and runs a Maruti showroom in
Kalamasserry, Kerala. The company is promoted by Mr. Maijo Joseph
and his family.
LANCO INFRATECH: CRISIL Reaffirms 'D' Rating on INR1.6BB Loan
-------------------------------------------------------------
CRISIL's ratings on the bank facilities of Lanco Infratech Limited
(LITL; part of the Lanco group) continue to reflect delays in
meeting debt obligations; the delays were due to weak liquidity.
Furthermore, the bankers have initiated insolvency proceedings
against the company.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1600.3 CRISIL D (Reaffirmed)
Letter of credit
& Bank Guarantee 5240 CRISIL D (Reaffirmed)
Term Loan 2183.7 CRISIL D (Reaffirmed)
The rating is based on limited information available in public
domain.
Analytical Approach
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of LITL and Griffin Coal, together
referred to herein as LITL. This is because they have strong
business linkages.
Key Rating Drivers & Detailed Description
Weakness
* Delays in debt servicing: LITL has been delaying its debt
repayments since fiscal 2013. This is because LITL's cash
accruals have been inadequate for meeting the repayments on
account of weak profitability and stretch in its working capital
requirements. Currently, the bankers have initiated insolvency
proceedings against the company.
Strengths
* Established position in domestic construction segment: LITL has
been an established player in the construction segment, with
experience of more than 20 years. The company has executed
diverse projects across the country, including power, civil
construction, roads, ports, irrigation, and urban infrastructure
projects.
LITL was originally incorporated in 1993 as Lanco Constructions
Ltd in Secunderabad, Telengana; its name was changed in 2000. The
company provides Engineering, Procurement and Construction (EPC)
services, largely to its own subsidiaries and affiliate entities.
The Lanco group includes subsidiaries and affiliates operating
across the infrastructure sector, including construction, power,
EPC, infrastructure, and property development. LITL is the Lanco
group's flagship company. At a standalone level LITL's net loss
was INR890 crore on total operating income of INR1635 crore in
fiscal 2017, as against a net loss of INR445 crore on operating
income of INR2669 crore in the previous fiscal.
MARIGOT AGRO: CRISIL Assigns 'B' Rating to INR4.6MM LT Loan
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facilities of Marigot Agro Private Limited (MAPL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 1.5 CRISIL B/Stable
Cash Credit 0.9 CRISIL B/Stable
Long Term Loan 4.6 CRISIL B/Stable
The rating reflects a nascent scale of operations in a highly
competitive industry and a weak financial risk profile. These
weaknesses are partially offset by the extensive experience of the
promoters in the agro commodity industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Nascent scale of operations and intense competition: Scale has
been modest, with revenue of INR2.98 crore in fiscal 2017, in
the intensely competitive agro commodity business.
* Weak financial risk profile: The financial risk profile has
been weak owing to small networth (INR0.7 crore estimated as on
March 31, 2017), high gearing (4.9 times) and modest debt
protection metrics (interest coverage and net cash accrual to
total debt ratios were 1.23 times and 1%, respectively, in
fiscal 2017).
Strength
* Experience of promoters: The promoters' experience (of over
three decades) and healthy relationships with suppliers and
customers should help in ramping up scale of operations over the
medium term.
Outlook: Stable
CRISIL believes MAPL will continue to benefit over the medium term
from the experience of promoters. The outlook may be revised to
'Positive' if increase in turnover with sustained operating margin
leads to higher-than-expected cash accrual and better financial
risk profile. Conversely, the outlook may be revised to 'Negative'
in case of large working capital requirement, delay in fund
support from promoters, or low operating performance.
MAPL, set up in 2014 by Mr Sithanand Ganesh and Mrs Marigot
Ambujam, is based in Pondicherry. The company manufactures and
trades in atta, maida and rava.
Profit after tax was INR0.01 crore on total revenue of INR2.9
crore in fiscal 2016, against INR0.01 crore and INR2.1 crore,
respectively, in fiscal 2015.
MAYAR INFRA: CRISIL Reaffirms B Rating on INR115.68MM Term Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Mayar Infrastructure Development Pvt Ltd (MIDPL) at
'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Funded Interest
Term Loan 24.32 CRISIL B/Stable (Reaffirmed)
Term Loan 115.68 CRISIL B/Stable (Reaffirmed)
The ratings reflect MIDPL's exposure to demand risk associated
with current project and constrained financial flexibility owing
to start-up nature of project with negligible occupancy. These
weaknesses are partially offset by the extensive experience of
promoters and qualified management.
Key Rating Drivers & Detailed Description
Weakness
* Demand risk associated with current project: Lack of tie-ups
with customers for leasing/selling the special economic zone
(SEZ) project leads to negligible occupancy and muted cash
accrual.
* Weak financial risk profile: Large debt of INR162.17 crore as
of March 2016 and stretched liquidity with no long-term tie ups
leads to below-average debt protection metrics.
Strengths
* Extensive experience of promoters: The promoters have sound
understanding of the business on account of four decades of
experience in diversified industries through group companies.
Outlook: Stable
CRISIL believes MIDPL will continue to benefit from the strong
background of promoters and experienced management. The outlook
may be revised to 'Positive' if high lease rentals or occupancy
strengthens revenue and profitability. The outlook may be revised
to 'Negative' if delay in off-take of project or lower revenue or
profitability weakens financial risk profile.
Incorporated in 1995, MIDPL is a part of the Mayar group. It
operates a Biotech SEZ at Sohna, Haryana, to support research &
development and manufacturing activities for biotech companies.
MIDPL incurred net loss of INR0.16 crore in fiscal 2016.
PRAGATI INGOTS: CRISIL Ups Rating on INR6.2MM Cash Loan to B+
-------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Pragati Ingots and Power Private Limited (PIPPL) to
'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.2 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term
Bank Loan Facility 5.2 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Term Loan 0.6 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects expectation of improvement in liquidity
following complete repayment of term loans by November 2017. Also,
there is no debt-funded capital expenditure (capex) plan over the
medium term. The overall financial risk profile has remained
comfortable aided by a gearing of below 1 time in the four fiscals
ended March 31, 2017.
