/raid1/www/Hosts/bankrupt/TCRAP_Public/170918.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 18, 2017, Vol. 20, No. 185
Headlines
A U S T R A L I A
CALMWINDS PAYROLL: First Creditors' Meeting Set for Sept. 25
EMPIRE OIL: First Creditors' Meeting Set for Sept. 26
ESPLANADE WOLLONGONG: First Creditors' Meeting Set for Sept. 25
MJ LOGISTICS: First Creditors' Meeting Set for Sept. 25
SAFE HOMES: First Creditors' Meeting Set for Sept. 27
TEN NETWORK: Gordon, Murdoch Make Revised Bid
C H I N A
CIFI HOLDINGS: Fitch Raises Long-Term Foreign Curr. IDR to BB
DONGBEI SPECIAL: Jiangsu Shagang to Acquire 43% Shares
JIANGSU FANGYANG: Fitch Affirms BB Long-Term IDR; Outlook Stable
POSTAL SAVINGS: Moody's Rates New AT1 Offshore Shares 'Ba3(hyb)'
SINO-OCEAN LAND: Fitch Rates US$600MM Perpetual Securities 'BB'
SUNAC CHINA: Fitch Rates 2 Senior Note Tranches BB-; on RWN
I N D I A
ADHUNIK CORP: Ind-Ra Lowers Issuer Rating to BB+, Still on RWN
AEGAN INDUSTRIES: Ind-Ra Moves D Issuer Rating to Not Cooperating
ALAKNANDA SPONGE: Ind-Ra Migrates BB+ Rating to Not Cooperating
ARHAM NON WOVEN: CRISIL Reaffirms 'D' Rating on INR11.55MM Loan
BHAGWANDAS METALS: CRISIL Reaffirms 'B' Rating on INR3MM Loan
BHAGWATI TIMBER: CRISIL Reaffirms B Rating on INR1MM Cash Loan
BHUMYA TEA: CRISIL Raises Rating on INR28.92MM Cash Loan to B+
BLOOM DEKOR: Ind-Ra Migrates BB- Issuer Rating to Not Cooperating
BRIJBASI ART: CRISIL Lowers Rating on INR9MM Cash Loan to 'B'
COCHIN FROZEN: CRISIL Reaffirms 'B' Rating on INR3MM Loan
CHOKSI IMAGING: Ind-Ra Withdraws B+ Long-Term Issuer Rating
ENGINEMATES HEAT: Ind-Ra Moves B+ Rating to Not Cooperating
ESN FINANCE: Ind-Ra Withdraws B+ Long-Term Issuer Rating
GRACE INT'L: CRISIL Reaffirms B+ Rating on INR10.5MM Loan
HARICHANDANA COTTONS: CRISIL Hikes Rating on INR3MM Loan to B+
HIMALYA INT'L: CRISIL Cuts Rating on INR51.64MM Loan to D
HIMANCHAL CONSTRUCTION: Ind-Ra Moves Rating to Not Cooperating
HINDUSTAN EVEREST: CRISIL Reaffirms 'D' Rating on INR7MM Loan
IBC LIMITED: CRISIL Reaffirms 'D' Rating on INR30MM Loan
IDEAL CHEMICALS: CRISIL Ups Rating on INR13MM Cash Loan to B+
INDIAN MARINE: CRISIL Reaffirms B+ Rating on INR6MM Loan
JINDAL ENGRAVURES: CRISIL Assigns B- Rating to INR5.45MM LT Loan
K M SUGAR: Ind-Ra Hikes Issuer Rating to 'BB+', Outlook Stable
KARAN AUTOMOTIVES: CRISIL Lowers Rating on INR6MM Loan to 'B'
KENOX AGRO: CRISIL Raises Rating on INR5MM Cash Loan to B+
LADO CERAMIC: CRISIL Reaffirms 'B' Rating on INR2.50MM Term Loan
LAXMI COTTON: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan
LEOLINE FOODS: CRISIL Lowers Rating on INR10.6MM Loan to 'D'
LIMENAPH CHEMICALS: CRISIL Lowers Rating on INR11MM Loan to 'B+'
LUKE EXPORT: CRISIL Reaffirms B+ Rating on INR1MM Term Loan
MAGNUM AVIATION: CRISIL Cuts Rating on INR9.5MM Cash Loan to D
MAHESHWARI MINING: CRISIL Lowers Rating on INR19MM Loan to B+
MARK INT'L: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
MAYFLOWER HOTELS: CRISIL Reaffirms B Rating on INR10MM Term Loan
MIRA MARINE: CRISIL Reaffirms B+ Rating on INR5MM Bill Loan
NOSLAR INTERNATIONAL: Ind-Ra Lowers LT Issuer Rating to 'D'
PHARMACON: CRISIL Assigns 'B' Rating to INR4.5MM Cash Loan
SASTASUNDAR HEALTHBUDDY: CRISIL Assigns B+ Rating to INR14MM Loan
SHINE STAR: Ind-Ra Migrates BB- Issuer Rating to Not Cooperating
SHREE ASHTVINAYAK: Ind-Ra Moves D Rating to Not Cooperating
SHREE KRUSHNA: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
SHRI SHYAM: Ind-Ra Migrates BB+ Issuer Rating to Not Cooperating
SMARTHA ENTERPRISES: Ind-Ra Withdraws 'B' LT Issuer Rating
SPRING BEE: Ind-Ra Assigns 'B' LT Issuer Rating, Outlook Stable
SRI LAKSHMI: CRISIL Reaffirms B+ Rating on INR20MM Cash Loan
SRI MANIKANTA: Ind-Ra Assigns 'B' Issuer Rating, Outlook Stable
SURE SAFETY: Ind-Ra Affirms 'B' Issuer Rating, Outlook Stable
TENTIWALA METAL: CRISIL Reaffirms D Rating on INR17.3MM Loan
VINDESHWARI EXIM: Ind-Ra Withdraws 'B' Long-Term Issuer Rating
* Weak Capital Drives Neg. Indian Bank Sector Outlook, Fitch Says
I N D O N E S I A
PELABUHAN INDONESIA: Moody's Downgrades BCA to Ba1
J A P A N
TAKATA CORP: All Non-MDL Airbag Suits on Hold Thru Nov. 15
TOSHIBA CORP: Bain Names Apple & Dell as New Partners in Bid
TOSHIBA CORP: To Conclude Chip Unit Deal on Sept. 20
N E W Z E A L A N D
MTF SIERRA 2017: Fitch Assigns B+ Rating to NZD1.32MM Cl. F Notes
TOP RETAIL: TopMan Wellington Closes Doors
S I N G A P O R E
GLOBAL A&T: Moody's Withdraws Ca CFR and Senior Sec. Notes Rating
GLOBAL A&T: Initial Notes Ad Hoc Group Rejects Restructuring Plan
S O U T H K O R E A
KUMHO TIRE: Creditors Question Self-Rescue Plan
X X X X X X X X
FIJI: Moody's Says Continuing Improvements Support Credit Profile
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A U S T R A L I A
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CALMWINDS PAYROLL: First Creditors' Meeting Set for Sept. 25
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Calmwinds
Payroll Pty Ltd will be held at Level 10, 239 George Street, in
Brisbane, Queensland, on Sept. 25, 2017, at 11:00 a.m.
Domenic Calabretta and Grahame Ward of Mackay Goodwin were
appointed as administrators of Calmwinds Payroll on Sept. 13,
2017.
EMPIRE OIL: First Creditors' Meeting Set for Sept. 26
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Empire Oil
Company (WA) Limited will be held at the offices of Ferrier
Hodgson, Level 28, 108 St Georges Terrace, in Perth, WA, on
Sept. 26, 2017, at 11:00 a.m.
Andrew Smith, Martin Jones and Peter McCluskey of Ferrier Hodgson
were appointed as administrators of Empire Oil on Sept. 14, 2017.
ESPLANADE WOLLONGONG: First Creditors' Meeting Set for Sept. 25
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Esplanade
Wollongong Pty Ltd will be held at Level 27, 259 George Street, in
Sydney, NSW, on Sept. 25, 2017, at 10:00 a.m.
Daniel Jean Civil and Amanda Young of Jirsch Sutherland were
appointed as administrators of Esplanade Wollongong on Sept. 13,
2017.
MJ LOGISTICS: First Creditors' Meeting Set for Sept. 25
-------------------------------------------------------
A first meeting of the creditors in the proceedings of MJ
Logistics Pty Ltd will be held at the offices of SV House,
138 Mary Street, in Brisbane, Queensland, on Sept. 25, 2017, at
2:30 p.m.
Terrence John Rose of SV Partners was appointed as administrator
of MJ Logistics on Sept. 13, 2017.
SAFE HOMES: First Creditors' Meeting Set for Sept. 27
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Safe Homes
Constructions Pty Ltd will be held at the offices of Worrells
Solvency & Forensic Accountants, Level 15, 114 William Street, in
Melbourne, Victoria, on Sept. 27, 2017, at 3:30 p.m.
Matthew Kucianski and Matthew Jess of Worrells Solvency were
appointed as administrators of Safe Homes on Sept. 15, 2017.
TEN NETWORK: Gordon, Murdoch Make Revised Bid
---------------------------------------------
Darren Davidson at The Australian reports that the battle for
control of Ten Network has taken a new twist after Bruce Gordon
and Lachlan Murdoch upped the ante by tabling a revised bid on
more "compelling" terms.
The Australian say the move, prompted by the passing of the media
reform bill, will test the resolve of Ten's administrators
KordaMentha after they backed a rival offer by US media giant CBS
that now offers a lower return to creditors.
Less than 24 hours after the Turnbull government pulled off the
near-impossible task of scrapping some of Australia's decades-old
media rules, Messrs. Gordon and Murdoch lobbed a new proposal that
could open a bidding war if CBS counters the offer, according to
The Australian.
At lunchtime on Sept. 15, corporate advisers Fort Street sent
KordaMentha a five-page letter outlining Messrs. Gordon and
Murdoch's latest attempt to take control of Ten, home of reality
franchise MasterChef and the Big Bash cricket league, the report
says.
"With the passage of the media reform bill now assured, there are
limited conditions to the revised proposal and a single execution
path," Fort Street Advisory wrote to KordaMentha partner Mark
Korda, The Australian relays.
Under the revised terms, the maximum payment to unsecured
creditors has increased by 57% from AUD35 million to AUD55
million, compared with AUD32 million from CBS, The Australian
discloses.
The Australian relates that the revised bid is 72% higher than the
proposed payment under the CBS bid. In aggregate, Ten's unsecured
creditors, excluding CBS, will receive 13.4c in the dollar
compared with 12.43c under the CBS deal.
The investment companies of Mr. Murdoch and Mr. Gordon, Illyria
and Birketu, employees and continuing trade creditors would
receive 100c in the dollar and all other creditors would get 5.75c
in the dollar, the report notes.
According to the report, Ten will no longer be burdened by a
contract with CBS that KordaMentha's official report describes as
"onerous", the letter states. It remains unclear if the revised
offer will be put to creditors at the second meeting of Ten's
creditors, which is due to be held in Sydney on Sept. 19, when
they will vote on the CBS bid.
KordaMentha is said to be seeking advice on whether a new bid
could be accepted, the report says.
CBS, which is based in New York, did not respond to a media
inquiry at the time of writing, The Australian says.
Under the new structure, Mr. Gordon and Mr. Murdoch will allow
shareholders to keep 25% of their equity, with Ten to be relisted
on the ASX, The Australian discloses.
This will enable Ten's 17,000 shareholders to share in any
recovery under Mr. Murdoch and Mr. Gordon. Under the CBS bid, the
US company will own 100% of the company, the report notes.
Under the CBS deal, retail shareholders would get nothing for
their stock, which prompted concerns from the Australian
Shareholders Association and talk of a class action by disgruntled
shareholders, says The Australian.
The Gordon and Murdoch deed of company arrangement provides
sufficient funds that would see Ten continue operating and meet
the obligations to staff.
With the media laws soon to complete their passage through
parliament and other conditions removed, the new bid from Mr.
Gordon and Mr. Murdoch had no execution risk, sources said.
Ten would also remained locally owned and operated, with Gordon
and Murdoch committed to increasing Australian content output, the
report adds.
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.
=========
C H I N A
=========
CIFI HOLDINGS: Fitch Raises Long-Term Foreign Curr. IDR to BB
-------------------------------------------------------------
Fitch Ratings has upgraded China-based property developer CIFI
Holdings (Group) Co. Ltd.'s Long-Term Foreign-Currency Issuer
Default Rating (IDR) and senior unsecured rating to 'BB' from
'BB-'. The Outlook on the IDR is Stable.
CIFI's attributable contracted sales have continued to increase
strongly since Fitch placed the rating on Positive Outlook in
October 2016. Sales growth has been supported by the company's
execution of its fast-churn strategy and stable operating
efficiency, while keeping land acquisitions steady and maintaining
a healthy financial profile. CIFI's enlarged scale and enhanced
credit profile make it more comparable with 'BB' rated China
homebuilders and Fitch expects its credit profile to remain
healthy in the next 18 months.
KEY RATING DRIVERS
Larger Scale: Fitch expects CIFI's attributable contracted sales
to quadruple from 2014 levels to reach CNY45 billion in 2017 and
CNY60 billion in 2018 based on its project-launch pipeline and
strong land bank. Total contracted sales for January 2017 to
August 2017 rose by 68% yoy to CNY61 billion - of which about 55%
were attributable sales - after CIFI increased the number of
ready-for-sale properties and project selling prices. CIFI
achieved a slight enhancement in the average selling price (ASP)
of contracted sales year-to-date amid strict pricing control, with
ASPs rising to CNY17,900 per square metre (sq m), from
CNY17,800/sq m in the same period during 2016 (2015: CNY12,700/sq
m). The larger scale gives CIFI a more stable sales base and
greater financial flexibility for land acquisitions.
Leverage to Remain Stable: CIFI's net leverage, as measured by net
debt/adjusted inventory with proportionate consolidation of joint
ventures (JV) and associates, was 36.1% at end-June 2017. This was
higher than the 29.5% recorded at end-2016, but lower than that of
most 'BB' rated Chinese homebuilders. The low leverage was due to
CIFI's prudent land acquisition strategy and adoption of the JV
model, which helps it improve operational efficiency as well as
lower its land acquisition and funding cost. Fitch expects
leverage to remain stable for the next 12-18 months as CIFI's
accelerated 1H17 land acquisition pace has prepared it with
abundant land resources for 2018. The HKD2.4 billion share
placement at end July 2017 will also help ease CIFI's leverage.
Healthy Margin: CIFI's EBITDA margin, excluding the effect of
acquisition revaluation, has been consistently above 25% and
further increased to 28.4% in 1H17, from 25.5% in 1H16. Fitch
expects the margin to continue widening to 30% by 2018 due to its
resilient ASPs and low land bank costs, which Fitch estimates at
30% of the contracted ASP. CIFI's large portfolio of projects in
tier 1 and 2 cities and its shift to offer products that appeal to
upgraders rather than the mass market have enhanced its profit
structure.
Focus on Tier 1 and 2 Cities: CIFI has a diversified presence in
the Yangtze River Delta, Pan Bohai Rim, Central Western Region and
Guangdong Province, reducing its exposure to uncertainty in local
policies and economies while providing room to expand. More than
90% of the company's attributable land bank at mid-2017 was in
tier 1 and 2 cities, which means CIFI is less exposed to the
oversupply plaguing lower-tier cities. In addition, its projects
are spread over 29 cities, helping mitigate risks arising from
policy intervention in individual cities. Nevertheless, strong and
widespread implementation of home-purchase restrictions by the
authorities may slow CIFI's growth.
Lower Funding Costs: CIFI has developed diversified funding
channels, including onshore bonds and offshore bank loans. The
company sold USD285 million in five-year 5.5% bonds in January
2017 and signed a USD303 million four-year offshore club-loan
facility to redeem 8.875% USD400 million bonds due 2019. It also
issued USD300 million of senior perpetual debt at 5.375% in August
2017. The proceeds will be used to refinance its existing
borrowings. The company reduced its average funding cost to 5.0%
in 1H17, from 5.5% in 2016. Fitch expects its funding cost to
decline further to below 5% in 2018 due to its active debt
structure management.
DERIVATION SUMMARY
CIFI is the closest peer to Sino-Ocean Group Holding Limited (BBB-
/Stable: standalone rating: BB/Stable) in terms of contracted
sales, land bank size and geographic focus on first and affluent
tier-2 cities. CIFI's leverage of around 35% is lower than the 40%
leverage Fitch expects for Sino-Ocean in 2018 and significantly
lower than the above 60% leverage of 'BB' peers, such as Guangzhou
R&F Properties Co. Ltd. (BB/RWN) and Beijing Capital Development
Holding (Group) Co., Ltd. (BBB-/Stable, standalone rating:
BB/Stable). CIFI's EBITDA margin of above 25% is also slightly
higher than Sino-Ocean's 23%-25%, but in line with Guangzhou R&F
and Beijing Capital Development. However, its nil recurring EBITDA
interest coverage is inferior to Sino-Ocean's 0.4x and GZ
Guangzhou R&F 0.2x.
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- attributable contracted sales of close to CNY45 billion in
2017 and CNY60 billion in 2018
- attributable land acquisition increasing to 70% of contracted
sales in 2017 then slowing to 55% in 2018 (2016: 45%)
- adjusted EBITDA margin improving to around 30% by 2018
- flattish average land cost in 2018 compared with 2017 year-to-
date acquisition costs
- 30% dividend payout
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- leverage, measured by net debt/adjusted inventory, sustained
below 30%
- EBITDA margin, excluding the effect of acquisition
revaluations, of over 30% on a sustained basis
- maintaining high cash flow turnover despite the JV business
model and consolidated contracted sales/debt at over 1.2x
(1H17: 1.0x)
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- substantial decrease in contracted sales
- EBITDA margin, excluding the effect of acquisition
revaluation, below 25% for a sustained period (1H17: 28.4%)
- net debt/adjusted inventory above 45% for a sustained period
(1H17: 36.1%)
LIQUIDITY
Ample Liquidity: CIFI had unrestricted cash of CNY25.0 billion at
end-June 2017, enough to cover short-term debt of CNY6.5 billion.
