/raid1/www/Hosts/bankrupt/TCRAP_Public/170911.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
Monday, September 11, 2017, Vol. 20, No. 180
Headlines
A U S T R A L I A
AFG 2017-1: S&P Assigns BB (sf) Rating to Class E Notes
ARKADIA CONSTRUCTIONS: First Creditors' Meeting Set for Sept. 18
BOART LONGYEAR: Moody's Affirms Caa2 Corporate Family Rating
BOART LONGYEAR: S&P Lowers CCR to 'SD' on Distressed Transaction
BRIERTY LIMITED: First Creditors' Meeting Set for Sept. 15
DAPTO BOWLING: First Creditors' Meeting Set for Sept. 18
MATHIESON FAMILY: First Creditors' Meeting Set for Sept. 18
NETWORK TEN: Second Creditors Meeting Moved to September 19
UNIV. OF NEW SOUTH: First Creditors' Meeting Set for Sept. 18
C H I N A
CHINA AOYUAN: Fitch Rates Proposed USD Senior Notes 'BB-'
CHINA AOYUAN: Moody's Assigns B2 Rating to New USD Notes
CHINA AOYUAN: S&P Rates New USD Senior Unsecured Notes 'B'
HYDOO INT'L: Consent Solicitation No Impact on Fitch B- Rating
MAOYE INTERNATIONAL: Moody's Hikes CFR to B3; Outlook Stable
SINO-OCEAN LAND: Fitch Rates Proposed USD Perpetual Securities BB
H O N G K O N G
NOBLE GROUP: Shareholders OK Sale of N. American Gas & Power Unit
I N D I A
ADIG JEMTEX: ICRA Withdraws B+ Rating on INR5.50cr LT Loan
AIR INDIA: Government Mulls Excluding Debt Before Stake Sale
APS POWER: Ind-Ra Migrates 'B+' Issuer Rating to Not Cooperating
ARUNA FINANCE: Ind-Ra Assigns 'BB' Rating to INR250MM Bank Loan
BADRI ECOFIBRES: Ind-Ra Puts BB- LT Issuer Rating, Outlook Stable
BANSAL SHIP: CRISIL Reaffirms 'B+' Rating on INR5MM LT Loan
CELEBRITY CORPORATE: CRISIL Assigns 'D' Rating to INR7MM Loan
CHHAPRA HAJIPUR: ICRA Reaffirms 'D' Rating on INR756.99cr Loan
DARON ENGINEERING: Ind-Ra Ups Issuer Rating to B-, Outlook Stable
DAYANA POLYPLAST: Ind-Ra Ups Issuer Rating to BB-, Outlook Stable
GAYATRI IRON: ICRA Moves B+ Rating to Issuer Not Cooperating
GCX LIMITED: Moody's Confirms B3 CFR; Outlook Negative
GOURAV ROSHNI: CRISIL Hikes Rating on INR5MM Cash Loan to 'B'
GREENBILT INDUSTRIES: CRISIL Reaffirms 'B' Rating on INR21MM Loan
GREENHOUSE AGRO: Ind-Ra Moves B+ Issuer Rating to Not Cooperating
GVNS TOLLWAY: Ind-Ra Migrates 'BB' Loan Rating to Not Cooperating
HI-TECH FROZEN: ICRA Moves B Rating to Not Cooperating Category
INTERTOUCH METAL: ICRA Reaffirms B+ Rating on INR2.0cr LT Loan
ISHWAR OIL: ICRA Moves 'D' Rating to Not Cooperating Category
JAGANNATH PLASTIPACKS: Ind-Ra Assigns 'B' Rating, Outlook Stable
JAGANNATH POLYMERS: Ind-Ra Gives B+ Issuer Rating, Outlook Stable
JD INDUSTRIES: ICRA Lowers Rating on INR6.50cr Cash Loan to D
JMT AUTO: ICRA Reaffirms 'B' Rating on INR87cr Fund Based Loan
KRISHNENDU BHAKTA: ICRA Assigns B+ Rating to INR3.25cr Cash Loan
KUMAR ELECTRICALS: Ind-Ra Migrates 'BB' Rating to Not Cooperating
LALCHAND JEWELLERS: Ind-Ra Assigns BB+ Rating to INR350MM Loan
LAMIYA SILKS: CRISIL Assigns 'D' Rating to INR4.90MM Cash Loan
MANGALMURTI BIO-CHEM: ICRA Moves B Ratings to Not Cooperating
NIMP HEALTHCARE: Ind-Ra Moves D Issuer Rating to Not Cooperating
PRINCE PROPERTIES: ICRA Moves B+ Rating to Not Cooperating
PSN MOTORS: CRISIL Reaffirms D Rating on INR4.8MM Cash Loan
RAGA MOTORS: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
RANCHI EXPRESSWAYS: ICRA Reaffirms D Rating on INR1,191.6cr Loan
RIGA CERAMICA: CRISIL Lowers Rating on INR5.98MM Term Loan to B
S. NANDA: ICRA Moves D Rating to Issuer Not Cooperating Category
S.R.R. IMPEX: CRISIL Reaffirms B+ Rating on INR3.55MM Loan
SANGAR OVERSEAS: Ind-Ra Moves B Issuer Rating to Not Cooperating
SANSAR TEXTURISERS: CRISIL Ups Rating on INR35MM Cash Loan to B-
SHIV SAI: ICRA Moves B+ Rating to Not Cooperating Category
SHIV SHAKTI: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
SHIVA LOKENATH: CRISIL Assigns B+ Rating to INR14MM Cash Loan
SHREE JAGDAMBA: ICRA Moves B+ Rating to Not Cooperating Category
SHRIMAN ENTERPRISES: ICRA Moves B Rating to Not Cooperating
SRAVANI RAW: CRISIL Reaffirms B- Rating on INR4MM Cash Loan
SRS MODERN: Ind-Ra Affirms 'D' Long-Term Issuer Rating
SUPERTECH AGROGRAINS: Ind-Ra Puts 'BB-' Long Term Issuer Rating
SWAMIJI TRANSMISSION: Ind-Ra Moves B+ Rating to Not Cooperating
TATWA TECHNOLOGIES: Ind-Ra Assigns BB- Rating to INR85.76MM Loan
USHDEV ENGITECH: Ind-Ra Hikes INR895.2MM Term Loan Rating to BB+
VIJAYA AERO: CRISIL Lowers Rating on INR24.5MM LT Loan to 'D'
VISHNURAAM TEXTILES: CRISIL Lowers Rating on INR6.82MM Loan to D
J A P A N
SOFTBANK GROUP: S&P Rates Two New Sr. Unsec US Dollar Notes 'BB+'
TAKATA CORP: Court Approves Frankel as Future Claimants Rep
TAKATA CORP: OEM Customer Group Balks at Ch.11 Notice Cost
TOSHIBA CORP: Foxconn's JPY2.1TT Bid has Apple, Softbank Support
TOSHIBA CORP: Bain, SK Hynix Ups Bid for Chip Unit to JPY2.4TT
S I N G A P O R E
GRYPHON CAPITAL: High Court Enters Wind Up Orders
S O U T H K O R E A
HANJIN INTERNATIONAL: Moody's Assigns B2 Corporate Family Rating
X X X X X X X X
FIJI: Moody's Hikes Rating to Ba3; Revises Outlook to Stable
- - - - -
=================
A U S T R A L I A
=================
AFG 2017-1: S&P Assigns BB (sf) Rating to Class E Notes
-------------------------------------------------------
S&P Global Ratings assigned its ratings to seven of the eight
classes of prime residential mortgage-backed securities (RMBS) to
be issued by Perpetual Corporate Trust Ltd. as trustee for AFG
2017-1 Trust in respect of Series 2017-1.
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including its view that the credit support is
sufficient to withstand the stresses it applies. The credit
support for the rated notes comprises note subordination, excess
spread and lenders' mortgage insurance (LMI) on 46.2% of the
portfolio.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity facility
equal to 1.0% of the aggregate outstanding amount of the notes,
and the principal draw function are sufficient to ensure timely
payment of interest.
-- The extraordinary expense reserve of A$150,000 funded by AFG
Securities Pty Ltd. on the closing date to meet extraordinary
expenses. The reserve is to be topped up from excess spread, if
any, to the extent it has been drawn.
-- The counterparty exposure to National Australia Bank Ltd. as
liquidity facility provider and Australia and New Zealand Banking
Group Ltd. as bank account provider. The transaction documents
for the liquidity facility and bank account include downgrade
language consistent with S&P Global Ratings' counterparty
criteria.
A copy of S&P Global Ratings' complete report for AFG 2017-1
Trust in respect of Series 2017-1 can be found on RatingsDirect,
S&P Global Ratings' Web-based credit analysis system, at
http://www.spglobal.com/ratingsdirect.
RATINGS ASSIGNED
Class Rating Amount (mil. A$)
A1 AAA (sf) 65.00
A2 AAA (sf) 250.00
AB AAA (sf) 22.54
B AA (sf) 6.02
C A (sf) 4.20
D BBB (sf) 1.05
E BB (sf) 0.63
F NR 0.56
ARKADIA CONSTRUCTIONS: First Creditors' Meeting Set for Sept. 18
----------------------------------------------------------------
A first meeting of the creditors in the proceedings of Arkadia
Constructions & Interiors Pty Ltd will be held at the Office of
Jirsch Sutherland, Level 27, 259 George Street, in Sydney, NSW,
on Sept. 18, 2017, at 11:00 a.m.
Trent Andrew Devine of Jirsch Sutherland were appointed as
administrators of Arkadia Constructions on Sept. 6, 2017.
BOART LONGYEAR: Moody's Affirms Caa2 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service has appended a limited default
designation (LD) to Boart Longyear's Probability of Default (PDR)
rating Caa2-PD/LD. Moody's affirmed Boart Longyear's Caa2
Corporate Family Rating (CFR), and the Caa1 senior secured and
Caa3 senior unsecured ratings at Boart Longyear Management Pty
Limited. Boart Longyear's SGL-3 speculative grade liquidity
rating is unchanged. The outlook is negative. The LD designation
will be removed within 3 business days and the PDR will be Caa2-
PD.
Moody's Investors Service Moody's views the exchange of the
senior unsecured notes, (Caa3), interest reduction and PIK
election to maturity (2022) as a distressed exchange and limited
default under Moody's definition of default. Similarly, the
higher interest rate and maturity extension (to 2022) on the
senior secured notes as well as payment in kind (PIK) option to
December 2018 is also viewed as a distressed exchange.
The following summarizes rating action:
Outlook Actions:
Issuer: Boart Longyear Limited
-- Outlook, Remains Negative
Issuer: Boart Longyear Management Pty Limited
-- Outlook, Remains Negative
Affirmations:
Issuer: Boart Longyear Limited
-- Probability of Default Rating, Affirmed Caa2-PD /LD (/LD
appended)
-- Corporate Family Rating, Affirmed Caa2
Issuer: Boart Longyear Management Pty Limited
-- Senior Secured Regular Bond/Debenture, Affirmed Caa1 (LGD 3)
-- Senior Unsecured Regular Bond/Debenture, Affirmed Caa3 (LGD 5)
RATINGS RATIONALE
While Boart Longyear has been able to extend maturities, reduce
cash interest expense and improve it's near term liquidity, and
its financial performance is evidencing improving trends, the
company's metrics remain weakly positioned at the Caa2 CFR.
However, should the improved mining environment and increasing
exploration and development trends continue, and Boart continue
to evidence strengthening in its earnings and cash flow
generation, its metrics are expected to strengthen to levels
appropriate for its Caa2 CFR.
Headquartered in Salt Lake City, Utah, Boart Longyear Limited is
incorporated in Australia and listed on the Australian Securities
Exchange Limited. The company provides drilling services and
complimentary drilling products and equipment, principally to the
mining and metals industries. The company's performance in recent
years has been severely impacted by the steep downturn in
exploration and development activity within the industry.
Revenues for the twelve months ended June 30, 2017 were $688
million.
Boart Longyear is owned 54.3% (following the recapitalization and
pre-warrants) by Centerbridge Partners, L.P.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
BOART LONGYEAR: S&P Lowers CCR to 'SD' on Distressed Transaction
----------------------------------------------------------------
U.S.-based drilling services provider and manufacturer Boart
Longyear Ltd. has completed an exchange offer on $196 million of
its 7% senior unsecured notes for common equity and at the same
time is extending the maturities of its 10% senior secured notes.
S&P views this as a distressed transaction because there is a
realistic possibility of a conventional default without the
transaction and participating noteholders received less than the
original amount promised.
As a result, S&P Global Ratings lowered its corporate credit
rating on Salt Lake City-based Boart Longyear Ltd. to 'SD' from
'CC'. S&P also lowered its issue-level ratings on the company's
senior secured notes due 2018 to 'D' from 'CCC-' and its issue-
level rating on the company's senior unsecured notes due 2021 to
'D' from 'C'. The recovery ratings on the debt are unchanged.
At the same time, S&P removed the ratings from CreditWatch, where
it had placed them with negative implications on April 5, 2017,
shortly after the exchange offer was initially announced.
The downgrade follows Boart Longyear Ltd.'s announcement that it
has completed an exchange offer in which $196 million of the
company's 7% senior unsecured notes due 2021 are converted into
common equity. At the same time, the company has reinstated the
senior secured notes due 2018 at approximately $200 million, plus
accrued interest. The senior secured notes now expire December
2022 and Boart has the option to pay payment-in-kind (PIK)
interest for the first four quarters. The senior secured note
holders also receive 4% common equity after the recapitalization.
BRIERTY LIMITED: First Creditors' Meeting Set for Sept. 15
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Brierty
Limited will be held at Ground Floor Auditorium, 235 St Georges
Terrace, in Perth, WA, on Sept. 15, 2017, at 10:00 a.m.
Matthew David Woods, Hayden Leigh White and Clint Peter Joseph of
KPMG were appointed as administrators of Brierty Limited on Sept.
6, 2017.
DAPTO BOWLING: First Creditors' Meeting Set for Sept. 18
--------------------------------------------------------
A first meeting of the creditors in the proceedings of Dapto
Bowling Club Limited will be held at Dapto Bowling Club Limited,
66-76 Marshall Street, in Dapto, NSW, on Sept. 18, 2017, at
12:00 p.m.
Robert Michael Brennan of RT Hospitality Solutions was appointed
as administrator of Dapto Bowling on Sept. 6, 2017.
MATHIESON FAMILY: First Creditors' Meeting Set for Sept. 18
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Mathieson
Family Enterprises Pty Ltd will be held at the office of BPS
Reconstruction and Recovery, Suite 6, Level 5, 350 Collins
Street, in Melbourne, Victoria, on Sept. 18, 2017, at 11:00 a.m.
Simon Patrick Nelson of BPS Reconstruction and Recovery was
appointed as administrator of Mathieson Family on Sept. 7, 2017.
NETWORK TEN: Second Creditors Meeting Moved to September 19
-----------------------------------------------------------
John Elmes at C21Media reports that CBS Corp's takeover of
Network Ten in Australia has been delayed further after
administrators consented to a court order to adjourn the second
meeting of creditors until September 19.
C21Media relates that creditors were due to meet on September 12
to vote on CBS's proposal to pay most of Ten parent company Ten
Network Holdings' creditors in full and on the proposed deed of
company arrangement (DOCA) set out by administrator KordaMentha.
However, following an application from Ten's representatives, the
courts have pushed back the second meetings by a week.
According to the report, administrator Mark Korda said the
application was "disappointing," as it would hinder the
remuneration to staff and creditors outlined in CBS's offer.
Resolving the matters before the court ahead of the second
meetings, he said, would provide creditors with greater certainty
that the outcome of the meetings would be binding on all parties,
the report relays.
C21Media notes that CBS moved to buy the commercial broadcaster
at the end of August, using its position as the struggling
network's biggest creditor.
C21Media says the US studio has already paid AUD143 million
(US$114 million) to secured creditor Commonwealth Bank of
Australia and billionaire shareholders and loan guarantors Bruce
Gordon, Lachlan Murdoch and James Packer.
Other creditors to be paid in full include employees and key
content providers, such as prodcos Endemol Shine Australia and
ITV Studios Australia. Additionally, CBS agreed to underwrite
Ten's operations until the implementation of the DOCA.
"The administrators' recommendation to creditors followed an
exhaustive sale and recapitalisation process and a comparison of
the likely returns to creditors under all offers," C21Media
quotes Mr. Korda as saying.
"In recommending the CBS proposal to creditors, the receivers,
the administrators and [financial advisor] Moelis Advisory agreed
the transaction provided the best return to creditors as a whole
and had a high level of execution certainty.
"The application by the plaintiffs is disappointing as it delays
the outcome for employees and creditors provided for under the
CBS proposal."
It was previously reported that KordaMentha hoped to complete the
sale by mid-October, with payouts to most creditors delivered by
the end of the year. 21st Century Fox stands to lose a
substantial amount of the AUD450 million it claims it is owed by
Ten as part of the deal, C21Media notes.
About Network Ten
Network Ten is a division of Ten Network Holdings, one of
Australia's leading entertainment and news content companies,
with free-to-air television and digital media assets. Ten Network
Holdings includes three free-to-air television channels - TEN/TEN
HD, ELEVEN and ONE - in Australia's five metropolitan markets of
Sydney, Melbourne, Brisbane, Adelaide and Perth, plus the online
catch-up and streaming service tenplay.
As reported in the Troubled Company Reporter-Asia Pacific on
June 15, 2017, KordaMentha Restructuring partners Mark Korda,
Jenny Nettleton and Jarrod Villani have been appointed voluntary
administrators to Network Ten.
"Network Ten will continue to operate under its existing
management and operating structures with KordaMentha oversight.
Customers, employees and other stakeholders are assured that the
administrators intend to keep the business running. Viewers can
expect the same content they currently enjoy on Network Ten,"
KordaMentha said in a statement.
The appointment will allow the voluntary administrators to
explore options for the recapitalisation or sale of Network Ten.
UNIV. OF NEW SOUTH: First Creditors' Meeting Set for Sept. 18
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of University
of New South Wales International House Limited will be held at
Johnson Winter & Slattery, Level 25, 20 Bond Street, in Sydney,
NSW, on Sept. 18, 2017, at 11:00 a.m.
Robyn Louise Duggan and Morgan John Kelly of Ferrier Hodgson were
appointed as administrators of University of New South Wales on
Sept. 6, 2017.
=========
C H I N A
=========
CHINA AOYUAN: Fitch Rates Proposed USD Senior Notes 'BB-'
---------------------------------------------------------
Fitch Ratings has assigned China Aoyuan Property Group Limited's
(BB-/Stable) proposed US dollar senior notes an expected 'BB-
(EXP)' rating.
The notes are rated at the same level as Aoyuan's senior
unsecured rating because they constitute its direct and senior
unsecured obligations. The final rating is subject to the receipt
of final documentation conforming to information already
received.
KEY RATING DRIVERS
Strong Sales Performance: Aoyuan's 1H17 total contracted sales
increased by 57% yoy to CNY16.5 billion, after quadrupling to
CNY25.6 billion in 2016 from 2012 as the company continued its
fast-churn strategy. Fitch expects contracted sales to continue
to increase in 2017, backed by CNY54 billion-60 billion of
sellable resources, although the pace of growth is likely to be
slower than in 2016. About 72% of Aoyuan's 1H17 contracted sales
remained in China's Guangdong province, but the company is
prudently exploring opportunities in other provinces and
overseas.
Stable Financial Profile: Maintaining healthy leverage despite
rapid expansion sets Aoyuan apart from its fast-growing peers.
Leverage, measured by net debt/adjusted inventory, was 33.2% at
end-June 2017, a slight increase from 28.7% at end-2016. This
gives the company healthy headroom below the 40% level where
Fitch would consider negative rating action. Fitch expects the
ratio to remain stable at end-2017. Sales efficiency, measured by
contracted sales in the last 12 months/gross debt, was stable at
above 1.2x at end-June 2017. Fitch expects Aoyuan to maintain its
fast-churn model and prudent land acquisition strategy. This
should keep its financial profile healthy for the next 12-18
months, supporting its credit profile.
Adequate Land Bank: Aoyuan had 95 projects, with 17.1 million
square metres (sq m) of gross floor area at end-June 2017,
sufficient for four to five years of development. Around 20% of
land bank by value is in lower-tier cities, but the percentage
continues to decrease, with land bank quality improving over the
years. Moreover, about half of Aoyuan's land in lower-tier cities
is in smaller cities outside of Guangzhou that are still targeted
at buyers from the city. Fitch considers contracted sales from
these sites to be satisfactorily predictable, as they are easily
accessible from Guangzhou and the company has a satisfactory
execution record.
Healthy Liquidity: Aoyuan has a strong liquidity position, which
supports its planned expansion. Total cash was CNY13.7 billion at
end-June 2017, against short-term debt of CNY10.0 billion. The
company is also committed to improving its debt structure.
Funding initiatives in the last few years, both onshore and
offshore, and diversified funding channels improved its debt
maturity profile and cut funding costs. The company's weighted-
average funding cost was 7.6% at end-1H17, falling from 8.1% in
2016. Fitch estimate that by end-2017 Aoyuan will retain its
strong liquidity position and its funding cost will fall further
to 7.5%.
DERIVATION SUMMARY
Aoyuan's contracted sales are comparable with other 'BB-' rated
Chinese developers that have contracted sales of CNY25billion-30
billion. These peers include KWG Property Holding Limited (BB-
/Stable), Logan Properties Holdings Company Limited (BB-/Stable)
and CIFI Holdings (Group) Co. Ltd. (BB-/Positive).
Aoyuan's sales efficiency ratio is also similar to that of fast-
churn homebuilders, such as CIFI, Future Land Holdings Co., Ltd.
(BB-/Positive) and Times Property Holdings Limited (B+/Positive).
Aoyuan's net leverage of below 35% in the past several years is
in line with that of Logan and CIFI, but compares favourably
against KWG, which has leverage of 40%-42%, Yuzhou Properties
Company Limited (BB-/Stable), with leverage of 38%-42%, and Times
Property's 38%-40%.
