/raid1/www/Hosts/bankrupt/TCRAP_Public/190404.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, April 4, 2019, Vol. 22, No. 68
Headlines
A U S T R A L I A
AD SECURITIES: First Creditors' Meeting Set for April 11
AS PAINTING: Second Creditors' Meeting Set for April 11
CENSEO PTY: First Creditors' Meeting Set for April 11
FISHER CBG: Nest Day Spa Placed Into Liquidation
MAZS CORP: First Creditors' Meeting Set for April 11
NAPOLEON PERDIS: Unsecured Creditors to Get Between 4-13 cents
NUTRITIONAL PRODUCTS: Second Creditors' Meeting Set for April 10
RUSH CORP: Second Creditors' Meeting Set for April 11
SECURICOM (NSW): Second Creditors' Meeting Set for April 11
C H I N A
BLUEFOCUS INTELLIGENT: Moody's Alters Outlook on B1 CFR to Stable
FANTASIA HOLDINGS: Moody's Alters Outlook on B2 CFR to Stable
FUTURE LAND: Fitch Gives BB(Exp) Rating to New USD Senior Notes
PANDA GREEN: S&P Keeps CCC+ Issuer Credit Rating on Watch Negative
XINYUAN REAL ESTATE: S&P Rates USD Sr. Unsecured Notes 'B-'
XINYUAN REAL: Fitch Gives B(EXP) Rating to New USD Sr. Unsec. Notes
I N D I A
ADVAITH BIO: ICRA Lowers Rating on INR6cr Loans to D
AJAY ENGICONE: ICRA Maintains 'D' Ratings in Not Cooperating
BEST CROP: ICRA Withdraws B+ Rating on INR16cr Cash Loan
C.S. INFRACONSTRUCTION: ICRA Withdraws D Rating on INR160cr Loans
CYBERWALK TECH: ICRA Withdraws 'D' Ratings on INR160cr Loans
DHANALAKSHMI SRINIVASAN: ICRA Assigns D Rating to INR28cr Loan
ECOREX BUILDTECH: ICRA Withdraws C+ Rating on INR15cr Loans
GANDHI ENTERPRISES: ICRA Lowers Rating on INR50.95cr Loan to D
GAYATH INDUSTRIES: ICRA Assigns 'B+' Ratings to INR7cr Loans
IL&FS LTD: SFIO Arrests Former Chairman Sankaran
INDURE PRIVATE: ICRA Lowers Ratings on INR1,650cr Loans to D
JALANNAGAR DEVELOPMENT: ICRA Assigns D Rating to INR10cr Loans
JANA SMALL: ICRA Lowers Rating on INR750cr NCDs to B+
MOSER BAER: Sawasdee Group Acquires Land in Noida
SAROJA AVIATION: ICRA Assigns B- Rating to INR29cr LT Loan
SRINIVASAN CHARITABLE: ICRA Assigns D Rating to INR175cr Loan
SRINIVASAN HEALTH: ICRA Assigns D Rating to INR181cr Term Loan
WELCOME DISTILLERIES: ICRA Cuts Rating on INR15cr Loan to B+
I N D O N E S I A
PAN INDONESIA: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
N E W Z E A L A N D
SOCIAL MEDIA: Owes More Than NZ$670,000, Liquidator Says
S I N G A P O R E
EZION HOLDINGS: Yinson to Buy Controlling Stake in Company
HYFLUX LTD: Fall Adds to Roster of Business Stumbles in Singapore
INTERPLEX HOLDINGS: S&P Withdraws 'BB-' Issuer Credit Rating
- - - - -
=================
A U S T R A L I A
=================
AD SECURITIES: First Creditors' Meeting Set for April 11
--------------------------------------------------------
A first meeting of the creditors in the proceedings of AD
Securities Australia Pty Ltd will be held on April 11, 2019, at
12:00 p.m. at the offices of Level 7, 114 William Street, in
Melbourne, Victoria.
Andrew Schwarz and Jon Howarth of AS Advisory were appointed as
administrators of AD Securities on April 1, 2019.
AS PAINTING: Second Creditors' Meeting Set for April 11
-------------------------------------------------------
A second meeting of creditors in the proceedings of AS Painting Pty
Ltd has been set for April 11, 2019, at 11:00 a.m. at One Wharf
Lane, Level 20, 171 Sussex Street, in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 10, 2019, at 5:00 p.m.
Jason Tang and Andre Lakomy of Cor Cordis were appointed as
administrators of AS Painting on March 6, 2019.
CENSEO PTY: First Creditors' Meeting Set for April 11
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Censeo Pty
Ltd will be held on April 11, 2019, at 11:00 a.m. at Level 27, 259
George Street, in Sydney, NSW.
Christopher John Baskerville and Marcus Jon Watters of Jirsch
Sutherlan were appointed as administrators of Censeo Pty on April
1, 2019.
FISHER CBG: Nest Day Spa Placed Into Liquidation
------------------------------------------------
Rhianna Mitchell at The West Australian reports that a popular
Perth day spa for pregnant women and new mothers has been placed
into liquidation, leaving local customers with gift vouchers out of
pocket.
According to The West Australian, dozens of customers took to
social media on March 27 to express their surprise and frustration
at the sudden closure of Nest Day Spa, formerly Yummy Mummy Day
Spa, on Brisbane Street.
On its website, the spa's owner Fisher CBG Pty Ltd said a decision
had been made to close the doors on the business after the property
landlord had given them 30 days' notice, the report relates.
"We have been proud to provide a place where mums and expecting
mums can comfortably enjoy unique beauty and massage experiences,
delivered by a team of professional therapists," the company, as
cited by The West Australian, said.
"However after being given 30 days notice by our landlord we were
unable to find a suitable premises in such a short amount of
time."
"No further bookings are available and all future bookings are
unfortunately cancelled."
GTS Advisory was appointed as liquidator on March 27, the report
discloses.
Nest has deleted its social media profiles and directed customers
to contact the administrators, the report says.
MAZS CORP: First Creditors' Meeting Set for April 11
----------------------------------------------------
A first meeting of the creditors in the proceedings of Mazs Corp
Pty Ltd will be held on April 11, 2019, at 11:00 a.m. at Apso
Serviced Offices, St Kilda Rd Towers, 1 Queens Rd, in Melbourne,
Victoria.