The company issued CNY4 billion in domestic bonds in March 2017
and had approved but unutilised facilities of CNY4.5 billion at
end-June 2017. This will be sufficient to fund development costs,
land premium payments and debt obligations for the next 18 months.
FULL LIST OF RATING ACTIONS
Long-Term Foreign-Currency IDR upgraded to 'BB' from 'BB-';
Outlook revised to Stable from Positive
Senior unsecured rating upgraded to 'BB' from 'BB-'
USD400 million 7.75% senior unsecured notes due 2020 upgraded to
'BB' from 'BB-'
DONGBEI SPECIAL: Jiangsu Shagang to Acquire 43% Shares
------------------------------------------------------
Nikkei Asian Review reports that private-sector steelmaker Jiangsu
Shagang will take Dongbei Special Steel Group under its wing,
nearly a year after the state-backed company filed for bankruptcy.
The Nikkei relates that an investment firm affiliated with Jiangsu
Shagang will acquire a 43% stake in Dongbei Special Steel for
CNY4.46 billion (US$680 million). A degree of government influence
over Dongbei Special Steel will remain, since Benxi Steel Group,
another state-owned steelmaker, will also take an interest worth
CNY1.03 billion, the report says.
Dongbei Special Steel was established as a steelmaker affiliated
with the Liaoning provincial government, the report discloses.
According to the report, the company's finances deteriorated as
China's economic growth slowed. It defaulted on its debt nine
times last year before finally going belly up in October. The
provincial government apparently delayed the bankruptcy process
out of concern for its impact on the regional economy.
The Nikkei says Dongbei Special Steel was known as a leading
Chinese "zombie" enterprise that was kept alive even though it was
bleeding money. Beijing has pledged to deal with these "zombie"
companies, particularly in the steel and coal industries, which
are saddled with excess production capacities, the report adds.
Headquartered in Dalian, China, Dongbei Special Steel Group Co.
manufactures carbon structural, alloy, tool, stainless, and
bearing steel; and super alloy products. It offers stainless
steel bars and wire rods; bearing steel bars and wire rods; steel
products for the automotive industry.
JIANGSU FANGYANG: Fitch Affirms BB Long-Term IDR; Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed China-based Jiangsu Fangyang Group Co.,
Ltd.'s Long-Term Foreign- and Local-Currency Issuer Default
Ratings at 'BB'. The Outlook is Stable.
Fitch has also affirmed Fangyang's USD200 million 5.35% senior
unsecured notes due 2019 at 'BB'. The notes were issued by
Haichuan International Investment Co., Ltd. and are
unconditionally and irrevocably guaranteed by Fangyang Commerce
Trade Company Limited (FYCT), a wholly owned subsidiary of
Fangyang. The notes are senior unsecured obligations of FYCT and
rank pari passu with all its other obligations.
In place of a guarantee, Fangyang has granted a keepwell and
liquidity support deed and a deed of equity interest purchase
undertaking to ensure FYCT has sufficient assets and liquidity to
meet its obligations under the note guarantee.
KEY RATING DRIVERS
Links to Lianyungang Municipality: Fangyang's ratings are credit
linked to Fitch's assessment of the creditworthiness of
Lianyungang municipality, a city in north-eastern Jiangsu
province. However, the ratings are not equalised due to the
absence of an explicit guarantee. The linkage reflects 100% state
ownership of Fangyang and the strategic importance of its
operation to the municipality. This results in a high likelihood
of extraordinary support, if needed. Therefore, Fangyang is
classified as a credit-linked public-sector entity under Fitch's
criteria.
Liangyungang's Modest Credit Profile: The municipality registered
economic growth of 10.0% in 2016, higher than the 6.7% national
average and Jiangsu province's 8.5%. However, Lianyungang ranked
12th out of Jiangsu's 13 prefecture-level municipalities by gross
regional product.
Legal Status Attribute Midrange: Fangyang is registered as a
wholly state-owned limited liability company under China's company
law, which means it is subject to bankruptcy. The municipal
government delegates the supervision of Fangyang to the management
committee of Lianyungang's Xuwei New District. Fangyang's major
decisions - for instance, M&A, spinoffs, bankruptcy and
liquidation - would require verification and approval from
Lianyungang municipality. The municipality did not plan to dilute
its shareholding in Fangyang as at August 2017.
Strategic Importance Attribute Midrange: Fangyang is integrated
into the National East-Central-West Regional Cooperation
Demonstration Region within Lianyungang's Xuwei New District.
Fitch expects Fangyang's important role of implementing the
blueprint of the municipal and central governments to continue in
the medium term. The entity is the sole developer of Xuwei New
District's large-scale infrastructure projects and affordable
housing. It also provides ancillary services to resident companies
in the area.
Government Integration Attribute Midrange: Fangyang received
around CNY142 million in government subsidies and grants in 2016,
compared with CNY229 million in 2015. The government also offered
Fangyang a debt swap of CNY700 million in 2016. The municipal
government and Xuwei New District management committee have
pledged to continue supporting Fangyang to ease its debt-servicing
pressure, enhance financial flexibility and support capital
expenditure for urban infrastructure development. Fitch expects
the strength of government support to persist in the medium term.
Control Attribute Midrange: Fangyang's board members are mainly
appointed by Lianyungang municipality and major projects require
municipal approval. The municipality closely monitors Fangyang's
financing plan and debt levels and the company is required to
regularly report its operational and financial results to the
municipality and the Xuwei New District management committee.
Weak Standalone Profile: As a public-sector entity, Fangyang
continues to incur large capex, negative free cash flow and high
leverage. Account receivables from contracting government entities
continued to rise in 2016, increasing by 88.5% from the previous
year to represent around 35% of Fangyang's current assets. Total
debt increased by 41% to CNY19.8 billion, causing total
debt/Fitch-calculated EBITDA to reach 17.7x, from 12.8x in 2015.
FFO/debt and interest coverage remains weak and Fitch expects the
trend of large capex, negative free cash flow and high leverage to
continue in medium term.
RATING SENSITIVITIES
An upgrade of Fitch's credit view on Lianyungang municipality as
well as a stronger or more explicit support commitment from the
municipality may trigger positive rating action on Fangyang.
Significant weakening of Fangyang's strategic importance to the
municipality, dilution of the municipality's shareholding to below
75% or lower explicit and implicit municipality support may result
in a downgrade. A downgrade could also stem from weaker fiscal
performance or increased indebtedness of the municipality, leading
to a deterioration in its fiscal strength.
Rating action on Fangyang would lead to similar action on the
rating of the US dollar notes.
POSTAL SAVINGS: Moody's Rates New AT1 Offshore Shares 'Ba3(hyb)'
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba3(hyb) rating to the
proposed USD-denominated additional tier 1 (AT1) capital
qualifying offshore preference shares of Postal Savings Bank of
China Co., Ltd. (PSBC, A2 positive).
The proposed AT1 securities are subject to full or partial
compulsory H-share conversion upon the occurrence of a trigger
event. The rating is three notches below PSBC's baa3 adjusted
baseline credit assessment (BCA), which in turn starts with the
bank's BCA and adds affiliate support, if any. The rating on the
securities will be upgraded and downgraded in line with PSBC's BCA
and adjusted BCA.
PSBC's adjusted BCA is the same as its BCA.
Moody's has not assigned an outlook to the rating of the AT1
securities. The outlook on the bank's A2 long-term deposit ratings
is positive.
RATINGS RATIONALE
The Ba3(hyb) rating is three notches below PSBC's baa3 adjusted
BCA, reflecting the structure of the proposed issuance and Moody's
assumption that investors in these securities face the risk of
full or partial compulsory H-share conversion upon the occurrence
of a trigger event.
The rating also incorporates the probability of impairment
associated with the cancellation of the dividends. Such an
impairment could occur before the bank reaches the point of non-
viability.
While Moody's believes that PSBC will receive a very high level of
support from the Chinese government (A1 stable) in a stress
situation, given the bank's market position and government
ownership, Moody's does not assume that AT1 securities - which are
designed to absorb losses - will receive extraordinary government
support.
Under the terms and conditions of the proposed securities, a
compulsory H-share conversion will be triggered if: (1) an AT1
capital instrument trigger event occurs, namely, if at any time
the bank's core tier 1 capital adequacy ratio falls to or below
5.125%; or (2) a tier 2 capital instrument trigger event or a non-
viability trigger event occurs.
A tier 2 capital instrument trigger event or a non-viability
trigger event will occur upon the earlier of (1) the China Banking
Regulatory Commission having decided that without a conversion or
write-off of the bank's capital, the bank would become non-viable;
and (2) the relevant authorities having decided that a public
sector injection of capital or equivalent support is necessary,
without which the bank would become non-viable.
Claims on the AT1 securities are senior to the claims of ordinary
shareholders, and rank pari passu with other preference
shareholders, but are subordinate to the claims of depositors, the
bank's general creditors, and holders of subordinated liabilities.
The AT1 securities will pay fixed-rate annual dividends, which
will be reset periodically. However, PSBC may choose not to pay
dividends on a non-cumulative basis. The distributions on the
capital securities are fully discretionary, but in priority to any
distributions made to ordinary shareholders.
WHAT COULD MOVE THE RATING UP
The rating of the AT1 securities could be upgraded if PSBC's BCA
is adjusted upwards in the following situations: (1) profitability
-- as measured by return on assets -- maintains the progress seen
in the first half of 2017; (2) asset quality -- as measured by new
problem loan formation -- remains healthy as its rapidly growing
loan portfolio seasons; (3) capital strengthens as a result of its
A-share listing and sound growth of risk-weighted assets, thereby
resulting in an improvement in its tangible common-equity capital
ratio to above 9%; or (4) the growth in leverage in the Chinese
economy is arrested and shadow banking risks are contained,
resulting in an improved operating environment and a change of the
macro profile.
WHAT COULD MOVE THE RATING DOWN
The rating of the AT1 securities could be downgraded if PSBC's BCA
is downgraded, although downward pressure is limited given the
positive outlook on the bank's long-term deposit ratings. PSBC's
BCA could come under downward pressure if (1) profitability fails
to maintain the improved level seen in the first half of 2017; (2)
capital weakens, with a deterioration in its tangible common
equity capital ratio because of a failure to raise capital as
planned or excessive growth of risk-weighted assets; (3) the
bank's operating environment weakens materially, for example, if
China's economic growth moderates, or corporate financial leverage
continues to increase, leading to worsening asset quality.
The principal methodology used in this rating was Banks published
in January 2016.
Postal Savings Bank of China Co., Ltd. was incorporated in March
2007. The bank is headquartered in Beijing and listed on the Hong
Kong Stock Exchange in September 2016. At end-June 2017, the bank
reported total assets of RMB8.54 trillion (USD1.26 trillion) and
had more than 539 million retail customers and 39,883 branch
outlets, as well as the largest distribution network and widest
geographic coverage in China.
SINO-OCEAN LAND: Fitch Rates US$600MM Perpetual Securities 'BB'
---------------------------------------------------------------
Fitch Ratings has assigned Sino-Ocean Land Treasure III Limited's
US$600 million subordinated perpetual capital securities a final
rating of 'BB'. Sino-Ocean is a wholly owned subsidiary of Chinese
homebuilder Sino-Ocean Group Holding Limited (BBB-/Stable). The
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 assignment of the final rating and equity credit
follows the receipt of documents conforming to information already
received. The final rating is in line with the expected rating
assigned on Sept. 6, 2017.
Fitch will 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 its 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 30 June 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 30 June 2017. This will be
sufficient to fund development costs, land premium payments and
debt obligations in 2017.
SUNAC CHINA: Fitch Rates 2 Senior Note Tranches BB-; on RWN
-----------------------------------------------------------
Fitch Ratings has assigned Sunac China Holdings Limited's (BB-
/Rating Watch Negative (RWN)) USD400 million 6.875% senior notes
and USD600 million 7.95% senior notes a final rating of 'BB-' on
RWN.
The notes are rated at the same level as Sunac's senior unsecured
rating because they represent the company's direct and senior
unsecured obligations. The final rating is in line with the
expected rating assigned on 1 August 2017.
Sunac's rating is supported by its large scale and position among
the top-10 Chinese homebuilders by contracted sales as well as its
fast-churn business model. Its ratings are constrained by rapidly
rising leverage due to its acquisitions, which have made its
financial profile volatile. The RWN reflects the risk of further
rating downgrades because Sunac's plan to acquire some assets of
Dalian Wanda Commercial Property Co. Ltd. (BBB/Negative) will
pressure its leverage over the next year and it is unclear if
stronger contracted sales from Sunac's aggressive expansion can
help it deleverage sufficiently over this period.
KEY RATING DRIVERS
Leverage to Stay High: Fitch believes Sunac's leverage, as
measured by net debt/adjusted inventory, will stay above 50% in
2017, after jumping to 60% as at end-2016, from 26% at end-2015
and 19% at end-2014. This is despite trimming its planned
acquisition of Wanda's projects to CNY44 billion from CNY63
billion by dropping 76 hotel assets and the 24 July 2017 share
placement that raised net proceeds of CNY3.4 billion.
Sunac reported that its 1H17 land acquisitions, including that of
its joint ventures and associates, totalled 24 million square
metres (sq m) in gross floor area (GFA), against sales of 6
million sq m. Fitch believe the 1H17 land acquisitions will not
generate sales immediately and will be at a lower profit margin
than what is achievable from the Wanda projects. This will
pressure Sunac's leverage, although Fitch expects its land
acquisition pace to slow after the company significantly increases
its land bank with the Wanda acquisition.
Mixed Impact from Wanda Deal: Fitch expects Sunac's acquisition of
Wanda's projects to result in a leverage spike at end-2017.
However, Fitch expects lower leverage thereafter along with
enhanced profit margins as Sunac strengthens its homebuilding
business with additional land bank and entry into new high-tier
cities. Fitch estimates the average land cost of the Wanda
projects is less than CNY1,500 per sq m, based on the total
acquisition costs of just under CNY60 billion, including CNY15
billion of net debt. This compares favourably with Fitch estimated
selling price of more than CNY12,000 per sq m for completed
properties.
The stronger profitability and faster cash generation from
property sales will be partly offset by the capex to build the
theme parks, hotels and shopping malls that form part of the
projects, though the impact of the high capex will be moderated by
Sunac's enlarged scale.
Diversification and Business Synergies: Sunac's property
development business may benefit from the planned Wanda
transaction by increasing Sunac's land bank by more than 80%, or
46 million sq m in GFA, by Fitch estimates. Sunac's geographical
diversification will also improve, as the majority of the Wanda
City projects are in the provincial capitals of new Tier 2 cities.
The projects will also bring in recurring rental income that will
increase steadily over the next five years.
Strong Contracted Sales: Sunac reported a 107% yoy increase in
attributable contracted sales in 1H17, following a 139% increase
over 2016, reflecting its high sales efficiency and supplementing
the company's cash position. Contracted sales GFA increased by
102% and average selling prices fell by 6% in 1H17, against a
backdrop of slowing property sales nationwide.
Post-Acquisition Financial Profile: The RWN will be resolved after
Fitch evaluates how Sunac's financial profile will develop after
the Wanda acquisition is completed. The possible outcomes
following the resolution of the RWN are discussed in "Rating
Sensitivities".
DERIVATION SUMMARY
Sunac's homebuilding business scale, geographical diversification,
project execution record and churn rates are comparable with those
of Country Garden Holdings Co. Ltd. (BB+/Stable) and superior to
those of Beijing Capital Development Holding (Group) Co., Ltd.
(BBB-/Stable; standalone BB/Stable) and Guangzhou R&F Properties
Co. Ltd. (BB/RWN). However, Sunac has a more volatile financial
profile, which is more comparable with that of lower-rated issuers
like Greenland Holding Group Company Limited (BB/Negative;
standalone BB-/Negative) and China Evergrande Group (B+/Stable).
KEY ASSUMPTIONS
Fitch's key assumptions within its ratings case for the issuer
include:
- maintaining a land replenishment rate (GFA acquired/GFA sold)
of around 1.5x-2.0x for long-term development
- increasing margin pressure from 2018, with EBITDA margin
dropping to between 15% and 20%
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Negative Rating Action:
- If the transaction takes place and after reviewing the
transaction information, Fitch may downgrade Sunac's rating if
net debt/adjusted inventory exceeds 50% for a sustained period
and attributable contracted sales/total adjusted debt falls
below 0.8x for a sustained period.
Developments that May, Individually or Collectively, Lead to
Positive Rating Action:
- If the transaction takes place and after reviewing transaction
information, Fitch may affirm the rating with a Negative
Outlook if net debt/adjusted inventory exceeds 50% over the
next 12 months but Fitch expects the ratio to be sustained
below 50% thereafter.
- If the transaction does not take place, the ratings may be
affirmed with a Stable Outlook.
LIQUIDITY
Liquidity to Remain Adequate: Fitch believes Sunac had sufficient
cash of CNY91 billion at end-1H17 to purchase the Wanda assets
following strong contracted sales in 1H17, when its attributable
contracted sales rose to CNY75 billion. Fitch expects the HKD4
billion new share placement and strong increase in contracted
sales in 2H17 following the Wanda City acquisition to further
improve its 2017 liquidity position.
=========
I N D I A
=========
ADHUNIK CORP: Ind-Ra Lowers Issuer Rating to BB+, Still on RWN
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Adhunik
Corporation Ltd's (ACL) Long-Term Issuer Rating to 'IND BB+' from
'IND BBB-', while maintaining it on Rating Watch Negative (RWN).