No Country Ceiling or parent/subsidiary aspects affect the
rating. Operating environment risks make it unlikely for
companies in this sector to be rated above 'BBB+'.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- A stable land acquisition pace in 2017 and 2018 at 40%-50% of
contracted sales
- Increasing contracted sales, which are estimated on sellable
resources in the next 12-18 months, although at a slower pace
than in 2016
- A slightly higher average selling price for contracted sales
in 2017 due to a larger share of high-margin products
- Company to maintain its fast-churn and high cash-flow turnover
business model
RATING SENSITIVITIES
Negative: Developments that may, individually or collectively,
lead to negative rating action include:
- EBITDA margin sustained below 20% (end-June 2017, estimated at
23%)
- Net debt/adjusted inventory sustained above 40% (end-June
2017: 33%)
- Contracted sales/gross debt sustained below 1.2x (end-June
2017: 1.1x)
- Decrease of total land bank sellable gross floor area to below
3.5x of annual contracted sales gross floor area for a
sustained period
Positive: Positive rating action is not expected unless Aoyuan
substantially increases its scale and establishes core markets in
multi-regions without compromising its financial metrics. This is
not expected over the next 12-18 months.
LIQUIDITY
Healthy Liquidity: Aoyuan has a strong liquidity position, which
supports its planned expansion. Total cash was at CNY13.7 billion
at end-June 2017, against short-term debt of CNY10.0 billion. The
company is also committed to improving its debt structure.
Funding initiatives in the last few years, both onshore and
offshore, and diversified funding channels improved its debt
maturity profile and cut funding costs. Short-term debt accounted
for only 21% of total debt at end-1H17 and the company's
weighted-average funding cost was 7.6%, from 8.1% in 2016.
CHINA AOYUAN: Moody's Assigns B2 Rating to New USD Notes
--------------------------------------------------------
Moody's Investors Service has assigned a B2 senior unsecured
rating to the USD notes to be issued by China Aoyuan Property
Group Limited (B1 stable).
The ratings outlook is stable.
China Aoyuan plans to use the proceeds from the proposed notes
mainly to refinance existing indebtedness and for general working
capital purposes.
RATINGS RATIONALE
"The proposed note issuance will not have a material impact on
China Aoyuan's credit metrics, because the proceeds will be
mainly used for debt repayment," says Kaven Tsang, a Moody's Vice
President and Senior Credit Officer.
In addition, the proposed issuance will lengthen the companies'
debt maturity profile.
China Aoyuan's B1 corporate family rating (CFR) reflects its
track record of property development in the economically strong
Guangdong Province. It also considers the strength of its
management through previous down cycles, its adequate liquidity
and access to offshore bank funding.
On the other hand, the B1 CFR is constrained by the company's
fairly concentrated operation in Guangdong and the execution
risks associated with its planned expansion.
The B1 CFR also reflects Moody's expectation that China Aoyuan's
revenue/adjusted debt will improve to 65%-70% in the next 12-18
months from 47% at end-June 2017, and that its EBIT/interest
coverage will improve to 2.5x-3.0x over the same period from 2.2x
for the 12 months to June 2017.
These improvements are based on Moody's expectation that China
Aoyuan's revenues will improve to RMB17-23 billion in the next
12-18 months, supported by strong contracted sales growth.
China Aoyuan's contracted sales grew 65% year on year to RMB21.7
billion in the first eight months of 2017, after growing 69% year
on year to RMB25.6 billion for the full year of 2016.
China Aoyuan's B2 senior unsecured rating is one notch lower than
its CFR, reflecting subordination risk for senior unsecured bond
holders.
The stable outlook reflects Moody's expectation that over the
next 12 months China Aoyuan will continue to achieve positive
growth in contracted sales, remain prudent in its land
acquisitions and maintain an adequate liquidity position, while
posting improved credit metrics.
Upward ratings pressure could emerge if the company (1) grows in
scale; (2) demonstrates sustained growth in contracted sales and
revenue recognition through the cycle without sacrificing
profitability; (3) maintains its prudent approach to land
acquisitions and financial management; (4) improves its credit
metrics, such that EBIT/interest registers 3.0x or above, and
revenue/adjusted debt is at 80% or above, on a sustainable basis;
and (5) maintains good liquidity, such that cash consistently
covers short-term debt and there is sufficient room in its
maintenance covenants for bank loans.
However, the ratings could be downgraded if (1) the company shows
more volatile or slower growth in contracted sales; or (2) its
credit metrics weaken due to aggressive land acquisitions. In
particular, Moody's could consider downgrading the ratings if
China Aoyuan's EBIT/interest falls below 2.0x and/or
revenue/adjusted debt registers less than 65% on a sustained
basis.
A weakening in the company's liquidity position, as reflected by
cash/short-term debt below 1.0x, will also pressure the ratings.
The principal methodology used in this rating was Homebuilding
And Property Development Industry published in April 2015.
Listed on the Hong Kong Stock Exchange in October 2007, China
Aoyuan Property Group Limited was founded in 1998 by Mr. Guo Zi
Wen, the chairman of the company. As of June 30, 2017, the
company had 95 projects with a total gross floor area of 17.12
million square meter in land bank, which can support its
development needs in the next 3-4 years.
CHINA AOYUAN: S&P Rates New USD Senior Unsecured Notes 'B'
----------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issue rating to a
proposed issue of U.S. dollar-denominated senior unsecured notes
by China Aoyuan Property Group Ltd. (Aoyuan; B+/Stable/--). The
rating is subject to S&P's review of the final issuance
documentation.
The issue rating is one notch lower than the long-term corporate
credit rating on Aoyuan to reflect the structural subordination
risk.
Aoyuan intends to use the proceeds from the proposed notes to
refinance its existing debt. We believe the company will continue
to reduce its average funding cost, from 7.6% as of June 30,
2017, as it replaces more expensive borrowings such as the 11.25%
2015 senior notes.
S&P believes Aoyuan will control its debt growth by moderating
its pace of land acquisitions for the remainder of 2017,
improving its debt-to-EBITDA ratio toward 6x. Aoyuan's sales in
2017 are in line with our expectation, with 66% of the company's
Chinese renminbi (RMB) 33-billion target completed during the
first eight months. However, the company has stepped up land
acquisitions in the first half, especially through equity
transactions, resulting in increased debt and leverage at the end
of June 2017.
HYDOO INT'L: Consent Solicitation No Impact on Fitch B- Rating
--------------------------------------------------------------
The ratings on Chinese homebuilder Hydoo International Holding
Limited (B-/Stable) and its US dollar senior notes due 2018 will
remain unchanged even if it adopts proposed amendments to the
indenture on the notes, says Fitch Ratings.
The company announced on September 6, 2017 that it is soliciting
the consent of bondholders for the changes. The proposed
amendments aim to align the terms of the company's notes with
those of peers and provide more flexibility in business,
investments in joint ventures and minority-owned entities, and
asset sales. The proposed amendments, if adopted, will provide
Hydoo with more funding and operational flexibility to support
its diversification beyond the weak trade centre business.
Fitch does not expect to change its view on Hydoo solely due to
the adoption of the proposed amendments. However, Hydoo's ratings
may come under pressure if new investments outside its core
business burn cash and drain liquidity swiftly, while the trade-
centre business continues to show no improvement.
Major proposed amendments of the indenture include:
- extending the permitted businesses to include internet-related
business;
- increasing the permitted investment basket to 30.0% of total
assets from 15.0%;
- loosening the restrictions on asset disposal by removing the
fixed-charge coverage ratio requirement of no less than 3.0x
For a more detailed analysis of the rating drivers and
sensitivities for Hydoo, please refer to the rating action
commentary "Fitch Affirms Hydoo at 'B-'; Outlook Stable", dated
January 13, 2017.
MAOYE INTERNATIONAL: Moody's Hikes CFR to B3; Outlook Stable
------------------------------------------------------------
Moody's Investors Service has upgraded Maoye International
Holdings Ltd.'s corporate family rating to B3 from Caa1.
At the same time, Moody's has changed the ratings outlook to
stable from negative.
RATINGS RATIONALE
"The upgrade reflects Moody's expectations that Maoye will be
able to manage the refinancing of its short-term debt, execute
property sales to raise operating cash flow, and slow its pace of
acquisitions," says Danny Chan, Moody's lead analyst for Maoye.
Moody's believes that the company can manage its debt refinancing
risk as it (1) had completed property-held-for-sales of RMB997
million as of June 30, 2017; (2) had fixed assets and investment
properties of RMB22 billion as of June 30, 2017 that could offer
some capacity for refinancing; (3) refinanced its USD300 million
senior notes and RMB 700 million medium term notes in 2Q 2017;
and (4) improved its profitability as its net profit before tax
increased to RMB1 billion in 1H 2017 from RMB258 million in 1H
2016.
Maoye's refinancing risk is, as mentioned, manageable, although
its unpledged cash/short-term debt ratio was still a low 13.9% at
end-June 2017, after it had reduced its short-term debt to RMB8.1
billion at end-June 2017 from RMB10.7 billion at end-2016.
Moody's also expects that Maoye will continue to dispose of its
property inventories, and will likely generate more than RMB2
billion in property development-related revenues per annum in the
next 2 years.
This conclusion is based upon the fact that company generated
such revenues of RMB588 million in 1H 2017, a 297% increase over
1H 2016.
While the property development segment did not report a profit in
1H 2017, the disposals provided cash flow as the land costs had
been paid in previous years.
Maoye has also indicated that it will slow its pace of
acquisitions and accelerate the disposal of non-core assets and
loss-making stores. If this new strategy is successful, the
growth in debt growth will slow.
As a result, Moody's expects debt leverage -- measured by
debt/EBITDA -- will improve to around 6.5x- 7.5x over the next
12-18 months compared with 9.1x at end-December 2016.
The expected improvement in debt leverage is also based upon the
company's proven ability to acquire and turn around loss-making
operations. Moody's notes that it has integrated and improved the
revenues of Chengdu Renhe Chuntian Department Store Ltd. and
Chengdu Qingyang District Renhe Chuntian Department Store Ltd.,
as well as Inner Mongolia Victory Commercial (Group) Co., Ltd.,
which were bought in 2016.
This strength resulted in Maoye reporting a year-on-year rise of
38% in department store revenues to RMB2.9 billion in 1 H 2017.
Maoye's B3 corporate family rating takes into account of the
company's (1) strong market position in its home base, as well as
its self-owned-store strategy and concessionaire business model;
(2) ability to manage the challenges in China's evolving retail
market; (3) track record of growth through acquisitions; (4)
exposure to property development risk until the current inventory
is fully disposed; and (5) weak credit metrics.
The stable outlook reflects Moody's expectation that the company
will be able to manage the refinancing of its short-term debt as
well as slow its acquisitions.
Rating upgrade pressure could arise if the company can further
improve its liquidity and debt leverage, while remaining prudent
in expansion.
Indicators for an upgrade could include cash/short-term debt at
1.00x, debt/EBITDA below 6.0x-6.5x, and EBITDA/interest above
2.5x.
On the other hand, Maoye's ratings could be under downgrade
pressure if it (1) shows a deterioration in its liquidity
position, such as an inability to refinance short-term debt or it
materially increases its short-term debt, or (2) takes on
significant debt-funded acquisitions.
The principal methodology used in this rating was Retail Industry
published in October 2015.
Maoye International Holdings Ltd. is one of the leading
department store operators in China (A1 stable). Headquartered in
Shenzhen, Guangdong Province, the company has built a strong
position in its home market, while strategically expanding
elsewhere in the country. The company had 64 stores in 18 cities
across China's four main regions at end-June 2017.
SINO-OCEAN LAND: Fitch Rates Proposed USD Perpetual Securities BB
-----------------------------------------------------------------
Fitch Ratings has assigned Sino-Ocean Land Treasure III Limited's
proposed US dollar perpetual capital securities an expected
'BB(EXP)' rating. Sino-Ocean is a wholly owned subsidiary of
Chinese homebuilder Sino-Ocean Group Holding Limited (BBB-
/Stable). The proposed perpetual securities are irrevocably and
unconditionally guaranteed by Sino-Ocean Group and will have 50%
equity credit until the fifth year, five years before the
dividend pusher in year 10.
Sino-Ocean said the proceeds of the proposed securities will be
used for the general corporate purposes of Sino-Ocean Group
and/or its subsidiaries in accordance with applicable laws and
regulations. The final rating and equity credit are contingent
upon the receipt of final documents conforming to information
already received.
Fitch expects to accord 50% equity credit to the proposed
perpetual capital securities until 2022, five years before the
existence of look-back provisions in 2027 in accordance with
Fitch's Treatment and Notching of Hybrids in Non-Financial
Corporate and REIT Credit Analysis criteria. Fitch believes the
new hybrid security will be a permanent part of the group's
capital structure, following discussions with management that
indicate it is committed to hybrid capital.
Sino-Ocean Group's ratings reflect the strong support from China
Life Insurance Company Limited (China Life; A+/Stable), which
provides a two-notch uplift from Sino-Ocean Group's standalone
'BB' credit profile. Sino-Ocean Group's standalone credit profile
is supported by its strong focus on and leading position in
targeted Tier 1 and 2 Chinese cities, increasing rental income,
prudent land acquisitions, and its diversified funding channels.
KEY RATING DRIVERS
Support from China Life: China Life has positioned Sino-Ocean
Group as its sole strategic real-estate investment platform in
China. It holds 29.98% of Sino-Ocean Group and is committed to
owning no less than 25% in the future. China Life's linkage with
the property developer is strong and provides support for Sino-
Ocean Group's rating level. China Guangfa Bank Co., Ltd.
(BB+/Stable), in which China Life has a controlling stake,
subscribed to 20% of the first phase of medium-term notes issued
by Sino-Ocean Group in March 2017. Sino-Ocean Group may intensify
its collaboration with China Life in investment property funds
and the senior living business.
Focus on Top-Tier Cities: Sino-Ocean Group continues to focus on
Tier 1 and 2 cities, making it well-positioned to benefit from
the strong demand in these cities. The Beijing-Tianjin-Hebei
region will account for about 43% of its saleable resources in
2017 by value. At end-2016, 43% and 55% of Sino-Ocean Group's
land bank by value was in Tier 1 and 2 cities, respectively,
where the demand-supply dynamic is more balanced than in lower-
tier cities. Sino-Ocean Group aims to raise contracted sales by
about 39% to CNY70 billion in 2017, compared with about CNY110
billion of saleable resources. Its contracted sales in January-
June 2017 rose 48% to CNY30.5 billion, while the average selling
price (ASP) for contracted sales rose 21% to CNY18,600.
Rising Rental Income: Sino-Ocean Group's attributable rental
income from investment properties and property management fees
increased 12% to CNY1.7 billion in 2016, due to the addition of a
new office building in Shanghai, and higher rental and occupancy
rates in its existing projects. Sino-Ocean Group is also
expanding its property management, real estate finance and senior
living businesses to provide an additional source of income in
the long term. The contribution of new businesses is still
immaterial, given their small scale.
Prudent Land Acquisitions: Sino-Ocean Group's leverage, as
measured by net debt/adjusted inventory (including guaranteed
debt for joint ventures and associates), decreased to 34.9% in
2016 from 49.6% in 2015, due to stronger contracted sales and a
prudent land acquisition strategy. The company acquired 19
projects for its land bank, with total gross floor area of 4.8
million sq m, at an attributable cost of CNY10.5 billion, which
accounted for only 24% of its contracted sales proceeds in 2016.
Fitch expects the company to spend about CNY20 billion-25 billion
on land acquisitions in 2017, which will form about half of its
contracted sales proceeds. Fitch expects its leverage ratio to
increase to 35%-40% by end-2017 due to more land acquisitions.
DERIVATION SUMMARY
Sino-Ocean Group's standalone rating is more reflective of 'BB'
category peers such as Guangzhou R&F Properties Co. Ltd.
(BB/RWN), Beijing Capital Development Holding (Group) Co., Ltd.
(BCDH, BBB-/Stable, standalone BB/Stable), and Yuexiu Property
Company Limited (Yuexiu, BBB-/Stable, standalone BB/Stable).
Sino-Ocean Group's contracted sales scale is smaller than
Guangzhou R&F's and BCDH's, but higher than Yuexiu's. Its
leverage of 35% is similar to Yuexiu's, but lower than Guangzhou
R&F's and BCDH's.
KEY ASSUMPTIONS
Fitch's key assumptions within Fitch ratings case for the issuer
include:
- Attributable contracted sales of CNY50 billion-70 billion per
year in 2017-2019 (2016 total contracted sales: CNY50.4
billion)
- EBITDA margin (excluding capitalised interest) at 23%-26% in
2017-2019 (2016: 23.9%)
- Annual land replenishment cost at about 50% of total
contracted sales for 2017-2019 (2016: 21%)
- Attributable rental income from investment properties at about
CNY1.8 billion-2.0 billion for 2017-2019 (2016: CNY1.7
billion)
RATING SENSITIVITIES
Future Developments That May, Individually or Collectively, Lead
to Positive Rating Action
-- Evidence of strengthening linkage with China Life
-- EBITDA margin (excluding capitalised interest) sustained
above 25% (2016: 23.9%)
-- Net debt/adjusted inventory (including guaranteed debt for
JVs and associates) sustained below 35% (2016: 34.9%)
-- Contracted sales/gross debt (including guaranteed debt for
JVs and associates) sustained above 1.25x (2016: 1.0x)
Future Developments That May, Individually or Collectively, Lead
to Negative Rating Action
-- EBITDA margin sustained below 20%
-- Substantial decrease in contracted sales
-- Net debt/adjusted inventory (including guaranteed debt
for JVs and associates) rising close to 50%
-- Contracted sales/total debt (including guaranteed debt for
JVs and associates) sustained below 0.8x
-- Evidence of weakening linkage with China Life
LIQUIDITY
Ample Liquidity: As at June 30, 2017, Sino-Ocean Group had
unrestricted cash of CNY19.6 billion, enough to cover short-term
debt of CNY8 billion. The company issued CNY4 billion in domestic
bonds in March 2017. It also has approved but unutilised
facilities of CNY146.7 billion at June 30, 2017. This will be
sufficient to fund development costs, land premium payments and
debt obligations in 2017.
================
H O N G K O N G
================
NOBLE GROUP: Shareholders OK Sale of N. American Gas & Power Unit
-----------------------------------------------------------------
Andrea Soh at The Business Times reports that Noble Group
shareholders approved the sale of its North American gas and
power unit to rival Mercuria Energy Group on Sept. 5, with 99.76%
casting a "yes" vote at a special general meeting.
BT relates that the sale, which would bring in about US$261
million based on the second quarter results - slightly higher
than the initially announced figure of US$248 million - is
expected to help Noble reduce its debt levels.
Noble's chairman, Paul Brough, also told shareholders that the
group is in the second phase of the sale of its global oil
liquids unit, the report says. The proceeds from these will be
used to retire as much as US$3 billion in credit facilities
linked to these operations, as well as the group's remaining
debt.
Mr. Brough said the group is now in "very difficult"
circumstances, and has not been able to operate on a business-as-
usual basis after it lost the support of its bankers, the report
adds.
Hong Kong-based Noble Group Limited (SGX:N21) --
http://www.thisisnoble.com/-- engages in supply of agricultural,
industrial and energy products. The Company supplies agricultural
and energy products, metals, minerals and ores. Agriculture
products include grains, oilseeds and sugar to palm oil, coffee,
and cocoa. Energy business includes coal, gas and liquid energy
products. In metals, minerals and ores (MMO), it supplies iron
ore, aluminum, special ores and alloys. The Company operates
nearly in 140 locations. It supplies growth demand markets in
Asia and Middle East. Alcoa World Alumina and Chemicals is the
subsidiary of this company.
As reported in the Troubled Company Reporter-Asia Pacific on
Aug. 17, 2017, Moody's Investors Service has downgraded Noble
Group Limited's corporate family rating and senior unsecured bond
ratings to Caa3 from Caa1, and the rating on its senior unsecured
medium-term note (MTN) program to (P)Caa3 from (P)Caa1. The
rating outlook remains negative.
The TCR-AP reported on Aug. 17, 2017, that S&P Global Ratings
lowered its long-term corporate credit rating on Noble Group Ltd.
to 'CCC-' from 'CCC+'. The outlook is negative. S&P said, "At the
same time, we lowered the long-term issue rating on Noble's
outstanding senior unsecured notes to 'CC' from 'CCC'.
"We downgraded Noble to reflect the heightened risk that the
company will not be able to meet its debt obligations in the next
six months. We believe Noble's cash on hand and the potential
proceeds from the sale of Noble Americas Gas & Power Corp. (NAGP)
will not be enough to cover the company's revolving credit
facilities (RCF) if Noble is not able to turnaround, or if it
breaches its financial covenants and fails to obtain a waiver
from banks.
"We estimate Noble has around US$700 million in unutilized
committed facilities as of the end of the second quarter of 2017.
However, the amount may not be enough to cover the RCF if the
weak operating performance and working capital cash outflow
persist in the third quarter. A default in any principal or
interest payment may trigger a cross-default of other debt
obligations."
Noble made a loss in the second quarter of 2017 even if S&P
exclude one-off write-downs. The company's net debt continued to
increase during the period, after an increase in the first
quarter from a recent low in the fourth quarter of 2016.
Operating cash flow remained negative in the second quarter due
to loss-making underlying operations and continued working
capital cash outflow after excluding one-off write-downs in fair
value gains in derivative instruments.
Noble is also in the process of selling its global oil liquids
business. Although the sale will likely reduce the debt balance
and need for working capital, Noble's scale will also reduce
significantly. In addition, the pricing and timing of the sale is
still uncertain.
=========
I N D I A
=========
ADIG JEMTEX: ICRA Withdraws B+ Rating on INR5.50cr LT Loan
----------------------------------------------------------
ICRA withdraws the long-term rating of [ICRA]B+ assigned to the
INR10.00-crore bank facilities of Adig Jemtex Private Limited.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Fund-
Based-Cash credit 1.50 [ICRA]B+; withdrawn
Long-term Fund-
Based-Term loans 5.50 [ICRA]B+; withdrawn
Long-term-Unallocated 3.00 [ICRA]B+; withdrawn
Incorporated in 2010, AJPL is promoted by Jindal family of
Bhilwara who are also managing two other group companies- RSPL
and ASPL. AJPL has set up a high speed sizing unit in Bhilwara in
the vicinity of group concerns. The processing plant commenced
operations in FY15. Prior to the setting up of the processing
unit, the company was trading in fabric and yarn on a small
scale.
AIR INDIA: Government Mulls Excluding Debt Before Stake Sale
------------------------------------------------------------
Anurag Kotoky at Bloomberg News reports that India's government,
which is planning to sell a stake in its state-run flag carrier,
is considering options such as keeping out at least a part of its
$8 billion of debt to help lure investors, the nation's civil
aviation minister said.