Trent McMillen of MaC Insolvency was appointed as administrator of
Mazs Corp on April 1, 2019.
NAPOLEON PERDIS: Unsecured Creditors to Get Between 4-13 cents
--------------------------------------------------------------
Sue Mitchell at Australian Financial Review reports that unsecured
creditors of Napoleon Perdis Cosmetics will receive between 4 cents
and 13 cents in the dollar under a rescue proposal by "daigou
queen" Livia Wang and fashion executive Henry Lee.
This is more than they would receive (between 0 and 5 cents in the
dollar) if Napoleon Perdis Cosmetics, which went into voluntary
administration in January, were wound up, its administrators say.
On a personal note, Napoleon Perdis, his wife and his brother owe
the company millions of dollars, says insolvency firm Worrells --
although the Perdises dispute the value of loans from the company,
and Mr. Perdis says the company owes him more than half a million
dollars, AFR relates.
According to AFR, the Worrells' estimate of returns to creditors
are less than creditors were hoping for when the administrators
revealed last week that Kuba Investments, a company owned by Ms
Wang and Mr Lee, planned to take control of NPC through a deed of
company arrangement. Ms Wang is known as the "daigou queen" for her
work promoting personal shoppers, who buy goods for consumers in
China.
Citing a report by Worrells, AFR says the administrators received
41 expressions of interest for NPC and 28 parties signed
confidentiality agreements, but only two proposals made it to the
final round.
"Kuba's DOCA proposal was (taking into consideration the imperative
to strive for the best outcome available to all creditors) the most
attractive offer on balance," the report, as cited by AFR, said.
Under the DOCA, Kuba will contribute $1.6 million to a deed fund
that will also hold any cash in the bank at the time the DOCA is
executed. The deed fund will be paid into a trust to be distributed
among creditors, AFR relays.
AFR relates that under the best-case DOCA scenario, priority
creditors such as the Tax Office and staff would receive a 100 per
cent return, secured creditors such as the ANZ Bank would receive a
1.5 per cent return and unsecured creditors 13 per cent.
Under a worst-case DOCA scenario, priority creditors would receive
100 per cent, secured creditors zero (but Kuba would adopt some
creditors' liabilities) and unsecured creditors 4.2 per cent, AFR
notes.
If the company were to go into liquidation, unsecured creditors
would receive between zero and 4.8 per cent. If the assets were
sold by an agent such as Hilco, unsecured creditors might receive
between zero and 5 per cent.
AFR says the outcomes will depend on final creditor numbers and how
successful the administrators or liquidators are in recovering
loans to directors and voidable and preferential transactions,
including dividends paid in 2017.
According to the report, creditors are owed between AUD22.8 million
and AUD45.3 million, depending on proof of debt, including AUD26
million owed to unsecured creditors and AUD12 million to secured
creditor ANZ.
Founder Napoleon Perdis owes the company AUD2.34 million in
director loans, his wife Soula-Marie AUD1 million and his brother
Emmanuel Perdis AUD1.05 million. However, Napoleon and Emmanuel
Perdis are disputing the value of the loans and Napoleon Perdis
claims the company owes him AUD563,188.
AFR relates that the administrators found the cosmetics company was
"probably" insolvent on or about September 30, 2018, after losing
AUD2.2 million and AUD2.4 million in the previous two quarters.
However, NPC appeared to have retained the support of ANZ until at
least November 2018 and received a funding offer from an unrelated
lender or investor that was available until January.
NPC experienced large cash-flow deficiencies between September and
December 2018, coinciding with its corporate credit card being
suspended by American Express in October 2018, which it had been
using to pay rent.
Around the same time, several transport and logistics providers
withheld supply because of non-payment of debts.
NPC received cash injections in November and December 2018 from
distribution partner Priceline, earmarked for payment to ANZ.
However, the cash was "inadequate to produce a net cash surplus,"
the report, as cited by AFR, said.
Worrells blamed NPC's demise on losses in the United States and New
Zealand, the shift to online retailing and the growth of cosmetics
brands Sephora and Mecca Cosmetica.
NPC lost AUD3.8 million on sales of AUD81.3 million in 2015, AUD2.2
million on sales of AUD77.9 million in 2016 and AUD1.4 million on
sales of AUD68.3 million in 2017, AFR discloses.
Despite the loss in 2017, the company paid AUD1.6 million in
dividends. The dividend was an offset against directors' loans,
rather than a cash dividend.
"In our view, there would be an arguable case that the dividend
should be set aside . . . if the company was placed into
liquidation," the report, as cited by AFR, said.
"The dividend may have been declared in breach of section 254T(2)
of the Corporations Act if it can be shown that they materially
prejudiced the company's ability to pay its creditors."
According to AFR, Worrells has also queried several
director-related transactions, including monthly and one-off
consultancy fees in 2018, which reduced Napoleon and Soula-Marie
Perdis' loan accounts, and AUD20,000 a month in rent the company
paid the Perdises so other employees could use their Double Bay
home.
However, these payments would potentially be recoverable only if
the company were liquidated, not if creditors approve the DOCA.
Creditors are due to meet on April 8, AFR notes.
About Napoleon Perdis
Based in Alexandria, Australia, Napoleon Perdis Cosmetics Pty. Ltd.
owns and operates stores that sell cosmetics. It offers makeup
products for face, lips, eyes, cheeks, and nails. The company also
provides skincare products, including auto pilot skincare, auto
pilot priming, cleansers, and body products. In addition, it offers
gifts and sets; and tools, such as brushes, brush sets, and books.
Further, the company operates a make-up academy in Australia and
California. Furthermore, it engages in the online retail of
cosmetics.
Simon Cathro, Chris Cook and Ivan Glavas of Worrells Solvency &
Forensic Accountants were appointed as administrators of Napoleon
Perdis on Jan. 31, 2019.
NUTRITIONAL PRODUCTS: Second Creditors' Meeting Set for April 10
----------------------------------------------------------------
A second meeting of creditors in the proceedings of Nutritional
Products (Aust) Pty Ltd, trading as Pappa Nutal, has been set for
April 10, 2019, at 11:00 a.m. at the offices of Cor Cordis
Level 29, at 360 Collins Street, in Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 9, 2019, at 5:00 p.m.
Sam Kaso and Bruno A Secatore of Cor Cordis were appointed as
administrators of Nutritional Products on March 5, 2019.