The ratings continue to reflect a modest scale, and working
capital-intensive nature, of operations. These rating weaknesses
are partially offset by the extensive experience of the promoters
in the steel ingot manufacturing industry, and a comfortable
financial risk profile supported by a moderate networth and low
gearing.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Revenue was INR56 crore in fiscal
2017. With a capacity of 36,000 tonne per annum, the scale of
operations is likely to remain modest in the intensely
competitive steel industry that has many small and large
players.
* Large working capital requirement: Gross current assets were
high, estimated at about 90 days, driven by inventory and
debtors estimated at around 30 days and 45 days, respectively,
as on March 31, 2017.
Strengths
* Comfortable financial risk profile: The networth and gearing
are estimated to have been comfortable at INR10.93 crore and
0.81 time, respectively, as on March 31, 2017, while the
interest coverage ratio is estimated at 1.5 times for fiscal
2017.
* Extensive industry experience of the promoters and their funding
support: The promoters have been in the steel ingot
manufacturing industry for nearly a decade and have gradually
built a strong network of customers and suppliers in Raipur,
Chhattisgarh.
They have also extended unsecured loans of INR3.4 crore during
fiscal 2017 to support business operations.
Outlook: Stable
CRISIL believes PIPPL will continue to benefit from the healthy
prospects for the secondary steel industry over the medium term.
The outlook may be revised to 'Positive' in case of a significant
increase in revenue and profitability, leading to higher cash
accrual. The outlook may be revised to 'Negative' in case of low
capacity utilisation leading to a revenue decline, or large, debt-
funded capex, weakening liquidity.
Incorporated in 2009, PIPPL is promoted by Mr. Rajesh Agrawal and
Mr. Pradeep Agrawal. The company manufactures mild steel ingots,
which find application in rolling mills, where they are used as
raw material to manufacture various steel products. The
manufacturing plant is in Raipur.
For fiscal 2017, profit after tax (PAT) was INR0.19 crore on net
sales of INR55.98 crore, against a PAT of INR0. 8 crore on net
sales of INR54.46 crore for fiscal 2016.
QUEST INFOSYS: CRISIL Assigns B+ Rating to INR5MM Term Loan
-----------------------------------------------------------
CRISIL Ratings has revoked the suspension of its ratings on the
bank facilities of Quest Infosys Foundation (QIF) and has assigned
its 'CRISIL B+/Stable/CRISIL A4' ratings to the facilities. CRISIL
had, on March 31, 2016, suspended the ratings as QIF had not
provided the information required for a rating review. The trust
has now shared the requisite information, enabling CRISIL to
assign ratings to its bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Overdraft 7 CRISIL A4 (Assigned;
Suspension Revoked)
Term Loan 5 CRISIL B+/Stable (Assigned;
Suspension Revoked)
The ratings reflect QIF's subdued financial risk profile because
of high gearing, modest net worth, and weak debt protection
indicators, and geographical concentration in revenue. These
weaknesses are partially offset by the extensive experience of
QIF's trustees in the education sector, and its healthy operating
profitability
Key Rating Drivers & Detailed Description
Weaknesses
* Moderate financial risk profile: The financial risk profile is
constrained by moderate gearing estimated at 1.48 times and
modest net worth of INR12.54 crores for fiscal 2017. Debt
protection indicators remained moderate, with interest coverage
ratio and net cash accrual to debt ratio estimated at 2.47 times
and 0.10 times respectively for fiscal 2017.
* Geographic concentration in revenue, and exposure to intense
competition: QIF derives all its revenue from institutes in
Punjab, leading to geographic concentration in revenue. The
trust faces competition from many other reputed universities and
institutes in Punjab. CRISIL believes that any increase in
competition or slowdown in student intake because of shift in
student preference to other competing institutes will hit the
trust's business risk profile.
Strengths
* Healthy operating efficiency: QIF had healthy estimated
operating margin of 35% for fiscal 2017 (34.51% for fiscal
2016). The margin was at 34-37% over the 3 fiscals through 2016.
CRISIL believes the margin will remain high over the medium term
backed by economies of scale and increase in intake.
* Trustees extensive experience in the education sector: QIF is
headed by Mr. Dipinder Singh Sekhon, who has been in the
education sector for many decades. He started the distance
education programme offered by Punjab Technical University
(PTU), and president of the distance education programme of All
India Council for Technical Education (AICTE). QIF has leveraged
the experience of its trustees and achieved occupancy of 85% in
its Bachelor of Technology (B.Tech) course. CRISIL believes QIF
will continue to benefit from the trustees' extensive experience
in the education sector.
Outlook: Stable
CRISIL believes that QIF, will continue to benefit over the medium
term from its trustees extensive experience in the education
sector. The outlook may be revised to 'Positive' if the society
registers significant improvement in revenue as a result of
increase in student intake, leading to higher accruals, and
improvement in its financial risk profile. Conversely, the outlook
may be revised to 'Negative' if the society undertakes large debt-
funded capital expenditure (capex) programme, leading to
deterioration in its financial risk profile, or if occupancy rates
for its courses decline, or if the ongoing capex is delayed,
resulting in deterioration in its liquidity.
Set up in 2008 by Mr. Dipinder Singh Sekhon and his wife Ms
Rajveer Kaur, QIF provides education through its Quest Group of
Institutions at Jhanjeri in Mohali, Punjab. The institute is
affiliated to PTU and approved by AICTE. It offers B.Tech and
Master of Business Administration courses, and started new
courses, such as graduate courses in commerce, computer
applications, and business administration, in fiscal 2017.