Air India Ltd.'s assets such as real estate could also be spun
off into a separate company, Ashok Gajapathi Raju said in an
interview in New Delhi on Sept. 8, Bloomberg relates. A call will
be taken by a group of ministers headed by Finance Minister Arun
Jaitley, and the government is open to all options, including
allowing foreign investment in the carrier, he said.
"Its books are bad, you can't leave it like that," Bloomberg
quotes Raju as saying. "Suppose a portion of its debt is removed,
non-aviation-related assets are removed and put into a shell
company owned by the government, I think things will work."
According to Bloomberg, a successful sale of Air India is key for
Indian Prime Minister Narendra Modi, who has promised reforms and
vowed to improve government finances. But Air India's balance
sheet that includes real estate from Tokyo to London, two hotels,
five subsidiary companies and a joint venture, makes a possible
sale complicated.
While a sale makes economic sense for the government, it may
still face resistance from political parties, Bloomberg notes. At
least one attempt almost two decades ago to sell the airline
failed.
Other options include handing over management of Air India-owned
hotels to provincial governments or to the tourism board, Raju,
as cited by Bloomberg, said.
A decision on Air India's future is needed soon, because to
remain a "vibrant" and competitive airline, it needs to take some
calls on its business plan, which is limited by its weak
finances, Raju said, Bloomberg relays. Potential buyers also need
to know what's on the table before giving it "serious
consideration," he said.
IndiGo, India's biggest commercial airline, said in June it was
willing to buy Air India's international operations, or even the
entire airline business, while travel and aviation firm Bird
Group has shown interest in bidding for the carrier's ground
handling business, according to Bloomberg.
"If Air India ceases activities, no one gains," Bloomberg quotes
Raju as saying. "If debt has to go with it, no one will be
interested."
About Air India
Air India Ltd -- http://www.airindia.com/-- is the flag carrier
airline of India owned by Air India Limited (AIL), a Government
of India enterprise. The airline operates a fleet of Airbus and
Boeing aircraft serving various domestic and international
airports. It is headquartered at the Indian Airlines House in
New Delhi.
As reported in the Troubled Company Reporter-Asia Pacific on
March 28, 2014, The Times of India said Air India got a breather
in the form of INR1,000-crore equity infusion from the government
on March 26, 2014. According to the report, the airline's
unending financial stress had got worse as the Centre had so far
given INR6,000 crore instead of the promised INR8,500 crore for
the fiscal. As a result, AI had to bridge this gap by borrowing
money from banks at 11%-12%, which increased its debt servicing
burden, the report said. Before the infusion, the government had
injected INR12,200 crore into AI and there was a shortfall in
equity to the tune of INR3,574 crore -- despite the airline
meeting most of the milestone-linked equity targets -- leading to
a liquidity crunch, the report related.
Air India has posted continuous losses since 2007, according to
The Economic Times.
APS POWER: Ind-Ra Migrates 'B+' Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated APS Power Tech
(India) Private Limited's (APTIPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR49 mil. Fund-based working capital limit migrated to non-
cooperating category IND B+(ISSUER NOT COOPERATING)/IND
A4(ISSUER NOT COOPERATING) rating;
-- INR60 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4(ISSUER NOT COOPERATING)
rating;
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 26, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated on July 25, 2005, APTIPL manufactures and repairs
power and distribution transformers at its facility in Lucknow.
ARUNA FINANCE: Ind-Ra Assigns 'BB' Rating to INR250MM Bank Loan
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned ratings to Aruna
Finance Limited's (AFL) bank loans as follows:
-- INR250 mil. Bank loans assigned with IND BB/Stable rating.
KEY RATING DRIVERS
The ratings reflect AFL's small scale of operations, high
geographical concentration and weak funding diversity. AFL had a
portfolio of INR270 million at FYE17 (FYE16: INR189 million)
constituting vehicle, gold and demand loans. The loan book is
concentrated in the state of Andhra Pradesh with merely three
branches namely Governorpet Vijayawada (portfolio concentration
as a percentage of total portfolio FY17: 77.1%, FY16: 80.1%),
Prakashnagar (15.7%, 11.6%) and Mangalagiri (7.1%, 8.1%). The
company plans to open three more branches in Andhra Pradesh in
FY18.
A major portion of the portfolio (75% of total assets under
management as of FY17) consists vehicle loans, with gold and
demand loans constituting the rest of the portfolio. AFL's
funding profile lacks diversity with access to funds from just
one bank and one NBFC.
However, the ratings are supported by the company's comfortable
asset quality with gross non-performing loan ratio of 0.41% in
FY17 (FY16: 0.16%) on a 90 days past due (dpd) basis. At present,
it follows a 120dpd asset recognition policy. Ind-Ra expects
credit costs as a percentage of assets under management (FY17:
0.03% FY16: 0.0%) to rise in FY18 as the company plans to shift
to 90+dpd non-performing loan recognition policy.
The ratings also factor in AFL's adequate capitalisation of 30.7%
in FY17 (FY16: 33.8%) as compared with similar rated peers and
moderate leverage (debt to equity) ratio of 2.2x (1.9x). The
ratings also benefit from the company's comfortable profitability
with net interest margins of 13% in FY17 (FY16: 12.8%), and
operating buffers and internal accruals of 19.1% (13.8%). During
FY17, AFL's return on average assets and return on average equity
was 5.2% (FY16: 4.2%) and 16.6% (12.0%), respectively.
The ratings also factor in the promoter's more than 35 years of
experience in the similar line of business. The company has an
experienced management team, and MIS and IT systems which are
sufficient for the current scale of operations. However, these
would be required to be significantly strengthened with growing
scale of operations.
RATING SENSITIVITIES
Negative: A decline in the asset quality, a significant
deterioration in the liquidity profile and a rise in leverage
reducing capitalisation buffers could result in a negative rating
action.
Positive: An increase in the scale of operations along with
geographical diversification while maintaining the asset quality,
and an increase in the funding mix could result in a positive
rating action.
COMPANY PROFILE
AFL is a Reserve Bank of India registered non-deposit taking non-
bank finance company - asset finance company operating in Andhra
Pradesh. Mr. Narayana Rao Bobba is the promoter.
BADRI ECOFIBRES: Ind-Ra Puts BB- LT Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Badri Ecofibres
Private Limited (BEPL) a Long-Term Issuer Rating of 'IND BB-'.
The Outlook is Stable. The instrument-wise rating actions are:
-- INR150 mil. Fund-based working capital limit assigned with
IND BB-/Stable rating; and
-- INR131.7 mil. Long-term loan due on September 2023 assigned
with IND BB-/Stable.
KEY RATING DRIVERS
The ratings reflect BEPL's limited operational track record as it
commenced its operations in October 2015, leading to moderate
scale of operations. FY17 was the first full year of operations
for the company. The company operated for only five months in
FY16.
The ratings also reflect the company's moderate profitability and
thus credit metrics due to its susceptibility to volatility in
raw material prices. According to the FY17 unaudited financials,
revenue was INR977 million (FY16: INR331 million), EBITDA margin
was 7.7% (8.3%), interest coverage was 2.6x (2.3x) and net
leverage (adjusted net debt/operating EBITDAR) was 3.79x (9.5x).
The ratings are supported by the comfortable liquidity position
of the company which is reflected from its average maximum
working capital utilisation of 84% for the three months ended
July 2017.
RATING SENSITIVITIES
Positive: An improvement in the revenue along with maintenance of
the credit profile would lead to a positive rating action.
Negative: Deterioration in the EBITDA margin leading to
deterioration in the credit metrics would lead to a negative
rating action.
COMPANY PROFILE
BEPL is a private limited company formed in 2013. Promoted by Mr.
Lakhan Lal Gupta and his son Mr. Amit Gupta, the company
manufactures recycled polyester staple fibres and is based out of
Raisen, Madhya Pradesh.
BANSAL SHIP: CRISIL Reaffirms 'B+' Rating on INR5MM LT Loan
-----------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B+/Stable/CRISIL A4' ratings on
the bank facilities of Bansal Ship Breakers (BSB).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Letter of Credit 15 CRISIL A4 (Reaffirmed)
Letter of Credit 5 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect BSB's modest scale of operations
and exposure to risk related to cyclicality in fragmented ship-
breaking industry. The ratings also factors in a below-average
financial risk profile marked by leveraged capital structure and
subdued debt protection metrics. These rating weaknesses are
partially offset by the extensive experience of promoters in the
ship-breaking industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: The firm's scale of operations
varies with the vessel broken and sold. The revenues remained
modest at INR9 Cr. in fiscal 2017 thus, reflecting modest scale
of operations.
* Leveraged capital structure and subdued debt protection
metrics: The gearing ratio was high at 4 times as on March 31,
2017. The subdued debt protection metrics is marked by weak
interest coverage ratio of 1.75 times for fiscal 2017.
* Exposure to risks related to a cyclical and fragmented
industry: The ship-breaking industry is cyclical and the
viability of the business is inversely correlated with the
international freight index. The company has to compete with
small players during periods of limited availability of vessels.
Domestic players also face competition from ship-breakers in
China, Bangladesh, and Pakistan.
Strengths
* Extensive experience of promoters: The firm is part of Bansal
group which is managed by the Bansal family. The firm benefits
from the extensive experience of over 2 decades of promoters in
ship breaking business.
Outlook: Stable
CRISIL believes that BSB will continue to benefit from the
extensive industry experience of its promoters. The outlook may
be revised to 'Positive' if there is substantial improvement in
topline and profitability, backed by an increase in ship-breaking
activity results in improvement in financial risk profile. The
outlook may be revised to 'Negative' if liquidity is constrained
by inability to recover the cost of ship purchase because of a
sharp fall in steel scrap prices or adverse movements in foreign
exchange rates.
Set up in 1993, BSB undertakes ship-breaking activity in
Maharashtra and Gujarat. The firm, promoted by Mr. B C Bansal,
undertakes ship-breaking activity at Mazagaon in Mumbai. The
promoter has been in the ship-breaking business for the past 35
years.
CELEBRITY CORPORATE: CRISIL Assigns 'D' Rating to INR7MM Loan
-------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Celebrity Corporate Club (CCC) and has assigned its
'CRISIL D' ratings to the bank facilities. CRISIL had suspended
the rating on October 30, 2015, as CCC had not provided the
necessary information required for a rating review. The company
has now shared the requisite information, enabling CRISIL to
assign a rating to its bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long Term Loan 7 CRISIL D (Assigned;
Suspension Revoked)
Overdraft 1 CRISIL D (Assigned;
Suspension Revoked)
The rating reflects delay in servicing term debt because of weak
liquidity. This is reflected in high bank limit utilisation and
muted debt protection metrics.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile
Total outside liabilities to tangible networth ratio was high,
estimated at 7 times as on March 31, 2017, while debt protection
metrics were muted, with interest coverage ratio and net cash
accrual to adjusted debt of 1.5 times and 0.08 time for fiscal
2017.
* Weak liquidity
Liquidity is weak because of highly utilised bank lines and
barely sufficient cash accrual to service repayment obligation.
Strength
* Experience of promoter
Benefits from the promoter's experience (above a decade) should
continue to support the business risk profile.
Set up in 2010 by Mr. Kangeyan, CCC runs a club in Chennai which
has three branches in Tamil Nadu.
CHHAPRA HAJIPUR: ICRA Reaffirms 'D' Rating on INR756.99cr Loan
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the
INR756.99 crore term loan facilities of Chhapra Hajipur
Expressways Limited (CHEL) at [ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Term Loan 756.99 [ICRA]D; Reaffirmed
Rationale
The rating remains constrained by the continued delays in
servicing CHEL's term loan obligations. Owing to delays in
securing RoW by the authority, CHEL was granted extension of
timeline for completion of project till December, 2017 as against
scheduled COD of July, 2013. As on March 2017, 51.74 km of RoW
has been handed over to CHEL and 15.00 km is yet to be handed
over. CHEL achieved financial progress of 82.96% of initial
project cost which corresponds to 76.70% in terms of physical
progress. Further, there has been cost escalation which is
estimated at INR369 crore (51% of initial project cost); of this,
INR257.19 crore is required for completion of 51.7 km stretch
(75% of total stretch) in order to achieve provisional completion
certificate. The rating continues to take into account the
implementation risks, pending land acquisition and susceptibility
to adverse movement of the interest rates.
The rating also factors in the operational strength of the
promoter (MPL), who is also the Engineering, Procurement and
Construction (EPC) contractor, fixed-price EPC contract; absence
of traffic risk and low revenue risk due to annuity nature of the
project. ICRA notes that CHEL has been selected by NHAI for one
time fund infusion. NHAI is expected to infuse INR175 crore out
of which NHAI has already infused around INR75 crore under this
scheme and would have the first charge on annuities post project
completion. NHAI is expected to pay compensatory annuities once
CHEL attains provisional completion certificate. These annuities
will be used to repay the funds infused by NHAI and interest
accrued thereon.
Going forward, CHEL's ability to service its debt obligations in
a timely manner will be the key rating sensitivity. Further,
achieving provisional completion, the acquisition of the
remaining right of way will be the other rating sensitivities.
Key rating drivers
Credit strengths
* Low revenue risk: Annuity nature of the project eliminates
traffic risks; strong credit profile of the project owner and
annuity provider, NHAI (rated [ICRA]AAA(Stable))
* One time fund infusion of INR175 crore sanctioned by NHAI out
of which NHAI has infused around INR75 crore as on March, 2017
Credit challenges
* Recent delays in servicing interest obligation
* Running delays in execution by around 53 months. NHAI has
approved extension of timeline till December 2017
* Exposed to interest rate risk given that the interest on the
loans is reset every year post COD
* Ability to maintain the operation and maintenance expenses
(including the major maintenance) within budgeted levels post
commercial operation date (COD) and ensure availability of lane
as stipulated.
Chhapra-Hajipur Expressways Limited (CHEL) has been incorporated
as a special purpose vehicle promoted by Madhucon Infra Limited
(MIL) and Madhucon Projects Limited (MPL) to undertake the
implementation of four- laning of Chhapra to Hajipur section of
NH-19 from km 143.200 to km 207.200 in the state of Bihar under
NHDP Phase III on Design, Build, Finance, Operate, Transfer
(DBFOT) Annuity basis. The total project cost has been revised to
INR1181.50 crore as against initial estimates of INR812.50 crore.
The total concession period is 15 years including the
construction period of 2.5 years. CHEL will receive a fixed
annuity payment of INR65.43 crores semi-annually for a period of
12.5 years. As on March, 2017 around INR719.24 crore of debt has
been drawn and promoters' have infused INR272.37 crore.
DARON ENGINEERING: Ind-Ra Ups Issuer Rating to B-, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Daron
Engineering Private Limited's (DEPL) Long-Term Issuer Rating to
'IND B-' from 'IND D'. The Outlook is Stable. The instrument-wise
rating actions are:
-- INR42.5 mil. (decreased from INR59.4 mil.) Term loans due on
March 2023 upgraded with IND B-/Stable rating; and
-- INR20.0 mil. Fund-based facilities upgraded with IND B-
/Stable/IND A4 rating.
KEY RATING DRIVERS
The upgrade reflects timely debt servicing by DEPL during the
three months ended August 2017. The ratings reflect DEPL's
comfortable liquidity as the average utilisation of fund-based
facilities was 48.1% over the 12 months ended July 2017.
The ratings derive support from DEPL's increased scale of
operations and moderate credit metrics. According to FY17
provisional financials, DEPL's revenue increased to INR144
million (FY16: INR24 million) as FY17 was the first full year of
operations. EBITDA interest coverage (operating EBITDA/gross
interest expense) was 2.6x in FY17 (FY16: 2.4x) and net financial
leverage (adjusted debt net of cash/EBITDA) was 4.4x (25.5x).
DEPL has registered INR57.697 million of revenue during 4MFY18.
The ratings, however, are constrained by a continuous decline in
EBITDA margin during FY15-FY17 (FY17: 13.2%, FY16:16.0%, FY15:
19%) due to an increase in the raw material prices.
RATING SENSITIVITIES
Positive: Any substantial improvement in revenue and EBITDA
margin leading to sustained improvement in credit metrics will be
positive for the ratings
Negative: A deterioration in the liquidity profile will be
negative for the ratings.
COMPANY PROFILE
Incorporated in 2011, DEPL offers complete turnkey solutions from
conceptualisation to designing and building structures for
industrial usage with top to bottom erection processes. The
commercial operation of DEPL started in September 2015.
DAYANA POLYPLAST: Ind-Ra Ups Issuer Rating to BB-, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Dayana Polyplast
Pvt Ltd's (DPPL) Long-Term Issuer Rating to 'IND BB-' from IND
B+. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR100 mil. (reduced from INR135.7 mil.) Long-term loans due
on March 2025 upgraded with IND BB-/Stable rating;
-- INR120 mil. (increased from INR75 mil.) Fund-based facilities
upgraded with IND BB-/Stable/IND A4+ rating.
KEY RATING DRIVERS
The upgrade reflects a continuous improvement in DPPL's scale of
operations and comfortable credit metrics. According to FY17
provisional financials, revenue grew at a CAGR of 66.21% over
FY13-FY17 to INR725 million (FY16: INR554 million) owing to an
increase in orders from new customers. During 1QFY18, the company
achieved revenue of INR228.2 million. As of August 2017, DPPL had
an order book of INR250.16 million, to be executed within the
next six months. EBITDA interest coverage (operating EBITDA/gross
interest expense) improved to 3.0x in FY17P (FY16: 2.6x) and net
leverage (total adjusted net debt/operating EBITDAR) to 5.0x
(5.3x) on account of a reduction in total debt.
The upgrade also reflects an improvement in DPPL's liquidity
position with 61% average utilisation of fund-based working
capital limits during the 12 months ended August 2017 as opposed
to near full utilisation during the 12 months ended March 2016.
However, the ratings are constrained by the company's volatile
EBITDA margins which ranged between 3% and 10.7% over FY14-FY17
(FY17P: 7.3%, FY16: 10.2%, FY15: 10.7%, FY14: 8.3%) owing to
fluctuations in raw material (crude oil derivatives) prices and
foreign currency; the company derives 25% of its revenue from
exports sales.
The ratings, however, remain supported by DPPL's founders' two
decades of experience in the manufacturing of high-density
polyethylene and polypropylene fabrics.
RATING SENSITIVITIES
Negative: Any decline in the revenue and the EBITDA margins
leading to deterioration in the credit metrics will lead to a
negative rating action
Positive: A substantial growth in the revenue while maintaining
strong order book position and an improvement in the operating
profitability leading to a sustained improvement in the credit
metrics could be positive for the ratings.
GAYATRI IRON: ICRA Moves B+ Rating to Issuer Not Cooperating
------------------------------------------------------------
ICRA has moved the ratings for the INR28.00 crore bank facilities
of Gayatri Iron & Steels to the 'Issuer Not Cooperating'
category. The rating is now denoted as [ICRA]B+ (Stable); ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term: Cash 22.75 [ICRA]B+ (Stable); ISSUER
Credit NOT CO-OPERATING; Rating
moved to the 'Issuer Not
Cooperating category'
Rationale
The rating action is based on limited cooperation and no updated
information on the entity's performance since the time it was
last rated in March 2016. The lenders, investors and other market
participants are thus advised to exercise appropriate caution
while using this rating as the rating does not adequately reflect
the credit risk profile of the entity. The entity's credit
profile may have changed since the time it was last reviewed by
ICRA; however, in the absence of requisite information, ICRA is
unable to take a definitive rating action.
As part of its process and in accordance with its rating
agreement with GIS, ICRA has been trying to seek information from
the entity so as to monitor its performance and has also been
sending repeated reminders to the entity for payment of
surveillance fee that became due. However, despite multiple
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, ICRA's
Rating Committee has taken a rating view based on best available
information. In line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, the
company's rating is now denoted as: "[ICRA] B+ (Stable) ISSUER
NOT COOPERATING".
Key rating drivers
Credit strengths
* Experienced promoters Credit weaknesses
* Moderate scale of operations
* Vulnerability of profitability to fluctuations in the raw
material prices; highly competitive industry marked by the
presence of numerous unorganised players and various established
players
* Vulnerability to cyclicality inherent in the steel industries
Gayatri Iron & Steels (GIS) is a partnership firm setup in the
year 2010. The firm manufactures mild steel Ingots and rolled
steel products like channels, TMT bars, angles, etc. GIS's
manufacturing facility is located in Roorkee (Utrakhand) with an
installed annual capacity of 48000 TPA for ingots and 36000 TPA
for rolled products.
GCX LIMITED: Moody's Confirms B3 CFR; Outlook Negative
------------------------------------------------------
Moody's Investors Service has confirmed the B3 corporate family
rating and senior secured debt rating of GCX Limited.
The outlook is negative.
This concludes the review of the ratings for downgrade initiated
by Moody's on June 1, 2017.
RATINGS RATIONALE
GCX is a wholly owned subsidiary of Reliance Communications
Limited (India) (RCOM, Ca, negative) through an intermediary
holding company, Global Cloud Xchange Limited (GCXL).
"The confirmation of GCX's B3 rating reflects the company's
stable operating performance and relatively low leverage. The
company had $53 million cash on hand at June 30, 2017, and
Moody's expects cash and cash from operations will be sufficient
to cover projected capex of $20-25 million, interest and working
capital outflows over the next 12 months," says Annalisa Di
Chiara, a Moody's Vice President and Senior Credit Officer.
The company generated around $400 million of revenues for the 12
months ended June 30, 2017, $127 million of reported EBITDA and
$81 million of cash EBITDA. GCX is also on track to achieving its
targeted $64 million of IRUs in FY18, having already delivered
$36 million at the end of August.
As a result, GCX also reported debt/EBITDA of 2.8x, and Moody's
estimates adjusted EBITDA to be around 3.0x, in line with Moody's
expectations.
However, the rating also considers the linkages to its parent,
RCOM, which announced a debt standstill to allow for the
completion of two strategic transactions -- the sale of its
telecommunications tower assets and the de-merger of its core
wireless operations which it will merge with Aircel Limited in a
new joint venture.
If the transactions do not complete by December 31, 2017, bank
lenders to RCOM may exercise their right to convert their debt
into equity, in accordance with Reserve Bank of India (RBI)
guidelines.