RUSH CORP: Second Creditors' Meeting Set for April 11
-----------------------------------------------------
A second meeting of creditors in the proceedings of Rush
Corporation Pty Ltd has been set for April 11, 2019, at 11:00 a.m.
at the offices of J P Downey & Co, Level 1, at 22 William Street,
in Melbourne, Victoria.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 10, 2019, at 4:00 p.m.
James Patrick Downey of JP Downey & Co was appointed as
administrators of Rush Corporation on March 6, 2019.
SECURICOM (NSW): Second Creditors' Meeting Set for April 11
-----------------------------------------------------------
A second meeting of creditors in the proceedings of Securicom (NSW)
Pty. Limited, trading as "Microlatch" & "Magnetic Head Recording
Equipment", has been set for April 11, 2019, at 2:00 p.m. at:
The Boardroom of Chifley Advisory
Level 2, 9 Phillip Street
Parramatta, NSW
-- and --
The Paradise Room 2
Sofitel Gold Coast Broadbeach
81 Surf Parade
Broadbeach, Queensland
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 10, 2019, at 4:00 p.m.
Gavin Moss of Chifley Advisory Pty Ltd was appointed as
administrator of Securicom (NSW) on March 7, 2019.
=========
C H I N A
=========
BLUEFOCUS INTELLIGENT: Moody's Alters Outlook on B1 CFR to Stable
-----------------------------------------------------------------
Moody's Investors Service has revised BlueFocus Intelligent Comm
Group Co., Ltd.'s outlook to stable from negative.
Moody's has also affirmed BlueFocus' B1 corporate family rating.
RATINGS RATIONALE
"The change in outlook to stable from negative reflects BlueFocus'
improving liquidity position and capital structure," says Ying
Wang, a Moody's Vice President and Senior Analyst.
"The stable outlook also considers the positive trend in the
company's cash flow generation, in turn driven by improved working
capital management and slower business acquisitions," adds Wang,
who is also Moody's Lead Analyst for BlueFocus.
BlueFocus' liquidity and capital structure have improved after only
1.9% of its RMB1.4 billion convertible bond holders requested early
redemption before the puttable right expired on February 14, 2019,
and a further 60% chose to convert into equity shares as of 29
March 2019.
This development has lowered the company's refinancing risk for the
next two years, with the remaining RMB0.5 billion maturing only on
17 December 2021 if the holders refuse to convert into equity
before then. The conversion of 16% of the company's total adjusted
debt into equity will also strengthen its equity base and provide
more financial flexibility for business growth.
At the same time, BlueFocus has proactively managed its working
capital and slowed its business acquisitions, and started reporting
positive quarterly operating cash flow from 2Q 2018.
Based on BlueFocus' preliminary results, its 2018 net profit rose
by 80%-102% from RMB222 million in 2017, 1Q 2019 net income further
increased by 31%-50% year-on-year, and interest-bearing debt
declined.
Moody's expects BlueFocus' annual revenue growth to slow to around
20% in the coming two years, compared with the 49% average recorded
from 2013 to 2017. This decline reflects the meaningful slowdown in
the company's business acquisitions.
Moody's also expects the company's adjusted EBITDA margin will
stabilize around 4.0%-4.5% in 2019-2020 as a result of increasing
scales, the integration of previous acquisitions and expense
controls, despite a decline from around 6% over the past three
years.
Moody's expects the margin decline will be offset by steadily
growing cash flows as BlueFocus expands into digital advertising.
The new business is less profitable when compared to the company's
other segments but provides more stability, while the shift in its
business mix supports positive operating cash flow through better
working capital management.
Moody's expects the company to continue paying down debt with the
improved cash flows. As a result, Moody's expects BlueFocus'
leverage -- as measured by adjusted debt/EBITDA -- will decrease to
around 3.0x over the next 12-18 months from 4.4x at the end of
September 2018. Such a level of leverage is consistent with its B1
rating and provides a buffer against margin volatility, intense
industry competition and its working capital needs.
BlueFocus' B1 corporate family rating reflects the company's long
track record and leading position in China's public relations and
advertising industry, its proven capabilities in the high-growth
sectors of mobile and digital advertising, as well as its
diversified blue-chip customer base, with a growing global
footprint.
The rating also considers the intense competition and inherent
cyclicality of the public relations and advertising industry, and
the company's expected trend of margin contraction, due to its
expansion into digital advertising.
BlueFocus' liquidity is adequate. Its reported cash balance of
RMB1.24 billion as of September 30, 2018, together with its
expected operating cash flow and announced investment disposal
proceeds, are sufficient to cover the company's short-term debt and
capital spending needs in the following 12-18 months.
The stable outlook reflects Moody's expectation that BlueFocus will
maintain its strong position in China's public relations and
advertising market, and balance its growth strategy without
jeopardizing its liquidity and financial profile.
Upward rating pressure could arise if BlueFocus (1) grows its
absolute scale to demonstrate business stability, (2) further
improves its adequate liquidity position through growth in free
cash flow generation, and maintains solid access to different
funding channels, and (3) sustains its profitability and continues
to deleverage, all on a sustained basis. An upgrade would also
require a demonstrated commitment to conservative financial
policies in terms of acquisitions, investments and dividends.
Downward rating pressure could arise if BlueFocus' (1) liquidity
deteriorates, (2) profitability continues to decline, (3) adjusted
debt/EBITDA rises above 4.5x, or (4) operating cash flow turns
negative, all on a sustained basis. Significant debt-funded
acquisitions, investments or dividends could also result in
negative rating actions.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
Established in 1996 and headquartered in Beijing, BlueFocus
Intelligent Comm Group Co., Ltd. provides one-stop end-to-end brand
management and marketing services, mainly to large corporations. It
listed on the Shenzhen Stock Exchange in 2010.
FANTASIA HOLDINGS: Moody's Alters Outlook on B2 CFR to Stable
-------------------------------------------------------------
Moody's Investors Service has changed to stable from negative the
outlook on Fantasia Holdings Group Co., Limited's B2 corporate
family rating and B3 senior unsecured debt ratings.
At the same time, Moody's has affirmed all ratings.
RATINGS RATIONALE
"The stable outlook on Fantasia's ratings reflects the company's
improved liquidity position and reduced refinancing risk, and our
expectation that its credit metrics will recover gradually in the
coming 12-18 months from the current weak levels," says Celine
Yang, a Moody's Assistant Vice President and Analyst.