The instrument-wise rating actions are:
-- INR550 mil. Fund-based limits downgraded and maintained on
RWN with IND BB+/RWN rating; and
-- INR220 mil. Non-fund-based limits downgraded and maintained
on RWN with IND A4+/RWN rating.
KEY RATING DRIVERS
The rating action reflects deterioration in ACL's liquidity
position due to a decline in its financial flexibility, resulting
in overutilisation of working capital limits. Ind-Ra believes that
ACL's liquidity may be further stressed in the near term as that
of an associate company, Adhunik Industries Limited (AIL; 'IND
D'), which has delayed its debt servicing in August 2017. Adhunik
group has common bankers, and its associate companies Adhunik
Alloys & Power Limited, Adhunik Metaliks Limited, Zion Steel
Limited and Orissa Manganese & Minerals Ltd have been referred to
and accepted by the National Company Law Tribunal under the
Insolvency and Bankruptcy Code, 2016.
RATING SENSITIVITIES
Ind-Ra is likely to resolve the RWN by November 2017 based on the
outcome of the final order against the group companies and the
banks' action on the loans extended to ACL. The RWN indicates that
the ratings may be downgraded or affirmed.
COMPANY PROFILE
Incorporated in 1996, ACL operates a 60,000 metric tons per annum
sponge iron facility and a 97,500 metric tons per annum alloy
steel billet facility with five induction furnaces in West Bengal.
AEGAN INDUSTRIES: Ind-Ra Moves D Issuer Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Aegan
Industries Private Limited's (Aegan) Long-Term Issuer Rating to
'IND D' from 'IND BB+'. The Outlook was Stable. The ratings have
also been migrated to the non-cooperating category. The issuer did
not participate in the surveillance exercise despite continuous
requests and follow-ups by the agency. Thus, the rating is on the
basis of best available information. The rating will now appear as
'IND D(ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating actions are:
-- INR268 mil. Term loan (Long-term) downgraded and migrated to
non-cooperating category with IND D(ISSUER NOT COOPERATING)
rating;
-- INR450 mil. Fund-based facilities (Long-term/Short-term)
downgraded and migrated to non-cooperating category with IND
D(ISSUER NOT COOPERATING) rating; and
-- INR101 mil. Non-fund-based facilities (Short-term) downgraded
and migrated to non-cooperating category with IND D(ISSUER
NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: Issuer did not cooperate; based on
best available information
KEY RATING DRIVERS
The rating action reflects delays in debt servicing by Aegan,
details of which are not available.
RATING SENSITIVITIES
Positive: Timely debt servicing for three consecutive months could
result in a rating upgrade.
COMPANY PROFILE
Incorporated in the 2008, Aegan is a cotton yarn manufacturer and
exporter with an installed capacity of 25,920 spindles. The
company utilises 98.2% of its installed capacity.
ALAKNANDA SPONGE: Ind-Ra Migrates BB+ Rating to Not Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Alaknanda Sponge
Iron Ltd.'s Long-Term Issuer 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 instrument-wise rating actions are:
-- INR125 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB+(ISSUER NOT COOPERATING)
rating; and
-- INR2.5 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
Oct. 27, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Established in 2009, Alaknanda Sponge Iron is an ISO 9001:2008
certified company engaged in manufacturing TMT bars.
ARHAM NON WOVEN: CRISIL Reaffirms 'D' Rating on INR11.55MM Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on bank loan facilities
of Arham Non Woven Private Limited (ANWPL) at 'CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3.00 CRISIL D (Reaffirmed)
Term Loan 11.55 CRISIL D (Reaffirmed)
The rating reflects the firm's delays in meeting term debt
obligation, due to stretched liquidity. These rating weaknesses
are partially offset by its promoters' extensive industry
experience.
Key Rating Drivers & Detailed Description
* Delay in meeting debt obligation due to weak liquidity: The firm
has delayed in meeting its term debt obligations because of weak
liquidity.
Weakness:
* Modest scale of operations: The scale of operations remained
modest with turnover of INR14 Crore in a fragmented industry.
Strengths:
* Experience of promoters: ANWPL's promoter has relevant
experience, leading to established relationships with customers
and suppliers.
ANWPL was incorporated in January 2014 by Mr. Dharmesh Jain and
Mr. Nishant Daga. The company, based in Surat, manufactures
technical textile fabric made out of polypropylene. The plant is
located at Mangrol in Surat (Gujarat). It started commercial
operations in January 2015.
BHAGWANDAS METALS: CRISIL Reaffirms 'B' Rating on INR3MM Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Bhagwandas Metals Limited (BML) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B/Stable (Reaffirmed)
Proposed Short Term
Bank Loan Facility 5.5 CRISIL A4 (Reaffirmed)
CRISIL's ratings continue to reflect BML's modest scale of and
working capital intensive operations. These weaknesses are
partially offset by the extensive experience of its promoters in
the steel industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations and intense competition: Scale of
operations is modest with revenue of INR28 crore in fiscal 2017.
The company faces intense competition from both large and small
players.
* Working capital intensive operations: High receivables of 60-90
days and other current assets such as advances to suppliers,
deposits and other loans and advances should keep operations
working capital intensive.
Strength
* Extensive experience of the promoters: Benefits from the
promoters' three decade-long experience in the industry and
established relationships with customers should support business.
Outlook: Stable
CRISIL believes BML will continue to benefit from the experience
of its promoters. The outlook may be revised to 'Positive' if
increase in revenue and profitability improves cash accrual and
liquidity. The outlook may be revised to 'Negative' if decline in
revenue or stretch in working capital cycle weakens financial risk
profile, particularly liquidity.
Incorporated in 1982 and promoted by Mr. Govind Prasad, BML trades
in steel and steel products such as thermo-mechanically treated
bars, sheets, plates, and scrap. It is based in Chennai and listed
on the Bombay Stock Exchange.
Profit after tax was INR0.15 crore on operating income of INR27.92
crore for fiscal 2017 against INR0.09 crore and INR22.09 crore,
respectively, for fiscal 2016.
BHAGWATI TIMBER: CRISIL Reaffirms B Rating on INR1MM Cash Loan
--------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable/CRISIL A4'
ratings on the bank facilities of Bhagwati Timber Store (BTS).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 1 CRISIL B/Stable (Reaffirmed)
Inland/Import
Letter of Credit 7 CRISIL A4 (Reaffirmed)
The ratings continue to reflect the firm's modest scale of
operations in the highly fragmented timber trading industry,
modest financial risk profile because of high total outside
liabilities to adjusted networth ratio and modest networth; and
susceptibility of operating margin to volatility in raw material
prices and foreign exchange rates. These weaknesses are partially
offset by extensive experience of its proprietor in the timber
trading business.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in the highly fragmented timber
trading industry: BTS has a modest scale of operations in imported
timber trading business reflected in estimated operating income of
about INR13.9 cr. in fiscal 2017. This is on account of intense
competition in the highly fragmented timber trading industry and
thus resulting in limited bargaining power.
* Susceptibility of operating margin to volatility in raw material
prices and foreign exchange rates: BTS's operating margins have
been volatile in the range of 1.0-1.9% over the four fiscals ended
2017, primarily on the back of volatility in raw material prices
and exposure to forex risk (90% of raw material is imported).
* Modest financial risk profile: Total outside liabilities to
tangible networth ratio (TOLTNW) has ranged from 3.5-5.0 over the
three fiscals ended March 31, 2017. Estimated networth, too, has
remained modest at around INR 16.5 crores as on March 31, 2017.
Financial risk profile is expected to remain modest over the
medium term
Strengths
* Extensive experience of its proprietor in the timber trading
business: BTS is promoted by Mr. Eashwarchand who has over three
decades of experience in timber trading and processing business
which has helped the firm establish healthy relationship with
suppliers as well as customers leading to repeat orders. Benefit
from the extensive experience of its proprietor is expected to
continue over the medium term.
Outlook: Stable
CRISIL believes that BTS will benefit over the medium term from
the extensive industry experience of its proprietor. The outlook
may be revised to 'Positive' in case of increase in revenue and
profitability, leading to significant and sustainable rise in net
cash accrual. The outlook may be revised to 'Negative' if revenue
or profitability declines, or working capital cycle lengthens,
leading to deterioration in liquidity, or if the firm undertakes a
large debt-funded capital expenditure, weakening its financial
risk profile.
BTS was set up as a proprietorship concern in 1984 by Mr.
Ishwarchand Garg. It processes (cuts and saws; capacity of 1500
cubic feet per day) and trades in timber, including teakwood, saal
wood, kapurlogs, and pinewood. It has a processing facility cum
warehouse in Ghandidham, Gujrat, and two shops and one warehouse
in Karnal, Haryana.
BTS is estimated to have achieved operating income INR 13.9 crores
in fiscal 2017.
BHUMYA TEA: CRISIL Raises Rating on INR28.92MM Cash Loan to B+
--------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Bhumya Tea Company Private Limited (BTCPL) to
'CRISIL B+/Stable' from 'CRISIL B/Stable/Issuer Not Cooperating'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 28.92 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/
Issuer Not Cooperating')
Term Loan 14.29 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/
Issuer Not Cooperating')
The upgrade reflects the improvement in the company's business
risk profile with sales rising 31% to INR89.12 crore in fiscal
2017 from INR68.23 crore in fiscal 2016, and expected to sustain
over the medium term. Liquidity is adequate because of sufficient
net cash accrual of INR4.04 crore against term debt obligation of
INR3 crore in fiscal 2017, and is expected to remain so over the
medium term.
The rating reflects the company's below-average financial risk
profile, indicated by high gearing and modest debt protection
metrics, and the vulnerability of its operating profitability to
seasonal production and high operating leverage. The weaknesses
are partially offset by increasing revenue and the promoter's
extensive experience in the tea industry.
Analytical Approach
For arriving at the rating, unsecured loans of INR13.33 crore from
the promoter and his friends and relatives have been treated as
neither debt nor equity, based on an undertaking from the
management that the loans will be retained in the business till
the currency of bank debt.
Key Rating Drivers & Detailed Description
Weaknesses
* Below-average financial risk profile: Gearing was high, at 2.2
times as on March 31, 2017, on account of incremental debt to
support increased scale of operations and term loan to fund
capital expenditure (capex). Debt protection metrics remained
weak, with interest coverage ratio at 1.7 times and net cash
accrual to total debt ratio at 0.08 time in fiscal 2017. The
ratios are expected to remain at similar levels over the medium
term.
* Vulnerability of operating profitability to seasonal production
and high operating leverage: Tea is a seasonal product and its
yield depends on the monsoon. Tea plantations have high fixed
costs. The major cost components are labour and fixed
manufacturing expenses, which account for 60-65% of the total
cost. In case of less-than-normal production, tea estates may face
significant decline in profitability or even operating losses.
CRISIL believes BTCPL's operating margin will remain susceptible
to fluctuations in tea prices and input costs.
Strength
* Extensive experience of the promoter in tea industry: The
promoter, Mr. Sanjay Prakash Bansal, has experience of more than 3
decades in the tea industry. BTCPL manufactures organic tea from
its own tea estate, and conventional tea from tea leaves purchased
from other estates. The company has invested regularly in
replantation and set up a unit to process bought leaves in 2012.
The processed tea is sold through auction houses and through
brokers and agents. Established relationships with brokers and
agents, and longstanding presence in auction centres have helped
increase revenue consistently over the years (from INR28 crore in
fiscal 2012 to INR89.12 crore in fiscal 2017).
Outlook: Stable
CRISIL believes BTCPL will continue to benefit from its promoter's
extensive industry experience. The outlook may be revised to
'Positive' if its financial risk profile improves on account of
better capital structure or higher profitability leading to an
increase in net cash accrual. The outlook may be revised to
'Negative' if the financial risk profile, particularly liquidity,
deteriorates because of less-than-expected cash accrual, stretch
in working capital cycle, or larger-than expected, debt-funded
capex.
Bhumya was set up as a proprietorship concern, and was
reconstituted as a private limited company after it was taken over
by Mr. Sanjay Prakash Bansal in 2003. The company plants and
processes organic Assam tea. Its tea estate, Jamguri Tea Estates,
is at Golaghat in Assam. It also manufactures conventional tea by
purchasing leaves from other tea estates.
For fiscal 2017, profit after tax (PAT) was INR2.18 crore on sales
of INR89.12 crore, against a PAT of INR66 lakh on sales of
INR68.23 crore for fiscal 2016.
BLOOM DEKOR: Ind-Ra Migrates BB- Issuer Rating to Not Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Bloom Dekor
Limited's 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:
-- INR180 mil. Fund-based limits migrated to non-cooperating
category with IND BB-(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating; and
-- INR145 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
March 31, 2017. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Bloom Dekor manufactures and sells laminated sheets and doors. The
company caters to both domestic and international markets.
BRIJBASI ART: CRISIL Lowers Rating on INR9MM Cash Loan to 'B'
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Brijbasi
Art Press Limited (BAPL) for obtaining information through emails
dated July 17, 2017, and August 8, 2017, apart from telephonic
communication. However, the issuer has remained non-cooperative.
CRISIL thus gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BBB-/Stable')
Inland/Import 6 CRISIL A4 (Issuer Not
Letter of Credit Cooperating; Downgraded from
'CRISIL A3')
Long Term Loan 1.5 CRISIL B/Stable (Issuer Not
Cooperating; Downgraded from
'CRISIL BBB-/Stable')
Packing Credit 16 CRISIL A4 (Issuer Not
Cooperating; Downgraded from
'CRISIL A3')
Proposed Long Term 1.5 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating; Downgraded from
'CRISIL BBB-/Stable')
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 they are arrived at without any management
interaction and are 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 BAPL. This restricts CRISIL's
ability to take a forward-looking view on the credit quality of
the company. CRISIL believes that the information available is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB category or
lower.' Based on the last available information, CRISIL has
downgraded the ratings to 'CRISIL B/Stable/CRISIL A4+' from CRISIL
BBB-/Stable/CRISIL A3'.
BAPL, based in New Delhi, is engaged in commercial printing and
publishing of books. It is closely held by the Garg family. Mr. M
L Garg and his two sons, Mr. Saurabh Garg and Mr. Apurv Garg,
manage operations. Its printing units are in Okhla, Delhi, and in
Noida and Greater Noida, both in Uttar Pradesh.
COCHIN FROZEN: CRISIL Reaffirms 'B' Rating on INR3MM Loan
---------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Cochin Frozen Foods (CFF) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 3 CRISIL B/Stable (Reaffirmed)
Packing Credit 3.5 CRISIL A4 (Reaffirmed)
The ratings continue to reflect the firm's modest scale of
operations, and below-average financial risk profile because of
modest net worth and weak debt protection metrics. These
weaknesses are partially offset by the extensive experience of
proprietor in the seafood export business and its established
clientele.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale: Small scale, as reflected in estimated revenue of
INR12 crore in fiscal 2017, intensifies competition from other
players, both large and small.
* Below-average financial risk profile: The financial risk profile
is constrained by modest networth of INR1.3 crore as on March 31,
2016, and subpar debt protection metrics. Interest coverage and
net cash accrual to total debt ratios for fiscal 2016 stood at
1.31 times and -1%, respectively.
Strength
* Proprietor's extensive experience: The proprietor, with around
two decades of experience in the seafood industry, has established
relationships with customers in various countries and also with
domestic suppliers which should support the business risk profile.
Outlook: Stable
CRISIL believes CFF will continue to benefit over the medium term
from its proprietor's extensive experience. The outlook may be
revised to 'Positive' if a significant increase in net cash
accrual because of higher revenue or profitability strengthens
financial risk profile. The outlook may be revised to 'Negative'
in case of a considerable decline in cash accrual, or
deterioration in working capital management, deteriorating the
financial risk profile.
CFF, set up in 2000, processes and exports seafood. It is based in
Kochi, Kerala, and its daily operations were being managed by the
proprietor Ms KG Sulochana until her death in August 2017. The
proprietorship is expected to pass on to Ms Sulochana's husband
Mr. K Prabhakaran.
The firm reported a profit after tax (PAT) of INR0.2 crore on
operating income of INR11.7 crores for fiscal 2016, against a PAT
of INR0.2 crore on operating income of INR15.1 crores for fiscal
2015.
CHOKSI IMAGING: Ind-Ra Withdraws B+ Long-Term Issuer Rating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Choksi Imaging
Limited's (CIL) Long-Term Issuer Rating of 'IND B+'. The Outlook
was Stable. The instrument-wise rating actions are:
-- INR30 mil. Fund-based facilities withdrawn with WD rating;
and
-- INR40 mil. Non-fund-based limits withdrawn with WD rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the
agency has received no-objection certificates from the lenders.
This is consistent with the Securities and Exchange Board of
India's circular dated 31 March 2017 for credit rating agencies.
Ind-Ra will no longer provide analytical and rating coverage for
CIL.
COMPANY PROFILE
Incorporated in 1992, CIL manufactures X-ray films that find
application in medical imaging. In addition, it is engaged in the
trading of various items used in the healthcare industry.
ENGINEMATES HEAT: Ind-Ra Moves B+ Rating to Not Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Enginemates Heat
Transfer Pvt. Ltd.'s (EHT) 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:
-- INR50 mil. Fund-based limits migrated to non-cooperating
category with IND B+(ISSUER NOT COOPERATING) rating; and
-- INR20 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 23, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Enginemates was established in 1978 as a partnership firm and
later converted to a private limited company in 1983 and renamed
as EHT. The company manufactures and supplies air cooled heat
exchangers, air fin coolers, high integrity radiators, aluminium
brazed heat exchangers and fabricated components such as fuel
tanks, among others.
ESN FINANCE: Ind-Ra Withdraws B+ Long-Term Issuer Rating
--------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn ESN Finance and
Capital Services Limited's (ESN) Long-Term Issuer Rating of 'IND
B+'. The Outlook was Stable. The instrument-wise rating action is:
-- INR135 mil. Long-term loan withdrawn with WD rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings as the
instrument has been repaid in full. This is consistent with The
Securities and Exchange Board of India's circular dated 31 March
2017 for credit rating agencies. Ind-Ra will no longer provide
analytical and rating coverage for ESN.