QIS reported net profit of INR1.76 crores on net sales of INR8.49
crores in FY 2015-16, against net profit of INR1.90 crores on net
sales of INR9.26 crores in FY 2014-15
SHREE HAZARILAL: CRISIL Reaffirms B+ Rating on INR4.71MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on the
bank facilities of Shree Hazarilal Cold Storage Private Limited
(SHCSPL; part of the Somnath group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.71 CRISIL B+/Stable (Reaffirmed)
Term Loan 0.26 CRISIL B+/Stable (Reaffirmed)
Working Capital Loan 0.90 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
SHCSPL; Somnath Cold Storage Pvt Ltd (SCPL), Chinsurah Cold
Storage - Bansidhar Agarwalla and Co Pvt Ltd (CCS) 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.
SHREE VIJAYASHREE: CRISIL Reaffirms B+ Rating on INR6MM Loan
------------------------------------------------------------
CRISIL's rating on the long-term bank facilities of Shree
Vijayashree Food Processing Industries (SVFPI) continues to
reflect the firms' modest scale of operations in the intensely
competitive rice-milling industry, and the susceptibility of the
firm's operating profitability to changes in government
regulations and to volatility in raw material prices.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1 CRISIL B+/Stable (Reaffirmed)
The rating also factors in the firm's below-average financial risk
profile, marked by weak capital structure and debt protection
metrics. These rating weaknesses are partially offset by the
extensive experience of SVFPI's promoters in the rice industry and
benefits expected from the healthy demand prospects for this
industry.
Key Rating Drivers & Detailed Description
Weakness
* Susceptibility of operating profitability to changes in
government regulations and to volatility in raw material prices:
SVFPI's operating margin, at 6.50-7.23 percent over the three
years ended March 31, 2016, will remain modest over the medium
term. Operations will remain susceptible to changes in
government regulations as the domestic rice industry is highly
regulated in terms of paddy prices, export/import policy for
rice, and rice release mechanism. MSP of paddy and prevailing
rice prices are key determinants of a rice mill's profitability.
Paddy accounts for 85-90 percent of the cost of producing rice.
Rice is also procured by the Government of India (GoI) through
statutory levy on rice millers. Levy prices are fixed by GoI
before the beginning of every kharif and rabi season.
Additionally, in response to domestic market conditions, GoI may
restrict rice exports. For instance, it banned export of non-
basmati rice in 2007-08, which has been continued fearing
substantial increase in price because of domestic shortage,
restricting increase in rice prices in the domestic market and
adversely affecting profitability of rice millers. Rice prices
also depend on supply, which depends on the buffer stock
position of rice and availability of paddy, both of which are
regulated by GoI.
* Modest scale of operations and intense competition: SVFPI will
remain a small player over the medium term, and will be able to
scale up operations only gradually because of the intense
competition in the rice industry. The firm has modest milling
capacity of 6 tph in the presence of players with capacity of 30
tph in Karnataka, and has no immediate plan to increase
capacity. While large players have better efficiency and pricing
power, small players face intense competition and have low
pricing flexibility, which constrains their profitability and
results in stretched receivables. SVFPI's revenue was low, at
INR23 crores in 2015-16 (refers to financial year, April 1 to
March 31).
* Below-average financial risk profile, Weak capital structure:
Large working capital debt and term loans for developing
infrastructure and rice milling plant will keep SVFPI's gearing
high at 3.37 times as on March 31, 2016 over the medium term.
Net worth, at INR3.05 crores as on March 31, 2016, will remain
small on account of low accretion to reserves due to modest
revenue. Debt protection metrics will remain subdued over the
medium term. Interest coverage and net cash accrual to total
debt ratios were 1.5 times and 1 percent, respectively, for
2015-16.
Strengths
* Promoters' extensive industry experience and established
customers relationships: SVFPI will continue to benefit over
the medium term from its promoters' experience of more than 20
years in the rice industry, and its established client
relationships. Promoters' strong track record, leading to
established relationships with customers, has resulted in repeat
orders. Also, the mill is strategically located in the middle of
paddy growing areas.
Outlook: Stable
SVFPI will continue to benefit over the medium term from its
promoters' extensive industry experience. The outlook may be
revised to 'Positive' in case of substantial increase in revenue
and profitability, or sizeable capital infusion, resulting in a
better financial risk profile. Conversely, the outlook may be
revised to 'Negative' if SVFPI undertakes a large debt-funded
capex programme or if partners withdraw capital, leading to
deterioration in its financial risk profile.
SVFPI, set up in 2009, mills and processes paddy into rice, rice
bran, broken rice, and husk. Its rice mill at Allanagar in Koppal,
Karnataka, has installed milling capacity of 6 tonne per hour
(tph). Mr. Arihanthkumar Mehta, Mr. S Goutamchand Mehta, Mr. S
Vijaykumar Mehta, and Mr. Vishal Mehta are partners in the firm.
During 2015-16 (refers to financial year April 1 to March 31),
SVFPI reported revenues of INR23.84 crore with Profit after Tax
(PAT) of INR0.24 crore as compared to revenues of INR26.87 crores
with PAT of INR0.22 crores in 2014-15.
SHRI BANKE: CRISIL Assigns B+ Rating to INR6.5MM Term Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable/CRISIL A4'
ratings to the bank facilities of Shri Banke Bihari Cotfab Private
Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 6.5 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility .06 CRISIL B+/Stable
Bank Guarantee 1.25 CRISIL A4
Cash Credit 3.75 CRISIL B+/Stable
The ratings reflect the company's average financial risk profile,
exposure to risks related to project execution, modest scale of
operations, and exposure to highly competitive and fragmented
footwear industry. These weaknesses are partially offset by the
extensive experience of the promoters in the footwear industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Average financial risk profile: Financial risk profile is
expected to remain average marked by high gearing of 2.46 times
as on March 31, 2017. Debt protection metrics are likely to be
moderate, with interest coverage and net cash accrual to total
debt ratios estimated at 2.11 times and 0.11 times,
respectively, for fiscal 2017.
* Modest scale of operations in highly competitive industry:
Scale is modest as reflected in revenue estimated at INR32.85
crore for fiscal 2017 (Rs 17.76 crore in fiscal 2016). Modest
scale limits bargaining power with suppliers as well as
customers.
* Exposure to risks related to project execution: The company
will undertake capital expenditure (capex) of around INR9.0
crore in fiscal 2018. As the plan is still in a nascent stage,
funding and execution of the capex will be a key factor.