Fantasia has demonstrated its ability to raise new term funding
with tenors ranging from 1.5 years to 3 years since December 2018,
albeit at high costs, to refinance its maturing debt, compared with
issuance of three programs of 364-day USD bonds with a sizeable
aggregate amount of USD540 million in 2018.
Its improved liquidity position is also evidenced by the
improvement in its cash to short-term debt ratio to 1.7x in 2018
from 1.1x in 2017 (after adjusting for puttable bonds and cash in
its subsidiary Colour Life Services Group Co., Limited).
The company achieved 50% growth in contracted sales to RMB30.2
billion in 2018 from RMB20.1 billion in 2017, after recording 65%
year-on-year growth in 2017 from RMB12.2 billion in 2016. The
increase in contracted sales in 2017 and 2018 supports its
liquidity and will support revenue growth in 2019 and 2020.
Fantasia's leverage -- as measured by revenue to adjusted debt --
of 32% in 2018 was weak when compared to many B2 Chinese property
peers. However, this weak level of leverage is mitigated by its
strengthened cash position at RMB25 billion (excluding cash held at
Colour Life) at the end of 2018, compared to RMB 14.2 billion at
the end of 2017.
At the same time, Moody's expects Fantasia will become more
disciplined in controlling its debt growth. For the next 12-18
months, accordingly, its leverage will likely trend towards 40%
from 32% in 2018 and EBIT/interest will improve to 1.50x from 1.31x
in 2018.
Fantasia's B2 corporate family rating reflects the company's (1)
established track record in property development in the
Chengdu-Chongqing Economic Zone and the Pearl River Delta; and (2)
the diversified income streams from its property management, rental
and hotel management businesses, which are mostly recurring in
nature.
On the other hand, the B2 rating is constrained by the company's
high leverage and weak interest coverage, which is in turn caused
by its high-cost financing.
Nevertheless, Fantasia's ratings could be upgraded if the company
(1) improves its debt maturity and liquidity profiles; and (2)
improves its credit metrics such that revenue/adjusted debt rises
to 60%-70% on a sustained basis and EBIT/interest improves to 2.5x
or above.
The ratings could be downgraded if (1) its contracted sales or cash
collections weaken; (2) it engages in aggressive land acquisitions
or other business acquisitions, such that its debt leverage and
liquidity deteriorate materially; (3) refinancing and liquidity
risks deteriorate; or (3) its credit metrics are unlikely to
improve, with EBIT/interest failing to trend towards 1.5x in the
next 12-18 months.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Fantasia Holdings Group Co., Limited is a property developer in
China (A1 stable). Established in 1996, the company listed on the
Hong Kong Stock Exchange in November 2009. Fantasia had a market
capitalization of HKD9.16 billion as of 1 April 2019. Zeng Jie Baby
is the company's largest shareholder, with a 57.5% stake as of 5
March 2019.
In addition to property development, Fantasia is engaged in
providing property operation services, property agency services and
hotel services for its own properties and properties of third
parties.
FUTURE LAND: Fitch Gives BB(Exp) Rating to New USD Senior Notes
----------------------------------------------------------------
Fitch Ratings has assigned Future Land Development Holdings
Limited's (FLDH, BB/Stable) proposed US dollar senior notes an
expected rating of 'BB(EXP)'. The proposed notes are rated at the
same level as FLDH's senior unsecured rating because they will
constitute its direct and senior unsecured obligations.
The final rating on the proposed notes is subject to the receipt of
final documentation conforming to information already received.
FLDH intends to use the net proceeds from the note issue to repay
existing debt and for general corporate purposes.
KEY RATING DRIVERS
Yangtze River Delta Focus: The FLDH group's strategy to focus
resources on the Yangtze River Delta - a wealthy region in eastern
China that includes the Jiangsu and Zhejiang provinces and Shanghai
- has helped drive scale expansion and strong sales turnover,
measured by consolidated contracted sales/gross debt. The region
has made up more than half of FLDH's total contracted sales during
the past few years, including its contribution of around 61% in
2018 after contracted sales increased by 75% to CNY221 billion.
FLDH continued to perform well in January-February 2019 as
contracted sales increased by 24.3% to CNY23.6 billion at an
average selling price of CNY10,820 per sq m, compared with
CNY11,010 per sq m a year earlier. FLDH's sales turnover was little
changed at 1.8x in 2018 from 1.9x in 2017 and has averaged 1.7x
annually since 2014, demonstrating the group's ability to rapidly
generate sales from new land acquisitions. The fast-churn strategy
has enabled FLDH to tap the strong demand in the Yangtze River
Delta to achieve higher contracted sales growth than peers. FLDH
aims to achieve CNY270 billion in total contracted sales in 2019.
Stable Leverage: FLDH's leverage including proportionate
consolidation of joint ventures (JVs) and associates was at 44% in
2018, compared with 50% in 1H18, 40% in 2017 and 45% in 2016.
FLDH's historical leverage has fluctuated particularly during the
mid-year due to land acquisition activities but has stayed within a
reasonable range and has remained below 45% on average during its
expansion. FLDH spent CNY50 billion-60 billion in attributable land
acquisitions in 2018, which accounted for half of its attributable
sales proceeds, and expects to remain acquisitive in 2019 by
spending around 60% of its sales proceeds on land premiums. Fitch
thinks FLDH's continued land replenishment and its high proportion
of JV operations will increase the uncertainty over its leverage.
Diversified, Sufficient Land Bank: The group had an attributable
land bank of 53.3 million sq m, or 49% of the total land bank, at
end-2018. The attributable interest is higher at around 67%,
according to management, after including the additional project
investment from its 67.5%-owned (at end-2018) onshore subsidiary,
Seazen Holdings Co., Ltd. (BB/Stable). The group has been investing
in projects with Seazen to increase attributable interests in its
land bank. Fitch thinks the land bank is sufficient for three to
five years of development. The group will continue to focus on the
Yangtze River Delta but has been increasing its land bank outside
the region to provide a buffer in case of regional market
uncertainties. The Yangtze River Delta accounted for 50.1% of
FLDH's total land bank by gross floor area at end-2018.