COMPANY PROFILE
ESN is a Reserve Bank of India-registered non-deposit-taking non-
banking financial company. It provides loans against gold and
operates in and around New Delhi.
GRACE INT'L: CRISIL Reaffirms B+ Rating on INR10.5MM Loan
---------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facility of Grace International (GI) at 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10.5 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the firm's modest scale of
operations, its working capital intensive nature of operations,
and high bank limit utilization. These weaknesses are partially
offset by extensive industry experience of its proprietor, and its
established customer relationships.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations
GI has modest scale of operations with revenues of INR32.6 crore
in fiscal 2017. The firm is engaged in trading of garment
accessories. The firm faces high competition in the industry with
presence of both large established players and numerous
unorganized players.
* Working-capital-intensive nature of operations
GI's operations are working capital intensive, as reflected in its
high gross current assets (GCAs) of 198 days as on March 31, 2017.
The GCA days have ranged between 190 to 216 days over the past
five fiscals through 2017. The high working capital requirements
are primarily attributable to the high inventory levels and the
extended credit required to be given to the customers.
* High bank limit utilisation
GI's working capital bank limits were almost fully utilized over
the 12 months ended Aug 2017. The firm also availed ad hoc limit
of INR 50 lakhs in the months of February, March, and April 2017
to fund its operations. The bank limit utilisation has been high
on account of working capital intensive operations
Strength
* Extensive experience of proprietors in the garment accessories
trading business and established customer relationships:
GI is promoted by Mr. Vikram Jain, who has more than two decades
of experience in the garment accessories trading business. Over
the years, the proprietor has developed good relationship with its
customer and suppliers.
Outlook: Stable
CRISIL believes GI will continue to benefit over the medium term
from its proprietor's extensive industry experience and its
established customer relationships. The outlook may be revised to
'Positive' if there is substantial increase in revenue and
profitability, leading to better-than-expected cash accrual, or
improvement in working capital cycle. The outlook may be revised
to 'Negative' in case of deterioration in financial risk profile
due to decline in revenue and profitability, or lengthening of
working capital cycle, increase in loans and advances to
affiliates or further stretch in liquidity.
GI was set up by Mr. Vikram Jain as a proprietorship firm in 1993.
It trades in buttons, hooks, patches, zipper sliders, cufflinks,
belt buckles, and other garment accessories. Its registered office
is in Delhi.
HARICHANDANA COTTONS: CRISIL Hikes Rating on INR3MM Loan to B+
--------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Harichandana Cottons Private Limited (HCPL) to
'CRISIL B+/Stable' from 'CRISIL B/Stable/Issuer not cooperating',
and has removed the 'issuer not cooperating' suffix as the client
has now shared the requisite information.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 3 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/
Issuer Not Cooperating')
Long Term Loan 2.25 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable/
Issuer Not Cooperating')
Proposed Long Term 2.00 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable/
Issuer Not Cooperating')
The upgrade reflects sustained improvement in business risk
profile supported by steady revenue growth and profitability.
Operating income increased to INR30.4 crore in fiscal 2017 (first
full year of operations) from INR13.3 crore earlier, while
operating margin was better than expected at 4.1%. Revenue is
expected to grow by 30% in fiscal 2018. Moreover, promoters have
infused equity of INR2.95 crore in the two fiscals through 2017,
resulting in a better capital structure: gearing improved to 1.53
times as on March 31, 2017, from 2.62 times earlier. Debt
protection metrics were also adequate, with interest coverage and
net cash accrual to total debt ratios of 2.38 times and 0.15 time,
respectively, in fiscal 2017.
The rating reflects HCPL's small scale of operations in the
intensely competitive cotton ginning industry, susceptibility to
government regulations and volatile input prices, and below-
average financial risk profile because of a small networth. These
weaknesses are partially offset by the extensive experience of its
promoters.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations: Exposure to intense competition in
the cotton ginning industry has led to a modest scale of
operations, reflected in an operating income of INR30.4 crore in
fiscal 2017.
* Susceptibility to government regulations and volatile raw
material prices: Government fixes the minimum support price for
each crop every year which, along with demand-supply factors,
affects cotton prices. Hence, operating margin remains susceptible
to volatile raw material prices.
* Below-average financial risk profile: Despite equity infusion in
the past two fiscals, financial risk profile remains constrained
by a modest networth of INR3.15 crore on March 31, 2017.
Strength
* Extensive experience of promoter: The promoter has been in the
cotton ginning industry for over two decades.
Outlook: Stable
CRISIL believes HCPL will continue to benefit over the medium term
from the extensive experience of its promoter. The outlook may be
revised to 'Positive' if there is a significant increase in scale
of operations, while improving profitability margins and capital
structure. The outlook may be revised to 'Negative' in case of
significant decline in revenue or profitability, or if capital
structure deteriorates on account of large working capital
requirement or debt-funded capital expenditure.
Established in 2015 in Warangal, Telangana, by Mr. M Gopal Reddy
and associates, HCPL gins and presses raw cotton and sells cotton
lint and cotton seeds. Commercial operations began in January
2016.
In fiscals 2017, profit after tax was INR0.07 crore on an
operating income of INR30.44 crore, against INR0.01 crore and
INR13.3 crore, respectively, in the previous fiscal.
HIMALYA INT'L: CRISIL Cuts Rating on INR51.64MM Loan to D
---------------------------------------------------------
CRISIL has been consistently following up with Himalya
International Ltd (HIL) for obtaining information through letters
and emails dated August 24, 2017, among others, apart from
telephonic communication. However, the issuer has remained non-
cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.5 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4')
Cash Credit & 51.64 CRISIL D (Issuer Not
Working Capital Cooperating; Downgraded
demand loan from 'CRISIL C')
Funded Interest 36.21 CRISIL D (Issuer Not
Term Loan Cooperating; Downgraded
from 'CRISIL C')
Letter of Credit .5 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4')
Letter of credit & 5 CRISIL D (Issuer Not
Bank Guarantee Cooperating; Downgraded
from 'CRISIL A4')
Term Loan 75.17 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL C')
Working Capital 24.31 CRISIL D (Issuer Not
Term Loan Cooperating; Downgraded
from 'CRISIL C')
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 HIL. This restricts CRISIL's
ability to take a forward-looking view on the credit quality of
the company. CRISIL believes that the information available is
consistent with 'Scenario 5' outlined in the 'Framework for
assessing consistency of information' with appropriate rating
action can be undertaken on the basis of available information.
Based on the available information, CRISIL has downgraded the
rating to 'CRISIL D/CRISIL D' from 'CRISIL C/CRISIL A4'.
The downgrade reflects recent instances of delay in term debt
payments.
HIL was originally promoted by Mr. Man Mohan Malik (chairman and
chief executive officer) and Mr. Sanjay Kakkar (managing director)
in 1992 as Himalya Cement & Calcium Carbonate Pvt Ltd (HCC) for
manufacturing precipitated calcium carbonate and hydrate of lime.
It was reconstituted as a public limited company with the current
name in 1994. In 1998-99, these operations were discontinued. HIL
now cultivates mushrooms and baby potatoes, and manufactures food
items, such as indigenously processed Italian cheese, paneer,
yoghurt, sweets, snacks, and breaded appetisers (eggplant, cheese,
mushrooms). These products are sold under the Himalya Fresh brand.
The company has manufacturing facilities at Sirmaur in Himachal
Pradesh, and at Mehsana in Gujarat.
HIMANCHAL CONSTRUCTION: Ind-Ra Moves Rating to Not Cooperating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Himanchal
Construction Company Private Limited's (HCPL) 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:
-- INR90 mil. Fund-based limits migrated to non-cooperating
category with IND BB+(ISSUER NOT COOPERATING)/IND A4+(ISSUER
NOT COOPERATING) rating;
-- INR20 mil. Term loan due on March 2018 with IND BB+ (ISSUER
NOT COOPERATING) rating;
-- INR20 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Jan. 22, 2015. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
HCPL is engaged in the construction of roads, bridges, dams,
overburden removal, earthworks, excavation and other civil works.
HINDUSTAN EVEREST: CRISIL Reaffirms 'D' Rating on INR7MM Loan
-------------------------------------------------------------
CRISIL Ratings has been consistently following up with Hindustan
Everest Tools Limited (HETL) for obtaining information through
letters dated February 15, 2017 and July 18, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 4 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Letter of Credit 1.5 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Packing Credit 7 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan .59 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 HETL. 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
HETL is consistent with 'Scenario 3' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL BBB' category
or lower. Based on the last available information, CRISIL has
reaffirmed its rating on the bank facilities of HEPL at 'CRISIL
D/CRISIL D' (Issuer Not Cooperating)'.
HETL is a public listed company that manufactures hand tools such
as spanners, wrenches, and screw drivers. The company's
manufacturing facility is based in Sonepat (Haryana), and has a
capacity of 1800 tonnes per annum (tpa). The company has shut down
its operations in fiscal 2017 due to non-viability of the
business.
IBC LIMITED: CRISIL Reaffirms 'D' Rating on INR30MM Loan
--------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of IBC Limited (IBC) at 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 5 CRISIL D (Reaffirmed)
Cash Credit 5 CRISIL D (Reaffirmed)
Drop Line Overdraft
Facility 12.8 CRISIL D (Reaffirmed)
Export Packing Credit 30 CRISIL D (Reaffirmed)
Letter of Credit 4 CRISIL D (Reaffirmed)
Standby Line of Credit 6.2 CRISIL D (Reaffirmed)
The rating reflects instances of delay by IBC in servicing its
term debt obligations; the delays have been caused by the
company's weak liquidity.
The rating also reflects the below-average financial risk profile,
marked by subdued debt protection metrics and working capital
intensive operations. These rating weaknesses are partially offset
by the extensive experience of IBC's promoter in the barytes
business.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: IBC's financial risk
profile is marked by below average debt protection metrics.
Interest coverage ratio and Net cash accruals to total debt was
estimated at 1.36 times and 4 per cent respectively for fiscal
2017.
* Working-capital-intensive operations: IBC's operations are
working capital intensive reflected in its gross current assets
(GCAs) of 348 days as on March 31, 2017. High inventory
requirements and moderate credit offered to customers lead to
large working capital requirements for the company resulting in
weak liquidity.
Strength
* Extensive experience of the promoters: The promoters of IBC have
been in the barytes business for over 3 decades. IBC has a
significant access to barite reserves in its proximity and the
promoters have leveraged on this to expand IBC's operations.
Incorporated as a partnership firm Indian Barytes and Chemicals in
1972, the firm was reconstituted as a public limited company, IBC,
in 1985. The company mines and processes barytes, and sells it
largely to oil well drilling companies. Operations are managed by
Mr. Rajamohan Reddy, the managing director of the company.
Profit after tax (PAT) was INR1.0 crore on total revenue of
INR156.3 crore in fiscal 2016, vis-a-vis PAT of INR1.6 crore on
total revenue of INR59.9 crore, respectively, in fiscal 2015.
IDEAL CHEMICALS: CRISIL Ups Rating on INR13MM Cash Loan to B+
-------------------------------------------------------------
CRISIL Ratings has upgraded its rating on long term bank
facilities of Ideal Chemicals India Private Limited (ICI) to
'CRISIL B+/Stable' from 'CRISIL B/Stable'; while reaffirming the
short term rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 13 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Letter Of Guarantee 2 CRISIL A4 (Reaffirmed)
Proposed Long Term 8 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
The rating upgrade reflects sustenance of an improved business
risk profile of the company. Revenue improved by around 17% year-
on-year to an estimated INR130 crore in fiscal 2017 on account
diversification of product profile by the company. The upgrade
also reflects improvement in operating profitability which stood
at 3% for the fiscal 2017; ICI is expected to sustain its
profitability at similar level over the medium term; thereby
leading to improvement in cash accruals for the company.
The ratings continue to reflect a below average financial risk
profile. This rating weakness is partially offset by the promoters
extensive industry experience and established relationship with
suppliers and efficiently managed working capital requirement.
Analytical Approach
CRISIL has treated unsecured loans of INR 0.31 crore as on March
2016 as neither debt nor equity since the same is from promoters
and has interest rate lower than marker rate and is expected to
remain in the business.
Key Rating Drivers & Detailed Description
Weakness
* Below average financial risk profile: ICI's financial risk
profile is weak, marked by a small net worth which stood at
INR4.13 crore and high TOLTNW ratio of 4.99 times as on March 2016
Strength
* Promoters' extensive industry experience and established
relationship with principals: ICI's business risk profile is
moderate, backed by its established relations with its principals
and its promoter's extensive experience in the chemicals trading
business.
* Efficiently managed working capital requirements: ICI generates
most of its revenue from supplying chemicals to organised players
such as Galaxy Surfactants Ltd (Galaxy; rated 'CRISIL
A/Positive/CRISIL A1'), and Gulbrandsen Chemicals Pvt Ltd ('CRISIL
BBB+/Stable/CRISIL A2'). ICI has efficiently managed its working
capital requirement as reflected in its expected gross current
assets (GCA) of 50 days as on March 2016. ICI extends varied
credit period, ranging from 30 to 120 days to its customers and
has average receivables of about 41 days.
Outlook: Stable
CRISIL believes ICI will continue to benefit over the medium term
from its established relationship with suppliers. The outlook may
be revised to 'Positive' in case of an improvement in the
financial risk profile, most likely because of substantial equity
infusion or large accretion to reserves. Conversely, the outlook
may be revised to 'Negative' if the financial risk profile,
including its liquidity, weakens, driven by low cash accrual, a
stretched working capital cycle, or any debt-funded capital
expenditure.
ICI was originally set up as a partnership firm in 1971; this firm
was reconstituted as a private limited company in 2000. The
company trades in chemicals used in the pharmaceutical, textile,
steel, and fertiliser industries. It is managed by Mr. Sameer
Sharda and Mr. Vipul Maheshwari.
INDIAN MARINE: CRISIL Reaffirms B+ Rating on INR6MM Loan
--------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Indian Marine Industries (IMI) at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .01 CRISIL A4 (Reaffirmed)
Export Bill Purchase
Discounting 3.00 CRISIL A4 (Reaffirmed)
Export Packing Credit 6.00 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility .99 CRISIL B+/Stable (Reaffirmed)
The ratings continue to reflect the firm's modest scale of
operations and average financial risk profile because of weak
capital structure. These weaknesses are partially offset by the
extensive experience of its promoters in the marine products
business.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations: With an estimated operating income
of about Rs107 crores in fiscal 2017, scale remains modest in the
intensely competitive seafood export segment that has both
organised and unorganised players. Though the scale is expected to
improve, it will still remain subdued over the medium term.
* Average financial risk profile: Gearing was high at 3.83 times
with a modest networth 1.8crores estimated as on March 31 2017.
However, debt protection metrics were moderate, with estimated net
cash accrual to total debt, and interest coverage ratios of 14 per
cent and 2.49 times, respectively, for fiscal 2017.
Strength
* Extensive experience of promoters: Presence of more than 15
years in the seafood processing business has enabled the promoters
to establish healthy relationship with suppliers and customers.
Outlook: Stable
CRISIL believes IMI will continue to benefit over the medium term
from the extensive experience of its promoters. The outlook may be
revised to 'Positive' if significant improvement in revenue and
profitability result in sustainable improvement in the financial
risk profile. The outlook may be revised to 'Negative' if low cash
accrual, stretched working capital cycle, or any large capital
expenditure further weakens financial risk profile, especially
liquidity.
Kochi-based IMI is a partnership firm of Ms A M Ruhaila and Mr. K
K Ashraf. It processes and exports frozen seafood products mainly
to the Middle East, but also to Europe, the USA, Russia, and
China.
The firm's net profit on provisional basis was INR0.14 crores on
net sales of INR101 crores for fiscal 2016, against net profit of
INR0.1 crore on net sales of INR143.8 Cr in fiscal 2016.
JINDAL ENGRAVURES: CRISIL Assigns B- Rating to INR5.45MM LT Loan
----------------------------------------------------------------
CRISIL Ratings has assigned 'CRISIL B-/Stable' rating on the long-
term bank facilities of Jindal Engravures (JE).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long Term
Bank Loan Facility 5.45 CRISIL B-/Stable
Proposed Working
Capital Facility .55 CRISIL B-/Stable
The rating reflects high project risk, weak liquidity and below
average financial risk profile. These weaknesses are partially
offset by funding support from partners.
Analytical Approach
Unsecured loans worth INR68 lakh as on March 31, 2018 will be
considered as neither debt nor equity as they are subordinated to
debt and expected to remain in the business over the medium term.
Key Rating Drivers & Detailed Description
Weaknesses
* High project risk as project is in initial stage:
Though civil construction has been completed, machines are yet to
be delivered; hence, the firm can face initial hurdles in erection
of machines and its trial run. Also, the term loan (INR5.45 crore)
raised to fund the project is yet to be sanctioned. Promoters have
limited experience in the business and there are no tie-ups,
hence, take off risk is high.
* Weak liquidity profile:
Liquidity is expected to remain weak because nascent stage of
operation may lead to limited cushion between cash accruals and
repayment obligations. Also, ramp up of operations will require
significant funding support and in absence of funding support from
promoters, funding need may remain dependent over bank debt.
* Below-average financial risk profile:
Financial risk profile may remain below average, driven by low
networth, high total outside liabilities to tangible networth
ratio, and weak debt protection metrics, owing to expected high
dependence over bank debt to fund project and working capital
requirements, both.
Strength
* Funding support from promoters:
The promoters already infused funds worth INR94.57 lakh for
advance payment of machinery and building cost. They are also
expected to infuse capital worth INR1.3 crore and unsecured loans
of INR0.68 crore as on March 31, 2018. The promoters are likely to
continue providing such need-based funding support to the
business.