* Exposure to intense competition: The footwear industry is
intensely competitive with many players in the organised and
unorganised segments. The company also has to compete with
global entities such as Reebok, Nike, and Adidas.
Strengths
* Extensive experience of promoters: Presence of more than a
decade through group entity has enabled the promoters to
establish strong relationship with customers and suppliers and
increase manufacturing capacities. The company has also expanded
presence across Haryana, Punjab, Uttar Pradesh, Rajasthan, and
other northern states.
Outlook: Stable
CRISIL believes SBBCPL will benefit over the medium term from its
promoters' experience. The outlook may be revised to 'Positive' if
more-than-expected revenue growth while maintaining working
capital requirement; and higher-than-expected profitability lead
to better financial risk profile. The outlook may be revised to
'Negative' if an increase in working capital requirement or any
delay in stabilisation of operations post the proposed capex
weakens the financial risk profile.
Incorporated in 2013, SBBCPL manufactures hawai chappals, shoes,
and footwear at its unit in Bahadurgarh, Haryana. Products are
sold under the Mien and Hot Red brands. Operations are managed by
Mr. Shailesh Poddar, Mr. Amar Poddar, and Mr. Kailash Poddar.
SBBCPL reported a net loss of INR0.01 crores on revenues of
INR17.76 crores for fiscal 2016 against PAT INR0.04 crores on
revenues of INR15.21 crore for fiscal 2015.
SHRIRAM TRANSPORT: S&P Puts B Short-Term ICR on CreditWatch Dev.
----------------------------------------------------------------
S&P Global Ratings said that it had placed its 'BB+' long-term and
'B' short-term issuer credit ratings on Shriram Transport Finance
Co. Ltd. (STFC) on CreditWatch with developing implications. S&P
said, "We also placed our 'BB+' long-term issue rating on the
India-based finance company's senior secured notes on CreditWatch
with developing implications.
S&P related, "Our CreditWatch placement follows STFC's proposed
merger with IDFC Group. On July 8, 2017, STFC received in-
principle approval from its board of directors for evaluating the
merger."
"Any rating impact from the potential merger of Shriram group's
financial services businesses with the IDFC group would depend on
the final terms of the deal, including the post-transaction
structure, pricing, and financial profile of the merged group,"
said S&P Global Ratings credit analyst Nikita Anand. "The rating
impact would also depend on STFC's strategic importance within the
group following the merger."
S&P said, "We note that the proposed merger requires approval from
several regulatory bodies along with approval from both groups'
shareholders. Given the complex nature of the transaction
involving several listed entities, these approvals can take time.
We believe the proposed merger could take up to 12 months to
materialize.
"We expect to resolve the CreditWatch placement over the next
three to six months after we receive more details regarding the
merger, including the expected final group structure and
associated changes in management and strategy. To resolve the
CreditWatch, we will need to assess the creditworthiness of the
consolidated merged group, and STFC's strategic importance within
the group."
SURYA FOODS: CRISIL Assigns 'B' Rating to INR7MM Loan
-----------------------------------------------------
CRISIL has assigned 'CRISIL B/Stable 'rating on the long-term bank
facilities of Surya Foods.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B/Stable
Warehouse Receipts 7 CRISIL B/Stable
The rating reflects weak financial risk profile because of high
gearing and average debt protection metrics, and moderate scale of
operations in the highly fragmented rice industry. These
weaknesses are mitigated by the extensive experience of its
partners.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile: Financial risk profile is weak due
to high total outside liabilities to tangible networth estimated
at 5.7 times as on March 31, 2017'and moderate debt protection
metrics with adjusted interest coverage ratio and net cash
accrual to adjusted debt of 2.1 times and 0.02 time for fiscal
2017. The ratios are expected to be at similar levels over the
medium term.
* Moderate scale of operations: Scale of operations is moderate
with operating income estimated at INR 37.5 crore for fiscal
2017. Majority of sales are domestic. Due to intense competition
in the rice milling industry and limited value addition,
operating income is expected to grow moderately over the medium
term.
Strengths
* Partners' extensive industry experience: Partners have more
than 15 years of experience through another firm "Sangam Rice".
Backed by their experience, Surya Foods has established strong
relationship with customers and suppliers resulting in revenue
of INR 12.9 crore in the first year of operations and consequent
growth thereafter.
Outlook: Stable
CRISIL believes Surya Foods will benefit from the extensive
experience of its partners. The outlook maybe revised to
'Positive' if increase in revenue, leading to large cash accrual
or capital infusion and efficient working capital management
strengthen financial risk profile. The outlook maybe revised to
'Negative' if low cash accrual, sizeable working capital
requirement, or large, debt-funded capital expenditure weakens
liquidity.
Surya Foods was established in 2014 by Mr. Kidar Nath and his
sons, Mr. Ashok Kumar and Mr. Raj Kumar. The firm is based out of
Patran, Patiala and has milling capacity of 600 quintals per day.
Profit after tax was INR46 lakh over operating income of INR37.5
crore in fiscal 2017 against INR79 lakh and INR 34.7 crore in
fiscal 2016.
VRC AGRO: CRISIL Assigns B+ Rating to INR6.7MM Cash Loan
--------------------------------------------------------
CRISIL Ratings has assigned 'CRISIL B+/Stable' ratings to the long
term bank facilities of VRC Agro Farms Private Limited (VRC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6.7 CRISIL B+/Stable
Proposed Long Term
Bank Loan Facility 3.3 CRISIL B+/Stable
The rating reflects its modest scale of operations, its modest
operating margins and its exposure to intense competition prawns
trading and cultivation business. The rating also factors in its
below-average financial risk profile marked by its modest net
worth and interest coverage, high total outside liabilities to
adjusted debt (TOLANW) and its exposure to risks inherent in
seafood industry. These rating weaknesses are partially offset by
the promoter's extensive experience in the prawns trading and
cultivation industry and its established relationship with its
suppliers and customers.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations and exposure to intense competition
prawns trading and cultivation business: Though VM has been in
the industry more than two decades, the scale of operations of
the company have remained modest as reflected in its estimated
revenues of around INR39.6 crores in fiscal 2017. VRC also
remains exposed to intense competition prawns trading and
cultivation business with many large as well as small
unorganised players in the industry.