Margin Expansion: Fitch expects the group's EBITDA margin to stay
at around 25% in the next two years. FLDH's EBITDA margin, without
adding back capitalised interest to avoid distortion from
accounting policy changes, improved to 26.4% in 2018 from 24.1% in
2017. The margin expansion was mainly helped by the higher
contribution from its rental-generating shopping-mall business as
FLDH's property-development gross profit margin remained flat at
34% in 2018. Rental and property-management fees rose to 8% of
FLDH's total gross profit in 2018 from 5% in 2017, and generated a
68% gross profit margin.
Rising Recurring Income: Fitch estimates the group's recurring
EBITDA will continue to increase rapidly to provide strong support
to its interest servicing in 2019. FLDH doubled its rental and
property-management fee income to CNY2 billion in 2018 from the
operation of shopping malls (Wuyue Plaza), which are mainly located
in second- and third-tier cities. Recurring EBITDA/interest expense
paid increased to more than 0.3x in 2018 from 0.2x in 2017. Fitch
expects FLDH to generate around CNY4 billion in rental and
management fees in 2019, and recurring EBITDA/interest expense to
rise to above 0.4x after 2019.
DERIVATION SUMMARY
Fitch uses a consolidated approach to rate FLDH and Seazen, based
on its Parent and Subsidiary Rating Linkage criteria. The strong
strategic and operational ties between the two entities are
reflected by Seazen representing FLDH's entire exposure to the
China homebuilding business, while FLDH raises offshore capital to
fund the group's business expansion. The two entities share the
same chairman.
The group's leverage remained stable during its expansion phase
through prudent land bank acquisitions, with leverage after JV
proportionate consolidation of below 45% at end-2018, in line with
that of 'BB' peers. The company's quick sales-churn strategy and
geographically diversified land bank contributed to faster
expansion in contracted sales than at most 'BB' peers.
The group has a larger contracted sales scale and faster sales
churn than most 'BB' peers and its leverage is comparable with
peers. Both the group and CIFI Holdings (Group) Co. Ltd.
(BB/Stable) started their homebuilding business in Zhejiang
province and expanded nationwide. FLDH has larger contracted sales
scale and faster sales churn than CIFI, while the two entities'
margins are comparable. CIFI has maintained a high EBITDA margin
and lower leverage for longer than the FLDH group and has been
disciplined in maintaining stable leverage.
The group has larger scale, with a more diversified land bank
throughout the nation, and faster sales churn than 'BB-' peers,
such as China Aoyuan Group Limited (BB-/Positive), KWG Group
Holdings Limited (BB-/Stable) and Logan Property Holdings Company
Limited (BB-/Stable).
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Contracted sales to increase by 20% in 2019 and 2020
- EBITDA margin, after adding back capitalised interest, to be
maintained at about 25% in 2019-2020
- Total land premium to represent 40%-50% of contracted sales in
2019-2020
- Maintain a controlling shareholding in Seazen and for
operational ties between FLDH and Seazen not to weaken
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Consolidated net debt/adjusted inventory sustained below 35%
while maintaining an EBITDA margin of 20% or above
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Contracted sales/total debt below 1.5x for a sustained period
- Consolidated net debt/adjusted inventory above 45% for a
sustained period
- EBITDA margin below 18% for a sustained period
All ratios mentioned above are based on the parent's consolidated
financial data.
LIQUIDITY
Sufficient Liquidity: The group doubled its unrestricted cash
balance to CNY41 billion by end-2018, which is sufficient to cover
its short-term borrowings of CNY27 billion. The group repaid its
HKD2.3 billion convertible bond in early 2019.
PANDA GREEN: S&P Keeps CCC+ Issuer Credit Rating on Watch Negative
------------------------------------------------------------------
S&P Global Ratings kept the 'CCC+' issuer credit rating on the
China-based solar utility company, Panda Green Energy Group Ltd.
(PGE), and the 'CCC' long-term issue rating on PGE's senior
unsecured notes on CreditWatch with negative implications. The
ratings were first placed on CreditWatch on Dec. 12, 2018.
S&P Global Ratings said that the rating on PGE and its senior
unsecured notes remains on CreditWatch with negative implications.
S&P maintains its view that the China-based solar utility company's
cash resources are insufficient to meet its near term liquidity
needs, mostly related to its debt repayment obligation in the near
term. PGE has raised more than Chinese renminbi (RMB) 1 billion
through asset disposals and by placing shares. This, combined with
reported cash and pledged deposit amounting to RMB1.3 billion as of
end 2018, is still insufficient to meet the company's short-term
debt maturities, which S&P estimates at RMB4.7 billion (excluding
the short-term loan from Qingdao City Construction, which was
converted into PGE's shares in early 2019).
S&P estimates PGE's adjusted cash flow from operations to be
negative in 2018 and 2019, given prolonged renewable subsidy
settlements in China. The company also has RMB2.5 billion
equivalent in U.S.-dollar-denominated senior unsecured notes due in
January 2020, as well as certain onshore private placement notes
and corporate bonds potentially due in the second half of 2019, if
investors decide to exercise the put options on these securities.
Earlier this year, PGE received about RMB800 million of proceeds
from its share subscription. In March 2019, the company disposed of
82.4 megawatt solar farm projects in the U.K. for about £34
million (about RMB296 million). The company also disposed of a 17%
stake in one of its projects in China for RMB43 million.
Nevertheless, liquidity remains weak, given the company's
significant near-term debt maturities.
S&P said, "In resolving the CreditWatch, we will closely monitor
PGE's asset disposal plans, its renewable subsidy collection
process, the potential of receiving further support from
shareholders, and PGE's ability to pre-finance some of its upcoming
debt maturities well ahead of the maturity. We could lower the
rating in the absence of any meaningful development and clarity on
the refinancing plan in the near term."
XINYUAN REAL ESTATE: S&P Rates USD Sr. Unsecured Notes 'B-'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issue rating to the
U.S.-dollar-denominated senior unsecured notes proposed by Xinyuan
Real Estate Co. Ltd. (B/Negative/--). The issue rating is subject
to S&P's review of the final issuance documentation.
S&P said, "In our opinion, the new issuance is slightly credit
positive for Xinyuan, given the mild extension in its debt
maturity. The company will use the proceeds to refinance certain
existing offshore debt and for general corporate purposes. Xinyuan
will purchase its outstanding offshore senior notes due 2019 with
the proceeds from this proposed issuance.