Outlook: Stable
CRISIL believes JE will benefit over the medium term from the
promoters' funding support. The outlook may be revised to
'Positive' if the project is successfully implemented and
financial risk profile substantially improves owing to higher-
than-expected cash accrual or capital infusion, along with
efficient working capital management. Conversely, the outlook may
be revised to 'Negative' if unsuccessful implementation, lower-
than-anticipated cash accrual, or larger-than-expected working
capital requirement constrains liquidity.
JE is a partnership firm, promoted by Mr. Shashikant Jindal, Ms
Mamta Jindal, Ms Ritu Jindal and Mr. Sanjay Jindal. The firm is
undertaking project to establish a manufacturing plant for
electronic rotogravure cylinders, flexi banners printing
electronic rollers, and rotogravure printing rollers. The plant
is expected to be operational by November, 2017.
K M SUGAR: Ind-Ra Hikes Issuer Rating to 'BB+', Outlook Stable
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has upgraded K. M. Sugar Mills
Limited's (KMS) Long-Term Issuer Rating to 'IND BB+' from 'IND
BB'. The Outlook is Stable. The instruments-wise rating actions
are:
-- INR1005.1 mil. Fund-based working capital limit upgraded with
IND BB+/Stable rating;
-- INR279 mil. (reduced from INR544 mil.) Term loans due on 30
June 2020 upgraded with IND BB+/Stable rating; and
-- INR20 mil. Non-fund-based working capital limit affirmed with
IND A4+ rating.
KEY RATING DRIVERS
The upgrade reflects an improvement in KMS's credit metrics. In
FY17, interest coverage (operating EBITDA/gross interest expense)
was 6.53x (FY16: 1.78x) and net leverage (total adjusted net
debt/operating EBITDAR) was 2.92x (2.93x). The improvement in
interest coverage was primarily due to lower interest cost (FY17:
INR70.71 million; FY16: INR168.46 million) and a rise in EBITDA
(INR461.88 million; INR300.38 million). The rise in EBITDA was
driven by an increase in per quintal realisation on sugar (FY17:
INR3,892/quintal; FY16: INR2,957/quintal).
The ratings are supported by a comfortable liquidity profile,
indicated by a 44.58% average maximum utilisation of working
capital limits during the 12 months ended July 2017, and the five-
decade experience of one founder in the sugar industry.
The ratings factor in KMS's large scale of operations. In FY17,
revenue was INR3,361.85 million (FY16: INR3,528.67 million). The
decline in sales was due to lower sales of distillery products
(FY17: INR386 million; FY16: INR619 million).
The ratings, however, are constrained by an inherent risk in the
agro-based industry. Considering sugar is an agricultural product,
its supply depends on weather conditions. Adverse weather
conditions could affect sugar price and quality. In addition, the
sugar industry is highly regulated and cyclical in nature.
Ind-Ra does not consider the grants KMS receives from Sugar
Development Fund for the ratings.
RATING SENSITIVITIES
Negative: Deterioration in the liquidity profile, with net
leverage exceeding 4.0x on a sustained basis, could lead to a
positive rating action.
Positive: An improvement in the liquidity profile, with net
leverage reducing below 2.5x on a sustained basis, could lead to a
positive rating action.
COMPANY PROFILE
KMS manufactures sugar, distillery products and bio-fertilizers at
its plant in Faizabad (Uttar Pradesh). The company commenced
operations as a partnership firm in 1942. It was reconstituted as
a private limited company in 1971 and as a public limited company
in 2005.
The company is managed by three directors: LK Jhunjhunwala, Aditya
Jhunjhunwala and Sanjay Jhunjhunwala.
KARAN AUTOMOTIVES: CRISIL Lowers Rating on INR6MM Loan to 'B'
-------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Karan Automotives Pvt Ltd (KAPL) to 'CRISIL B/Stable/CRISIL A4'
from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B/Stable (Downgraded
from 'CRISIL BB-/Stable')
Letter of Credit 2.5 CRISIL A4 (Downgraded from
'CRISIL A4+')
Proposed Term Loan .95 CRISIL B/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects the weakened liquidity of KAPL in over the
past one year due to working capital-intensive operations. The
bank limit was over-utilized with an average utilisation of 104%
over the 12 months ended July 2017 which has substantially
increased over the past year. Additionally, the company had to
contract ad hoc limits occasionally to meet the working capital
gap. Further, the company has also taken up a corporate loan in
fiscal 2017 to shore up its working capital cycle which has led to
higher repayment obligations over the medium term, leading to
lower cushion in accruals versus repayments. Further, the subdued
revenue performance in fiscal 2017 is expected to slightly improve
in fiscal 2018, however, the ramp up in operations and margins
along with management of working capital cycle will remain key
rating sensitivity factors over the medium term.
The ratings reflect KAPL's weak liquidity, modest scale of
operations in a competitive segment, and working capital-intensive
operations. These weaknesses are partially offset by the extensive
experience of its promoters and diversified customer base.
Key Rating Drivers & Detailed Description
Weakness
* Weak liquidity: Bank limit utilisation was 104% on average in
the 12 months ended July 2017. Moreover, with the new corporate
loan, liquidity could be further impacted.
* Modest scale of operations: With an operating income of INR95
crore for fiscal 2017, scale remains small in the competitive
automotive components industry. However, scale is expected to
improve over the medium term.
* Large working capital requirement: Gross current assets were 154
days as on March 31, 2017, because of inventory of 45 days and
receivables of 100-120 days. However, this is supported by
payables of 100-130 days in the past 2-3 years. Operations will
remain working capital-intensive over the medium term.
Strengths
* Extensive experience of promoters: Presence of more than two
decades in the pipes segment through another entity (AG Pipes) has
enabled the promoters to develop strong relationship with
customers and suppliers.
* Diversified customer base: Clientele is spread across the four-
wheeler, two-wheeler, and cycle segments, which provides
flexibility in revenue. However, around 80% of income comes from
four- and two-wheelers.
Outlook: Stable
CRISIL believes KAPL will continue to benefit over the medium term
from the extensive experience of its promoters. The outlook may be
revised to 'Positive' if liquidity and financial risk profile
improves due to higher-than-expected net cash accrual and
improvement in working capital requirement. The outlook may be
revised to 'Negative' if liquidity or capital structure
deteriorates or there is pressure on profitability.
Incorporated in 2000 and promoted by Mr. Ravinder Singh and his
family, KAPL manufactures metal sheets and tubes used in cycles,
and four- and two-wheelers. The business was earlier carried out
under Karan Impex, which was established in 1998.
On a provisional basis, net profit was INR0.29 crore on net sales
of INR95 crore in fiscal 2017; profit was INR0.4 crore on net
sales of INR94.1 crore in fiscal 2016.
KENOX AGRO: CRISIL Raises Rating on INR5MM Cash Loan to B+
----------------------------------------------------------
CRISIL Ratings has upgraded its rating on the long-term bank
facilities of Kenox Agro Industries Private Limited (Kenox) to
'CRISIL B+/Stable' from 'CRISIL B/Stable', and reaffirmed the
short-term rating at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee .25 CRISIL A4 (Reaffirmed)
Cash Credit 5.00 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
Proposed Long Term .75 CRISIL B+/Stable (Upgraded
Bank Loan Facility from 'CRISIL B/Stable')
Term Loan 4 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade reflects sustaining of improved business risk profile
over the medium term, backed by higher revenue and maintaining of
steady profitability. Revenue increased by 17% to INR65.8 crore in
fiscal 2017 from INR36.6 crore in fiscal 2016, leading to moderate
cash accrual of INR1.8 crore. The upgrade also reflects efficient
working capital management, with gross current assets (GCAs) of 49
days as on March 31, 2017.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations in fragmented industry
With revenue of INR65.3 crore for fiscal 2017, scale remains small
in the intensely competitive flour milling segment. This restricts
ability to negotiate with customers and suppliers.
* Average financial risk profile
Total outside liabilities to adjusted networth ratio was high at
4.3 times and networth small at INR2.9 crore (against INR2.0 crore
in the previous year), as on March 31, 2017. However, interest
coverage ratio was above average at 2.6 times in fiscal 2017.
Strengths
* Extensive experience of promoters
Presence of over a decade in trading in agricultural commodities
such as chickpeas and gram flour has enabled the promoters to
register healthy growth in revenue and establish strong
relationship with major suppliers and customers.
* Efficient working capital management
The GCAs were 49 days as on March 31, 2017, on account of moderate
receivables of 34 days and small inventory of 15 days.
Outlook: Stable
CRISIL believes Kenox will continue to benefit over the medium
term from the extensive experience of its promoters. The outlook
may be revised to 'Positive' in case of a significant and
sustained increase in revenue, while improving operating margin;
or if financial risk profile improves on account of better capital
structure and networth. The outlook may be revised to 'Negative'
if any pressure on profitability leads to lower-than-expected cash
accrual, or if sizeable working capital requirement further
weakens financial risk profile.
Established in 2014 by Mr. Akbar Vasaya, Mr. Nasruddin Vasaya, Mr.
Amir Lakhani, and Mr. Ram Singh Chouhan, Kenox processes gram
flour (besan) at its unit in Silvassa. Commercial operations began
in April 2015.
LADO CERAMIC: CRISIL Reaffirms 'B' Rating on INR2.50MM Term Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Lado Ceramic Pvt. Ltd. (LCPL) at 'CRISIL B/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1 CRISIL A4 (Reaffirmed)
Cash Credit 2 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 1.25 CRISIL B/Stable (Reaffirmed)
Term Loan 2.50 CRISIL B/Stable (Reaffirmed)
The ratings continue to reflect the company's modest scale of
operations and large working capital requirement. These weaknesses
are partially offset by the extensive experience of its promoters
in the ceramic tiles industry.
Analytical Approach
To arrive at the ratings, unsecured loans from promoters have been
treated as neither debt nor equity since these are non-interest
bearing and are expected to remain in business over the medium
term.
Key Rating Drivers & Detailed Description
Weaknesses
* Modest scale of operations
With net sales of INR9.9 crore in fiscal 2017, scale remains small
in the intensely competitive ceramic industry. This restricts
bargaining power with customers and suppliers.
* Large working capital requirement
Gross current assets were 142 days as on March 31, 2017, due to
sizeable receivables and inventory of 67 days and 58 days,
respectively.
Strength
* Extensive experience of promoters
Presence of more than a decade in the ceramic tiles business has
enabled the promoters to register moderate growth in revenue and
establish strong relationship with major suppliers and customers.
Outlook: Stable
CRISIL believes LCPL will benefit over the medium term from its
promoters' extensive experience in the ceramic industry. The
outlook may be revised to 'Positive' if a significant increase in
scale of operations and profitability leads to larger-than-
expected cash accrual. The outlook may be revised to 'Negative' in
case of lower-than-expected revenue or accrual due to reduced
profitability, or if financial risk profile deteriorates because
of stretch in working capital cycle.
Incorporated in September 2014 and promoted by Mr. Rohit Barasara,
Mr. Piyush Kalariya, and their family members, Morbi-based LCPL
manufactures digitally printed ceramic wall tiles. Unit has
production capacity of 24,000 tonne per annum.
LAXMI COTTON: CRISIL Reaffirms 'B' Rating on INR6MM Cash Loan
-------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B/Stable' rating on the
long term bank facilities of Laxmi Cotton Industries (Paratwada)
(LCI).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 6 CRISIL B/Stable (Reaffirmed)
The rating continues to reflect LCI's modest scale of operations
in the fragmented trading industry and below-average financial
risk profile. These rating weaknesses are partially offset by the
extensive experience of LCI's promoters in the cotton industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations in a fragmented industry: The scale
of operations had remained modest around INR45 crore is fiscal
2017. This is mainly on account of highly fragmented and
competitive trading industry.
* Below-average financial risk profile: The gearing was high at 3
times as on March 31, 2017, and debt protections metrics modest
with interest coverage and net cash accrual to total debt ratios
at 1.4 times and -0.08 time, respectively, in fiscal 2017.
Strengths
* Extensive industry experience of the partners: LCI is a
partnership firm of the Agarwal family, which has been in the
business of cotton ginning for around five decades. The extensive
experience has led to strong relationships with suppliers and
customers.
Outlook: Stable
CRISIL believes LCI will continue to benefit from the extensive
industry experience of its partners and established relationship
with customers. The outlook may be revised to 'Positive' in case
of a significant increase in cash accruals leading to improvement
in financial risk profile. The outlook may be revised to
'Negative', in case of deterioration in the financial risk profile
due to a stretched working capital cycle, or a decline in revenue
or profitability, or in case of any debt funded capex.
Incorporated in 2004, LCI, a partnership concern established by
Agrawal family is engaged in ginning and pressing of raw cotton
and trading of food grains.
LEOLINE FOODS: CRISIL Lowers Rating on INR10.6MM Loan to 'D'
------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the bank loan
facilities of Leoline Foods Private Limited (LFPL) to 'CRISIL D'
from 'CRISIL B/Stable'
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 2 CRISIL D (Downgraded from
'CRISIL B/Stable')
Long Term Loan 10.6 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects delay in servicing debt obligation.
Continuous time and cost overrun in the project has resulted in
stretched liquidity and delay in servicing the repayment
obligation.
The rating also reflects the risk associated with stabilisation of
the recently commissioned project. These weaknesses are partially
offset by extensive experience of the promoters in the food-
processing industry.
Key Rating Drivers & Detailed Description
Weakness
* Nascent stage of operations: Commercial operations commenced
only in March 2017 as against scheduled commencement in
July 2016, and hence, fiscal 2018 will be the first full year of
operations. The company is yet to demonstrate track record of
successful ramp up of operation and attaining favourable
operational parameters. However, the established contacts of
promoters in the food processing industry is expected to help the
company in creating market for its products
Strengths
* Extensive experience of promoters in the food processing
industry: The decade long experience of the Agarwal family, in the
food processing industry, and strong clientele, will continue to
support the business risk profile. Directors owe other
trading/manufacturing companies in similar businesses, and have
established good credentials.
LFPL was incorporated in 2015, by the promoter, Mr. Agarwal, and
his family, based in Patna. The company is setting up a unit for
manufacturing 2D and 3D pellets, pasta, and vermicelli at Choti
Nawada, Patna.
LIMENAPH CHEMICALS: CRISIL Lowers Rating on INR11MM Loan to 'B+'
----------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities
of Limenaph Chemicals Private Limited (LCPL) to 'CRISIL
B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Letter of Credit 1.25 CRISIL A4 (Downgraded from
'CRISIL A4+')
Proposed Long Term 1.75 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects a stretch in liquidity owing to high
working capital intensity arising from closure of one of the
quarries. This has led to an increase in expenses and hence to
high bank limit utilisation. Timely fund infusion by the promoters
to ease the liquidity pressure will be a key rating sensitivity
factor.
The ratings reflect a below-average financial risk profile because
of a modest networth, a small scale of operations, and large
working capital requirement. These weaknesses are partially offset
by the extensive experience of promoters in the lime powder
manufacturing industry and a healthy relationship with customers.
Analytical Approach
For arriving at the ratings, CRISIL has treated unsecured loans of
INR3.21 crore as on March 31, 2017, as neither debt nor equity as
they are non-interest bearing and will remain in the business over
the medium term.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: LCPL has a modest scale of
operations, as reflected in its revenue of around INR31 crore in
fiscal 2017.
* Working capital-intensive operations: Gross current assets were
high at 249 days as on March 31, 2017.
* Below-average financial risk profile: The estimated networth was
modest at INR6.3 crore and the gearing high at 1.95 times, as on
March 31, 2017. Debt protection metrics were average with interest
coverage ratio at 1.29 times in fiscal 2017.
Strengths
* Extensive industry experience of the promoters and an
established market position: The company, set up in 1983 by Mr. P
C Balaramraja, is one of the pioneers in manufacturing lime powder
in South India. It has an established market position in the
region with its brand 'Janathacem'.
Outlook: Stable
CRISIL believes LCPL will continue to benefit from the extensive
industry experience of its promoters. The outlook may be revised
to 'Positive' if considerable improvement in revenue and operating
profitability, or efficient working capital management, results in
a better financial risk profile. The outlook may be revised to
'Negative' if low cash accrual or a stretched working capital
cycle weakens the financial risk profile.
Established in 1983 and based in Chennai, LCPL manufactures lime
powder and other paint-related products. Operations are managed by
the director, Mr. P B Jeyasubramanian.
LUKE EXPORT: CRISIL Reaffirms B+ Rating on INR1MM Term Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Luke Export (LE) at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Foreign Bill
Discounting 8 CRISIL A4 (Reaffirmed)
Packing Credit 6 CRISIL A4 (Reaffirmed)
Term Loan 1 CRISIL B+/Stable
(Reaffirmed)
The ratings continue to reflect LE's modest scale of operations,
and below-average financial risk profile because of small networth
and average debt protection metrics. These weaknesses are
partially offset by the extensive experience of its proprietor in
the seafood industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations: Small scale, as reflected in
estimated revenue of INR62 crore in fiscal 2017, intensifies
competition from other players, both large and small.
* Below-average financial risk profile: The financial risk profile
is average, with modest networth and average debt protection
metrics. Small networth renders the firm susceptible to external
business shocks.
Strength
* Proprietor's extensive experience: Experience of around two
decades of the proprietor, Mr. Xavier Luke, has helped establish
relationships with customers in various countries and also with
domestic suppliers. This should support the business risk profile
over the medium term.
Outlook: Stable
CRISIL believes LE will continue to benefit over the medium term
from the proprietor's extensive experience. The outlook may be
revised to 'Positive' in case of significant and sustainable
growth in revenue, and improvement in profitability and debt
protection metrics. The outlook may be revised to 'Negative' if
revenue or profitability declines significantly, or if any debt-
funded capital expenditure leads to deterioration in financial
risk profile.