* Modest operating margin: VRC derives maximum revenues from
trading of prawns. Trading operations limit value addition,
hence operating margin has been modest at 5.5% for fiscal 2017.
The operating margins have though improved over the last 3 years
ending March, 2017 due to increasing contribution from own
cultivation and foray into processing of prawns leading to value
addition.
* Exposure to risks inherent in seafood industry: VRC's business
profile is exposed to risk inherent to the seafood industry. The
seafood industry is marked by uncertainty, which is more
pronounced on the supply side than on the demand side.
Furthermore, the industry is susceptible to the outbreak of
diseases, natural calamities.
* Below-average financial risk profile: VRC has below-average
financial risk profile marked by high TOLANW estimated at 6
times and estimated networth of INR3.1 crores as on March, 2017.
The interest coverage is modest at 1.9 times in fiscal 2017.
Strengths
* Extensive experience of the promoters and its established
relationship with its suppliers and customers: VRC is promoted
and managed by Mr. K. Ramakrishna who has been associated with
the prawn trading and cultivation segment for around three
decades. The extensive industry experience of the promoter has
enabled VRC to scale up its operations and have an established
presence in Nellore (Andhra Pradesh) and established
relationship with its suppliers and customers.
Outlook: Stable
CRISIL believes that VRC will maintain its credit profile over the
medium term aided by the extensive industry experience of its
promoter in the prawn cultivation and trading segment. The outlook
may be revised to 'Positive' if the VRC reports substantial
increase in revenues and operating profitability while maintaining
its s financial risk profile. Conversely, the outlook may be
revised to 'Negative' if the VRC's revenue and operating
profitability decline or if it undertakes a larger than expected
debt funded capital expenditure leading to weakening of its
financial risk profile.
Set up in 1994 as a proprietorship firm, Kanneganti Sea Foods, was
reconstituted into two private limited companies - VRC Agro Farms
Private Limited and VRC Shoreline Enterprises Private Limited in
2011. VRC Agro is engaged in both cultivation and trading of
prawns and is based out of Hyderabad, Telangana.
For fiscal 2017, VRC is estimated to report profit after tax (PAT)
of INR0.5 crores on net sales of INR39.6 crores against PAT of
INR0.3 crores on net sales of INR34 crores for fiscal 2016.
=========
J A P A N
=========
TAKATA CORP: Adds 2.7 Million More Vehicles to air bag recall
-------------------------------------------------------------
The Associated Press reports that Takata Corp. is adding 2.7
million vehicles from Ford, Nissan and Mazda to the long list of
those being recalled to replace potentially dangerous air bag
inflators.
The inflators are a new type that previously was thought to be
safe. Vehicles affected are from the 2005 through 2012 model
years, AP discloses.
According to the report, Takata inflators can explode with too
much force and spew shrapnel into drivers and passengers. At least
17 people have died and more than 180 injured due to the problem.
The inflators have caused the largest automotive recall in U.S.
history with 42 million vehicles and up to 69 million inflators
being called back for repairs.
Takata uses the chemical ammonium nitrate to inflate air bags. But
it can deteriorate when exposed to high airborne humidity and high
temperatures. Previously the company believed that a drying agent
called a desiccant stopped the chemical from degrading and the
inflators were safe.
But the National Highway Traffic Safety Administration said in a
statement on July 11 that tests done by Takata show that for the
first time, a type of desiccated inflator "will pose a safety risk
if not replaced," AP relates. The agency said it has no reports
of any inflators with the desiccant rupturing.
According to the report, Nissan said the new recall affects just
over 515,000 Versa subcompact hatchback and sedans from the 2007
through 2012 model years. Mazda said its recall covers about 6,000
B-Series trucks from 2007 through 2009. Ford, which has the most
vehicles involved in the latest recall, is reviewing the
information and will file a list of models within the five days
required by law.
AP relates that Takata said in documents filed with the safety
agency that it tested inflators returned from Nissan and Ford
vehicles, which use calcium sulfate as a drying agent. Although
none of the inflators blew apart, some showed a pattern of
deterioration in the ammonium nitrate propellant over time "that
is understood to predict a future risk of inflator rupture."
NHTSA said in a statement that not all Takata inflators with a
desiccant are being recalled. Takata used different drying agents
in other inflators, the agency, as cited by AP, said.
AP says the latest recall raises doubts about the safety of other
Takata Corp. inflators that use ammonium nitrate and drying
agents. The company has agreed to recall all original equipment
inflators without a drying agent in phases by the end of 2018.
NHTSA gave Takata until the end of 2019 to prove that inflators
with the drying agents are safe, or they must be recalled as well.
U.S. Sen. Bill Nelson, D-Fla., said on July 11 that NHTSA needs to
move faster to figure out whether all remaining Takata inflators
are safe. "This recall now raises serious questions about the
threat posed by all of Takata's ammonium nitrate-based air bags,"
Sen. Nelson said in a statement, AP relays. "We certainly can't
afford to wait until the December 2019 deadline for that
determination."
About Takata Corp
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide.
The Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea,
China and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the
U.S., amid recall costs and lawsuits over its defective airbags.
Takata and its Japanese subsidiaries commenced proceedings under
the Civil Rehabilitation Act in Japan in the Tokyo District Court
on June 25, 2017. Takata's main U.S. subsidiary TK Holdings Inc.
and 11 of its U.S. and Mexican affiliates each filed voluntary
petitions under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Del. Lead Case No. 17-11375) on June 25, 2017. Together with the
bankruptcy filings, Takata announced it has reached a deal to sell
all its global assets and operations to Key Safety Systems (KSS)
for US$1.588 billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is
tax advisor. Prime Clerk is the claims and noticing agent.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor while UBS Investment Bank also
provides financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of
the Chapter 11 Debtors, obtained an order of the Ontario Superior
Court of Justice (Commercial List), among other things, granting a
stay of proceedings against the Chapter 11 Debtors pursuant to
Part IV of the Companies' Creditors Arrangement Act. The Canadian
Court appointed FTI Consulting Canada Inc. as information officer.