"We also expect the new issuance, together with the company's
recent onshore bond issuance, to only moderately improve Xinyuan's
liquidity position, given that the company's short-term debt
accounted for close to 50% of its total debt at end-2018. That
said, we believe further improvement in Xinyuan's liquidity hinges
more on the smooth execution of its sales plan and disciplined land
acquisitions this year, given its small sales scale and land
reserve. Potential further weakening of the company's liquidity is
reflected in our negative rating outlook. A ratio of liquidity
sources over uses of less than 1.0x would indicate such weakness.
We could also lower the rating if Xinyuan's EBITDA interest
coverage falls below 1.5x."
S&P rates the proposed notes one notch lower than the issuer credit
rating on Xinyuan to reflect subordination risks because the notes
will rank behind a material amount of priority debt in the
company's capital structure. As of Dec. 31, 2018, Xinyuan's capital
structure consists of Chinese renminbi (RMB) 12 billion in secured
debt and RMB4 billion in unsecured debt at the subsidiary level,
altogether making up about 67% of total reported debt.
XINYUAN REAL: Fitch Gives B(EXP) Rating to New USD Sr. Unsec. Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Xinyuan Real Estate Co., Ltd.'s
(B/Negative) proposed US dollar senior unsecured notes an expected
'B(EXP)' rating and a Recovery Rating of 'RR4'.
Xinyuan's proposed notes are rated at the same level as its senior
unsecured rating because they constitute its direct, unsubordinated
and senior unsecured obligations under a guarantee. Xinyuan has
also proposed a concurrent tender offer of its 8.125% notes due
August 2019 (2019 notes). The maximum acceptance amount of the
tender is up to the lower amount of the outstanding 2019 notes and
the proposed new notes.
The final rating on the proposed notes is contingent on the receipt
of final documents conforming to information already received.
The Negative Outlook reflects Xinyuan's high leverage as the
company significantly increased land acquisitions to sustain its
operations, including expanding outside its established market of
Zhengzhou city in China's Henan province to mitigate regional
economic and policy risk. Fitch believes Xinyuan will slow its
acquisition pace, but there is inherent execution risk in launching
projects outside of established cities amid weakening market
sentiment, which may delay its deleveraging. In addition, Xinyuan's
margins are lower than those of similarly sized peers in the 'B'
rating category and the company's ratings are constrained by its
smaller contracted sales scale.
KEY RATING DRIVERS
Rapid Land Replenishment: Xinyuan's small land bank and short land
bank life have been insufficient to sustain the fast growth of its
contracted sales, leading the company to increase its leverage to
significantly accelerate land replenishment. The company's land
bank increased from 2.2 million sq m in 2016 to 5.7 million sq m in
2018. The ratio of land acquisitions/contracted sales, measured by
gross floor area (GFA), rose from 1.0x in 2016 to 2.1x in 2018.
Fitch estimates Xinyuan's land reserve life was more than four
years at end-2018, which is comparable with 'B' rated peers and
improves the sustainability of its business profile.
Xinyuan has begun to diversify into areas outside of Zhengzhou,
such as Jiangsu, Sanya and Wuhan, helping lower regional economic
and policy risks.
Leverage Surge: Xinyuan's leverage, denoted by net debt/adjusted
inventory, spiked to 57.1% in 2018 from 45% in 2016, to support its
land bank acquisitions. The company does not plan to acquire land
aggressively in 2019. A large batch of new land acquired in 4Q17
turned into contracted sales in 4Q18. This was partially negated by
a lower cash collection rate in 2018 as most of Xinyuan's project
launches were in late 2018. Fitch expects leverage to gradually
fall, but to stay above 50% in the medium term.
Slowdown in Contracted Sales: Xinyuan's contracted sales fell by 8%
to USD2.3 billion in 2018 (approximately CNY15 billion) after a 40%
increase in 2017. This missed the company's 18% growth guidance, as
a large part of sales occurred in December 2018 with down payments
that were less than 30% of the agreed amounts and GFA sold fell
22%. The sales at the end of the year were driven by robust market
sentiment in its core tier-2 cities and satellite cities close to
tier-1 cities, namely Zhengzhou, Jinan, Changsha and Kunshan. The
average selling price (ASP) growth of 18% yoy to CNY13,047 per sq m
in 2018 reflected the improved land-bank quality, with tier-2
cities accounting for around 80% of contracted sales.
Xinyuan diversified contracted sales to other regions in 1H18,
including Jiangsu province. The lower proportion of sales from
Zhengzhou, where it made more than half of its sales in 2017, helps
lower policy risk arising from regional concentration. However,
Fitch believes there is inherent execution risk in expanding sales
outside its core city, in light of its small operating scale and
weakening market sentiment. Any delay in project launches is likely
to slow the company's deleveraging.
Lower-than-Peer Margin: Fitch does not expect a significant
improvement in Xinyuan's EBITDA margin, which is likely to remain
below that of 'B' rated peers due to the company's limited
operating scale. However, Fitch expects its EBITDA margin to edge
higher in 2019, with a rising ASP for most of Xinyuan's projects on
sale in 2017 and 2018. Its EBITDA margin improved to around 25% in
2018 due to higher ASPs in core cities and recognition of US
projects.
Foreign-Exchange Risk: Xinyuan is more exposed to foreign-exchange
fluctuation risk than other Chinese developers, as its revenue is
mostly denominated in Chinese yuan, while its reporting currency is
in US dollars. Depreciation of the US dollar against the Chinese
yuan brought exchange gains of USD11.6 million in 1Q18, but this
turned into a USD21.3 million exchange loss in 2Q18 when the US
dollar appreciated against the Chinese yuan, causing a volatile
reported net profit. Xinyuan has a few residential projects in the
US, UK and other countries where revenue is not denominated in
Chinese yuan, but these projects will contribute less than 10% of
Xinyuan's sales, which is inadequate to mitigate the negative
effect of further potential Chinese yuan devaluation against the US
dollar.
DERIVATION SUMMARY
Xinyuan's business profile is comparable with other 'B' category
peers. Its rating is supported by solid sales and constrained by a
smaller contracted sales scale and low EBITDA margin.
In terms of financial profile, Xinyuan's contracted sales scale is
slightly larger than that of Beijing Hongkun Weiye Real Estate
Development Co., Ltd. (B/Stable). However, Xinyuan's leverage is
set to be significantly higher than that of Hongkun. In addition,
Xinyuan has a lower EBITDA margin, while sales churn is similar.