LE, established in 1998 as a proprietorship concern of Mr. Xavier
Luke, processes and exports seafood. Its processing facilities are
at Sakthikulangara in Kerala, and Padanthalumoodu in Tamil Nadu.
The firm reported a profit after tax (PAT) of INR0.65 crores on
operating income of INR61.75 crore for fiscal 2016, against a PAT
of INR0.51 crore on operating income of INR61.29 crore for fiscal
2015.
MAGNUM AVIATION: CRISIL Cuts Rating on INR9.5MM Cash Loan to D
--------------------------------------------------------------
CRISIL Ratings has been consistently following up with Magnum
Aviation Private Limited (MAPL) for obtaining information through
letters dated January 27, 2017 and March 22, 2017 among others,
apart from telephonic communication. However, the issuer has
remained non cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 6 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
Cash Credit 9.5 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Overdraft 7.5 CRISIL D (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MAPL. 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
MAPL is consistent with 'Scenario 3' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL BBB' category
or lower. Based on the last available information, CRISIL has
downgraded its rating on the bank facilities of MAPL to 'CRISIL
D/CRISIL D/Issuer Not Cooperating' from 'CRISIL BB+/Stable/CRISIL
A4+'. The rating downgrade reflects instances of overdrawals in
the fund based limits for over 30 days.
Incorporated in 2003, MAPL, promoted by Mr. Vishal Varshnei, is an
aerospace services provider specialising in maintenance, repair,
and overhaul of aircraft wheels, brakes, and avionic components.
The company also trades in spares for various aircrafts. Moreover,
MAPL is an approved and registered vendor for supply of fixed and
rotary wing aircraft spares to armed forces and various state
governments. The company, ISO-9001-2008 certified, is approved by
Federal Aviation Administration and registered with British
Standards Institution. MAPL's facilities are in the special
economic zones in Noida (Uttar Pradesh) and Kochi (Kerala).
MAHESHWARI MINING: CRISIL Lowers Rating on INR19MM Loan to B+
-------------------------------------------------------------
CRISIL has been consistently following up with Maheshwari Mining
Pvt Ltd (MMPL) for obtaining information through letters and
emails dated February 6, 2017 and July 12, 2017, respectively,
apart from telephonic communication. However, the issuer has
remained non-cooperative.
CRISIL gave these ratings:
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 32 CRISIL A4 (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
Cash Credit 19 CRISIL B+/Stable (Issuer Not
Cooperating; Downgraded
from 'CRISIL BB+/Stable')
Letter of Credit 3 CRISIL A4 (Issuer Not
Cooperating; Downgraded
from 'CRISIL A4+')
The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MMPL. 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
MMPL is consistent with 'Scenario 1' outlined in the 'Framework
for Assessing Consistency of Information with CRISIL B rating
category or lower. Based on the last available information, CRISIL
has downgraded the rating to 'CRISIL B+/Stable/CRISIL A4' from
'CRISIL BB+/Stable/CRISIL A4+'. CRISIL has also reaffirmed its
'FB+/Stable' rating to the fixed deposit programme of company.
MMPL, based in Burdwan, West Bengal, is engaged in drilling and
exploration activities, mine development, and underground mining
of various metals. It was incorporated in 1994, as Mecons
Consulting Pvt Ltd, which initially supplied fly-ash bricks. The
company was renamed as Maheshwari Entrepreneurs Pvt Ltd in 2002,
and commenced mining operations in 2003, the name was changed to
MMPL.
MARK INT'L: Ind-Ra Migrates BB Issuer Rating to Not Cooperating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Mark
International Foods Stuff Pvt Ltd's 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 ratings will
now appear as 'IND BB(ISSUER NOT COOPERATING)' on the agency's
website. The instrument-wise rating action is:
-- INR60 mil. Fund-based working capital limit migrated to non-
cooperating category with IND BB(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 12, 2016. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Mark International Foods Stuff was incorporated in 2000 as a
proprietorship company. It was converted into a private limited
company in 2013. The company processes and exports frozen buffalo
meat.
MAYFLOWER HOTELS: CRISIL Reaffirms B Rating on INR10MM Term Loan
----------------------------------------------------------------
CRISIL Ratings has reaffirmed its rating on the long-term bank
facilities of Mayflower Hotels and Resorts (MFHR) at 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 10 CRISIL B/Stable (Reaffirmed;
Removed from 'Issuer Not
Cooperating')
The rating reflects modest scale of operation on account of
initial stage of operations of its hotel in fiscal 2017 supported
by improvement in the operating profitability at around 66% in
fiscal 2017 as against around 53% in fiscal 2016. The rating also
factors in weak financial risk profile of the firm marked by small
net worth and a highly leveraged capital structure as on March,
2017. The net cash accruals of the firm remained tightly matched
with the repayment obligations constraining the liquidity.
Key Rating Drivers & Detailed Description
Weakness
* Weak financial risk profile:
The networth of the firm is small, estimated at around INR3 Crore
as at March 31, 2017. The gearing continue to remain high at
around 4.5 times for the year ending March, 2017 against 4.7 times
during last year. The high leverage is on account of significant
debt funded capex for construction of hotel. The debt protection
metric also remained moderate at around 1.7 times in fiscal 2017
and is expected to remain at similar level over the medium term.
* Early stage of operations: The firm has fully commercialized its
hotel in fiscal 2017. As such, the scale of operation remained
modest marked by an expected operating income of around INR4 Crore
in fiscal 2017. The firm is yet to establish its market position,
brand equity and demonstrate track record of prudent management of
operation.
* Exposure to intense competition and geographical concentration
in revenues: MFHR operates 1 three star hotel in the city of
Guwahati. Though, the hotel property is strategically located in
the heart of the city, but is exposed to intense competition in
the hotel industry and risk associated with geographical
concentration in revenue.
Strengths
* Healthy operating margin: The firm his expected to report
healthy improvement in operating margin of around 66% in fiscal
2017 against 53% in fiscal 2016. The same reflects increased
operating efficiency of the hotel. CRISIL believes that sustaining
stable operating margin along with higher occupancy rate would
continue to be the key rating driver over the medium term.
Outlook: Stable
CRISIL believes the business risk profile of Mayflower Hotels and
Resorts (MFHR) will remain sensitive to the initial stage of
operation of the hotel. The outlook may be revised to 'Positive',
if MFHR successfully stabilizes its operation by achieving higher
than the expected occupancy rate and average room rent, leading to
scale up of its operations. The outlook may be revised to
'Negative' in case of lower than the expected occupancy rate leads
to lower than expected cash accruals impacting its financial risk
profile, particularly liquidity.
MFHR, a partnership firm established in 2008. The firm is
operating a 40-key three-star hotel on AT Road, Guwahati, which
has started its full-fledged commercial operations in fiscal 2017.
The firm is primarily owned and managed by the Guwahati-based
Borah family. Mr. Biswadeep Borah and Mr. Kuladhar Borah are the
key promoters. Currently, the day to day operations of the firm is
managed by Mr. Biswadeep Borah.
MIRA MARINE: CRISIL Reaffirms B+ Rating on INR5MM Bill Loan
-----------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the bank facilities
of Mira Marine Foods (MMF) at 'CRISIL B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 5 CRISIL B+/Stable (Reaffirmed)
Packing Credit 3.6 CRISIL A4 (Reaffirmed)
The rating reflects small scale of operations and below-average
financial risk profile. These weaknesses are partially offset by
experience of partners in the marine business.
Key Rating Drivers & Detailed Description
Weaknesses
* Small scale of operations
MMF's scale of operations is small, as reflected in its operating
income of about INR9.8 Cr in fiscal 2017, a year on year decline
of around 64 per cent owing to temporary halt in operations.
Though the firm's scale of operations is expected to increase with
full-fledged operations resuming in the current fiscal, it will
still continue to remain modest at around 25-28 Cr over the medium
term.
* Below-average financial risk profile
The firm's networth continues to remain modest at around INR3.5 Cr
as on March 2017. Gearing was however moderate at around 1.62
times during the same period. Limited profitability has resulted
in below average debt protection metrics; Interest coverage ratio
and net cash accrual to total debt were modest at 1.26 times and
3%, respectively, in fiscal 2017
Strength
* Experience of partners
MMF benefits from the extensive industry experience of its
promoters, who have over two decades of experience in the seafood
industry. The promoters' extensive industry experience has
resulted in established relationships with clients across key
export markets like the Europe, Russia, China and Middle East.
Benefits from the partners' extensive experience should continue
to support the business.
Outlook: Stable
CRISIL believes MMF will continue to benefit over the medium term
from experience of partners. The outlook may be revised to
'Positive' if significant increase in scale of operations and
operating profitability with prudent working capital management
strengthen financial risk profile. Conversely, the outlook may be
revised to 'Negative' if decline in cash accrual or stretch in
working capital cycle weakens financial risk profile, particularly
liquidity.
MMF, set up in 2012 is a Kodamthuruthu (Kerala)-based partnership
firm that exports processed marine products. The firm is managed
by the partners - Mr. Baburaj and Mr. C B Hari
The firm's net profit on provisional basis was INR0.02 crore on
net sales of INR9.8 crores for fiscal 2017, against net profit of
INR0.1 crore on net sales of INR27.5 Cr in fiscal 2016.
NOSLAR INTERNATIONAL: Ind-Ra Lowers LT Issuer Rating to 'D'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Noslar
International Ltd.'s (NIL) Long-Term Issuer Rating to 'IND D' from
'IND BB(ISSUER NOT COOPERATING)'. The instrument-wise rating
actions are:
-- INR172.5 mil. (increased from INR139 mil.) Fund-based working
capital limits (long-term/short-term) downgraded with IND D
rating;
-- INR30 mil. Non-fund-based limits (short-term) downgraded
with IND D rating; and
-- INR44.1 mil. Term loan (long-term) due on October 2022
assigned with IND D rating.
KEY RATING DRIVERS
The ratings reflect NIL's delays in debt servicing over the six
months ended August 2017, due to stretched liquidity resulting
from the company's elongated net working capital cycle of 149
days (provisional) in FY17 (FY16: 140 days).
COMPANY PROFILE
Incorporated in 1974, NIL is a premium bicycle tyres and tubes
brand in India and abroad. It is situated in Mandideep, Bhopal and
has an installed capacity of producing 6 million tyres and 3.6
million tubes per annum.
PHARMACON: CRISIL Assigns 'B' Rating to INR4.5MM Cash Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to
bank facilities of Pharmacon (PC).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL A4
Cash Credit 4.5 CRISIL B/Stable
The ratings reflect PC's modest scale of operation along with
large working capital requirement. The ratings are partially
offset by extensive experience of promoters in the medical
equipment distribution business and healthy relationship with
suppliers.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operation: Scale of operations are small as
reflected in sale of INR221.5 million in 2016-17; which is majorly
on account of the trading nature of operations, high competition
with distributers of other medical equipment manufacturers, other
manufacturers.
* Large working capital requirement: The company has large working
capital requirements, as reflected in high gross current assets of
166 days as on March 31,2017.
Strength
* Extensive experience of promoters in the medical equipment
distribution business and healthy relationship with suppliers: The
partners have been in the medical equipment industry for more than
two decades and this extensive experience has helped the company
to grow over the years by expanding its geographical presence to
Kerala.
Outlook: Stable
CRISIL believes PC will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if significant and sustained increase in revenue and
profitability strengthens cash accrual and either there is no or
minimal withdrawals to maintain the liquidity. Conversely, the
outlook may be revised to 'Negative' if stretch in working capital
cycle, or adverse risk management policies or large cash
withdrawals by proprietor weaken financial risk profile,
particularly liquidity.
PC was set up in 2007 by Mr. C. P. Rajeev, Mr. Madhavan, Mrs.
Praseeda and Mr. Priya. The firm is engaged in the trading of
medical devices and medicines like pacemaker, coronary stent,
heart valves and syringes to hospitals and medical institutes in
Kerala.
SASTASUNDAR HEALTHBUDDY: CRISIL Assigns B+ Rating to INR14MM Loan
-----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Sastasundar Healthbuddy Limited
(SHL).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 11 CRISIL B+/Stable
Proposed Fund-Based
Bank Limits 14 CRISIL B+/Stable
The rating reflects the company's weak profitability due to large
cash losses and stretched liquidity. These weaknesses are
partially offset by the extensive experience of its promoters and
healthy financial risk profile because of comfortable networth and
gearing.
Key Rating Drivers & Detailed Description
Weakness
* Weak profitability: Despite growth in topline to INR111.31 crore
in fiscal 2017 from INR0.67 crore in fiscal 2014, the company
incurred cash losses of INR25.20 crore in fiscal 2017. SHL has not
yet achieved breakeven and expects to clock operating profit in
fiscal 2018. To expand operations, it has been offering discount
of 15% on MRP, leading to low realisations. Moreover, the company
has not been able to absorb high fixed cost expenses.
* Stretched liquidity: Large cash losses has led to weak
liquidity. Working capital requirement is likely to be met through
bank limit of INR11 crore.
Strengths
* Longstanding presence of promoters: Entrepreneurial experience
of over two decades will enable the promoters to increase scale of
operations and establish a strong customer base. Also, the company
has wide market reach with 180 franchisee outlets in West Bengal
that cater to over 1 lakh clients.
Outlook: Stable
CRISIL believes SHL will benefit over the medium term from the
entrepreneurial experience of its promoters. The outlook may be
revised to 'Positive' if significant improvement in operating
margin and cash accrual leads to a better financial risk profile,
especially liquidity. The outlook may be revised to 'Negative' if
lower-than-expected accrual, stretch in working capital cycle, or
significant debt-funded capital expenditure further weakens
financial risk profile, particularly liquidity.
Incorporated in 2011 and promoted by Mr. Banwari Lal Mittal and
Mr. Ravi Kant Sharma, SHL (formerly, Microsec Healthy Buddy Ltd)
sells healthcare and FMCG products such as medicines, shampoos,
soaps, beverages, and cleaning agents. It is a 100% subsidiary of
Sastasundar Ventures Ltd (erstwhile, Microsec Financial Services
Ltd).
In fiscals 2017, net loss was INR29.27 crore on an operating
income of INR111.31 crore, against net loss of INR24.74 crore and
INR63.55 crore, respectively, in the previous fiscal.
SHINE STAR: Ind-Ra Migrates BB- Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shine Star's
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:
-- INR100 mil. Fund-based Limits migrated to non-cooperating
category with IND BB-(ISSUER NOT COOPERATING) rating; and
-- INR8.5 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Sept. 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 1975, Shine Star is a partnership firm with a
registered office in Mumbai. The firm imports, polishes, and
exports rock diamonds. It is managed by Mr. Vishal Shah and
family.
SHREE ASHTVINAYAK: Ind-Ra Moves D Rating to Not Cooperating
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shree Ashtvinayak
Roller Flour Mills Private Limited's (SARFM) 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 action is:
-- INR50 mil. Fund-based limits (Long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating; and
-- INR28.5 mil. Term loan (Long-term) migrated to non-
cooperating category with IND D(ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Oct. 4, 2016. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
SARFM was incorporated as a private limited company in December
2012 and began commercial operations in 2015. It manufactures and
processes products such as flour (white and wheat) and semolina.
SHREE KRUSHNA: Ind-Ra Lowers Long-Term Issuer Rating to 'D'
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded Shre Krushna
Enterprises' (SKE) Long-Term Issuer Rating to 'IND D' from 'IND
BBB-'. The Outlook was Stable. The instrument-wise rating action
is:
-- INR85 mil. Fund-based limit (long-term) downgraded with IND D
rating.
KEY RATING DRIVERS
The downgrade reflects SKE's overuse of the fund-based limits for
more than 30 days during July 2017 due to a weak liquidity
position resulting from an increase in working capital
requirements.
RATING SENSITIVITIES
Positive: Use of the fund-based limits within the sanctioned
limits for at least three consecutive months would lead to a
positive rating action.
COMPANY PROFILE
SKE is a part of Jajodia group, headed by Mr. Pawan Kumar Jajodia.
SKE is a partnership firm, engaged in the trading of pulses, sugar
and edible oil. All entities are engaged into the same business
activity.
SHRI SHYAM: Ind-Ra Migrates BB+ Issuer Rating to Not Cooperating
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Shri Shyam Agro
Biotech Private Ltd's 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:
-- INR140 mil. Fund-based limits migrated to non-cooperating
category with IND BB+(ISSUER NOT COOPERATING) rating;
-- INR3.7 mil. Term loan migrated to non-cooperating category
with IND BB+(ISSUER NOT COOPERATING) rating; and
-- INR11 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+(ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
Dec. 22, 2014. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Shri Shyam Agro Biotech was incorporated in May 2001 and
manufactures wheat products at its 57,000mt plant in Raniganj,
West Bengal.
SMARTHA ENTERPRISES: Ind-Ra Withdraws 'B' LT Issuer Rating
----------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Smartha
Enterprises Private Limited's (SEPL) Long-Term Issuer Rating of
'IND B+'. The Outlook was Stable. The instrument-wise rating
actions are:
-- INR15 mil. Fund-based limit withdrawn with WD rating; and
-- INR150 mil. Non-fund-based limit withdrawn with WD rating.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the
agency has received no-objection certificates from the lenders.
This is consistent with the Securities and Exchange Board of
India's circular dated 31 March 2017 for credit rating agencies.
Ind-Ra will no longer provide analytical and rating coverage for
SEPL.
COMPANY PROFILE
Incorporated in November 2010, SEPL commenced operations in
February 2011. It is engaged in the trading of edible oils,
fertilisers, pulses and metal scraps.
SPRING BEE: Ind-Ra Assigns 'B' LT Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Spring Bee Diary
Products Private Limited (SBDPPL) a Long-Term Issuer Rating of
'IND B'. The Outlook is Stable. The instrument-wise rating actions
are:
-- INR200 mil. Proposed long-term loans assigned with
Provisional IND B/Stable rating; and
-- INR90 mil. Proposed fund-based facilities assigned with
Provisional IND B/Stable/Provisional IND A4 rating.