"The negative outlook reflects the uncertainty surrounding RCOM's
debt standstill and corporate restructuring. Moody's believes the
process heightens the risks of future transactions or events that
could drive GCX's leverage higher than Moody's expectations,
reduce its liquidity, or limit its ability to access the capital
markets," adds Di Chiara, also Moody's lead analyst for GCX.
For example, GCX said that its $30 million working capital
facility -- which is set to expire on September 9, 2017 -- has
not yet been extended. Moody's believes this situation may be
reflective of the lenders wanting to reduce their exposure to
RCOM-related entities during the debt standstill period.
While Moody's still expects GCX to maintain sufficient liquidity
from cash from operations and cash on balance sheet, the
company's inability to extend the working capital facility is
credit negative.
Still, GCX is not a restricted subsidiary under RCOM's $300
million bond indenture and therefore its assets and cash flows
are ring-fenced from creditors at RCOM.
However, all of the shares in GCX and GCXL are pledged against a
$15 million loan outstanding at GCXL's parent, Reliance Globalcom
BV (RGBV), which is 100% owned by RCOM. This situation could
expose GCX to various issues should RGBV's lending banks call for
repayment of the loan, or take over ownership of GCX or GCXL
through the pledged shares. This change in shareholding could
trigger a put option for GCX bondholders, if accompanied with a
ratings downgrade. That being said, this is not Moody's base case
assumption.
Upward ratings pressure is unlikely, given the uncertainty
surrounding the parent's debt restructuring. In addition, GCX's
refinancing risks will rise over the next 12 months as the
maturity on the company's $350 million senior secured bonds nears
in August 2019.
Given the restructuring underway at its parent, should
transactions or events arise that elevate GCX's leverage, reduce
its liquidity or restrict it from paying interest as scheduled,
then negative ratings pressure would arise.
Downward ratings pressure could also emerge should new IRU sales
trend below $60 million on an annualized basis, such that
cash/EBITDA falls below $80 million, or the company's liquidity
profile tightens, such that cash falls below $45 million.
The principal methodology used in these ratings was Global
Communications Infrastructure Rating Methodology published in
June 2011.
GCX Limited, incorporated in Bermuda in 2014, wholly owns five
subsea cable systems on major data traffic routes. As of 31
March, these cable systems had a total length of 68,698
kilometers with 46 landing stations in 27 countries. GCX provides
data connectivity solutions to major telecommunications carriers
and large multinational enterprises in the US, Europe, Middle
East and Asia Pacific with a need for multi-national IP-based
solutions and connectivity.
GOURAV ROSHNI: CRISIL Hikes Rating on INR5MM Cash Loan to 'B'
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
Gourav Roshni Limited (GRL) to 'CRISIL B/Stable' from 'CRISIL D.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL B/Stable (Upgraded
from 'CRISIL D')
The rating upgrade reflects improvement in GRL's liquidity driven
by improvement in operating revenue and margins leading to timely
servicing of its debt obligations. It is expected that GRL will
maintain its liquidity over the medium term, aided by growth in
the operating revenue and improved profitability.
The rating reflects a modest scale of operations and exposure to
intense competition. Revenue is estimated at INR17.74 crore in
fiscal 2017, and INR8.90 crore for the four months ended
August 25, 2017and has order book in hand of INR2 crore; revenue
is expected to grow at 5-10% annually over the medium term.
Liquidity is supported by absence of debt-funded capital
expenditure (capex) plans for the medium term. However, working
capital requirement is large, with gross current assets (GCAs)
estimated at 420 days as on March 31, 2017.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations:
Though GRL has grown at 42 per cent year-on-year in fiscal 2017,
its scale of operations remains modest, with revenue of about
INR17.74 crore; on account of intense competition in the market
from branded players such as Havells India Ltd, Bajaj Electricals
Ltd, and Anchor Electricals Pvt Ltd. The commoditised nature of
the products'wires, miniature circuit breakers (MCBs), and tube
lights'lead to lower profitability.
CRISIL believes that GRL will continue to face intense
competition from large players and the order flow will be a key
rating sensitivity factor.
* Working capital-intensive operations:
Working capital requirement is large because of high receivables
and sizeable inventory. Company keeps open inventory (not backed
by orders) of nearly eight to nine months, this led to high
inventory level. Because of intense competition and limited
bargaining power, GRL has to offer extended credit to customers,
leading to high receivables level. Hence, the company has to
stretch payables and rely on bank borrowing to meet working
capital requirement.
* Below-average financial risk profile:
The networth was low, estimated at around INR2.47 crore as on
March 31, 2017, with limited increase expected over the medium
term due to low accretion to reserves given the small scale of
operations and average operating profitability. The total outside
liabilities to tangible networth ratio was high, estimated at
8.92 times as on March 31, 2017, and is expected to remain high
in the range of 6.5-7.5 times over the medium term due to
considerable reliance on external borrowing, despite the absence
of any debt-funded capex plans. GRL's interest coverage and net
cash accrual to total debt ratios were 2.68 times and 0.12 time,
respectively, in fiscal 2017; the ratios are projected at 2.5-2.7
times and 0.11-0.12 time, respectively, over the medium term.
Strength:
* Experience of the promoters:
Promoter Mr. Pankaj Khanna has experience of over one decade in
the industry. The experience has enabled him to gain a keen
understanding of the dynamics of the industry as well as develop
good contacts with suppliers. It has a wide distribution network
in North and East. Over the years with strong association in the
market, they have added new distribution network in Punjab too.
CRISIL believes that with the wide distribution network spread
across West Bengal, Rajasthan, Haryana, and Punjab, and addition
of agents and distributors will help GRL to increase operating
income and profitability over the medium term.
Outlook: Stable
CRISIL believes that GRL will continue to benefit over the medium
term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if GRL significantly
improves its net cash accruals or its financial risk profile,
with prudent working capital management. Conversely, the outlook
may be revised to 'Negative' if GRL reports decline in revenue
and profitability, resulting in low cash accruals, or undertakes
a large debt-funded capex, weakening its liquidity.
GRL was incorporated in 2010, and is based at Sahibabad in
Ghaziabad, Uttar Pradesh. It is currently managed by Mr. Pankaj
Khanna. The company manufactures switches, LED (light emitting
diode) lights, fans, and miniature circuit breakers under the
Gkon brand.
Profit after tax is estimated at INR0.70 crore on net sales of
INR17.74 crore for fiscal 2017; net loss was INR0.07 crore on net
sales of INR12.49 crore for fiscal 2016.
GREENBILT INDUSTRIES: CRISIL Reaffirms 'B' Rating on INR21MM Loan
-----------------------------------------------------------------
CRISIL has been consistently following up with Greenbilt
Industries Private Limited for obtaining information through
letters and emails dated May 24, 2017 and June 7, 2017 among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term 21 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Greenbilt Industries 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 Greenbilt Industries Private
Limited is consistent with 'Scenario 1' outlined in the
'Framework for Assessing Consistency of Information with CRISIL
B' category or lower. Based on the last available information,
CRISIL has reaffirmed the rating at 'CRISIL B/Stable'.
Promoted by Mr. Aditya Agrawal, Greenbilt was incorporated on
June 4, 2012. The company is setting up a manufacturing unit of
AAC blocks, having installed capacity of 1,71,000 CBM per annum
at Durg district in the state of Chhattisgarh.
GREENHOUSE AGRO: Ind-Ra Moves B+ Issuer Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Greenhouse Agro
Products' Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND B+(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR130 mil. Term loan migrated to non-cooperating category
with IND B+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 30, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2013, Greenhouse Agro Products is engaged in the
prawn seed hatchery business.
GVNS TOLLWAY: Ind-Ra Migrates 'BB' Loan Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated GVNS Tollway
Private Ltd's bank loan rating to the non-cooperating category.
The issuer did not participate in the surveillance exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The rating action is:
-- INR360 mil. Senior project bank loans migrated to non-
cooperating category with IND BB(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Dec. 2, 2016. Ind-Ra is unable to provide an update as it does
not have adequate information to review the rating.
COMPANY PROFILE
GVNS Tollway is a special purpose vehicle; it secured a 15-year
concession from the government of Andhra Pradesh to design,
finance, build, operate and transfer a two-lane, 600m bridge on
the Miryalaguda-Kodada Andhra Pradesh state highway in February
2009. The project is sponsored by GVR Infra Project Limited.
HI-TECH FROZEN: ICRA Moves B Rating to Not Cooperating Category
---------------------------------------------------------------
ICRA has moved the ratings for the INR11.80-crore bank facilities
of Hi-Tech Frozen Facilities Private Limited (HTFFPL) to the
'Issuer Not Cooperating' category. The rating is now denoted as
"[ICRA] B (Stable) ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 10.00 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Term Loan 1.80 [ICRA]B (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Rationale
The rating action is based on limited information on the entity's
performance since the time it was last rated in February 2016.
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating
as it does not adequately reflect the credit risk profile of the
entity. The credit profile may have changed since the time it was
last reviewed by ICRA; however, in the absence of requisite
information, ICRA is unable to take a definitive rating action.
As part of its process and in accordance with its rating
agreement with HTFFPL, ICRA has been trying to seek information
from the entity so as to monitor its performance and had also
sent repeated reminders to the company for payment of
surveillance fee that has been overdue, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Extensive experience of the promoters in the cold storage
business
* Favourable demand outlook for cold storage facilities;
advantage for the entity due to its proximity to consumption
centre
Credit weaknesses
* Profitability exposed to adverse fluctuations in prices of
traded items
* Rental income vulnerable to agro-climatic risks
* Stiff competitive pressures due to presence of alternative
storage facilities in the nearby area.
Hi-Tech Frozen Facilities Private Limited (HTFFPL) was
incorporated by Mr. Vijay Shah for setting up a frozen and cold
chain facility in Surat, Gujarat. The cold chain facility
commenced operations in FY2010-11 and has an installed cold
storage capacity of 10,000 MT. The company also has two
refrigerated trucks of 7 MT and 9 MT capacities for transporting
farm produce to cold storage facility and then to the consumption
centres. The cold storage facility was set up under the aegis of
the "Integrated Cold Chain Infrastructure Project Scheme"
launched by the Ministry of Food Processing Industries, Govt. of
India, under which financial assistance in the form of grant-in-
aid @50% of the total cost of plant and machinery and technical
civil works is given to the company (subject to a maximum grant
of INR10.00 crore). HTFFPL received a total grant of INR7.20
crore under the scheme.
INTERTOUCH METAL: ICRA Reaffirms B+ Rating on INR2.0cr LT Loan
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating of [ICRA]B+ for the
INR2.00-crore fund-based facilities and the long-term / short-
term rating of [ICRA]B+/A4 for the INR13.50-crore non-fund based
bank facilities of Intertouch Metal Buildings Private Limited
(IMBPL). The outlook on the long-term rating is 'Stable'. The
rated amount has been enhanced to INR15.50 crore from INR10.00
crore earlier.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Fund-
Based-CC 2.00 [ICRA]B+ (Stable); reaffirmed
Long Term/Short (2.00) [ICRA]B+ (Stable)/[ICRA]A4;
Term-Interchangeable reaffirmed
Long Term/Short
Term-Non Fund Based
Bank Guarantee
Inland/Import LC 10.00 [ICRA]B+ (Stable)/[ICRA]A4;
Long Term/Short
Term-Unallocated 0.20 [ICRA]B+ (Stable)/[ICRA]A4;
Rationale
The reaffirmation of the ratings positively factors in the rich
experience of the promoters in the field of civil engineering,
timely funding support provided by the promoters, and long
association with Kalzip Roofing System, enabling steady order
flows for the company. The ratings also consider the company's
efforts towards vertical integration by setting manufacturing
plant for PEBs (pre-engineered buildings). The ratings are,
however, constrained by the company's limited scale of current
operations, which restricts the economies of scale benefits
leading to pressure on pricing and thin margins, vulnerability of
profits to any demand slowdown in the end-user industries and
fragmented nature of the business with competition emanating from
other organised and unorganised players. The ratings are also
tempered by the moderate financial profile characterised by
volatility in revenues, thin operating profit margins, high
working-capital intensity and moderate debt-coverage indicators.
Going forward, the company's ability to scale up its revenues,
improve profit margins and debt-coverage indicators will be the
key rating factors.
Key rating drivers
Credit Strengths
* Rich experience of the promoters in the field of civil
contracting for over two decades:
Incorporated in 2000, the company provides commercial
construction services and industrial building system that include
pre-engineered buildings (PEBs), civil work on turnkey bases,
Metal Roof/ wall claddings in coated substrates, roof/ wall
cladding profiles and Kalzip aluminium roofing system. The
Managing Director of the company, Mr. Niraj Malik, is a civil
engineer with more than 23 years of experience in the field of
civil engineering including contract management, negotiation,
construction, project planning, management, etc.
* Favorable demand for pre-engineered building (PEB) and Kalzip
products to support the company's revenue growth over the near to
medium term: The company operates predominantly out of two
segments - pre-engineered buildings (PEBs) and Kalzip Roofing
Systems (Kalzip). PEBs include steel structure, wall cladding and
roofing solutions where the company associated itself with a
German-based client for selling Kalzip products. The company has
a mixed order book of PEBs and Kalzip orders amid rising share of
Kalzip orders over the past couple of years. The company has an
order book in hand worth ~Rs. 50 crore at present. Of this, the
company expects to achieve around INR40 crore in FY2018 and has
already booked revenues worth ~Rs.14 crore till July, 2017.
* Long association with Kalzip Roofing System to support steady
order flows: In 2006, the company entered into an association
with Kalzip and the orders for the usage of German products. The
same started from 2007, supporting the growing order book of the
company. Kalzip products are used by elite customers and the
share of revenues from Kalzip roofing has been increasing in the
recent past due to higher rates commanded and the company's sole
presence in southern India to carry out Kalzip roofing work. The
order-book outstanding in FY2018 also reflects orders
predominantly from Kalzip segment (around 66%).
Credit Weaknesses
* Small scale of operations limits benefits of economies of
scale; fragmented nature of the industry with competition from
organised and unorganised players: The company operates primarily
in PEBs and Kalzip roofing systems. In the PEB segment, the
company faces competition from other players across the country
and hence the market share of the company in this segment stands
at around 5%. However, the company is a sole channel partner for
Kalzip products in the south region owing to which the company
derives more than 40% market share in this segment. Further, the
company's limited scale of operations restricts the economies of
scale benefits, leading to pressure on pricing and thin margins.
* Profits vulnerable to demand slowdown in end-user industries:
Profits are contingent upon the demand scenario in the end-user
industries and any slowdown is expected to affect the margins of
the company. To mitigate the risk to an extent, the company has
geographically diversified across pan India.
* Financial profile characterised by thin profit margins, high
working capital intensity and moderate debt-coverage indicators:
The operating margins range around 5%-7%, with raw material and
employee costs accounting for the major portion of expenses.
Debt-coverage indicators also remain moderate owing to low
operating profits and high debt levels. Long-duration contracts
and modest bargaining power resulted in elongated working capital
cycle for the company.
Established in 1997 and incorporated in 2000, the company
provides commercial construction services and industrial building
system that include Pre-Engineered Buildings (PEBs), civil work
on turnkey bases, metal Roof/ wall claddings in coated
substrates, roof/ wall cladding profiles and Kalzip aluminium
roofing system. Other service offerings of the company include
latchways fall arrest systems, hunter douglas facade systems,
KME, MN and VMZINC. In FY2008, the company established an
association with Kalzip Aluminium Roofing. Kalzip is offered as
fully compatible and coordinated roofing and often, walling
system, from structural steel to outer sheet.
ISHWAR OIL: ICRA Moves 'D' Rating to Not Cooperating Category
-------------------------------------------------------------
ICRA has downgraded the rating to [ICRA]D from [ICRA]B and moved
the rating to the 'Issuer Not Cooperating' category. The rating
is now denoted as "[ICRA]D ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 0.51 Downgraded to [ICRA]D ISSUER
NOT COOPERATING; Rating
downgraded from [ICRA]B and
moved to the 'Issuer Not
Cooperating' category
Cash Credit 13.00 Downgraded to [ICRA]D ISSUER
NOT COOPERATING; Rating
downgraded from [ICRA]B and
moved to the 'Issuer Not
Cooperating' category
Rationale
The rating downgrade follows the delays in debt servicing by
Ishwar Oil Mill (IOM) to the lender(s), as confirmed by them to
ICRA. The liquidity profile is strained on account of temporary
suspension of operations for around two months leading to
business loss. ICRA has limited information on the entity's
performance since the time it was last rated in February 2016.
As part of its process and in accordance with its rating
agreement with Ishwar Oil Mill, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a
rating view based on the best available information.
Key rating drivers
Credit strengths
* Locational advantage from being situated in cotton producing
belt- IOM is located in the Gondal region of Gujarat, an area
with high cotton acreage and quality cotton crop. The company
benefits from its location due to the easy availability of high
quality raw cotton at competitive prices.
Credit weaknesses
* Delays in repayment of debt obligations - The account is
irregular.
* Highly competitive and fragmented industry structure with low
entry barriers restrict pricing flexibility - The cotton ginning
industry is highly fragmented with numerous players operating in
Gujarat, leading to high competitive intensity and pressure on
margins.
* Risks inherent in partnership firm - Any capital withdrawal,
given the partnership nature of the firm's constitution, could
adversely impact the capital structure.
Ishwar Oil Mill (IOM) was established in 2012 by Mr. Ashok Gamdha
and Mr. Ramesh Gamdha as a partnership firm and is engaged in
manufacturing of edible cottonseed oil and cottonseed oil cake as
well as trading of cotton bales. The firm markets crude
cottonseed oil in loose form to bulk dealers and cottonseed oil
cake as cattle feed to dairies. IOM operates from its plant
located in Rajkot, Gujarat with a total installed capacity of
crushing ~113 MT of cottonseeds per day.
JAGANNATH PLASTIPACKS: Ind-Ra Assigns 'B' Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Jagannath
Plastipacks Limited (JPL) a Long-Term Issuer Rating of 'IND B'.
The Outlook is Stable. The instrument-wise rating action is:
-- INR50 mil. Fund-based working capital limit assigned IND
B/Stable rating.
KEY RATING DRIVERS
The ratings reflect JPL's weak credit profile due to a year-on-
year decline in revenue and an increase in total debt. According
to the FY17 unaudited financials, revenue was INR102 million
(FY16: INR129 million), gross interest coverage of 1.2x (1.2x)
and net financial leverage (adjusted net debt/operating EBITDAR )
was 7x (7x). Revenue has been decreasing year on year due to low
average sales realisation.
The ratings factor JPL's tight liquidity profile which is
reflected in its average maximum working capital utilisation of
close to 100% for the 12 months ended July 2017.
The ratings however are supported by the company's promoters'
experience of more than three decades in manufacturing
polypropylene bags.
RATING SENSITIVITIES
Positive: An improvement in the revenue along with an improvement
in its credit profile will lead to a positive rating action.
Negative: Deterioration in the profitability leading to
deterioration in the credit metrics may lead to a negative rating
action.
COMPANY PROFILE
JPL is a limited company formed in 1984. Promoted by MR. Manoj
Kumar Subudhi, the company manufactures polypropylene bags at
75,00,000 pieces/annum manufacturing facility in Cuttack, Orissa.
The company sells the majority of its products to Paradeep
Phosphates Limited. The company is managed by its Managing
Director Mr Manoj Kumar Subudhi.
JAGANNATH POLYMERS: Ind-Ra Gives B+ Issuer Rating, Outlook Stable
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Jagannath
Polymers Limited (JPL) a Long-Term Issuer Rating of 'IND B+'. The
Outlook is Stable. The instrument-wise rating action is:
-- INR70 mil. Fund-based working capital limit assigned with IND
B+/Stable rating.
KEY RATING DRIVERS
The ratings reflect JPL's weak credit profile due to a high level
of debt compared to its small scale of operation. According to
the FY17 unaudited financials, revenue was INR164 million (FY16:
INR158 million), interest coverage was 1.5x (1.4x) and net
financial leverage (adjusted net debt/operating EBITDAR) was 4.7x
(6.1x). The improvement in revenue was because of healthy order
execution for its client. Credit metrics improved during FY17 due
to an increase in operating EBITDA.
The ratings also reflect JPL's high customer concentration as the
company depends on a single entity for revenue booking, and tight
liquidity profile which is reflected in its average maximum
working capital utilisation of 98.74% for the six months ended
July 2017.
The ratings, however, are supported by the company's promoter's
experience of more than three decades in manufacturing
polypropylene bags.
RATING SENSITIVITIES
Positive: An improvement in the revenue along with an improvement
of the credit profile will lead to a positive rating action.
Negative: Deterioration in the profitability leading to
deterioration in the credit metrics may lead to a negative rating
action.
COMPANY PROFILE
JPL is a limited company formed in 1995, promoted by Mr. Manoj
Kumar Subudhi. The company manufactured of polypropylene bags at
its 126,0000 woven sacks/annum facility in Cuttack, Orissa. The
company sells its products mainly to Indian Farmers Fertiliser
Cooperative Ltd. The company recently been made consignment
stockist of Indian Oil Corporation Ltd ('IND AAA'/Stable) for
Orissa. The company is managed by its Managing Director Mr Manoj
Kumar Subudhi.
JD INDUSTRIES: ICRA Lowers Rating on INR6.50cr Cash Loan to D
-------------------------------------------------------------
ICRA has downgraded the long-term rating assigned to the INR1.58-
crore term loan and INR6.50-crore cash-credit facilities of JD
Industries from [ICRA]B+ to [ICRA]D. ICRA has also downgraded the
short-term rating assigned to the INR4.00-crore non-fund based
facility of JDI from [ICRA]A4 to [ICRA]D. ICRA has also
downgraded the [ICRA]B+ and [ICRA]A4 ratings assigned to the
INR1.92-crore unallocated limits to [ICRA]D on both long-term and
short-term scale.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Term 1.58 [ICRA]D; Downgraded
Loan from [ICRA]B+
Fund-based-Cash 6.50 [ICRA]D; Downgraded
Credit from [ICRA]B+
Non Fund-based- 4.00 [ICRA]D; Downgraded
Bank Guarantee from [ICRA]A4
Unallocated limits 1.92 [ICRA]D/ [ICRA]D; Downgraded
from [ICRA]B+/[ICRA]A4
Rationale
The downward revision of the ratings primarily takes into account
delays in servicing of debt obligation in the recent past along
with consistent overutilisation of working-capital limits. ICRA
notes that the firm has witnessed delay in commissioning of the
project to increase its production facilities, which led to cash-
flow mismatch. The ratings also remained constrained by JDI's
modest scale of current operations in an intensely competitive
industry with low entry barrier, and its weak financial profile
as reflected by low net profitability and a leveraged capital
structure, leading to weak coverage indicators. The ratings were
impacted by the risks inherent in an agro-based business like
rice milling, including vulnerability towards changes in
Government policies and raw-material supply risks as the level of
harvest and quality of paddy depend on agro-climatic conditions.