TK Holdings, as the foreign representative, is represented by
McCarthy Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimant.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and
Tyson Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New
York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley &
McCloy LLP, in Washington, D.C., as its bankruptcy counsel.
TOSHIBA CORP: U.S. Court Orders to Allow WD's Access to Database
----------------------------------------------------------------
The Japan Times reports that a U.S. court on July 11 ordered
Toshiba Corp. to stop blocking Western Digital Corp.'s access to
databases of their chip joint venture, as the business partners
engage in an ongoing dispute over the Japanese company's plan to
sell its memory unit.
According to the report, the temporary order by the San Francisco
County Superior Court comes after Toshiba blocked Western
Digital's access to chip development data in their joint
operations last month.
The Japan Times relates that Toshiba, reeling from massive losses
stemming from the bankruptcy of its former U.S. subsidiary
Westinghouse, hopes to sell Toshiba Memory Corp. to raise cash,
while Western Digital said the planned sale would violate their
joint venture contract.
The court said Western Digital's chip business unit SanDisk Corp.
has shown that "serious irreparable harm will occur unless an
injunction is granted," the report relays.
A further hearing will be held on July 28, according to the court.
The Japan Times says Western Digital is separately seeking a
preliminary injunction against the sale of Toshiba Memory in a
California court where a hearing is scheduled July 14.
According to the report, Toshiba has filed a damages suit against
Western Digital for attempting to block the chip business sale.
At the same time, Toshiba is continuing talks with Western Digital
and others about the sale of Toshiba Memory, the report relyas
citing people with knowledge of Toshiba's meeting with creditor
banks on July 11.
Apart from the legal cases, Toshiba has told its creditor banks it
is in talks with Western Digital and Taiwan's Foxconn over the
sale of its chip unit in addition to its preferred bidder, banking
sources said in Tokyo, the report says.
The Japan Times adds that the company 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.
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, according to sources, due to
SK Hynix's proposal 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 chipmaker, the report says.
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.
TOSHIBA CORP: Landis+Gyr Unit Aims to Raise Up to $2.49BB in IPO
----------------------------------------------------------------
Reuters reports that Toshiba Corp.'s Landis+Gyr smart meters unit
aims to raise up to CHF2.4 billion ($2.49 billion) in an initial
sale of shares as the Japanese company unloads the business to
help cover losses at its bankrupt U.S. nuclear unit Westinghouse.
The price range for the IPO was set at 70 francs to 82 francs per
share, Landis+Gyr said on July 12, with the transaction to raise
between 2.1 billion francs and 2.4 billion francs, Reuters
discloses.
There is no overallotment option, and Toshiba and minority owner
INCJ are selling 100 percent of their stakes, the report says.
Shares are due to begin trading on July 21 on the SIX Swiss
Exchange, Reuters 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.
=====================
P H I L I P P I N E S
=====================
MIGHTY CORP: To Settle Tax Liabilities Through Asset Sale
---------------------------------------------------------
Mary Grace Padin at The Philippine Star reports that Mighty Corp.
has offered to settle its tax liabilities of PHP25 billion through
a loan and through proceeds of its sale to Japan Tobacco
International (JTI) Philippines Inc.
"We are studying the offer," the report quotes Finance Secretary
Carlos Dominguez III as saying in a statement.
Mr. Dominguez however clarified that the settlement offer of the
Bulacan-based manufacturer is separate from criminal charges the
Bureau of Internal Revenue (BIR) filed against the company, the
report says.
The Philippine Star relates that in a letter to BIR Commissioner
Caesar Dulay last July 10, Mighty president and director Oscar
Barrientos said the company is willing to offer an amount of P25
billion as settlement for the company's tax liabilities.
According to the report, Mr. Barrientos said the fund for the
settlement would be sourced from an interim loan from JTI
Philippines, as well as from proceeds from the sale of Mighty, its
affiliates and assets - including those owned by Wong Chu King
Holdings Inc. - to JTI for a total of PHP45 billion, exclusive of
VAT.
The report relates that Mr. Barrientos said the PHP25-billion
settlement offer will include PHP3.5 billion for the deficiency
excise taxes on its cigarette products and PHP21.5 billion for the
internal revenue tax liabilities, including income taxes from 2010
until the tax period at the closing of the deal with JTI.
The initial payment of PHP3.5 billion would be paid on or before
July 20, just before Mighty Corp. and JTI sign a binding
memorandum of agreement on the proposed buy-out, the report says.
The balance of PHP21.5 billion will be paid on or after the
closing of the proposed deal with JTI, the report notes.
Mr. Barrientos has also requested the BIR for a reinvestigation of
its pending cases before the Department of Justice following the
initial payment of PHP3.5 billion, The Philippine Star says.
"We also respectfully request the BIR to issue to the company and
its shareholders and officers following closing of the proposed
transaction (with JTI) and the payment of the PHP21.5 billion the
relevant Certificate of Availment of Compromise, a final tax
assessment for all the Company's excise and other tax issues
described above, and relevant tax clearances to the Company, its
shareholders and officers," Mr. Barrientos' letter read, The
Philippine Star relays.
Three cases have been filed by the BIR against Mighty Corp. before
the DOJ for the alleged non-payment of excise taxes and the use of
counterfeit tax stamps. In total, Mighty's estimated tax
liabilities have reached PHP37.88 billion, the report discloses.
Mr. Barrientos has also committed to retire the operations of
Mighty Corp. after the conclusion of its deal with JTI, adds The
Philippine Star.