The rating is provisional and shall be confirmed upon the sanction
and execution of loan documents for the above facilities by SBDPPL
to the satisfaction of Ind-Ra.
KEY RATING DRIVERS
The ratings reflect the under-construction stage of SBDPPL's milk
processing unit. The company was established in October 2015 to
set up a 9.2 metric tonnes per day milk processing unit. The total
project cost is INR365 million, which is being funded by term
loans of INR200 million, promoters' equity and government subsidy.
The project company has yet to start the civil construction work.
Trial production is likely to begin at end-August 2018 and
commercial production from September 2018.
However, the ratings are supported by the plant's locational
advantage in terms of proximity to raw materials, labour, power,
water supply, and a stable product demand.
The ratings factor in the promoters' six years of experience in
the milk production business.
RATING SENSITIVITIES
Positive: Successful commencement of operations leading to
substantial revenue and profitability will lead to a positive
rating action.
Negative: Failure to achieve substantial revenue leading to
liquidity stress will be negative for the ratings.
COMPANY PROFILE
SBDPPL was incorporated in October 2015. It will be engaged in the
processing of raw milk to produce milk powder, packaged milk and
milk by-products such clarified butter and butter. Mr. Yalavarthi
Ravindra Kumar, Mr. Jaswanth Kadiyam, Mr. Prasannaraju Yalavarthi,
Mr. Ramesh Babu Yalavarthy and Ms. Rosyhemalathajoynehu Yalavarthi
are the promoters of the company.
SRI LAKSHMI: CRISIL Reaffirms B+ Rating on INR20MM Cash Loan
------------------------------------------------------------
CRISIL Ratings has reaffirmed its ratings on the long term bank
facilities of Sri Lakshmi Ganesh Modern Raw & Boiled Rice Mill
(SLG) at 'CRISIL B+/Stable.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 20 CRISIL B+/Stable (Reaffirmed)
Long Term Loan 1 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 6 CRISIL B+/Stable (Reaffirmed)
CRISIL's rating on the long-term bank facilities of SLG continues
to reflect the firm's modest scale of operations, below-average
financial risk profile marked by its modest net networth, high
gearing, and weak debt protection metrics, and susceptibility of
its profitability to changes in paddy prices and government
regulations. These weaknesses are partially offset by extensive
experience of its promoters in the rice milling industry.
Key Rating Drivers & Detailed Description
Weakness
* Modest scale of operations
SLG's scale of operations is modest, as indicated by its estimated
revenues of around INR45.6 crore for 2017-18. The firm has
witnessed modest growth in revenues over the years. The firm has
an installed milling capacity of 15 tonnes per hour (tph), which
is modest given the presence of players with capacities of 50 to
70 tph in Andhra Pradesh (AP). While large players have better
efficiencies and pricing power because of their scale of
operations, small players are exposed to intense competition
* Below-average financial risk profile
SLG's financial risk profile is marked by its modest net worth,
high gearing and weak debt protection metrics. The firm's revenues
are estimated to have increased by 7 per cent in 2016-17, however
modest profitability levels, along with high debt levels, have
resulted in weak debt protection measures; the firm's interest
coverage and net cash accruals to total debt (NCATD) ratios were
estimated at around 1.27 times and 2 per cent, respectively, for
2016-17.
* Susceptibility of its profitability margins to changes in
government regulations and paddy prices
Cost of paddy accounts for about 80 to 85 per cent of the cost of
producing rice. Availability of paddy being an agriculture product
is seasonal, and is dependent on the monsoons/irrigation. This
exposes the company to the risk of limited availability of paddy
in case of unfavourable climatic conditions. The price of paddy
has also been volatile in the past. The rice milling business is
marked by intense competition, which restricts the ability of the
players from fully passing on the increase in paddy prices to
customers or retaining any benefit of lower paddy price.
Strength
* Extensive experience of promoters in rice milling industry
SLG's managing partner Mr. B Satyanarayana Murthy has been in the
rice milling business since the 1970s. The family is well reputed
in the rice growing and milling communities in those areas. After
running various rice mills with other partners, Mr. Murthy set up
SLG with his family members as partners in 1983. He has developed
the mill as one of the largest rice mills in Pondicherry. The mill
is strategically located in the middle of heavy paddy growing
areas, very close to Kakinada, which is one of the largest rice
growing areas in AP, specialising in high yielding rice varieties.
The promoters have also supported the business in the form of
unsecured loans. CRISIL believes that SLG will leverage the
experience of its management in the rice milling business.
Outlook: Stable
CRISIL believes SLG will continue to benefit over the medium term
from its promoters' extensive industry experience. The outlook may
be revised to 'Positive' if there is substantial and sustained
improvement in revenue and profitability, or in networth because
of sizeable equity infusion. The outlook may be revised to
'Negative' in case of steep decline in profitability, or
significant deterioration in capital structure because of large
debt-funded capital expenditure or stretch in working capital
cycle.
SLG was set up in 1983 by Mr. B Satyanarayana Murthy and his
family. The firm mills and processes paddy into rice; the firm
also generates by-products, such as broken rice, bran, and husk.
The firm's rice mill is located at Yanam (Union Territory of
Pondicherry).
SLG reported a profit after tax of INR0.14 crore on revenue of
INR43.46 crore in fiscal 2017, against INR0.12 crore and revenue
of INR40.60 crore in fiscal 2016.
SRI MANIKANTA: Ind-Ra Assigns 'B' Issuer Rating, Outlook Stable
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sri Manikanta
Industries (SMI) a Long-Term Issuer Rating of 'IND B'. The Outlook
is Stable. The instrument-wise rating actions are:
-- INR60 mil. Fund-based working capital limits assigned with
IND B/Stable/IND A4 rating.
KEY RATING DRIVERS
The ratings reflect SMI's small scale of operations and weak
credit metrics because of the seasonal nature of business. The
revenue declined to INR102 million in FY17 (FY16: INR232 million)
due to a reduction in the supply of paddy and a lower number of
orders from Food Corporation of India. SMI booked revenue of INR65
million in 1QFY18 and had INR50 million orders in hand as of July
2017, to be executed before September 2017. EBITDA interest
coverage (operating EBITDA/gross interest expense) was 0.4x in
FY17 (FY16: 1.2x) and net financial leverage (adjusted net
debt/operating EBITDAR) was 25.1x (5.8x).
The ratings factor in SMI's thin EBITDA margins (FY17: 1.4%; FY16:
2.8%) due to raw material price fluctuations and seasonal
availability of paddy.
The ratings are supported by SMI's comfortable liquidity position,
due to a low debtor value of INR25 million in FY17, as reflected
in the average maximum working capital utilisation of 50.2% over
the 12 months ended July 2017.
The ratings are also supported by the company's partners' over 10
years of experience in rice processing.
RATING SENSITIVITIES
Positive: Substantial growth in the revenue leading to an
improvement in the credit metrics could be positive for the
ratings.
Negative: A substantial decline in the top line or profitability
leading to sustained deterioration in the overall credit metrics
could lead to a negative rating action.
COMPANY PROFILE
SMI was established in 1999 as a partnership firm, located in
Mahbubnagar, Telangana. It has a 150 tonnes per day capacity rice
mill.
SURE SAFETY: Ind-Ra Affirms 'B' Issuer Rating, Outlook Stable
-------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Sure Safety
Solutions Private Limited's (SSS) Long-Term Issuer Rating at 'IND
B'. The Outlook is Stable. The instrument-wise rating actions are:
-- INR55 mil. (increased from INR2.77 mil.) Long-term loans due
on March 2018 affirmed with IND B/Stable rating;
-- INR35 mil. Fund-based facilities affirmed with IND B/Stable
rating; and
-- INR105 mil. Non-fund-based facilities affirmed with IND A4
rating.
KEY RATING DRIVERS
The affirmation reflects SSS' continued small scale of operations
and weak credit metrics, despite an improvement in the credit
profile in FY17. According to FY17 provisional financials, revenue
grew to INR390 million (FY16: INR75 million) on account of
increased orders from the defence sector. However, FY16 was an
exceptional year when revenue declined from INR270 million in FY15
due to a change in the government policy leading to lower orders.
However, EBITDA margin remained volatile at 4.5%-29.7% over FY12-
FY17 (FY17: 7.9%, FY16: 29.7%, FY15: 6.5%) owing to currency
fluctuations as the company imports certain goods for
manufacturing defence equipment. Gross interest coverage
(operating EBITDA/gross interest expense) improved to 1.8x in
FY17P (FY16: 1.1x) and net financial leverage (total adjusted net
debt/operating EBITDAR) to 9.1x (12.3x) owing to the increase in
the top line.
The ratings remain constrained by SSS' tight liquidity position
with near full utilisation of fund-based facilities during the 12
months ended July 2017.
However, the ratings continue to benefit from the promoters'
experience of three decades in supplying safety equipment to the
Ministry of Defence.
RATING SENSITIVITIES
Positive: An increase in the scale of operations along with an
improvement in the liquidity position will be positive for the
ratings.
Negative: A further deterioration in the liquidity position will
be negative for the ratings.
COMPANY PROFILE
Established in 2004, SSS is an ISO 9001:2008 certified
manufacturer of security equipment such as radar and remote
controlled improvised explosive device, jammers, defence
simulators, training aids, electronic labs, aerial targets
systems, unmanned aerial vehicles, personal safety equipment,
disaster management equipment, among others.
TENTIWALA METAL: CRISIL Reaffirms D Rating on INR17.3MM Loan
------------------------------------------------------------
CRISIL Ratings has been consistently following up with Tentiwala
Metal Products Limited (TMPL) for obtaining information through
letters and emails dated April 18, 2017 and May 12, 2017, among
others, apart from telephonic communication. However, the issuer
has remained non-cooperative.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 4 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Overdraft 17.3 CRISIL D (Issuer Not
Cooperating; Rating
Reaffirmed)
Term Loan 8.15 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 TMPL. This restricts CRISIL's
ability to take a forward-looking view on the credit quality of
the company. CRISIL believes that the information available is
consistent with 'CRISIL BBB' category rating or lower as per
'Scenario 3' outlined in the 'Framework for assessing consistency
of information'.Based on the last available information, CRISIL
has reaffirmed its rating at 'CRISIL D'.
Incorporated in 1994, TMPL is owned and managed by Mr. Radhapad
Tetiwala. It manufactures submersible copper winding wires,
aluminium extrusions, and enamelled copper wires. Its plant is in
Mathura, Uttar Pradesh.
VINDESHWARI EXIM: Ind-Ra Withdraws 'B' Long-Term Issuer Rating
--------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Vindeshwari Exim
Private Limited's (VEPL) Long-Term Issuer Rating of 'IND B'. The
Outlook was Stable. The instrument-wise rating action is:
-- INR240 mil. Non-fund-based limit withdrawn with WD ratings.
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the
agency has received no-objection certificates from the lenders.
This is consistent with the Securities and Exchange Board of
India's circular dated 31 March 2017 for credit rating agencies.
Ind-Ra will no longer provide analytical and rating coverage for
VEPL.
COMPANY PROFILE
Incorporated in August 2013, VEPL commenced operations in February
2014. It is engaged in the trading of edible oils, fertilisers,
pulses and metal scraps.
* Weak Capital Drives Neg. Indian Bank Sector Outlook, Fitch Says
-----------------------------------------------------------------
Indian banks' sector outlook will likely remain negative in the
future as their weak financial performance and vulnerable core
capitalisation continue to put pressure on intrinsic
creditworthiness, says Fitch Ratings.
State banks remain the most at risk as persistent losses have
battered their weak capital position while their dominant stock of
non-performing loans (NPLs) continues to be a significant overhang
on their ability to pursue meaningful growth. Loan growth dipped
to a multi-decade low of 4.4% in the year ended March 2017 (FY17)
as state banks continued to rationalise assets to conserve capital
in the absence of greater capital injections from the state. The
large private-sector banks' financials also weakened considerably
in FY17 but their stronger capital position and satisfactory
earnings buffer put them in a relatively better position compared
with their state-owned peers.
Fitch estimates Indian banks will need USD65 billion in additional
capital to meet Basel III requirements by 2019 with state banks
requiring around 95% of the total. We view raising capital as the
biggest challenge for state banks as most have few practical
options except to rely on the state for support. Access to the
Additional Tier 1 (AT1) capital market has improved but around
two-thirds of the capital shortage is in the form of common equity
Tier 1 (CET1).
The challenges for the sector persisted in 1QFY18 as loan growth
was weak while asset quality continued to deteriorate due to
higher delinquencies in the agriculture and retail sector as a
result of politically motivated waivers on farm loans in some
Indian states and the expiry of forbearance on small ticket
demonetisation-related NPLs. A pickup in domestic issuance of AT1
securities did support overall capital ratios with the issuance of
around INR130 billion (USD2 billion) in 1QFY18 while there was
none a year earlier. However, pressure on core capital ratios was
persistent on account of subdued earnings and the lack of fresh
equity injection, except in the case of IDBI Bank Ltd.
(BB+/Stable) where the core capital ratio had dipped precariously
close to the regulatory minimum.
=================
I N D O N E S I A
=================
PELABUHAN INDONESIA: Moody's Downgrades BCA to Ba1
--------------------------------------------------
Moody's Investors Service has affirmed Pelabuhan Indonesia II
(Persero) (P.T.)'s (Pelindo II) Baa3 issuer and senior unsecured
ratings.
Moody's has also lowered Pelindo II's baseline credit assessment
(BCA) to ba1 from baa3, reflecting the company's standalone credit
quality.
The ratings outlook is positive.
Issuer: Pelabuhan Indonesia II (Persero) (P.T.)
Ratings Affirmed:
-- Issuer Rating, Affirmed at Baa3
-- Senior Unsecured Notes Ratings, Affirmed at Baa3
RATINGS RATIONALE
Pelindo II's Baa3 issuer rating reflects: (1) its BCA of ba1; and
(2) a one-notch uplift based on Moody's expectation that the
company will receive a high level of support from the Indonesian
sovereign (Baa3 positive) in times of need.
"Pelindo II's BCA reflects its leading position in Indonesia's
ports sector with high barriers to entry and the continued
favorable domestic industry dynamics", says Ray Tay, a Moody' Vice
President and Senior Credit Officer.
"However, the BCA considers Pelindo II's plan to undertake
significant expansionary capex in the next three years, resulting
in potential weakening in its financial metrics to levels that are
more consistent with a BCA of ba1", says Tay, who is also the lead
analyst for Pelindo II.
Although Pelindo II is likely to be measured in its capex spend,
which would be consistent with its historical practice, the lower
BCA nevertheless provides headroom should the company's expansion
plans materialise.
"Over the next 1-3 years, Moody's expects the ratio of Funds from
Operations (FFO)/Adjusted Debt to be in the range of 7%-10%,
assuming that the company proceeds with its port expansion as
planned", Tay says, adding "These metrics are within Moody's
expectations for Pelindo II's BCA of ba1".
Moody's assumption of support is consistent with Moody's joint-
default analysis approach for government-related issuers and is
based on the government's full ownership of the company, and the
fact that Pelindo II plays a pivotal role in Indonesia's maritime
transportation sector.
Moody's believes that the Indonesian government will provide a
high level of support, if required, in light of Pelindo II's
strategic role and the government's full ownership through the
Ministry of State Owned Enterprises.
As the gateway for Indonesia's international trade, Pelindo II is
exposed to the global trade environment and this exposure is
evident from the volatile growth rates seen in the container
segment over the past few five years.
As a defensive measure, Pelindo II's revenue profile features a
material level of recurring income in the form of rental payments
from the container terminals it leases to other operators under
concession contracts. Such income is largely insulated from volume
risk and partially mitigates the impact of volatile container
throughput. Nonetheless, Pelindo II is a significant shareholder
in these concessionaires, which results in some retention of
volume risk despite the fixed payments.
The government has indicated that it is in the process of setting
up a maritime holding company which will hold its stakes in port
and shipping companies. Moody's will assess the impact on Pelindo
II's credit profile once more details become available.
The ratings outlook is positive, reflecting the positive outlook
on Indonesia's sovereign rating and Pelindo II's strategic role as
the key international maritime gateway for Indonesia, given its
control of the terminals in Jakarta.
Given Pelindo II's BCA of ba1, under Moody's joint default
approach for Government Related Issuers, an upgrade of the
Indonesian sovereign could lead to an upgrade of Pelindo II's
ratings, if the company's underlying credit quality remains
consistent with its BCA.
Absent an upgrade to the sovereign rating, an upgrade to Pelindo
II's ratings is highly unlikely, because the company's business
profile is highly dependent on the Indonesian economy.
Moody's expects Pelindo II's financial metrics to be at the lower
end of the BCA tolerance -- assuming the company proceeds with its
expansion plans -- thereby limiting any upgrade of its BCA.
Given the positive outlook, Pelindo II's ratings are unlikely to
be downgraded. However, the outlook could return to stable if
Moody's further lowers the BCA of Pelindo II because of a weaker
financial performance as the result of: (1) unfavorable
policy/regulatory decisions; (2) weak throughput and increased
pressure on its profit margins due to a weaker trade environment
or stronger competition; and/or (3) significant cost overruns for
its capex plan.
Metrics indicative of a downward revision in its BCA include funds
from operations (FFO)/debt falling below 6%-8%, and/or cash
interest coverage falling below 1.5x-2.25x on a sustained basis.
The methodologies used in these ratings were Privately Managed
Port Companies published in September 2016, and Government-Related
Issuers published in August 2017.
Pelabuhan Indonesia II (Persero) (P.T.) (Pelindo II) - also known
as IPC - is Indonesia's leading port operator, with 12 ports
across 10 provinces in Java, Sumatra and Kalimantan.