The ratings also consider a low entry barrier prevailing in a
highly-fragmented rice-milling industry, which intensifies
competition and restricts pricing flexibility for players like
JDI. The ratings, however, derive comfort from the location-
specific advantage of JDI's plant as it is situated in close
proximity to raw material sources, leading to easy availability
as well as low landed cost of input material. Rice, which forms
an important part of the staple Indian diet, has a stable demand
outlook.
Going forward, the firm's ability to service its debt obligations
in a timely manner and improve profitability, while managing its
liquidity profile, would be the key rating sensitivities.
Key rating drivers
Credit strengths
* Experience of the proprietor in rice-milling business: The
proprietor has been in the rice-milling business for more than a
decade and the firm has an established operational track record.
* Advantage of being located in close proximity to raw material
sources, ensuring easy availability of paddy at low landed cost:
The manufacturing facility of the firm is located amid a paddy-
growing region in the Raipur district of Chhattisgarh, which
mitigates the raw material supply risks to a large extent.
Moreover, the same helps in keeping inward freight costs under
control.
Credit weaknesses
* Delays in servicing of debt obligation in the recent past along
with consistent overutilisation of working-capital limits: The
working capital limits remained consistently overutilised in the
recent past due to stretched liquidity position of the entity.
ICRA notes that the firm has witnessed delay in commissioning of
the project to increase its production facilities, which led to
cash-flow mismatch.
* Modest scale of current operations in a highly competitive
industry with low entry barrier: The scale of operations has
remained modest over the past few years with no major growth in
top-line. Rice-milling industry is characterised by low entry
barriers and a fragmented structure, leading to intense
competition, especially for mid-size players like JDI, which is
also likely to put pressure on the profit margins.
* Vulnerability of profitability to movement in paddy prices,
which are subject to seasonality and variation in crop harvest as
well as regulatory risks: The level of harvest of paddy mainly
depends on agro-climatic conditions, which impacts the raw
material availability to some extent. The firm would also remain
exposed to other risks inherent in an agro-based business,
including change in Government policies in relation to
stipulation of minimum support price (MSP) for procurement of
paddy from farmers and revision of policies on export of rice,
levy sale, etc.
* Weak financial profile characterised by low net profitability
and a leveraged capital structure, leading to weak coverage
indicators: The financial profile of the firm remained weak,
reflected by low net profits at an absolute level and leveraged
capital structure which led to weak coverage indicators.
Established in 2007 as a proprietorship firm, JD Industries (JDI)
has a rice-milling unit with an annual milling capacity of 72,000
MT of paddy and a processing facility for silky sortex rice with
an installed capacity of 48,000 MT. The manufacturing facility of
the firm is situated at Tilda in Raipur district, Chhattisgarh.
The firm is also involved in the milling of paddy on job-work
basis for the Food Corporation of India (FCI). The firm has set
up another rice mill with an installed capacity of 200 tonnes per
day. The same was commissioned in June, 2017.
In FY2017 (provisional), the entity reported a net profit of
INR0.87 crore on an operating income of INR49.86 crore compared
to a net profit of INR0.81 crore on an operating income of
INR52.28 crore in the previous year.
JMT AUTO: ICRA Reaffirms 'B' Rating on INR87cr Fund Based Loan
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating to the INR52.35-crore
term loans (reduced from INR91.80 crore), the INR87.00-crore
fund-based facilities and the INR11.05-crore unallocated limits
(reduced from INR16.60 crore) of JMT Auto Limited at [ICRA]B.
ICRA has also reaffirmed the short-term rating to the INR48.60-
crore non-fund based facilities (reduced from INR53.60 crore) and
to the INR1.00-crore bill-discounting facility of JMT at
[ICRA]A4. The outlook on the long-term rating continues to be
negative.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 52.35 [ICRA]B (negative) reaffirmed
Fund-based Facilities 87.00 [ICRA]B (negative) reaffirmed
Unallocated Limits 11.05 [ICRA]B (negative) reaffirmed
Non-fund Based
Facilities 48.60 [ICRA]A4 reaffirmed
Bill Discounting
Facility 1.00 [ICRA]A4 reaffirmed
Rationale
The reaffirmation of ratings and outlook takes into account JMT's
continued subdued performance, as reflected by a consistently
declining turnover and net profits, as well as the tight
liquidity position due to deterioration in working capital cycle.
ICRA notes that there has been a decline in the order position of
the company, leading to inventory build up, which along with an
elongated collection period, resulted in cash-flow mismatches.
Consequently, there have been multiple instances of devolvement
of letter of credit in recent months, though the same has been
regularised within 30 days. The ratings continue to take into
account the fact that the current cash accruals of the
consolidated company are insufficient to meet the large debt-
repayment obligations, necessitating refinancing or external
funding requirement for the same. In FY2016, the company
undertook a large size debt-funded acquisition of two auto
component manufacturing companies-REGE Holdings GmbH (REGE) and
Amtek Components Sweden (ACS), through its Singapore-based 100%
subsidiary, Amtek Machining Systems Pte Ltd. (AMSPL). Though ICRA
notes that the company is in the process of monetising its
overseas assets to strengthen its capital structure, the net
worth of the consolidated company has turned negative as on
March 31, 2017. The ratings also continue to factor in the
continued depressed financial performance of Amtek Auto Ltd.
(AAL), which holds a 66.77% stake of JMT's equity capital. ICRA
notes that AAL has reported continuous net losses in the last
three financial years, leading to a tight liquidity position of
the group. Given that the "Corporate Insolvency Resolution
Process (CIRP)" has been initiated with respect to AAL in July
2017, JMT's ability to secure a healthy order book and improve
collection efficiency, while managing its cash flows, would be
key rating sensitivities.
The ratings continue to favorably factor in JMT's established
relationships with reputed clientele both in the domestic and
export markets, and the vertically-integrated nature of its
operations, with in-house casting and forging facilities, which
provide better control on quality and cost of production. Such
strengths are partially offset by JMT's significant sales and
client-concentration risks, with Tata Motors Ltd. (TML) and its
subsidiaries in the cyclical automobile sector accounting for a
large share of its turnover, notwithstanding the sales
diversification that the company has achieved in recent years.
Key rating drivers
Credit strengths
* Established relationships with reputed clients both in the
domestic and export markets - JMT's established relationship with
reputed clientele has helped it in establishing its credentials
as a machined component manufacturer, thereby helping it in
bagging orders in both the domestic and the export markets.
* Vertically integrated nature of operations with in-house
casting and forging facilities provide better control on quality
and costs - JMT commenced operations in 1987 primarily as an
ancillary to erstwhile Telco, supplying various machined
components for its Medium and Heavy Commercial Vehicle (M&HCV)
segment. The company has eight manufacturing plants located in
Jamshedpur, Dharwad and Lucknow. JMT's existing operations are
vertically integrated with in-house casting and forging
facilities which provide better control on quality and costs.
Credit weaknesses
* Continued subdued financial performance denoted by a
consistently declining turnover and net profits, as well as a
tight liquidity position - There has been a decline in the order
book of the company, leading to inventory build-up. This, along
with an elongated collection period has resulted in cash-flow
mismatches leading to multiple instances of devolvement of letter
of credit in recent months, though the same has been regularised
within 30 days.
* Large debt-funded acquisition through its 100% subsidiary;
substantial debt-repayment obligation to exert pressure on the
liquidity position of the consolidated entity - JMT's large size
debt-funded acquisition of REGE and ACS resulted in an aggressive
capital structure on a consolidated basis. The current cash
accruals of the consolidated company are insufficient to meet the
large debt-repayment obligations, necessitating refinancing or
external funding requirement for the same.
* Weak financial performance of AAL, which holds a 66.77% of
JMT's equity capital; consistent net losses leading to a tight
liquidity position in the Group - A substantial equity stake
(66.77%) of JMT is owned by AAL, which has presence in the global
auto-components manufacturing industry. Continuous depressed
financial performance of AAL, as reflected by net losses in the
last three financial years, is resulting in a tight liquidity
position in the Group.
* High sales concentration in the cyclical automobile sector,
notwithstanding some diversification achieved in recent years -
The business prospects of the company remain closely linked with
the performance of the domestic automobile industry as most of
the sales are made to the automobile segment. However, JMT has
taken measures to de-risk its high dependence on the automobile
industry by increasing its focus on other industries like
tractors and farm equipment, oil and natural gas, railways and
capital goods. However, significant change in the company's
segment-wise sales profile is yet to be seen.
* Significant client-concentration risks with Tata Motors Ltd.
(TML) and its subsidiaries accounting for a large share of the
turnover - The company faces significant client-concentration
risks, with TML and its subsidiaries accounting for 41% of its
turnover in FY2017. Though the same limits the bargaining power
of the company, it also helps in eliminating counterparty risks.
JMT Auto Limited (JMT) is a 66.77% subsidiary of Amtek Auto Ltd.,
and is involved in manufacturing of machined components for the
automobile, tractor and farm equipment, oil and natural gas and
construction equipment sectors. The company was incorporated in
1987 as Jamshedpur Metal Treat Private Limited and operated as a
dedicated ancillary to the erstwhile Tata Engineering and
Locomotive Company Limited (Telco), supplying various machined
components. The company's shares were listed in 1994 and are
traded on both the Bombay Stock Exchange and National Stock
Exchange. Over the years, JMT has enhanced its manufacturing
capabilities by backward integrating into forging and casting
components. JMT has its manufacturing plants located in
Jamshedpur, Dharwad and Lucknow through eight production units.
In FY2016, JMT, through its subsidiary, AMSPL, has acquired two
automotive component-manufacturing companies, REGE and ACS. REGE
manufactures auto components, primarily for the passenger cars
segment, through its three manufacturing plants - two in Germany
and one in Romania. ACS manufactures components for passenger and
commercial vehicles through its facility in Floby, Sweden.
KRISHNENDU BHAKTA: ICRA Assigns B+ Rating to INR3.25cr Cash Loan
----------------------------------------------------------------
ICRA has assigned a long-term rating of [ICRA]B+ to the INR3.25-
crore cash credit and INR1.75 crore unallocated limits and a
short-term rating of [ICRA]A4 to the INR1.50-crore non-fund based
bank facilities and INR3.35 crore unallocated limits of
Krishnendu Bhakta. The outlook on the long-term rating is Stable.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 3.25 [ICRA]B+ (Stable) Assigned
Long-Term-Unallocated 1.75 [ICRA]B+ (Stable) Assigned
Non-fund based-Bank
Guarantee 1.50 [ICRA]A4 Assigned
Short-term-Unallocated 3.35 [ICRA]A4 Assigned
Rationale
The assigned ratings take into account KB's small scale of
operations and its high utilisation of fund based limits which
reduces the firm's financial flexibility. The ratings also factor
in the highly fragmented industry structure, characterized by
intense competition from a large number of players besides the
sectoral concentration risk arising from contracts majorly
dependent on road projects in Haldia-Digha region in West Bengal.
The ratings, however, derive comfort from the long track record
of the proprietor in the civil construction, particularly the
road construction industry, and KB's revenue growth visibility
over the near to medium term as reflected by the healthy order
book position of around INR51 crore as on May 31, 2017,
translating into an order book/OI ratio of 2.8 times of FY2017
revenues.
Going forward, the firm's ability to ramp up the scale of
operations while improving its profit metrics along with
efficient working capital management will remain key rating
sensitivities.
Key rating drivers
Credit strengths
* Experience of proprietor in the civil construction industry
spanning over two decades - Established in 1995, as a
proprietorship firm, Krishnendu Bhakta is primarily involved in
the execution of Government tenders for civil construction
contracts of roads, buildings and other construction works. The
proprietor of the firm has an extensive experience of more than
20 years in construction segment.
* Healthy order book position providing adequate revenue
visibility for the short to medium term business prospects-The
firm has an healthy order book position of around INR51 crore as
on May 31, 2017, translating into an order book/OI ratio of 2.8
times of FY2017 revenues, which provides revenue visibility for
the entity in the short to medium term.
Credit weaknesses
* Small scale of operations of the firm - The firm has a small
scale of operations with the operating income of around INR17-18
crore during the last two financial years.
* High utilisation of fund based limits reduces the firm's
financial flexibility-The firm's inadequate financial
flexibility, as reflected by high level of utilisation of its
fund based bank limits.
* Highly fragmented industry, characterized by intense
competition from a large number of players-. KB faces stiff
competition from other contractors in government tenders, given
the low complexity of work involved and low entry barriers in
terms of qualifications required for the tenders floated which
limits its pricing flexibility, thereby putting pressure on its
revenues and margins.
* Geographic concentration risk, with almost the entire revenue
derived from Haldia-Digha market in West Bengal- The firm's sales
are concentrated, and a major portion of its revenues are
generated from Haldia-Digha region in West Bengal.
Mr. Krishnendu Bhakta, proprietor of Krishnendu Bhakta (KB)
forayed into civil construction business in 1995. The firm is
primarily engaged in the execution of Government tenders for
civil construction contracts of roads, buildings and other
construction works. The firm operates through its registered
office in Purba Medinipur, West Bengal and is a registered
contractor with Public & Works Department (PWD), West Bengal and
is also enlisted with Digha Shankarpur Development Authority
(DSDA), Haldia Development Authority (HDA) and West Bengal
Fisheries Corp Ltd (WBFCL).
In FY2017, on a provisional basis, the company reported a net
profit of INR0.94 crore on an operating income of INR18.07 crore
compared to a net profit of INR0.62 crore on an operating income
of INR16.86 crore in the same period previous year.
KUMAR ELECTRICALS: Ind-Ra Migrates 'BB' Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kumar
Electricals' Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise,
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are:
-- INR20 mil. Fund-based limit migrated to non-cooperating
category with IND BB(ISSUER NOT COOPERATING) rating;
-- INR230 mil. Non-fund-based limit migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating;
-- INR100 mil. Proposed fund-based limit migrated to non-
cooperating category with Provisional IND BB(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 28, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1979, Kumar Electricals executes electrical
contracts for the Karnataka government as well as for private
entities. It is a partnership firm managed by Mr. Vasant Kumar
and Mr. Rohit Kumar.
LALCHAND JEWELLERS: Ind-Ra Assigns BB+ Rating to INR350MM Loan
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Lalchand
Jewellers Private Limited (LCJPL) a Long-Term Issuer Rating of
'IND BB+'. The Outlook is Stable. The instrument-wise rating
action is:
-- INR350 mil. Fund-based limit assigned with IND BB+/Stable
rating.
KEY RATING DRIVERS
Ind-Ra has taken a consolidated view on Lalchand group comprising
LCJPL and Lalchand Gem and Jewellers Private Limited (LCGJ; 'IND
BB+'/Stable) to arrive at the ratings. The consolidated approach
was taken because LCJPL holds 99.99% stake in LGCJ and both the
entities are engaged in the jewellery retailing business. The
parent entity has also extended a corporate guarantee of INR284.1
million to its subsidiary.
The ratings reflect the group's moderate credit profile. As per
FY17 provisional financials, revenue grew to INR3.25 billion
(FY16: INR2.64 billion) on account of higher sales. Consequently,
EBITDA margin improved to 5.0% in FY17P (FY16: 4.1%), interest
coverage (gross interest expense/operating EBITDAR) to 1.9x
(1.6x) and net leverage (total net adjusted debt/operating
EBITDAR) to 4.2x (6.1x).
The ratings also factor in the company's moderate liquidity
position with around 99% average utilisation of its working
capital facilities during the 12 months ended July 2017.
However, the ratings are supported by the promoter's more than
three decades of experience in the similar line of business.
RATING SENSITIVITIES
Positive: A substantial improvement in the top line and operating
profitability leading to an improvement in the group's overall
credit metrics will be positive for the ratings.
Negative: Deterioration in the operating profitability leading to
deterioration in the overall credit metrics will be negative for
the ratings.
COMPANY PROFILE
LCGJ and LCJPL were incorporated in 2015 and 1987, respectively,
to run a jewellery retail business. The group has two showrooms
in Cuttack and Bhubaneshwar with an area of 15,000sf and
25,000sf, respectively.
On a standalone basis, LCJPL reported revenue of INR2,349.7
million in FY17P (FY16: INR2,128 million), interest coverage of
1.9x (1.7x), net leverage of 4.1x (5.5x) and operating EBITDA
margins of 4.7% (4.2%).
LAMIYA SILKS: CRISIL Assigns 'D' Rating to INR4.90MM Cash Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
facilities of Lamiya Silks - Triprayar (LS). The ratings reflect
instances where the working capital limit was overused for more
than 30 days continuously due to weak liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan .77 CRISIL D
Cash Credit 4.90 CRISIL D
Proposed Cash
Credit Limit .33 CRISIL D
The ratings also reflect the small scale of, and working capital
intensity in, operations, and the modest financial risk profile.
These weaknesses are partially offset by the extensive experience
of the promoters in the apparel retail industry.
Key Rating Drivers & Detailed Description
Weakness
* Small scale of operations: Operations commenced in October
2014, and are still at a nascent stage. Exposure to intense
competition in the apparel retail business also restricts the
scale of operations, as reflected in estimated revenue of around
INR15 crore for fiscal 2017, and limits the pricing flexibility
and operating margin.
* Working capital intensity in operations: The retail industry is
inherently working capital intensive, mainly led by large
inventory to meet customer requirements. Thus, inventory has been
high, in excess of 300 days for the three years through March
2017.
* Below-average financial risk profile: Financial risk profile is
constrained by the small networth of around INR6 crore as on
March 31, 2017, and subdued debt protection metrics, as reflected
in estimated interest coverage and net cash accrual to total debt
ratio of around 1 time and 1%, respectively, for fiscal 2017.
Strength
* Promoter's extensive experience in the retail industry: The
promoters of LS have extensive experience in the apparel retail
industry for over two decades through other group entities. The
experience of the promoters has enabled them to develop strong
relationship with their suppliers.
LS is a Kerala-based firm, engaged in retailing of readymade
garments. The firm was set up by Mr. Abdul Jabbar in 2008. Daily
operations are being managed by Mr. Abdul and his son, Mr. Ashik.
LS reported a net loss of around INR0.04 crore on an operating
income of INR11.64 crore for fiscal 2017 against a profit after
tax of INR0.03 crore on operating income of INR3.85 crore for
fiscal 2015.
MANGALMURTI BIO-CHEM: ICRA Moves B Ratings to Not Cooperating
-------------------------------------------------------------
ICRA has moved the ratings for the INR5.99 crore bank facilities
of Mangalmurti Bio-Chem Private Limited to the 'Issuer Not Co-
operating' category. The rating is now denoted as: "[ICRA]B
(Stable) ISSUER NOT CO-OPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-Cash
Credit 2.00 [ICRA]B (Stable) ISSUER NOT
CO-OPERATING; Rating moved
to the 'Issuer Not Co-
operating' category
Fund based-Term 3.99 [ICRA]B (Stable) ISSUER NOT
Loans CO-OPERATING; Rating moved
to the 'Issuer Not Co-
operating' category
Rationale
As part of its process and in accordance with its rating
agreement with MBPL, ICRA has been trying to seek information
from the company so as to undertake a surveillance of the
ratings, but despite repeated requests by ICRA, the company's
management has remained non-cooperative. In the absence of
requisite information, ICRA's Rating Committee has taken a rating
view based on best available information. In line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016,
the company's rating is now denoted as: "[ICRA]B (stable) ISSUER
NOT COOPERATING". The lenders, investors and other market
participants may exercise appropriate caution while using this
rating, given that it is based on limited or no updated
information on the company's performance since the time it was
last rated.
Key rating drivers
Credit strengths
* Long standing experience of the promoters in the fertiliser
industry - Operational since October 2012, MBPL is engaged in the
manufacturing and trading of granulated NPK mixture fertilisers,
soil nutrients, water soluble fertilizers, pesticides etc. The
promoters of the company have nearly a decade's experience in the
field of manufacture of fertilisers.
Credit weaknesses
* Weak financial profile characterized by leveraged capital
structure, subdued debt coverage indicators and tight liquidity
position as evident by high utilisation of working capital limits
- In the backdrop of modest accruals, MBPL's reliance on external
financing to support its capital expenditure and working capital
borrowing have remained high, though MBPL has also seen an
infusion of unsecured loans from promoters/friends and relatives
to support its funding requirements. Consequent to the high debt
levels, the capital structure of the company remains stretched.
High gearing coupled with modest profits in turn lead to a
subdued financial profile for the company.
* High working capital intensity of operations owing to high
debtors and inventory levels - The company enjoys a credit period
of ~30 days from its suppliers while offering a credit period of
30-60 days, though sometimes the receivables position gets
stretched due to delayed payments from customers. The company
typically maintains finished goods inventory for ~30 days, while
raw materials are held for a period of 30-45 days, depending on
the demand scenario. All these factors translate into high
working capital intensity for the company.
* Modest scale of operations; scaling up of revenues remains
crucial for generating sufficient accruals in order to service
debt repayments falling due in near to medium term - The company
has small scale of operations and with the profitability being
susceptible to raw material price fluctuations, the profitability
remains modest at an absolute level. The ability of the company
to scale up its operations and generate sufficient cash accruals
is crucial for debt-servicing.
* Vulnerability of profitability to erratic agro-climatic
conditions, which affect the demand indicators in the fertiliser
industry, and regulatory risks associated with the industry- With
the demand of the fertiliser industry being driven by the agro-
climatic conditions like monsoons, draught etc., the
profitability remains vulnerable to the same.
Mangalmurti Bio-Chem Private Limited (MBCPL) was established in
2011 and commenced commercial production of granulated NPK
(Nitrogen, Phosphorus, and Potassium) mixture fertilisers in
October 2012. MBPL is engaged in the manufacture of predominantly
three grades of granulated NPK mixture fertilisers, viz.,
20:10:10, 20:05:20 and 20:20:00 and soil nutrient-12:32:06
(denoting respective proportions of Calcium, Magnesium and
Sulphur). The promoters of the company have nearly a decade's
experience in the field of manufacture of fertilisers.