=================
S I N G A P O R E
=================
FALCON ENERGY: Seeks Extension for SGD50MM Notes Due Sept. 2017
---------------------------------------------------------------
Navin Sregantan at The Business Times reports that Falcon Energy
Group will ask holders of SGD50 million of notes due September
2017 to extend the maturity date by three years and waive all
covenants, the offshore oil and gas contractor said on July 12
after the market closed.
Noteholders were told of the proposed duration of the extension at
an informal meeting with the company on July 12, the second such
meeting conducted by Falcon Energy as it seeks to conserve cash
amid an industry-wide downturn, The Business Times relats.
The notes carry a coupon of 5.5 per cent, the report discloses.
According to the report, Falcon Energy said it will conduct a
consent solicitation exercise, and will call a third informal
meeting with bondholders when details are closer to being
finalised.
Singapore-based Falcon Energy Group Limited is an investment
holding company. The Company, through its subsidiaries, operates
in oil and gas industry, providing a range of services to global
oil companies and contractors, from the initial exploration-stage
to production and post-production stage. It operates in four
segments: Marine, Oilfield and drilling services, Oilfield
Projects and Resources.
INFINIO GROUP: Auditor Raises Going Concern Doubt
-------------------------------------------------
Kenneth Lim at The Business Times reports that Infinio Group's
external auditor has withheld its opinion on the company's
financial report, citing uncertainties about asset valuations and
the company's ability to remain as a going concern.
Auditor Foo Kon Tan said that the management has not provided
sufficient evidence to support the carrying value of
SGD1.9 million for rights related to the Birthday Mine in
Australia, or been able to support the recoverability of that
amount, The Business Times relates.
Noting that the investment holding company had a loss of
SGD1.2 million in the latest year, net operating cash flows and
negative equity, the auditor said that there is "significant
doubt" about Infinio's ability to remain as a going concern,
according to The Business Times.
The company's directors said in an announcement that they believe
that the company will have sufficient capital to discharge its
liabilities as they fall due, the report adds.
Infinio Group Limited (SGX:5G4) is a Singapore-based investment
holding company. The Company's segments include Mining and Others.
The Mining segment relates to revenue generated from the Mining
operations in Australia. The Company's main asset is the Birthday
Mine. The mining rights related to the Birthday Mine, which
encompasses a total area of approximately 58.5 hectares, is
located over 30 kilometers north of Bullfinch, Western Australia.
MERCATOR LINES: Judicial Manager Back on Search for Investors
-------------------------------------------------------------
Soon Weilun at The Business Times reports that the search is on
again for a new lifeline for shipping company Mercator Lines'
frustrated judicial manager, as he jettisons one that was thrown
to it three months ago.
According to the report, the company's judicial manager, Yit Chee
Wah, said in a release to the Singapore Exchange on July 12 that
he has terminated an agreement that the company had with Nickolaos
Mitropoulos and Dimitrios Podaridis.
This is because they have failed to meet certain set conditions,
"despite several extensions of time granted by the judicial
manager," the report adds.
In April, Mercator said that it signed an implementation agreement
with the two persons, the report discloses. Together, they wholly
own three Australian businesses: Champion Commodities, Country
Fresh Milk and Champion Beverages.
But on July 12, judicial manager Yit Chee Wah said: "The judicial
manager wishes to inform that the implementation agreement has
been terminated by the judicial manager on behalf of the company,
on account of the individual parties' failure to meet their
condition precedents, despite several extensions of time granted
by the judicial manager," The Business Times relays.
The judicial manager will hence "recommence efforts to source for
other potential investors for the transfer of the company's
listing status", the release, as cited by The Business Times,
said.
Mercator underwent judicial management in January 2016, and has
since been selling its vessels for cash, the report discloses.
When the implementation agreement was announced in April this
year, the judicial manager said that one of the company's major
intangible assets is its listing status. "If the transfer is
successful, it will provide some recovery to incumbent
shareholders and creditors of the company," adds The Business
Times.
Mercator Lines (Singapore) Limited operates as a dry bulk shipping
company. The company charters maritime vessels on short-term and
long-term contracts; and provides marine transportation services.
====================
S O U T H K O R E A
====================
INDUSTRIAL BANK: Fitch Rates Basel III AT1 Notes 'BB+(EXP)'
-----------------------------------------------------------
Fitch Ratings has assigned the proposed US dollar-denominated
perpetual subordinated notes of South Korea's Industrial Bank of
Korea (IBK; AA-/Stable) an expected rating of 'BB+ (EXP)'.
While the size of the issue has yet to be determined, the notes
have a call option after five years and each interest payment date
thereafter. The notes will be issued under IBK's USD8 billion
global medium-term note programme, which was last updated on 30
June 2017. IBK will use the proceeds for its general corporate
purposes. Fitch expects the notes to qualify as Basel III
Additional Tier-1 (AT1) securities for regulatory capital
purposes. The final rating is contingent upon the receipt of final
documents conforming to the information already received.
KEY RATING DRIVERS
Fitch rates the Basel III AT1 notes four notches below IBK's
Viability Rating (VR) of 'a-' by applying two notches for loss
severity relative to the recovery prospects of senior unsecured
debt and another two notches for the high incremental non-
performance risk relative to the anchor rating.
The anchor rating of the notes is the VR, which is consistent with
Fitch's criteria and captures the notes' going-concern loss-
absorption feature - the coupon omission risk.
The two notches for the incremental non-performance risk are lower
than the typical three notches Fitch would apply to a Korean
commercial bank's AT1 notes with similar terms and conditions to
IBK's. Management is given full discretion on coupon payments or
omissions. However, Fitch views that in practice this decision
would be in effect dictated by South Korea's government (AA-
/Stable), the policy bank's controlling shareholder and ultimate
support provider. Fitch expects the government to be reluctant to
allow a coupon omission due to wider implications for the banking
system, for example on funding costs. The repercussions of
omitting a coupon would potentially not be limited to IBK as the
Korean financial system benefits from the stability provided by
its policy banks, which in aggregate account for about a quarter
of the system's total assets and loans.