Xinyuan has slightly larger contracted sales but lower leverage
than Xinhu Zhongbao Co., Ltd. (B-/Stable). Xinyuan's churn rate is
faster than that of Xinhu, but at the expense of a significantly
lower EBITDA margin. Xinyuan's land bank is focused on tier-2
cities, while Xinhu's land bank is focused in Shanghai.
Compared with 'B-' rated peers, Xinyuan's contracted sales and
EBITDA scale are a few times larger than that of Hydoo
International Holding Limited (B-/Stable). Xinyuan's contracted
sales scale is larger than that of Oceanwide Holdings Co. Ltd.
(B-/Stable), while its leverage is lower. Xinyuan's churn rate is
also faster than that of Oceanwide.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Flat contracted sales ASP in 2019-2021 (2018:18%)
- 15% increase in contracted sales GFA sold on average in
2019-2021 (2018: -22%)
- Ratio of land acquisitions/contracted sales, measured by GFA,
gradually falling from 2.1x in 2018 to 1.0x by 2021
- Construction cost inflation of 2% in 2019-2021
- Land cost per sq m to rise by 5% in 2019-2021
Recovery Rating Assumptions
- Xinyuan will be liquidated in a bankruptcy because it is an
asset-trading company
- 10% administrative claim
- The 2019 notes to be fully refinanced by the proceeds from the
proposed bond issuance
The liquidation estimate reflects Fitch's view of the value of
inventory and other assets that can be realised and distributed to
creditors.
- Fitch applies a haircut of 40% to adjusted inventory
- Fitch applies a haircut of 25% to account receivables
Based on Fitch's calculation of the adjusted liquidation value,
after administrative claims of 10%, it estimates the recovery rate
of the offshore senior unsecured debt at 39%, which corresponds to
a Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Fitch does not anticipate developments that would lead to a rating
upgrade. However, developments that may, individually or
collectively, lead to the Outlook being revised to Stable include
the negative guidelines below not being met in the next 18 months.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Net debt/adjusted inventory rising above 50% for a sustained
period
- Contracted sales/total debt falling below 0.6x for a sustained
period
- EBITDA margin falling below 15% for a sustained period
LIQUIDITY
Adequate Liquidity: Xinyuan had cash and cash equivalents of USD772
million as of 2018 and restricted cash of USD416 million. Together
with undrawn credit facilities of around USD1.3 billion, this was
enough to cover short-term borrowings of USD1.7 billion (which
include the 2019 notes). Of the USD1.7 billion in short-term debt,
around USD200 million is classified as current debt, even though
they will not mature in 2019, because the debt has loan terms that
allow lenders to request early repayment. The company indicates
that there have not been requests for early repayment of these
types of loans. Holders of the bonds puttable in 2019 continued to
hold the bonds without asking for a step-up of the coupon rate.
=========
I N D I A
=========
ADVAITH BIO: ICRA Lowers Rating on INR6cr Loans to D
----------------------------------------------------
ICRA has revised the long-term rating to [ICRA]D ISSUER
NOT-COOPERATING from [ICRA]B- ISSUER NOT-COOPERATING for the
INR6.0-crore bank facilities of Advaith Bio Remedies. The rating
continues to remain in the 'Issuer Not Cooperating' category. The
rating is now denoted as "[ICRA]D ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 3.0 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Revised from [ICRA]B-(Stable)
and continues to remain under
'Issuer Not Cooperating'
Category
Fund-based- 3.0 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Revised from [ICRA]B-(Stable)
and continues to remain under
'Issuer Not Cooperating'
Category
As part of its process and in accordance with its rating agreement
with Advaith Bio Remedies, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 01, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Rationale
The rating downgrade follows the delays in debt servicing by
Advaith Bio Remedies to the lender, as confirmed by them to ICRA.
ICRA has limited information on the entity's performance since the
time it was last rated in April 2016 and the rating was moved to
the ISSUER NOT COOPERATING category in September 2017.
Key rating drivers
Credit challenges
Delay in debt servicing: The entity has delayed in meeting its
repayment obligations on its term loan.
Advaith Bio Remedies is a partnership firm based out of Bangalore
manufacturing herbal-based products for pharmaceutical and cosmetic
industry. The firm sells hair care, face care, baby care products
in cosmetic segment and products for diabetes, neurological, heart
diseases in pharmaceutical segment under the brand name BIO CARE.
It has its own research and development center and is closely
associated with laboratories in India like Bangalore Test House for
research and analysis to ensure high quality products. This ensures
sterilized raw material for highly sensitive Pharmaceutical and
Ayurveda formulations.
AJAY ENGICONE: ICRA Maintains 'D' Ratings in Not Cooperating
------------------------------------------------------------
ICRA said the rating for the bank facilities of Ajay Engicone Pvt.
Ltd. (AEPL) continues to remain in the 'Issuer Not Cooperating'
category. The rating is denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 0.28 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating continues to remain
under 'Issuer Not Cooperating'
category
Fund based- 1.25 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain
under 'Issuer Not Cooperating'
category
Non fund 8.47 [ICRA]D ISSUER NOT COOPERATING;
based-Bank Rating continues to remain
guarantee under 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Incorporated in March 1997, AEPL constructs and maintains roads,
dams, canals and bridges in the states of Jharkhand and Bihar. The
company is registered as a Class-I contractor with the Road
Construction Department, Jharkhand. In 1997, it took over the
entire business of the partnership firm - M/s Ajay Construction,
which had been in the same line of business since 1982.
BEST CROP: ICRA Withdraws B+ Rating on INR16cr Cash Loan
--------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Best Crop Science LLP (BCS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based-
Cash Credit 16.00 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating Withdrawn
Fund Based-
Term Loan 12.86 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating Withdrawn
Unallocated
Limits 1.14 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating Withdrawn
Non Fund Based 15.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating Withdrawn
Rationale
The ratings assigned to BCS have been withdrawn at its request and
based on the no objection certificate provided by its banker.
The firm was incorporated in 2009 as Best Crop Science Private
Limited (BCPL) and was primarily engaged in trading of diversified
agrochemicals. The company was converted into a limited liability
partnership firm with its current name in August 2015. The firm has
been promoted by Mr. Vimal Kumar, Mr. Rajkumar and Mr. Gaurav
Sharma. The firm is a part of the Best Agro Group which is into
diversified agrochemicals and serves Indian and exports markets
with a range of crop protection products, including insecticides,
herbicides, pesticides, fungicides, and plant nutrients. It has
acquired a new manufacturing unit at Gajraula, Uttar Pradesh, which
will commence manufacturing operations in FY2017.