Pelindo II handled 6.2 million 20-foot equivalent units (TEUs) in
2016, about 45% share of container throughput among the four
Pelindo companies in Indonesia. It also operates Indonesia's
largest and busiest container port, Tanjung Priok in Jakarta,
which handled over 5.5 million TEUs in 2016. The port is
Indonesia's main international container gateway.
Pelindo II is wholly owned by the Ministry of State Owned
Enterprises and is regulated by the Ministry of Transportation.
=========
J A P A N
=========
TAKATA CORP: All Non-MDL Airbag Suits on Hold Thru Nov. 15
----------------------------------------------------------
Matt Chiappardi of Bankruptcy Law360 reported that Judge Brendan
Shannon entered a bench ruling in mid-August for a 90-day freeze
of all non-multidistrict litigation defective airbag lawsuits
against Takata Corp.
The three-month freeze doesn't include the multidistrict
litigation in the Southern District of Florida, Law360 cited.
The judge ordered the lawsuits freeze, which will run through Nov.
15, to allow Takata to focus on its restructuring proceedings,
Law360 related.
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: Bain Names Apple & Dell as New Partners in Bid
-------------------------------------------------------------
Kyodo News reports that Bain Capital has brought in Apple Inc.,
Dell Inc. and other technology heavyweights into a consortium
seeking to buy Toshiba Corp.'s prized semiconductor unit, the U.S.
investment fund said Sept. 15.
Kyodo relates that the move, aimed at bolstering the group's hand
in its bidding war with Toshiba's business partner Western Digital
Corp., includes the addition of memory product maker Kingston
Technology Corp. and data storage company Seagate Technology.
According to Kyodo, Toshiba said last week it had agreed to step
up talks with the consortium, which includes South Korean
chipmaker SK Hynix Inc. It is reportedly offering รน2.4 trillion
($22 billion) for Toshiba Memory Corp., the world's No. 2
manufacturer of NAND memory chips.
In a statement, Bain said the companies were prepared to "provide
capital in a sign of industry-wide support for an independent
Toshiba," the report relays.
Kyodo says the struggling Japanese conglomerate is seeking to sell
the unit to raise funds to prevent a second year of negative net
worth, which would cause it to be delisted from the Tokyo Stock
Exchange.
But negotiations have been hampered by lawsuits filed by Western
Digital claiming that Toshiba is violating the terms of their
joint venture contract by seeking a buyer without its consent.
Bain on Sept. 15 criticized the legal action, saying "Western
Digital's position regarding their contractual rights is over-
reaching and an attempt to frustrate the legitimate efforts of
Toshiba to preserve an independent Japanese Toshiba Memory
company," according to Kyodo.
It added, "The newly capitalized company would continue to honor
all the contractual terms of the Western Digital joint venture,"
the report relays.
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: To Conclude Chip Unit Deal on Sept. 20
----------------------------------------------------
The Japan Times reports that Toshiba Corp. aims to conclude a
contract on the sale of its flash memory unit as early as
Sept. 20.
According to the report, the struggling electronics and machinery
maker explained the plan during a meeting Sept. 14 with its main
creditor banks, including Sumitomo Mitsui Banking Corp. and Mizuho
Bank.
Toshiba's board is scheduled to meet on Sept. 20, the report
notes.
Last week, Toshiba signed a memorandum of understanding with a
consortium led by U.S. private equity firm Bain Capital to
accelerate talks to conclude a contract on the sale of the chip
unit by late September, The Japan Times relates.
The consortium also includes Innovation Network Corp. of Japan, a
government-backed investment fund, the government-affiliated
Development Bank of Japan and South Korean chipmaker SK Hynix
Inc., the report discloses.
The Japan Times says Toshiba has also expressed its intention to
continue talks with Western Digital Corp., its U.S. flash memory
business partner, on the sale of the chip unit.
The report adds that the creditor banks have been pressing Toshiba
to pick up the buyer of the chip unit by Sept. 20, so that the
Japanese maker can complete the sale and erase its negative net
worth by the end of March next year to avoid being delisted from
the Tokyo Stock Exchange.
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.
====================
N E W Z E A L A N D
====================
MTF SIERRA 2017: Fitch Assigns B+ Rating to NZD1.32MM Cl. F Notes
-----------------------------------------------------------------
Fitch Ratings has assigned final ratings to MTF Sierra Trust
2017's automotive-backed floating-rate notes. The issuance
consists of notes backed by automotive loan receivables originated
by Motor Trade Finance Ltd (MTF). The ratings are:
NZD194.04m Class A notes: 'AAAsf'; Outlook Stable
NZD7.33m Class B notes: 'AAsf'; Outlook Stable
NZD6.42m Class C notes: 'Asf'; Outlook Stable
NZD2.93m Class D notes: 'BBBsf'; Outlook Stable
NZD2.75m Class E notes: 'BBsf'; Outlook Stable
NZD1.32m Class F notes: 'B+sf'; Outlook Stable
NZD5.21m Seller notes: 'NRsf'
The notes are issued by Trustees Executors Limited in its capacity
as trustee of MTF Sierra Trust 2017.
At the cut-off date 7 September 2017, the total collateral pool
consisted of 17,925 receivables, totalling NZD217.8m, with an
average obligor exposure of NZD13,024. The loan receivables,
originated by MTF, are amortising principal and interest loans for
both new and used vehicles (7.5% and 92.5% respectively), with a
portfolio weighted-average seasoning and remaining term of 3.9 and
37.9 months respectively.
KEY RATING DRIVERS
Asset Performance: Historical net losses have been minimal due to
the alignment of interests between MTF and the originating parties
via a back-to-back loan agreement.
Yield Support Mechanism: The weighted-average (WA) yield generated
by the cash balance held in the designated account and the
receivables pool must remain above 8% during the revolving period.
This calculation is weighted by the remaining term of the
contracts to ensure the yield is maintained as the pool amortises.
Fitch's cash flow analysis tested that excess yield was available
under all stressed scenarios tested.
Granular Pool Quality: Wide-ranging parameters manage portfolio
concentrations. These include, but are not limited to, controls on
high-risk loans, contract size, geographic distribution, single-
dealer and franchisee concentration, maximum obligor exposure and
restrictions on non-standard motor vehicles.
Stop-Origination Triggers: The revolving period can expose
noteholders to additional risks with respect to a longer time
horizon or degradation in portfolio asset quality. The revolving
period is limited to two years after closing, unless stop-
origination triggers are met. These include, but are not limited
to, the aforementioned pool parameters and yield support levels,
as well as performance-based arrears, loss and charge-off stop-
origination triggers.
Excess Spread: Once 30+ day arrears, averaged over the previous
three-month period, exceed 3.5%, half of the available excess will
be allocated to the excess spread account. If a stop-origination
event subsists, all the available excess will be allocated to the
excess spread account.
RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss
severity on defaulted receivables could produce loss levels higher
than Fitch's base case and is likely to result in a decline in
credit enhancement (CE) and remaining loss-coverage levels
available to the notes. Decreased CE may make certain note ratings
susceptible to negative rating action, depending on the extent of
the coverage decline. Hence, Fitch conducts sensitivity analysis
by stressing a transaction's initial base-case assumptions.
Fitch evaluated the sensitivity of the ratings on MTF Sierra Trust
2017 to increased defaults and decreased recovery rates. This
analysis determined that collectively, the ratings of class A, B
and C notes were susceptible to downgrades under 25% and the E and
F notes under 50% increases in defaults. Only the Class D notes
were susceptible to downgrade at the stress test of a 10% increase
in defaults.
Recovery scenarios, whereby the model assumed recovery rates are
decreased, showed that only the class D notes were sensitive to a
10% decrease in recoveries, and class C notes sensitive to the
severe stress of a 50% decrease in recoveries. All other rated
notes were not sensitive to any change in recovery assumptions
(10%, 25% and 50% decrease).
The ratings of the class C and D notes were sensitive to the
combined stress scenario of a 10% increase in defaults and a 10%
decrease in recoveries. The Class A, B, E and F notes were
sensitive to the moderate stress of a 25% increase in defaults and
25% decrease in recoveries.
TOP RETAIL: TopMan Wellington Closes Doors
------------------------------------------
Julie Iles at Stuff.co.nz reports that the top level of TopShop in
Wellington, which sold the store's TopMan brand, has closed.
Store manager Meg Underwood would not comment on the closure, nor
would store employees, Stuff says.
According to the report, receiver McGrathNicol's Conor McElhinney
said the top of the store closing was discussed with him to happen
as the stores got rid of stock.
"As stock levels reduced they were going to close the top level,"
the report quotes Mr. McElhinney as saying.
He said stores would remain open as there was "still the
possibility of a new buyer coming in," the report relays.
Stuff relates that Mr. McElhinney would not comment on whether
there were interested buyers at this time, citing a
confidentiality agreement.
Top Retail Ltd, the company behind global fashion brand Topshop
and Topman in New Zealand was put into voluntary receivership last
month. McGrathNicol's Conor McElhinney and Kare Johnstone were
appointed receivers on Sept. 7.
The brand's two stores in Auckland and Wellington would remain
open until a decision was made about their future ownership, the
company's directors said.
According to the report, the two stores have ongoing receivership
sales, selling all but designer brand Calvin Klein stock for 50%
off the retail price, Stuff says.
Topshop and Topman's arrived in New Zealand with a first store
opening in Queen St, Auckland in early 2015. Another store was
opened in Wellington last November and two more were planned, one
in Christchurch and a second in Auckland. The Christchurch store
opening has been cancelled and the space sold to another retailer.
The company employs 70 staff.
=================
S I N G A P O R E
=================
GLOBAL A&T: Moody's Withdraws Ca CFR and Senior Sec. Notes Rating
-----------------------------------------------------------------
Moody's Investors Service has withdrawn Global A&T Electronics
Ltd.'s (GATE) Ca corporate family rating (CFR) and its negative
outlook. At the same time, Moody's has also withdrawn the Ca
rating on GATE's senior secured notes.
RATINGS RATIONALE
On September 4, GATE announced that it decided not to pay the $56
million interest payment due on August 1, 2017 on the company's
10% senior secured noted due in 2019 following the end of the
applicable 30-day grace period to make such payment on August 31,
2017.
Moody's has withdrawn the ratings as the company announced that
the failure to pay this amount constitutes an event of default
under the indenture governing the notes.
Further, on September 11 the company also announced it has reached
an agreement with certain of its key stakeholders regarding the
material economic terms of a restructuring.
Global A&T Electronics Ltd. (GATE) is a leading provider of
semiconductor assembly and test services. It operates under the
name UTAC, with manufacturing facilities in Singapore, Taiwan,
Thailand and China. UTAC (unrated) was privatized through a
leveraged buy-out by a private equity group led by TPG Capital
(47.7%) and Affinity Equity Partners (47.7%) in October 2007.
GLOBAL A&T: Initial Notes Ad Hoc Group Rejects Restructuring Plan
-----------------------------------------------------------------
In response to the announcement on Sept. 10, 2017, by Global A&T
Electronics Ltd. that it has reached an agreement with certain of
its stakeholders regarding the material economic terms of a
restructuring including certain holders of the Company's 10%
Senior Secured Notes due in 2019 issued in February 2013 (the
"Initial Notes"), noteholders KLS Diversified Asset Management LP
and Marble Ridge Capital LP, working together with other holders
of Initial Notes (collectively, the "Rejecting Holders"), do not
support the Company's restructuring as proposed. Accordingly, the
Rejecting Holders are confident that the restructuring as proposed
cannot be approved, sanctioned or confirmed in any insolvency or
similar proceeding.
The Rejecting Holders have attempted to negotiate with the Company
in good faith. Despite the efforts of the Rejecting Holders, the
Company has chosen to pursue a non-consensual restructuring path
handing substantial value and protections to a sub-set of holders
of the Initial Notes and the Company's equity sponsors to the
detriment of both the Rejecting Holders and the majority of other
holders of Initial Notes.
Dan Kamensky, Managing Partner of Marble Ridge, stated, "This
proposal casts further uncertainty about Global A&T's future path.
It should be in all parties' interests that Global A&T has a
viable future which can realistically only be achieved if there is
a consensual resolution acceptable to the holders of the Initial
Notes. We remain committed to working with the company and its
other stakeholders to achieve that outcome."
Holders of Initial Notes can contact Michael J. Sage or Brian E.
Greer at Dechert LLP, michael.sage@dechert.com and
brian.greer@dechert.com.
Singapore-based Global A&T Electronics Ltd. provides semiconductor
assembly and testing services in mixed signal and logic products,
analog products, and memory products.
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 6, 2017, Fitch Ratings has downgraded Global A&T Electronics
Ltd's Long-Term Foreign- and Local-Currency Issuer Default Ratings
(IDRs) to 'RD' (Restricted Default) from 'C'.
The downgrades follow the expiration of the 30-day grace period
after the company failed to pay interest of USD56 million on its
USD1.1 billion 2019 senior secured notes. The coupon payment was
due on Aug. 1, 2017, with the 30-day grace period expiring on
Aug. 31, 2017.
====================
S O U T H K O R E A
====================
KUMHO TIRE: Creditors Question Self-Rescue Plan
-----------------------------------------------
Yonhap News Agency reports that creditors of Kumho Tire Co. could
not assess the latest self-rescue plan by the South Korean
tiremaker due to lack of details, officials said on Sept. 13.
The move came a day after the tire unit of Kumho Asiana Group
submitted the self-rescue plan to its main creditor, the state-run
Korea Development Bank (KDB), Yonhap says.
Under the plan, Kumho Tire said it can raise KRW630 billion
(US$558 million) by selling its money-losing plant in China and
injecting capital worth KRW200 billion through a rights issue,
Yonhap relates.
According to the report, the tiremaker also said it plans to sell
its 4.4-percent stake in Daewoo Engineering & Construction Co. to
secure liquidity worth around 130 billion won.
Still, creditors need specific explanations from Kumho Tire, said
an official at KDB, the report relays.
Yonhap relates that the official said the company could not sell
its 4.4-percent stake in Daewoo Engineering & Construction Co.
without the consent of its creditors as the stake is held as
collateral by the creditors.
Kumho Tire said its officials met with their counterparts from the
creditors on Sept. 13 to further explain the self-rescue plan.
According to Yonhap, the KDB official said its creditors will hold
a meeting to discuss the self-rescue plan, though he said no
specific time frame has been set.
In March, China's Qingdao Doublestar signed a KRW955 billion
contract with the creditors led by KDB to buy a 42.01 percent
stake in South Korea's second-biggest tiremaker, Yonhap recalls.
The deal, however, unraveled as the creditors rejected
Doublestar's demand to cut the purchase price by 16% to
KRW800 billion, citing deteriorating earnings, Yonhap says.
Doublestar on Sept. 13 sent a document to KDB that agrees to the
termination of its stock purchase agreement and officially ended
its pursuit of acquiring Kumho Tire, the report says.
The creditors have pressured Kumho Asiana Group, saying a process
can be undertaken to dismiss Park and his senior management if the
group does not file a satisfactory restructuring plan, adds
Yonhap.
Kumho Tire was placed under a creditor-led workout program in
2009 after its parent company was hit by a liquidity problem
following its takeover of Daewoo Engineering and Construction Co.
At that time, Kumho Asiana Group Chairman Park Sam-koo was given
a priority option to buy back the tiremaker should the creditors
of Kumho Tire decide to sell the company, according to Yonhap
News Agency.
===============
X X X X X X X X
===============
FIJI: Moody's Says Continuing Improvements Support Credit Profile
-----------------------------------------------------------------
Moody's Investors Service says that Fiji's (Ba3 stable) credit
profile is supported by continuing improvements in the country's
economic and institutional strength, aided by political stability.
Government debt is moderately high, although Fiji's re-engagement
with institutional financial institutions supports lower funding
costs and improved debt affordability.
However, its economy and public finances are highly vulnerable to
both sudden climate events and gradual climate change trends.
Moody's conclusions are contained in its just-released report on
Fiji, "FAQ on climate change risk, policy effectiveness, and the
country's fiscal and economic outlook".
The report addresses questions from investors and provides an
overview of the key drivers of Fiji's credit profile. The report
is a regular update and does not constitute a rating action.
Fiji's small size, lack of economic diversification and relatively
low level of development increase the potential economic impact of
climate change-related natural disasters.
In February 2016, Tropical Cyclone Winston, the strongest storm to
ever make landfall in the Southern Hemisphere, damaged
infrastructure and housing, and cut agricultural production,
resulting in real GDP growth of only 0.4% for the year.
The impact on public finances and the current account has been
modest, in part because of financial support from development
partners. The government has implemented policies to enhance the
country's resilience to climate events and trends, but the
country's GDP growth and public finances remain vulnerable to
weather-related events.
Moody's also expects additional borrowing in the aftermath of the
cyclone to come from domestic sources and external sources on
concessional terms. Moody's projects government debt to rise to
46.5% of GDP in fiscal 2018, from 44.3% in fiscal 2017, before
stabilising around these levels through 2020. Fiji's debt burden
will remain moderately high, in line with the median of Ba3 rated
sovereigns.
Furthermore, Fiji has taken a number of measures that improve its
institutional framework and strengthen policy effectiveness.
Effective tax cuts are bolstering revenue as a share of GDP to
higher levels than many similarly-rated peers, denoting fiscal
policy effectiveness.
The government is using these higher revenues for investment that
will boost the economy's potential. These measures will help
buttress the economy's ability to counter shocks.
In addition, political stability has been positive for Fiji's
credit profile as it has supported macroeconomic stability, buoyed
reform and improved the government's funding conditions. Continued
GDP growth stamps the government's legitimacy and provides a
favourable environment in which to implement policies that are
likely to improve Fiji's credit profile. Moody's expects continued
political stability before and after elections in 2018.
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 215-945-7000 or Joseph Cardillo at 856-381-8268.
*** End of Transmission ***