The two notches for loss severity reflect the notes' poor recovery
prospects because the AT1 notes will be fully and permanently
written-off if and when IBK is designated by the local regulator
as an insolvent financial institution according to Article 2 of
the Act on the Structural Improvement of the Financial Industry,
the key resolution legislation in Korea. This means that investors
would not recover any of their investment.
The coupon payments may be partially or fully restricted if IBK's
regulatory capital ratios fall into the capital buffer zone (for
more details on the capital buffer zone, see Fitch: AT1 Coupon
Risk in Focus on New Korean Bank Capital Rules, dated 17 March
2016). At end-1Q17, IBK would have surpluses of 2.6 percentage
points (pp), 2.5 pp and 2.8 pp to the fully phased-in additional
buffer requirements of Common Equity Tier-1, Tier-1 and total
capital-adequacy ratios in 2019, respectively, assuming the
current 0% countercyclical capital buffer holds.
Moreover, a forceful coupon cancellation may be triggered if the
local regulator imposes against IBK prompt-corrective measures,
pursuant to Article 97 of the Regulation on Supervision of Banking
Business. It can also be triggered if the regulator imposes on IBK
an emergency measure (eg restrictions on acceptance of deposits
and a prohibition on repayment of debts) pursuant to Article 38 of
the same regulation.
The government has been a responsible shareholder of its policy
banks as it has helped them meet all their regulatory capital
requirements, mostly by injecting capital into the banks in a
proactive manner, and effectively preventing the policy banks'
capital ratios from falling into the capital buffer zone. Fitch
believes that there is an extremely high probability of the
government providing continued ongoing support, if needed, to IBK,
and currently does not have concerns over IBK's ability to avoid
falling into the capital buffer zone.
RATING SENSITIVITIES
The rating of IBK's Basel III AT1 notes is sensitive to a change
in IBK's Viability Rating, which in turn is sensitive to IBK's
operating environment and risk appetite. (For details, see Fitch
Affirms 3 Korean Policy Banks' IDRs; IBK's VR Rated 'a-', dated 4
July 2017).
The rating of the notes is also sensitive to a change in Fitch's
assumptions about the notching for incremental non-performance
risk. For example, it could be widened if Fitch develops concerns
over IBK's ability and flexibility to service full coupon payments
on time, which potentially depends on the government's propensity
to provide support to IBK.
KUMHO TIRE: Employees Hold Rally to Oppose Sale to Qingdao
----------------------------------------------------------
Yonhap News Agency reports that hundreds of employees of Kumho
Tire Co. on July 13 held a rally against plans by creditors to
sell the company to China's Qingdao Doublestar.
About 750 workers held separate rallies at the company
headquarters in Seoul and an R&D center in Yongin, Gyeonggi
Province, demanding creditors led by the state-run Korea
Development Bank stop the sales process, Yonhap says.
"The creditors are trying to sell our company to Doublestar, which
is inferior in every aspect, including size, technology and
marketing, ignoring our efforts (to stop the sale)," they said in
a statement, Yonhap relays. "Our clients and business partners, as
well as Kumho Tire employees, are all concerned about the
possibility of Doublestar closing Kumho Tire's factories at home
after securing Kumho Tire's technology and overseas assets."
According to Yonhap, workers also called on creditors to allow the
tiremaker time to stand on its own, saying, "We are determined to
do everything in our power to normalize the management of the
company using the world's top-notch technology and the global
distribution networks."
Qingdao Doublestar signed a KRW955 billion (US$827 million) deal
in March to acquire a 42% stake in Kumho Tire, but the process of
acquisition hit a snag over how much the Chinese company should
pay for the use of the Kumho brand name, Yonhap notes.
Kumho Asiana Group has called for the Chinese company to pay
0.5% of its sales to use the name for 20 years, while Qingdao
Doublestar suggested that it pay 0.2% for five years.
Yonhap adds that creditors claimed they ironed out a compromise
regarding the brand usage fee, with Kumho Asiana asked to inform
creditors of whether it will accept the mediation.
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
At that time, Kumho Asiana Group Chairman Park Sam-koo was given
a priority option to buy back the tiremaker should the creditors
of Kumho Tire decide to sell the company, according to Yonhap
News Agency.
The creditors signed a deal in April to sell their combined
42.01% stake in the tiremaker to Doublestar for KRW955 billion
(US$831 million), added Yonhap.
SHINSEGAE: To Spend KRW300BB in Loss-Making Convenience Stores
--------------------------------------------------------------
Yonhap News Agency reports that retail giant Shinsegae said on
July 13 it will invest KRW300 billion (US$263 million) over the
next three years to help its loss-making convenience store
business cope with the rapidly growing market.
Shinsegae, which tapped into the convenience store market in 2014
with an acquisition, has been suffering from losses as a relative
newcomer in the crowded industry, which first emerged in the
country in the 1980s, Yonhap discloses.
According to Yonhap, Shinsegae said it will change the name of its
convenience store brand from With Me to emart24 to attract more
customers familiar with the country's largest discount chain
E-Mart operated by the retailer.
"The rebranding was decided in desperation that we will be weeded
out of the fast-changing market if we do not innovate," Yonhap
quotes Shinsegae Vice Chairman Chung Yong-jin, the de facto leader
of the retailer, as saying.
"The investment will be for building more distribution centers and
developing new operating systems for the next generation," Kim
Song-yong, chief of the With Me operator, said during a press
conference held in Seoul, Yonhap relays.
Yonhap says the convenience store operator aims to run 2,700
stores and reach KRW700 billion in sales this year, nearly double
from the KRW378.3 billion recorded last year. It currently runs
2,174 stores nationwide.
With Me logged KRW135 billion in sales in 2015, a sharp increase
from KRW29.1 billion in 2014, but its operating loss widened from
KRW14 billion in 2014 to KRW26 billion in 2015 and KRW35 billion
last year, according to Yonhap.
"With our current business model, we need some 5,000 to 6,000
stores to record profits," the report quotes Kim as saying. "We
will push to open 1,000 new stores every year until we reach the
level."
*********
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
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TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
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thereof are US$25 each. For subscription information, contact
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*** End of Transmission ***