The manufacturing facility of the company is located at Mangrol,
Surat (Gujarat) and is equipped with an installed capacity of
18,000 metric tonnes per annum.
NIMP HEALTHCARE: Ind-Ra Moves D Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated NIMP Healthcare
Private Limited's (NIMP) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise, despite continuous requests and follow-ups by
the agency. Therefore, investors and other users are advised to
take appropriate caution while using these ratings. The rating
will now appear as 'IND D(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR44.5 mil. Term loan (long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating; and
-- INR22.5 mil. Fund-based working capital limit (long-/short-
term) migrated to non-cooperating category with IND D(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 13, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2012, NIMP manufactures bulk drugs and fine
chemicals.
PRINCE PROPERTIES: ICRA Moves B+ Rating to Not Cooperating
----------------------------------------------------------
ICRA has moved the long-term rating on the INR20.0-crore bank
facilities of Prince Properties to the 'Issuer Not Cooperating'
category. The long-term rating is now denoted as: "[ICRA]B+
(Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 20.00 [ICRA]B+, 'Stable' ISSUER
NOT COOPERATING; Rating moved
to the 'Issuer Not
Cooperating' category
Rationale
The rating is based on no updated information on the firm's
performance since the time it was last rated in February 2016.
The last rating exercise was based on detailed information. The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with PP, ICRA has been trying to seek information from
the entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained non-
cooperative. In the absence of requisite information, and in line
with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 01, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
PP was established in 2009 as a partnership firm to build a 3-
star hotel, with 137 rooms in Jodhpur, Rajasthan. The firm is
promoted by the Rajasthan-based Soni and Purohit Groups.
PSN MOTORS: CRISIL Reaffirms D Rating on INR4.8MM Cash Loan
-----------------------------------------------------------
CRISIL has been consistently following up with PSN Motors Private
Limited (PSN) for obtaining information through letters and
emails dated May 24, 2017 and June 09, 2017 among others, apart
from telephonic communication. However, the issuer has remained
non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4.8 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Overdraft .75 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Long Term
Bank Loan Facility 3.16 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan .29 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PSN Motors 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 PSN Motors Private Limited is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL B' rating
category or lower. Based on the last available information,
CRISIL has reaffirmed the rating at 'CRISIL D'.
PSN was initially set up in 1921 and reconstituted as a private
limited company in 1952. Since 2009, PSN has been an authorised
dealer for SML Isuzu Ltd. It is presently managed by its managing
director, Mr. P K Sangameswaran.
RAGA MOTORS: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Raga Motors
Private Limited's (RAGA) Long-Term Issuer Rating to the non-
cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating actions are as follows.
-- INR190.9 mil. Fund-based working capital limit migrated to
non-cooperating category with IND BB(ISSUER NOT
COOPERATING)/IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
May 13, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
RAGA, incorporated in 1999 as a private limited company, is an
authorised dealer for Mahindra & Mahindra Limited's ('IND
AAA'/Stable) four-wheelers in Jalandhar, Kapurthala and Nakodar
in Punjab and Honda Motorcycle & Scooter India Private Limited's
two-wheelers in Jalandhar.
RANCHI EXPRESSWAYS: ICRA Reaffirms D Rating on INR1,191.6cr Loan
----------------------------------------------------------------
ICRA has reaffirmed the long-term rating assigned to the
INR1191.60 crore of term loan facilities of Ranchi Expressways
Limited (REL) at [ICRA]D.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-Term
Loan 1,191.60 [ICRA]D; Reaffirmed
Rationale
The re-affirmation of rating takes into account the continued
delays in servicing its term loan obligations. In terms of
financial progress, REL achieved a progress of 51% of the total
Engineering, Procurement and Construction (EPC) cost as against
the revised target of 62.3% as of March, 2017 due to
unavailability of RoW and delayed equity infusion. ICRA notes
that owing to delays in securing RoW by the authority, REL has
sought extension of timeline for completion of project till
March, 2018 as against scheduled COD of June, 2015. The rating
continues to take into account the implementation risks, pending
land acquisition and susceptibility to adverse movement of the
interest rates. The rating is further constrained by REL's
exposure to funding risk in the light of weak financial risk
profile of Madhucon Projects Limited (MPL, rated [ICRA]D) given
that MPL is yet to bring in around INR60 crore of equity and
would be required to part fund the cost escalation. While
reaffirming the rating, ICRA has noted the operational strength
of the promoter (MPL), who is also the EPC contractor; fixed-
price EPC contract and absence of traffic risk due to annuity
nature of the project.
Going forward, REL's ability to service its debt obligations in a
timely manner will be the key rating sensitivity. Further, timely
infusion of remaining equity and tying up funds for the
escalation in cost, timely execution of the project as per
revised schedule will be the other rating sensitivities.
Key rating drivers
Credit strengths
* Low revenue risk: Annuity nature of the project eliminates
traffic risks; strong credit profile of the project owner and
annuity provider, NHAI (rated [ICRA]AAA(Stable))
Credit challenges
* Recent delays in servicing interest obligation
* Equity mobilization risk: REL is exposed to equity mobilization
risk in the light of weak financial risk profile of MPL; given
that MPL is yet to bring in around INR60 crore of equity and
would be required to part fund the cost escalation
* Delays in execution: Running delays in execution by around 26
months. NHAI has approved extension of timeline till March 2018
* Interest rate risk: Exposed to interest rate risk given that
the interest on the loans is reset every year post COD
Instrument* Rated Amount (Rs. crore) Rating Action Fund Based-
Term Loan 1191.60 [ICRA]D; Reaffirmed Total 1191.60
* Ability to maintain the operation and maintenance expenses
(including the major maintenance) within budgeted levels post
commercial operation date (COD) and ensure availability of lane
as stipulated
Ranchi Expressways Limited (REL) has been incorporated in the
year 2011 as a special purpose vehicle promoted by Madhucon Infra
Limited (MIL) and Madhucon Projects Limited (MPL) through their
Road BOT (Build, Operate, Transfer) projects holding company
Madhucon Toll Highways Limited (MTHL) to carry out the four-
laning of Ranchi-Jamshedpur Highway section of NH-33 from km
114.000 to km 277.500 in the state of Jharkhand under NHDP Phase
III on Design, Build, Finance, Operate, Transfer (DBFOT) Annuity
basis. The total cost of the project is INR1655.0 crore. The
total concession period is 15 years including the construction
period of 2.5 years. The appointed date for the project has been
announced as 4th Dec 2012 and the scheduled date of completion of
the project is 3rd June 2015. REL will receive a fixed annuity
payment of INR133.2 crore semi-annually for a period of 12.5
years. The project is being funded by INR1191.6 crore debt and
INR463.4 crore of promoter's contribution in the form of
INR182.05 crore equity and INR281.35 crore interest free
unsecured loans. Till March 2017 promoters have brought in
INR402.58 crore (86.87%) of INR463.4 crore and total debt drawn
stands at INR895.45 crore (75%) of INR1191.60 crore. RoW for
132.63 Km (81.1%) has been provided to REL.
RIGA CERAMICA: CRISIL Lowers Rating on INR5.98MM Term Loan to B
---------------------------------------------------------------
CRISIL has been consistently following up with Riga Ceramica
Private Limited (RCPL) for obtaining information through letters
and emails dated May 24, 2017 and June 09, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.2 CRISIL A4 (Issuer Not
Cooperating; Rating
Reaffirmed)
Cash Credit 2.75 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL B+/Stable')
Proposed Long Term .07 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL B+/Stable')
Term Loan 5.98 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded
from 'CRISIL B+/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 Riga Ceramica 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 Riga Ceramica Private Limited is
consistent with 'Scenario 2' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' rating
category or lower. Based on the last available information,
CRISIL has downgraded the long term rating to 'CRISIL B/Stable
and reaffirmed the short term rating at CRISIL A4'.
Incorporated in 2014, RCPL is based in Morbi, Gujarat. It is
engaged in manufacturing of digital wall tiles and commenced
commercial production in April 2015.
S. NANDA: ICRA Moves D Rating to Issuer Not Cooperating Category
----------------------------------------------------------------
ICRA has downgraded the ratings for the INR16.00 crore bank
facilities of S. Nanda Industries Private Limited (SNIPL) to
[ICRA] D from [ICRA] B+. ICRA has also moved the ratings to the
'Issuer Not Cooperating' category. The rating is now denoted as
"[ICRA] D ISSUER NOT COOPERATING"
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Limits 12.00 [ICRA]D ISSUER NOT
COOPERATING; Rating
downgraded from [ICRA]B+
and moved to the 'Issuer not
Cooperating' category
Long-term-Unallocated 4.00 [ICRA]D ISSUER NOT
Limits COOPERATING; Rating
downgraded from [ICRA]B+
and moved to the 'Issuer not
Cooperating' category
Rationale
The rating downgrade follows the delays in debt servicing by
SNIPL to the lender(s), as confirmed by them to ICRA. ICRA has
limited information on the entity's performance since the time it
was last rated in March, 2016.
As part of its process and in accordance with its rating
agreement with SNIPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Track record of the promoters, spanning more than 10 years in
the textile industry - Long track record of promoters in textile
industry of more than 10 years
Credit weaknesses
* Delay in debt servicing due to cashflow pressures - The key
driver of the rating revision is the delay in servicing the debt
obligations due to cashflow pressures.
SNIPL, promoted by Mr Sudhir Nanda in 1992, is engaged in the
business of manufacturing and trading of cotton yarn, polyester
fibre, recycled fibre and knitted yarn. Most of the sales (~98%)
of the company are from trading operations. The company also
manufactures fancy yarn at its own manufacturing capacities
located in Ludhiana which has 39 machines with total capacity of
800-900 tonnes per annum.
In FY2015, the company reported a net profit of INR0.22 crore on
an operating income of INR167.59 crore, as compared to a net
profit of INR0.28 crore on an operating income of INR143.2 crore
in the previous year.
S.R.R. IMPEX: CRISIL Reaffirms B+ Rating on INR3.55MM Loan
----------------------------------------------------------
CRISIL has been consistently following up with S.R.R. Impex (SRR)
for obtaining information through letters and emails dated
May 24, 2017, and June 7, 2017, among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.55 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 3.30 CRISIL B+/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of S.R.R. Impex. 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 S.R.R. Impex is consistent with 'Scenario 3'
outlined in the 'Framework for Assessing Consistency of
Information with CRISIL BBB rating category or lower. Based on
the last available information, CRISIL has reaffirmed the rating
at 'CRISIL B+/Stable'.
SRR is a partnership concern set up in 2015 by Mr. Aman Aggarwal,
Mr. Happy Gupta, Mrs. Monika Gupta, and Mrs. Swati Gupta. The
firm has set up a facility to manufacture polyester fabric, which
will be used in manufacturing blankets. It is based in Karnal, a
hub for the textile industry in Haryana.
SANGAR OVERSEAS: Ind-Ra Moves B Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Sangar Overseas'
Long-Term Issuer Rating to the non-cooperating category. The
issuer did not participate in the rating exercise, despite
continuous requests and follow-ups by the agency. Therefore,
investors and other users are advised to take appropriate caution
while using these ratings. The rating will now appear as 'IND
B(ISSUER NOT COOPERATING)' on the agency's website. The
instrument-wise rating actions are:
-- INR100 mil. Fund-based working capital limit migrated to non-
cooperating category with IND B(ISSUER NOT COOPERATING)/IND
A4(ISSUER NOT COOPERATING) rating;
-- INR72.5 mil. Non-fund-based working capital limit migrated to
non-cooperating category with IND A4(ISSUER NOT COOPERATING)
rating; and
-- INR4 mil. Term loan migrated to non-cooperating category with
IND B(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Aug. 16, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 1996, Sangar Overseas is based in Gurgaon and
managed by Rajiv Sangar and Gloria Sangar. The firm manufactures
and exports readymade garments specially kids wear.
SANSAR TEXTURISERS: CRISIL Ups Rating on INR35MM Cash Loan to B-
----------------------------------------------------------------
CRISIL has upgraded its rating on the bank facility of Sansar
Texturisers Pvt Ltd (STPL) to 'CRISIL B-/Stable' from 'CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 35 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The upgrade reflects the regularization of its working capital
limit over the past six month period through June 2017.
The rating continues to reflect its below-average financial risk
profile marked by modest net worth and modest scale of
operations. These weaknesses are partially offset by the
extensive experience of promoters in the textile industry.
Key Rating Drivers & Detailed Description
Weakness
* Below-average financial risk profile: The networth is estimated
to be modest at INR 16 crores and the gearing at 1.62 times, as
on March 31, 2017.
* Modest scale of operations: Firm has modest scale of operations
marked by estimated revenues of around INR 59 crores in fiscal
2017.
Strength
* Industry experience of the management in the yarn trading
business: STPL, set up in 1989-90, trades in nylon and viscose
yarn imported mainly from China and Korea. The company is
promoted and managed by Mr. Vishnu Goenka and his family.
Outlook: Stable
CRISIL believes that STPL will continue to benefit over the
medium term from the established track record of its promoters in
the textile industry and its established customer base. The
outlook may be revised to 'Positive' if increase in sales and
profitability and efficient management of working capital cycle
result in stronger cash accruals and liquidity. Conversely, the
outlook may be revised to 'Negative' if low sales realizations or
profitability, or stretch in working capital cycle weakens its
financial risk profile.
STPL set up in 1989-90, trades in nylon and viscose yarn imported
mainly from China and Korea. The company is promoted and managed
by Mr. Vishnu Goenka and his family. The company is based in
Surat (Gujarat).
For fiscal 2017, STPL reported profit after tax (PAT) of INR66
lacs on net sales of INR59.44 crore against PAT of INR1.1 crore
on net sales of INR117 crore for fiscal 2016.
SHIV SAI: ICRA Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------
ICRA has moved the long-term rating of the INR8.00-crore fund-
based cash-credit limits and INR4.00-crore non-fund-based-limit
of Shiv Sai Metal Products Private Limited to 'Issuer Not
Cooperating' category. The rating is now denoted as "[ICRA]B+
(Stable) ISSUER NOT COOPERATING."
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-limit-
Cash-credit facility 8.00 [ICRA]B+ (Stable) Reaffirmed
ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
Non-fund-based-limit 4.00 [ICRA]B+ (Stable) Reaffirmed
ISSUER NOT COOPERATING;
Rating moved to the 'Issuer
Not Cooperating' category
Rationale
The rating is based on no updated information on the entity's
performance since the time it was last rated in January, 2016.
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating
as the rating does not adequately reflect the credit risk profile
of the entity. The entity's credit profile may have changed since
the time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with SSMPPL, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Key rating drivers
Credit strengths
* Repeat orders from the existing clients, demonstrate acceptable
product quality; also association with the Government clients
reduces the counterparty risk to a large extent The company
primarily manufactures three types of Aluminium Conductor Steel
Reinforced (ACSR) conductors, such as ACSR Rabbit, ACSR Weasel
and ACSR Dog. SSMPPL's sales are primarily to the State
Electricity Boards (SEBs) such as North Bihar Power Distribution
Co. Limited and South Bihar Power Distribution Co. Limited, with
contracts being awarded through the tender based bidding process.
The repeat orders from the clients demonstrate acceptable product
quality
* For complete rating scale and definitions, please refer to
Credit weaknesses
* High competitive pressures from both large players as well as
the unorganized sector in the conductor industry along with low
value-additive nature of company's operations exert pressure on
the profitability the cables and conductor industry is highly
fragmented with large number of players. This along with low
value-additive nature of company's operations keeps profitability
of SSMPPL under check.
* Vulnerability of profitability to fluctuations in raw material
prices; though, mitigated to an extent by the presence of price
variation clause in some of the contracts entered with the
customers Around 90% of the company's total cost is the raw
material cost. Thus high dependence of the company on its raw
materials- particularly aluminium and steel exposes its
profitability to fluctuations in raw material prices; though,
mitigated to an extent by the presence of price variation clause
for aluminium prices in some of the contracts entered with the
customers.
Shiv Sai Metal Products Private Limited, incorporated in the year
2012, commenced its aluminium conductor manufacturing facility in
December, 2013 in Patna, Bihar. The product portfolio of the
company primarily includes Aluminium Conductor Steel Reinforced
(ACSR) and Double Paper Covering (DPC) aluminium wire and strip.
Other than the conductor manufacturing business, the members of
Agarwal family are engaged in the jewellery manufacturing and
retail business in Patna and Kolkata.
SHIV SHAKTI: Ind-Ra Downgrades Long-Term Issuer Rating to 'D'
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shiv Shakti
Exporters Private Limited's (SSEPL) Long-Term Issuer Rating to
'IND D' from 'IND BB-(ISSUER NOT COOPERATING)'. The instrument-
wise rating action is:
-- INR343.50 mil. (reduced from INR350 mil.) Fund-based limits
(Long-term/Short-term) downgraded with IND D rating.
KEY RATING DRIVERS
The ratings reflect SSEPL's overutilisation of the working
capital facilities during June-July 2017 due to a weak liquidity
position. This was because of a weak credit profile.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months could result in a positive rating action.
COMPANY PROFILE
Incorporated in 2010 in Punjab, SSEPL runs a rice milling
business. It has a 10 metric tons per day of paddy processing
plant. The company's operations are managed by Surendra Verma and
Hitesh Verma.
SHIVA LOKENATH: CRISIL Assigns B+ Rating to INR14MM Cash Loan
-------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Shiva Lokenath Rice Mills Private Limited (SLRMPL)
and assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to the
firm's facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .30 CRISIL A4 (Assigned;
Suspension Revoked)
Cash Credit 14.00 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Term Loan 9.54 CRISIL B+/Stable (Assigned;
Suspension Revoked)
Proposed Fund-Based .16 CRISIL B+/Stable (Assigned;
Bank Limits Suspension Revoked)
Proposed Cash Credit 5.00 CRISIL B+/Stable (Assigned;
Limit Suspension Revoked)
Proposed Bank 1.00 CRISIL B+/Stable (Assigned;
Guarantee Suspension Revoked)
CRISIL had suspended the ratings on April 14, 2015, on account of
non-cooperation by SLRMPL with CRISIL's efforts to undertake a
review of the ratings. The company has now shared the requisite
information, enabling CRISIL to assign its ratings
The ratings reflects the longstanding experience of the promoter
in the agro related business, and healthy relationships with
government bodies, ensuring assured offtake and high revenue
visibility over the medium term. These strengths are partially
offset by the modest scale of operations, and exposure to risks,
arising from intense competition, adverse government regulations,
volatility in raw material prices and dependence on monsoon.
Key Rating Drivers & Detailed Description
Weaknesses:
* Moderate scale operations, amidst intense competition: Intense
competition from organised and unorganised players, and
commoditised nature of product, keep the scale of operations
modest, limit the negotiating power with customers and suppliers,
and thus, constrain profitability. This is well-reflected in
revenue of INR107.83 crore in fiscal 2017. The company mainly
caters to state government agencies and cooperatives such as
Gangaram Co Operative Society, and Damdama Co Operative Society.
* Susceptibility to adverse changes in regulations on paddy and
rice prices: Availability of paddy is seasonal, and dependent on
monsoons/availability of irrigation. This exposes the firm to
risk related to shortage of raw material, due to unfavourable
climatic conditions. Stringent regulations, related to paddy
prices, export/import of rice, and rice release mechanism,
adversely affect the operating margin. The minimum support price
(MSP) of paddy and the prevailing rice prices determine
profitability of rice millers. Paddy accounts for 85-90% of the
input cost. The Government of India also procures rice through
the statutory levy on millers and dealers. Percentage of levy
rice is fixed by state governments, and approved by the central
government, after taking into account requirements for the
central pool, domestic consumption, and marketable surplus.
Strengths:
* Extensive experience of the promoters: The two decade-long
experience of the promoters, Mr. Ranjan Paul and his family
members, in trading and processing of agricultural commodities,
and their healthy established relationships with government
agencies and cooperatives in West Bengal, which ensure repeat
orders, will continue to support the business risk profile. The
promoters also manage many other entities, including Jai Lokenath
Oil Extraction Pvt Ltd, Baba Loknath Rice Mill, Sree Brindavan
Rice Mill Pvt Ltd, M/S Paul Brothers, Vrindavan Videsh Vyapaar,
Ms Jailoknath Flour Mills Pvt Ltd, and Aryan Flour Mills Pvt Ltd,
together accounting for revenue of INR100 crore.
* Established relationship with government bodies ensuring
assured offtake and high revenue visibility: SLRMPL derives 80%
of its sales from supply to government bodies. Further, the
longstanding relationships with government bodies, ensure repeat
orders. India is the second largest rice producer in the world
(20% of total production), after China. However, India is also
the second largest consumer of rice in the world, and hence, bulk
of production is consumed in the domestic market.
Outlook: Stable
CRISIL believes SLRMPL will continue to benefit from the
extensive experience of the promoters in the agro products
industry. The outlook may be revised to 'Positive' if significant
growth in revenue, strengthens the capital structure and
financial risk profile. The outlook may be revised to 'Negative'
if lower-than-expected profitability, substantial withdrawal of
capital from business by the partners, considerable stretch in
the working capital requirement, or any major debt-funded capex
which weakens the financial risk profile.
SLRMPL, which was set up in 1998, is engaged in processing non-
basmati rice, and trades in wheat and rice. Daily operations are
managed by the director, Mr. Ranjan Paul.
For fiscal 2016, profit after tax (PAT) was INR25 lakh on net
sales of INR103.70 crore, against net loss of INR22 lakhs on net
sales of INR49.70 crore for fiscal 2015.
SHREE JAGDAMBA: ICRA Moves B+ Rating to Not Cooperating Category
----------------------------------------------------------------
ICRA has moved the long-term rating for the INR5.00 crore bank
facilities of Shree Jagdamba Agrico Exports Private Limited
(SJPL) to the 'Issuer Not Cooperating' category. The long-term
rating is now denoted as: "[ICRA] B+ (Stable); ISSUER NOT
COOPERATING". ICRA has also moved the short-term rating for the
INR50.00 crore bank facilities of SJPL to the 'Issuer Not
Cooperating' category. The short-rating is now denoted as:
"[ICRA] A4; ISSUER NOT COOPERATING"
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund- 5.00 [ICRA]B+(Stable); ISSUER NOT
based Limits COOPERATING; Rating moved to
the 'Issuer not Cooperating'
category
Short-term-Fund-
based Limits 50.00 [ICRA]A4; ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer not Cooperating'
category
Rationale
The rating is based on limited information on the entity's
performance since the time it was last rated in March, 2016.The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with Shree Jagdamba Agrico Exports Private Limited ICRA
has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA,
the entity's management has remained non-cooperative. In the
absence of requisite information, and in line with SEBI's
Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 01,
2016, ICRA's Rating Committee has taken a rating view based on
the best available information.
Key rating drivers
Credit strengths
* Extensive experience of the promoters in the line of business:
The promoters have extensive experience in the rice business
Credit weaknesses
* Fragmented nature of the industry leads to high competitive
intensity: The company faces high competition because of
fragmented nature of the industry and low product differentiation
* Limited pricing power: DTPL has limited pricing power due to
commodity nature of product increases vulnerability of
profitability to price fluctuation and low profitability.
SJPL originally started operations in the year 1965 as a
partnership firm under the name of "Matu Ram Kedar Nath Rice
Mill" at Gohana, Haryana which was later renamed as "Shree
Jagdamba Rice and General Mills" in 1981. The firm was converted
into a private limited company in 2010. The company is engaged in
milling, processing and selling of various varieties of Basmati
rice. The company exports primarily to countries such as Iran,
Iraq, Saudi Arabia, UAE, Yemen and Kuwait.
In FY2015, on an Audited basis, the company reported a net profit
of INR1.68 crore on an operating income of INR345.09 crore, as
compared to a net profit of INR1.22 crore on an operating income
of INR501.73 crore in the previous year.
SHRIMAN ENTERPRISES: ICRA Moves B Rating to Not Cooperating
-----------------------------------------------------------
ICRA has moved the long-term rating for the INR36.00 crore bank
facilities of Shriman Enterprises (SE) to the 'Issuer Not
Cooperating' category. The long-term rating is now denoted as:
"[ICRA] B (Stable); ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Term Loan 36.00 [ICRA]B (Stable); ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer not Cooperating'
category
Rationale
The rating is based on limited information on the entity's
performance since the time it was last rated in March, 2016.The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating does not adequately reflect the credit risk profile of the
entity. The entity's credit profile may have changed since the
time it was last reviewed by ICRA; however, in the absence of
requisite information, ICRA is unable to take a definitive rating
action.
As part of its process and in accordance with its rating
agreement with Shriman Enterprises. ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite
information, and in line with SEBI's Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 1, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
Key rating drivers
Credit strengths
* Extensive experience of the promoters in the line of business:
The promoters have extensive experience in the different medical
fields
Credit weaknesses
* Project execution risk: The company faces project execution
risk
Constituted in 2015, SE is a partnership firm that is setting up
a 150-bedded multi-speciality hospital in Jalandhar (Punjab). All
the four partners of the firm are qualified doctors having
relevant experience across different medical fields.
The key project details are summarised in the adjoining table.
The project is estimated to cost INR48.00 crore and is being
funded in a debt: equity ratio of 3:1. Term loan for funding the
capex has been tied up, and is repayable in 84 monthly
instalments starting October 2017.
SRAVANI RAW: CRISIL Reaffirms B- Rating on INR4MM Cash Loan
-----------------------------------------------------------
CRISIL has been consistently following up with Sravani Raw &
Boiled Rice Mill (SRBRM) for obtaining information through
letters and emails dated May 24, 2017, and June 9, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Long Term Loan 2 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
Proposed Cash
Credit Limit 1 CRISIL B-/Stable (Issuer Not
Cooperating; Rating
Reaffirmed)
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING'. These ratings lack a
forward looking component as it is arrived at without any
management interaction and is based on best available or limited
or dated information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Sravani Raw & Boiled Rice
Mill. 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 Sravani Raw & Boiled Rice Mill is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL B rating
category or lower. Based on the last available information,
CRISIL has reaffirmed the rating at 'CRISIL B-/Stable'.
Set up in 2010, SRBRM is engaged in milling of raw and par-boiled
rice. The firm is promoted by Mr.L.Durga Prasad and his family
members.
SRS MODERN: Ind-Ra Affirms 'D' Long-Term Issuer Rating
------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed SRS Modern Sales
Ltd's (SRSM) Long-Term Issuer Rating at 'IND D'. The instrument-
wise rating action is:
-- INR750 mil. Fund-based working capital limits (long-/short-
term) affirmed with IND D rating.
KEY RATING DRIVERS
The affirmation reflects SRSM's continued tight liquidity
position leading to overutilisation of bank limits since the last
surveillance on Aug. 11, 2016, as the slowdown in the
construction and real estate industry in Delhi NCR remained.
RATING SENSITIVITIES
Positive: An improvement in the liquidity position could lead to
a positive rating action.
COMPANY PROFILE
SRSM, a part of the SRS group, is engaged in the trading of
construction materials such as cement, TMT bars and glasses. The
company has presence, primarily in Delhi NCR.
The SRS group operates various businesses such as retail,
wholesale trading of FMCG products, jewellery, real estate and
financing.
SUPERTECH AGROGRAINS: Ind-Ra Puts 'BB-' Long Term Issuer Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Supertech
Agrograins Private Limited (SAPL) a Long-Term Issuer Rating of
'IND BB-'. The Outlook is Stable. The instrument-wise rating
actions are:
-- INR72.7 mil. Term loan due on February 2024 assigned with IND
BB-/Stable rating; and
-- INR25 mil. Fund-based working capital facilities assigned
with IND BB-/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings are constrained by SAPL's small scale of operations
due to its limited track record of operations of less than one
year and high leverage due to the high debt taken to set up a
manufacturing facility. The company reported revenue of INR285.5
million and net leverage (adjusted net debt/operating EBITDAR) of
4.6x in FY17.
The ratings are supported by SAPL's moderate EBITDA margins of
7.2% in FY17 and its reasonable net working capital cycle of 33
days in FY17. Furthermore, owing to low interest expenses during
the year, gross coverage was moderate at 3.3x in FY17.
Moreover, the company's liquidity position is comfortable with
its average utilisation of the fund-based facilities being 68%
during the 11 months ended July 2017.
The ratings are further supported by SAPL's promoters' almost
seven years of experience in rice processing.
RATING SENSITIVITIES
Negative: Any decline in the revenue or EBITDA margins leading to
deterioration in the credit profile would be negative for the
ratings.
Positive: A substantial increase in the scale of operations along
with stable EBITDA margins resulting in a sustained improvement
in the credit metrics will lead to a positive rating action.
COMPANY PROFILE
Established in 2015 in Gujarat, SAPL runs a rice processing
business. The company began commercial operation in September
2016. SAPL is promoted by Mr. Vinay Narula and his family, who
have almost seven years of experience in the same line of
business. The company has achieved revenue of around INR143.7
million during April-July 2017.
SWAMIJI TRANSMISSION: Ind-Ra Moves B+ Rating to Not Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Swamiji
Transmission Private Limited's (STPL) Long-Term Issuer Rating to
the non-cooperating category. The issuer did not participate in
the rating exercise, despite continuous requests and follow-ups
by the agency. Therefore, investors and other users are advised
to take appropriate caution while using these ratings. The rating
will now appear as 'IND B+(ISSUER NOT COOPERATING)' on the
agency's website. The instrument-wise rating actions are:
-- INR20 mil. Proposed Non-fund-based limits migrated to non-
cooperating category with Provisional IND A4(ISSUER NOT
COOPERATING) rating; and
-- INR65 mil. Proposed Fund-based limits migrated to non-
cooperating category with Provisional IND B+(ISSUER NOT
COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Aug. 19, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
STPL manufactures all types of insulator hardware parts/fittings,
conductors and earth wire accessories, clamps and connectors, and
others.
Incorporated as Swamiji Forging Pvt Ltd in 1997, the company was
renamed Swamiji Transmission Private Limited in 2006. In FY16,
the company was acquired by Lal Baba Group.
TATWA TECHNOLOGIES: Ind-Ra Assigns BB- Rating to INR85.76MM Loan
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Tatwa
Technologies Limited (TTL) a Long-Term Issuer Rating of 'IND BB-
'. The Outlook is Stable. Instrument-wise rating actions are:
-- INR85.76 mil. Term loan due on March 2026 assigned with IND
BB-/Stable rating;
-- INR70 mil. Fund-based working capital limit assigned with IND
BB-/Stable rating;
-- INR5 mil. Non-fund-based working capital limit assigned with
IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect TTL's small scale of operations and moderate
credit metrics. As per FY17 provisional financials, revenue grew
to INR395 million (FY16: INR358.8 million) on account of new
customer additions. EBITDA margin improved to 13.4% in FY17P
(FY16: 11.7%) owing to a decrease in operating expenses.
Consequently, net financial leverage (total adjusted net
debt/operating EBITDAR) improved to 6.0x in FY17P (FY16: 8.0x)
and gross interest coverage (operating EBITDA/gross interest
expense) to 2.7x (2.3x).
The ratings also factor in the firm's moderate liquidity position
as reflected by 85.2% average utilisation of working capital
limits during the 12 months ended July 2017.
However, the ratings are supported by the promoter's over a
decade of experience in the business process outsourcing
industry, leading to established relationships with customers and
suppliers.
RATING SENSITIVITIES
Positive: A substantial improvement in the revenue along with an
improvement in the credit metrics will be positive for the
ratings.
Negative: Deterioration in the credit metrics and liquidity
position will be negative for the ratings.
COMPANY PROFILE
Incorporated in January 2006 in Bhubaneswar, Orissa, TTL provides
voice-based business process outsourcing services such as
inbound/outbound call centre services, software design and
development services, and packaged technology solutions. It
hires, trains and recruits young professionals and acquires
expertise from different sectors to run its process.
USHDEV ENGITECH: Ind-Ra Hikes INR895.2MM Term Loan Rating to BB+
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded Ushdev Engitech
Limited's (UEL) rupee term loan as follows:
-- INR895.2 mil. (INR698.9 mil. outstanding) Rupee term loan due
on June 30, 2022 upgraded with IND BB+/Stable rating.
KEY RATING DRIVERS
The upgrade reflects UEL's timely debt servicing post December
2016, creation of a debt service reserve (DSR) for two quarters
of debt servicing and satisfactory project performance as per the
company's FY17 unaudited financials. The company reported
instances of delays in debt servicing of about 22 days in
May/June 2016 and around 10 days in December 2016, which were
rectified post December 2016. As per the bank statement provided
by the company related to fixed deposits made for creating the
DSR, there was a delay in debt servicing in December 2016,
despite availability of funds. The agency believes timely debt
servicing will remain a key monitorable for the project.
As per Ind-Ra's analysis, UEL has moderate coverage ratios and
cash flow cushions to absorb moderate shocks in the plant load
factor (PLF) as well as financial stress. The presence of a DSR
of around INR120 million for about two quarters of debt servicing
provides comfort in case of a temporary mismatch in cash flows.
Although the company had utilised the DSR for debt servicing in
May/June 2016, it was able to replenish the same up to required
level by end-December 2016 as per fixed deposit balance provided
to Ind-Ra.
UEL has a long operational track record (commencement of
commercial operations ranging from October 2002 to March 2012
across assets) and diversified wind generation assets spread
across nine locations in five states. UEL's 58.2MW wind assets
exhibited an increase in average PLF to 25.90% in 1QFY18 (FY17:
19.46%). While machine availability averaged around 96.9% in
1QFY18 (FY17: 95.61%), grid availability to evacuate power
averaged around 93.94% (94.28%), mainly due to lower availability
in Tamil Nadu and Rajasthan. Ind-Ra believes the yoy operational
performance improvement in 1QFY18 if sustained through FY18 could
lead to improved cash flows and ability for timely debt
servicing.
The rating also reflects UEL's long-term power purchase
agreements (PPAs) with four state distribution companies
(discoms) along with group captive consumers in Tamil Nadu
(28.05MW) and Maharashtra (3.80MW). The average tariff across all
the off-takers was around INR4.67/unit as of August 2017.
However, receivable days for Rajasthan state discoms have been
high, averaging around 175 days between May 2016 and March 2017,
as opposed to the weighted average receivable days of about 60
days across all the off-takers. The company has fixed tariff
offtake agreements with group captive counterparties that bypass
the merit order system and do not penalise the project for low
generation. Also, the 'must run' status for wind assets in India
adds strength to UEL's asset profile.
PPAs for 5.05MW of capacity in Maharashtra are expiring in FY19
and tariff for Karnataka project (7.5 MW) has to be re-determined
by state regulatory commission in FY18. The renewal of PPAs
before expiry at close to the existing tariffs is factored in the
rating assigned and non-achievement of this can affect the rating
assigned negatively.
The rating also factors in UEL's moderate operational risk as
Ind-Ra believes the company's wind turbine technologies are
standard and proven. In March 2012, UEL entered into a 10-year
fixed cost operation and maintenance (O&M) contract with Suzlon
Infrastructure Services Limited (SISL), the O&M arm of Suzlon
Energy Limited (turbine supplier). The stipulation of 95% machine
availability at the minimum in the O&M contract provides support
to the rating. The rating also factors in total operating costs
within Ind-Ra base case estimate of INR 2.59 million per MW in
FY18 with a fixed annual escalation.
However, the rating is constrained by the supply risks associated
with the availability and variability of wind resources compared
with management expectations and third-party wind assessment. The
availability of wind resources is an important factor, given the
high sensitivity of the project cash flow to changes in wind
patterns. Thus, the project's revenue and operating cash flow
directly depend on the accuracy of wind assessment studies and
energy production forecasts. Ind-Ra's base case projections
assume an average PLF of 19.46% in line with FY17 actual
generation data.
RATING SENSITIVITIES
Negative: Payment delays from the off-takers beyond Ind-Ra's base
case, inability to renew the PPAs (expiring before debt maturity)
at par with existing tariffs and operational/financial
performance below Ind-Ra's base case estimates could result in a
negative rating action.
Positive: Sustained timely debt servicing without a single day
delay and a minimum debt servicing coverage ratio (DSCR) of 1.2x
for FY18 and beyond (as per audited annual accounts; actual DSCR
of 1.25x in FY17), with generation levels and financial
performance above Ind-Ra's base case could result in a rating
upgrade.
COMPANY PROFILE
UEL operates wind power plants across Karnataka, Maharashtra,
Tamil Nadu, Gujarat and Rajasthan with an aggregate capacity of
58.2MW. Ushdev Power Holdings Private Limited is UEL's holding
company and is part the Ushdev Group with a presence in power,
mining, trading and industrial sectors.
Total outstanding rupee term loan stood at INR 698.94 million
(about INR23.3 million per MW) at the end of July 2017 with no
working capital facility being availed.
VIJAYA AERO: CRISIL Lowers Rating on INR24.5MM LT Loan to 'D'
-------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of Vijaya
Aero Blocks Private Limited (VABPL) to 'CRISIL D' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 5 CRISIL D (Downgraded from
'CRISIL B/Stable')
Long Term Loan 24.5 CRISIL D (Downgraded from
'CRISIL B/Stable')
The rating downgrade reflects current delays by VABPL in
servicing its debt. The delays have been caused due to VABPL's
weak liquidity.
The ratings reflect working capital intensive and early stage of
operations. Rating also factors in weak financial risk profile
marked by Weak capital structure and weak debt protection
metrics. These rating weaknesses are partially offset by
extensive industry experience of promoters and healthy demand
prospect of product.
Key Rating Drivers & Detailed Description
Weaknesses:
* Delay in debt servicing
VABPL has been delaying in repayment of interest and principal
amount of its term loan facility. The same is on account of
company's weak liquidity arising due to delay in commencement of
operations. Operations were expected to commence from October
2015 however it actually commenced form January 2016 that too
with only 33% of the original expected capacity.
* Working capital intensive operations
Operations are working capital intensive as reflected in GCA of
268 days as on March 31 2017. High GCA emanates from high
inventory of around 193 days as on March 31 2017. Operations are
expected to remain working capital intensive over the medium
term.
* Weak financial risk profile
Financial risk profile is weak marked by weak capital structure
and weak debt protection metrics. Capital structure is weak on
account of low net worth due to accumulated losses. Debt
protection metrics is weak due insufficient revenues and net
losses.
* Early stage of operations
The company started the commercial production from January 1 2016
and hence Fiscal 2017 was first full year of operations resulting
in modest scale of operations as reflected in revenues of INR6.3
crore in Fiscal 2017. Scale of operations is expected to remain
modest over the medium term.
Strength
* Extensive industry experience of promoters
Promoters of the company Mr. Prasanna Kumar and Mr. Ram Prasad
has extensive industry experience as a result of which they have
been able to establish strong relationship with the customers and
suppliers. Extensive experience of promoters is expected to
benefit the company over medium term.
* Demand prospects of AAC blocks
Demand of AAC blocks is on uptrend in India because of structural
superiority and cost effectiveness in comparison with the
conventional bricks.
Incorporated in 2012, VABPL manufactures AAC bricks and blocks at
the manufacturing unit in Mahabub Nagar District, Telangana. The
company started commercial operations in January 2016, and
operations are managed by Mr. Prasanna Kumar and Mr. Ram Prasad.
VABPL reported net losses of INR3.97 crore on revenue of INR6.31
crore in fiscal 2017, against INR7.04 crore and INR0.16. crore in
fiscal 2016.
VISHNURAAM TEXTILES: CRISIL Lowers Rating on INR6.82MM Loan to D
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank loan facilities of
Vishnuraam Textiles Limited (VTL) to 'CRISIL D/CRISIL D' from
'CRISIL B/Stable/CRISIL A4' driven by the delays in the repayment
of term loan obligations and overdrawals in the working capital
limits for over 30 days. These delays were caused due to
stretched liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .11 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 4.30 CRISIL D (Downgraded from
'CRISIL B/Stable')
Letter of Credit 2.75 CRISIL D (Downgraded from
'CRISIL A4')
Long Term Loan 6.82 CRISIL D (Downgraded from
'CRISIL B/Stable')
The rating also factors in the modest scale of operations with
susceptibility of margins to volatility in raw material prices,
working capital intensive operations and below average financial
risk profile. These strengths are offset by extensive experience
of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Delays in repayment of term loan instalment
The company has delayed its repayment on its maturing debt
obligations. Also, there are overdrawals in the working capital
limits for over 30 days. These delays have been caused due to the
stretched liquidity of the company resulting from weak demand
scenario in the market.
* Modest scale of operations and susceptibility of operating
margin to volatility in raw material prices: Scale of operations
is modest as reflected in revenues of INR 28.8 crore in fiscal
2016. Also, the operating margin has been fluctuating to the
extent of about 15% over the past 5 years through March 2016, due
to susceptibility to volatility in cotton prices.
* Working capital intensive operations: Operation is working
capital intensive marked by gross current asset (GCA) days of
243 days as on March 31, 2016, driven by high inventory and
moderate debtor days of 83 and 53 respectively.
* Below average financial risk profile: Financial risk profile is
below average marked by low gearing but average debt protection
metrics with interest coverage and net cash accrual to adjusted
debt of 1.18 and 0.04 times for fiscal 2016.
Strength
* Extensive experience of promoters in the textile industry:
Benefits from the three-decade long experience of the promoters
is expected to continue.
Incorporated in 1990, VTL is into manufacturing of cotton yarn.
The company has its manufacturing facilities in Tirupur and
Udumalpet.
The company incurred a loss of INR2.54 Cr on revenue of INR28.8
Cr in fiscal 2016, against loss of INR0.81 Crore on revenue of
INR27.5 Cr in fiscal 2015.
=========
J A P A N
=========
SOFTBANK GROUP: S&P Rates Two New Sr. Unsec US Dollar Notes 'BB+'
-----------------------------------------------------------------
S&P Global Ratings said that it has assigned its 'BB+' issue
rating to Japan-based telecommunications and internet company
SoftBank Group Corp.'s (BB+/Stable/--) two proposed senior
unsecured U.S. dollar notes, each with different maturities, and
to its two proposed senior unsecured euro notes, each with
different maturities. SoftBank will use the proceeds of the
issuances mainly to refinance existing debt.
SoftBank Group has a pure holding company structure. S&P said,
"In some cases with a holding company structure, we notch down
the ratings we assign to a holding company's debt from the
corporate credit rating on the holding company to reflect
structural subordination of the parent's debt obligations to
those of subsidiaries. Though SoftBank Corp., a major subsidiary
of SoftBank Group that is a telecommunications operator in Japan,
will guarantee the notes, we think the guarantee could be
released before the proposed notes mature under certain
circumstances, such as the guarantor no longer guaranteeing any
indebtness of SoftBank Group. Nevertheless, we believe risk
concerning structural subordination is mitigated for two reasons:
SoftBank Group possesses multiple operating subsidiaries and
large unrealized capital gains on assets in its investment
portfolio, which the company can monetize if necessary; and
because the liabilities of SoftBank Group subsidiaries arise
mostly from U.S.-based subsidiary and mobile communications
carrier Sprint Corp., we think bondholders might recover losses
from relatively unleveraged subsidiaries such as SoftBank Corp.
The notes will rank pari passu (equal) with all of SoftBank
Group's existing and future senior unsecured obligations."
S&P's issuer rating on SoftBank Group reflects its stable
profitability supported by a strong market position as a
diversified telecommunications operator in Japan as well as its
good business and geographic diversity. Constraining the rating
are the still-low, albeit improving, profitability and weak
position of Sprint in the U.S. market; SoftBank Group's heavy
debt burden and heightened financial leverage because of costs
for large-scale acquisitions and very active investments for
growth and because of Sprint's weak cash flow; and continuing
constraints on free cash flow because of the group's high capital
expenditures and acquisitions.
TAKATA CORP: Court Approves Frankel as Future Claimants Rep
-----------------------------------------------------------
The Hon. Brendan L. Shannon in Delaware entered an order
approving Roger Frankel as legal representative for individuals
who sustain personal injuries after the June 25, 2017 bankruptcy
filing date, arising from or related to PSAN Inflators
manufactured by the Debtors prior to confirmation of a Chapter 11
plan of reorganization.
The FCR may employ attorneys and other professionals consistent
with Section 1103 of the Bankruptcy Court, subject to prior Court
approval. The FCR's representatives and his professionals are
required to undertake reasonable efforts to comply with the U.S.
Trustee's request for information and additional disclosures as
set forth in the Guidelines for Reviewing Applications for
Compensation and Reimbursement of Expenses Filed under 11 U.S.C.
Sec. 330 by Attorneys in Large Chapter 11 Cases Effective as of
November 1, 2013.
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. 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) granting, among other things,
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
Claimants. The Official Committee of Tort Claimants selected
Pachulski Stang Ziehl & Jones LLP as counsel.
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.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
TAKATA CORP: OEM Customer Group Balks at Ch.11 Notice Cost
----------------------------------------------------------
Jeff Montgomery, writing for Law360, reports that manufacturing
creditors of Takata Corp. objected to taking on most of the $37
million cost of expanded notifications to future individual
claim-makers, arguing in a Delaware bankruptcy filing that the
expense is part of the overall case cost and benefit.
The Original Equipment Manufacturer Customer Group noted that
Takata's Chapter 11 plan sponsor and prospective buyer, Key
Safety Systems Inc., has said it will not proceed with a global
transaction in Takata's case without additional noticing
measures.
Specifically, the noticing provisions must include the Takata
Debtors purchasing available vehicle owner data, directly mailing
notices to these vehicle owners, creating a dedicated website,
setting up a toll-free number, pursuing paid interest
advertising, issuing press releases and undertaking a social
media campaign -- all targeted to ensure widespread notice to and
communication with creditors. While these are material
additional steps aimed at a more expansive due process, they
constitute an integral component of the complex Global
Transaction announced by the Debtors.
Without the Debtors undertaking these efforts, the Plan Sponsor
has repeatedly advised that it is not prepared to consummate the
Global Transaction.
As the Debtors have indicated to the Court, the Global
Transaction is the crux of this restructuring and, without it,
the Debtors will liquidate. Therefore, the use of the
Supplemental Notice Plan is critical and, by definition, benefits
all stakeholders.
In its limited objection, the Unsecured Creditors Committee only
takes issue with two components of the Supplemental Notice Plan
-- the purchase of individual identifying data and the direct
mailing of notices to currently unknown PPICs -- that will
together cost approximately $29.1 million. The UCC makes two
arguments: (a) actual mailing to unknown creditors is not
customary and goes over and above that which is legally required
and (b) the OEMs should bear these costs as the primary
beneficiary of this supplemental direct mailing to PPICs.
But the Plan Sponsor, not the OEMs, insists on actual mailing and
has stated that this is a condition of its willingness to proceed
with the Global Transaction. The Debtors' estates and all of
their stakeholders are the beneficiaries from the Global
Transaction, not the OEMs alone.
The OEM Customer Group contends that noticing is an estate
obligation and a cost of this Global Transaction and overall
restructuring. There is no basis to force any single creditor
group (OEMs or otherwise) to bear the cost of this required
notice.
"The relevant inquiry is not whether actual mailing is customary,
but rather whether the scope of the proposed notice benefits the
estates and all of their stakeholders -- and, here, the answer is
yes. Nor has the UCC cited any precedent holding that a more
elaborate noticing protocol is legally impermissible," said Derek
C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, counsel
to the OEM Customer Group.
Separately, the Official Committee of Tort Claimants suggests
that the OEMs should participate in the noticing process by
providing vehicle owner lists and information to vehicle owners
that visit the dealerships. The OEMs do not have current
individual vehicle owner information necessary for the proposed
actual mailing. Nor are the OEMs able to mandate that its
dealers participate in the Debtors' noticing plan. Those
dealerships are independently-owned and operated. The Tort
Committee has not provided any authority to support this type of
notice.
According to Mr. Abbott, implementing any such noticing process
advocated for by the Tort Committee would inevitably require each
OEM to rely on its vehicle owners to actually visit the
dealership during the prescribed time frame and would require the
OEM's employees (who are not employees of the dealerships) to
provide notices during each visit. This inconsistent and
haphazard noticing approach cannot legitimately serve as a
substitute for the Debtors' noticing procedures. The Debtors'
efforts provide certainty that noticing to PPICs is completed in
a uniform fashion.
The OEM Customer Group also notes that the Official Committee of
Tort Claimants seeks to link OEM participation in noticing as a
quid pro quo to the OEMs receiving a third-party release.
Third-party releases are a plan confirmation issue unrelated to
the Bar Date Motion and the noticing process to be undertaken by
the Debtors.
Mr. Abbott may be reached at:
Derek C. Abbott, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 North Market Street, 16th Floor
Wilmington, DE 19899-1347
Telephone: (302) 658-9200
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. 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) granting, among other things,
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
Claimants. The Official Committee of Tort Claimants selected
Pachulski Stang Ziehl & Jones LLP as counsel.
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.
Chapter 15 Cases
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
TOSHIBA CORP: Foxconn's JPY2.1TT Bid has Apple, Softbank Support
----------------------------------------------------------------
Debby Wu at Nikkei Asian Review reports that key iPhone assembler
Hon Hai Precision Industry, or Foxconn Technology Group, is
offering JPY2.1 trillion ($19.6 billion) for the memory unit of
embattled Japanese conglomerate Toshiba Corporation with support
from Apple, Kingston and SoftBank Group, a company executive
said.
The proposal calls for the Taiwanese manufacture to hold 25% of
the equity, Foxconn-controlled Sharp Corporation 15%, Apple 20%,
Kingston Technology 20% and SoftBank 10%, with Toshiba keeping
the remaining 10%, Foxconn Spokesman Louis Woo told Nikkei.
Apple and SoftBank declined to comment, while Kingston did not
immediately respond to an email.
"Our consortium is really a Taiwanese-Japanese-American
consortium," the report quotes Mr. Woo as saying. "Where the
[intellectual property] goes will need to be determined by all
members of the consortium . . . we are all commercial companies
so why would we not want to protect our own IP?"
Nikkei says Mr. Woo's comments aimed to allay concerns within
Toshiba and the Japanese government that Foxconn, which assembles
iPhones in China, could leak sensitive technology to the
communist country, which is aggressively building and acquiring
cutting-edge technology.
"Toshiba should make a decision that is in the best interest of
the company and shareholders, rather than based on political
considerations," Mr. Woo told Nikkei.
Nikkei notes that Foxconn is up against two other rivals in its
bid for Toshiba Memory Corporation.
One is led by Western Digital and includes U.S. investment firm
Kohlberg Kravis Roberts, the public-private Innovation Network
Corp. of Japan and the government-backed Development Bank of
Japan, the report relates.
The other bidder is an American-Japanese-South Korean consortium,
including investment firm Bain Capital and chipmaker SK Hynix.
Toshiba must complete the sale of its memory unit before the end
of the current fiscal year ending next March to compensate for
massive losses incurred by its U.S. nuclear operations, or risk
being delisted from the Tokyo Stock Exchange, Nikkei adds.
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 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: Bain, SK Hynix Ups Bid for Chip Unit to JPY2.4TT
--------------------------------------------------------------
Reuters reports that a group including Bain Capital and South
Korea's SK Hynix has raised its offer for Toshiba Corp's chip
business to JPY2.4 trillion ($22.3 billion) including a JPY200
billion investment in infrastructure, sources familiar with the
matter said.
The offer by the consortium, which is led by the U.S. private
equity group and the South Korean chipmaker as well as Japanese
state-backed investors, was higher than an initial offer of
around JPY1.94 trillion, Reuters relates that sources who
requested anonymity because the talks were confidential.
Bain and SK Hynix representatives were not immediately available
for comment, while Toshiba declined to comment on details of the
deal negotiations, Reuters notes.
Reuters says the move comes after sources said Western Digital
Corp, which was part of a competing group in final-stage talks
with Toshiba, had revised its offer.
According to Reuters, the sources said the U.S. company would
take a step back from the initial financing consortium to address
Toshiba's concerns that a Western Digital stake could lead to
prolonged anti-trust reviews.
It was unclear what its latest offer was, but sources previously
said it was offering around JPY1.9 trillion.
Toshiba is desperate to sell the unit and cover billions of
liabilities at its U.S. nuclear unit Westinghouse, the report
notes. Two weeks ago it said it was considering three competing
offers including one led by Taiwan's Hon Hai, also known as
Foxconn.
All three bidder groups have roped in Apple Inc to bolster their
offers, sources have said, Reuters adds.
Under their latest offer, Bain and SK Hynix offered to provide a
combined total of around JPY567.5 billion, while Apple Inc would
provide JPY335 billion, according to sources, Reuters relays.
Toshiba would keep JPY250 billion in the business, they said.
U.S. technology firms and other Japanese companies were also
expected to provide funding, while major banks were expected to
provide a total of around JPY600 billion in funds, the sources,
as cited by Reuters, said.
Bain would have 49.9 percent of initial voting rights in the
memory chip business, while Toshiba would have 40 percent and
Japanese firms would have 10.1 percent, the sources said, adds
Reuters.
Toshiba's board is due to meet on Sept. 13 to consider the
offers, sources said, Reuters reports.
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 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.
=================
S I N G A P O R E
=================
GRYPHON CAPITAL: High Court Enters Wind Up Orders
-------------------------------------------------
Chai Hung Yin at Business Times reports that the High Court has
ordered Sakae Holdings Ltd's associate company, Gryphon Capital
Management (GCM), to be wound up by consent, said the company in
a Singapore Exchange filing.
According to the report, the High Court has also appointed the
company's nominees, Seshadri Rajagopalan and Jotangia Paresh
Tribhovan of SR Associates LLP, as liquidators of GCM.
GCM's liquidators will now look into the affairs of GCM and bring
such claims as they consider appropriate, Business Times relates.
In light of the High Court's order, the trial of Suit 1099, which
was a claim by the company against ERC Holdings Pte Ltd, Andy
Ong, and Ong Han Boon in connection with the affairs of GCM, will
no longer proceed, the report adds.
====================
S O U T H K O R E A
====================
HANJIN INTERNATIONAL: Moody's Assigns B2 Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating (CFR) to Hanjin International Corp. (HIC).
The rating outlook is stable.
At the same time, Moody's has assigned a Ba3 rating to the
proposed $600 million senior secured term loan borrowed by HIC
and guaranteed by its parent, Korean Air Lines Co., Ltd. (KAL).
HIC plans to use the proceeds from the senior secured term loan
to repay existing borrowings, including its Arirang bond of
approximately $210 million and project finance loan of $300
million.
The ratings are dependent upon the satisfactory documentation and
successful completion of HIC's refinancing, including the $300
million senior unsecured note due in October 2017 that is
guaranteed by The Export-Import Bank of Korea (KEXIM, Aa2/P-1
stable). The failure of meeting such conditions could pressure
the ratings.
RATINGS RATIONALE
"HIC's B2 CFR primarily reflects its weak financial metrics at
least over the next 2-3 years, its limited operating history and
the high concentration risk associated with HIC's single-location
operations," says Wan Hee Yoo, a Moody's Vice President and
Senior Credit Officer.
"At the same time, HIC's CFR factors in the good competitive
profile of its property and an expected improvement in liquidity,
as well as a one-notch rating uplift, based on the likelihood of
extraordinary parental support from KAL, in case of need," adds
Yoo.
Moody's expects HIC's adjusted debt/EBITDA to remain elevated
well above 10x over the next 2-3 years, because its construction
costs to build the Wilshire Grand Center (WGC) were funded with
sizable debt.
In addition, there is a degree of uncertainty over its ability to
improve the occupancy rates of its hotel operations and office
leasing business to satisfactory levels. This risk is exacerbated
by its single-site operation.
HIC's operations are vulnerable to potential external events that
may adversely affect the property or the market in which it
operates.
Such risk factors are partly mitigated by (1) the prime location
and good competitive profile of the Class A building; (2) the
well-established brand and experience of the hotel operator,
InterContinental Hotels Group plc; (3) HIC's operational
affiliation with KAL which will assist hotel demand through its
crew members and passengers: and (4) its adequate liquidity which
will improve following the completion of the refinancing.
Moody's also expects EBITDA to be sufficient to cover interest
expenses from 2018-19.
The one-notch uplift based on the likelihood of extraordinary
parental support factors in the parent's strong track record of
rendering financial support to HIC. KAL has provided payment
guarantees or collateral on effectively all of HIC's debt and has
injected $653 million in equity since 2013 for the construction
of WGC.
The support assumption also considers KAL's significantly larger
scale and stronger credit quality than HIC, given its leadership
position in Korea's airline industry and better financial
profile.
Moody's expects KAL's adjusted debt/EBITDA to stay at around
6.3x-6.5x over the next 12-18 months, a level that is broadly
similar to the 6.4x registered in 2016.
On the other hand, KAL's credit quality is constrained by its
weak liquidity profile, given its sizable short-term debt and
weak access to unsecured funding.
The Ba3 rating on the proposed term loan mainly reflects the
first lien on substantially all of the assets owned by HIC. The
term loan benefits from the priority claims relative to the
senior unsecured note of $300 million (guaranteed by KEXIM) in
the company's liability structure.
The stable rating outlook reflects Moody's expectation that HIC's
credit quality will remain stable and consistent with its current
rating category over the next 1-2 years.
Upward pressure on the ratings could arise over time if HIC's
operations stabilize with steady hotel demand and a good level of
office occupancy, such that the company's adjusted debt/EBITDA
trends down to 8x and EBITDA/interest coverage stays above 2.0x
on a sustained basis; and/or if KAL's credit quality improves
meaningfully.
Downward pressure on the ratings could emerge if HIC's liquidity
profile and/or KAL's credit quality weakens considerably.
Moody's could also review the ratings in the event of significant
adverse changes in the company's relationship with KAL.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Hanjin International Corp. (HIC) is a wholly owned subsidiary of
Korean Air Lines Co., Ltd. (KAL) and owns the Wilshire Grand
Center (WGC), a 73-story Class A mixed-use building located in
Los Angeles in the US.
Established in 1962, Korean Air Lines Co., Ltd. (KAL) is a
leading airline company based in Korea. As of end-June 2017, it
owned a fleet of 161 aircraft (passenger 131, cargo 30) serving
125 destinations across 43 countries. KAL is also engaged in the
aerospace and catering businesses, as well as the hotel business
in the US through HIC.
===============
X X X X X X X X
===============
FIJI: Moody's Hikes Rating to Ba3; Revises Outlook to Stable
------------------------------------------------------------
Moody's Investors Service has upgraded the Government of Fiji's
local and foreign currency issuer ratings to Ba3 from B1 and
changed the outlook to stable from positive.
The factors driving the rating upgrade and stable outlook are
Moody's expectation that:
(1) The strengthening in Fiji's institutional framework and
policy effectiveness, aided by political stability, will support
economic growth
(2) The engagement with international financial institutions will
continue to enhance government debt affordability and overall
fiscal strength
Despite government measures to mitigate the impact of climate
change, Fiji's economy and public finances will remain highly
vulnerable to both sudden climate events and gradual climate
change trends, a constraint on its rating.
Fiji's local and foreign currency senior unsecured ratings have
also been upgraded to Ba3 from B1.
The local-currency bond and deposit ceilings were raised to Baa3
from Ba1. The foreign currency bond ceiling was maintained at Ba3
and the foreign currency deposit ceiling was raised to B1 from
B2. In addition, the short-term foreign-currency bond and deposit
ceilings are maintained at "Not Prime.''
RATINGS RATIONALE
RATIONALE FOR RATING UPGRADE TO Ba3
STRENGTHENING POLICY EFFECTIVENESS SUPPORTS ECONOMIC GROWTH
PROSPECTS
Fiji has taken a number of measures which, together, enhance the
institutional framework and strengthen policy effectiveness.
First, one set of measures relates to the effectiveness of fiscal
policy and the use of government resources.
Effective tax cuts are bolstering revenue as a share of GDP to
higher levels than many similarly rated peers. Cuts to the value-
added tax (VAT) combined with a broadening of the VAT base
through removal of exemptions and the recent increase in the
personal income tax threshold are boosting disposable incomes and
in turn bolstering private consumption and tax collection.
Greater resources provided to Fiji's Revenue and Customs Service
and public declaration of overseas assets will increase tax
compliance.
Moody's expects government revenues to rise to around 30% of GDP
in the fiscal year ending in July 2018 (FY2018), compared to a
Ba-median of about 28%, and from 27% in FY2017, and remain
broadly stable around these levels in the next few years.
The government is using the fiscal space afforded by higher
revenues to pursue investment in infrastructure and education,
which will boost the economy's long-run productive capacity. This
is reflected in an increasing share of capital expenditure in
total government spending to around 40% in FY2017, up from about
27% in 2012.
Second, a set of measures are aimed at strengthening the
economy's resilience to negative shocks.
These include government policies to diversify the services
offered and markets reached by the tourism sector, to develop the
information and communications industry through special economic
zones, and support small and medium-sized enterprises and
companies in the forestry industry. Over time, these measures
have the potential to partially offset hurdles to investment
posed by factors such as slow business registration and
investment approval processes.
In addition, Moody's expects the new strategic plan in the sugar
industry, which involves greater engagement with farmers, the
mechanisation of production processes and investment in rail to
lower transportation costs to support a pickup in sugar
production and productivity in the sector.
Policies aimed at bolstering resilience also relate to climate
change risks. For instance, the Environment and Climate
Adaptation Levy (ECAL), which was increased from 6% to 10% in the
latest budget, will directly fund environment protection
programmes and climate adaptation projects. The government has
also strengthened building codes and implemented new construction
designs to ensure structures are more resilient to climate
change. The government's recent move towards a fiscal year
running from August to July also allows for better budget
planning around the cyclone season.
Although the extent and durability of credit positive changes has
yet to be ascertained, Moody's expects that, in combination, this
range of measures will strengthen the effectiveness of fiscal
policy and bolster the resilience of the economy to potential
negative shocks.
Fiji's vulnerability to climate change will continue to pose
significant challenges to policymaking that is inherent in small
and narrowly diversified economies.
ENGAGEMENT WITH INTERNATIONAL FINANCIAL INSITITUTIONS SUPPORT
IMPROVEMENT IN DEBT AFFORDABILITY AND FISCAL STRENGTH
Progress on reforms combined with greater political stability
since 2008 and the country's return to electoral democracy in
2014 have helped the government re-engage multilateral
development banks for financing, which is often provided at low
cost.
The Asian Development Bank's (Aaa stable) decision to host its
annual meetings in Fiji in 2019, the first time the meetings will
be held in a Pacific country, is in part the result of the
credit-positive improvement in political stability and
institutional progress that support increasing government
effectiveness.
More directly, loans from the Asian Development Bank and World
Bank (International Bank for Reconstruction and Development,
IBRD, Aaa stable) will help diversify Fiji's government funding,
including infrastructure development, which has been largely
market-based over the past decade, and reduce its costs.
Lower interest rates, stemming from a more stable macroeconomic
environment and lower refinancing costs on the government's
international bond in 2015, as well as a larger tax take, will
also enhance the government's debt affordability.
Moody's expects interest payments to fall to 8.7% as a percentage
of revenues in FY2018, well down from a peak of 14.3% in 2011.
With additional borrowing for cyclone-related and economic
development spending, mostly from domestic sources and external
sources on concessional terms, Moody's projects government debt
to rise slightly to 46.5% of GDP in FY2018 from 44.3% in FY2017.
Fiji's government debt burden will remain moderately high, in
line with the median of Ba-rated sovereigns.
With the government budgeting FJD372 million in privatisation
receipts in FY2018 (about 3.5% of 2017 GDP), the potential for
delays to the sale of the government assets could result in a
higher government debt burden than Moody's currently forecast.
Assuming that the deficit narrows significantly and durably from
FY2019 once reconstruction costs following Tropical Cyclone
Winston abate, Moody's overall assessment of fiscal strength
would not be materially affected by lower privatisation receipts
than currently budgeted.
RATIONALE FOR STABLE OUTLOOK
The stable outlook indicates risks to Fiji's rating are balanced.
Moody's expects reconstruction, strong demand for Fiji tourism,
robust public expenditure and continued accommodative monetary
settings to support real GDP growth of 3.8% in 2017 and 3.0% in
2018, following a disaster-affected 0.4% growth outcome in 2016.
Over the medium term, rising incomes in Asia, increased hotel
development and government policies to boost tourism will help
support continued growth in the sector. Moody's expects
agriculture output to strengthen in line with new investment
initiatives.
Prospects for continued political stability and economic growth
will provide a favourable context to the continued implementation
of government policies that bolster economic and fiscal
management.
These positive prospects are balanced by downside risks related
to Fiji's vulnerability to negative shocks, particularly
environmental risks, and ongoing hurdles to doing business that
could weigh on economic growth momentum and public finances to a
greater extent than Moody's currently assume. Wider fiscal
deficits in recent years and moderately high government debt
would constrain fiscal flexibility in the event of any future
potential negative economic shocks.
WHAT COULD CHANGE THE RATING UP
Upward rating pressure could develop as a result of 1) more
robust economic growth, for instance through improvements in the
business climate, which would allow a faster narrowing of
deficits and debt consolidation than Moody's currently expects,
and 2) significant diversification of the tourism industry and
expansion in new industries which would enhance the economy's
resilience to negative shocks.
WHAT COULD CHANGE THE RATING DOWN
Downward rating triggers could stem from 1) a large external or
domestic shock, perhaps stemming from a natural disaster, that
would result in substantially weaker economic growth prospects
and fiscal outcomes for a prolonged period, 2) the reemergence of
domestic political risks that would disrupt economic and fiscal
management, potentially strain relationships with IFIs, and in
turn weaken institutional strength, or 3) balance of payments
strains that would result in a deterioration in the foreign
reserve position and raise repayment risks on external debt
obligations.
GDP per capita (PPP basis, US$): 8,926 (2016 Actual) (also known
as Per Capita Income)
Real GDP growth (% change): 0.4% (2016 Provisional) (also known
as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 3.9% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -2.0% (2016-17 Actual) (also
known as Fiscal Balance)
Current Account Balance/GDP: -5.4% (2016 Actual) (also known as
External Balance)
External debt/GDP: 18.6% (2016 Estimate)
Level of economic development: Low level of economic resilience
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On September 4, 2017, a rating committee was called to discuss
the rating of the Fiji, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have not materially changed. The
issuer's institutional strength/ framework, have not materially
changed. The issuer's fiscal or financial strength, including its
debt profile, has materially increased. The issuer's
susceptibility to event risks has not materially changed.
The principal methodology used in these ratings was Sovereign
Bond Ratings published in December 2016.
The weighting of all rating factors is described in the
methodology used in this credit rating action, if applicable.
*********
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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