C.S. INFRACONSTRUCTION: ICRA Withdraws D Rating on INR160cr Loans
-----------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
C.S. Infraconstruction Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Loan 5.0 [ICRA]D; withdrawn
Fund-based Limits 30.0 [ICRA]D; withdrawn
Non-fund Based
Limits 125.0 [ICRA]D; withdrawn
Rationale:
The rating is withdrawn in accordance with ICRA's policy on
withdrawal and suspension and at the request of the company based
on the no-objection certificate provided by its banker.
CSIL was set up as a partnership firm (Chhatrashakti Construction
Company) in 2002 by Shri Umashanker Singh and his friends. The
partnership firm was converted into a limited company on November
10, 2009. CSIL is involved in the road construction business and
has executed multiple projects in Uttar Pradesh offered by state
government bodies, primarily PWD.
In FY2018, the company on a provisional basis, reported a net loss
of INR14.7 crore on an operating income (OI) of INR197.8 crore
compared with a net profit of INR31.9 crore on an OI of INR406.2
crore in the previous year (FY2017).
CYBERWALK TECH: ICRA Withdraws 'D' Ratings on INR160cr Loans
------------------------------------------------------------
ICRA withdrawn the ratings on certain bank facilities of
Cyberwalk Tech Park Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Loan 5.0 [ICRA]D; withdrawn
Fund-based Limits 30.0 [ICRA]D; withdrawn
Non-fund Based
Limits 125.0 [ICRA]D; withdrawn
Rationale:
The rating is withdrawn in accordance with ICRA's policy on
withdrawal and suspension and at the request of the company based
on the no-objection certificate provided by its banker.
CSIL was set up as a partnership firm (Chhatrashakti Construction
Company) in 2002 by Shri Umashanker Singh and his friends. The
partnership firm was converted into a limited company on November
10, 2009. CSIL is involved in the road construction business and
has executed multiple projects in Uttar Pradesh offered by state
government bodies, primarily PWD.
In FY2018, the company on a provisional basis, reported a net loss
of INR14.7 crore on an operating income (OI) of INR197.8 crore
compared with a net profit of INR31.9 crore on an OI of INR406.2
crore in the previous year (FY2017).
DHANALAKSHMI SRINIVASAN: ICRA Assigns D Rating to INR28cr Loan
--------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Dhanalakshmi
Srinivasan Charitable and Educational Trust, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 28.00 [ICRA]D; Assigned
Term Loan
Rationale
The assigned rating reflect the delays in meeting interest and
principal repayment obligations by the trust on bank loans due to
tight liquidity position arising from the mismatch in cash flows
between lumpy fee collections and periodical debt repayment
obligations. The debt levels have increased over years which have
been availed for undertaking large capital expenditure in the past.
The group's financial profile is weak characterised by cash losses,
stretched capital structure and coverage indicators. The rating
also considers the intense competition in the industry, and
presence of regulatory risks in having to comply with the standards
set by regulatory bodies, for the educational institutions. Going
forward, the group's ability to generate higher accruals would be
key to meet its debt repayment obligations.
Key rating drivers
Credit challenges
Delays in servicing debt obligations: There are delays in debt
repayment obligations (both interest and principal) of the trust.
Weak Financial risk profile and constrained liquidity: Owing to
large debt funded capex in the recent years, the group has elevated
debt levels, which coupled with net losses has resulted in
stretched capitalisation and coverage indicators with consolidated
gearing of 12.2 times as on March 31, 2018 and consolidated
TD/OPBITDA of 18.7 times for FY2018. With steady losses, the
group's liquidity position is tight and accordingly there are
delays in servicing interest and principal obligations.
Intense competition and regulatory risks: The group is exposed to
intense competition from other educational institutions / hotels in
the vicinity. Moreover, the education sector in India remains
highly regulated and the group's earnings remain vulnerable to
regulatory risks.
Liquidity Position:
The group's liquidity profile remains constrained by presence of
cash losses and high debt repayment obligations. The liquidity
position is expected to be constrained going forward as well, until
a turnaround happens in the group's operations.
DS group of trusts namely Dhanalakshmi Srinivasan Charitable and
Educational Trust (DSCET), Srinivasan Health and Educational
Trust(SHET), Srinivasa Charitable and Educational Trust (SCET) were
established in 1994 by Mr. Srinivasan, with the objective of
running charitable and educational institutions. Dhanalakshmi
Srinivasan Hotels Private Limited (DSHPL) was incorporated in 2008.
The group has 19 colleges, 2 hospitals, 3 schools and one 68 key
hotel.
In FY2018, on a consolidated basis, the group reported a net loss
of INR48.2 crore on an operating income of INR276.0 crore, as
compared to a net loss of INR16.2 crore on an operating income of
INR273.7 crore in the previous year.
ECOREX BUILDTECH: ICRA Withdraws C+ Rating on INR15cr Loans
-----------------------------------------------------------
ICRA has withdrawn the long-term rating of [ICRA]C+ and short-term
rating of [ICRA]A4 assigned to the INR20.00-crore bank facilities
of Ecorex Buildtech Private Limited (EBPL).
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 2.00 [ICRA]C+; Withdrawn
Cash Credit
Fund-based 15.00 [ICRA]C+; Withdrawn
Limits-OD
Against
Tangible
Security
Untied Limits 3.00 [ICRA]C+/[ICRA]A4; Withdrawn
Rationale
The rating is withdrawn in accordance with ICRA's policy on
withdrawal and suspension and as desired by the company.
Key rating drivers
Key Rating drivers has not been captured as the rated instrument is
being withdrawn.
Liquidity Position
Information was not available on the liquidity position of the
rated entity.
Incorporated in 2012, Ecorex Buildtech Private Limited (EBPL) has a
Autoclaved Aerated Concrete (AAC) blocks manufacturing unit with an
installed capacity of 150,000 cubic metre per annum at Bhurwadih
Khurd village near Raipur, Chhattisgarh. The company sells AAC
blocks under the brand name 'Ecorex'. The manufacturing operations
of the unit started in December 2014.
GANDHI ENTERPRISES: ICRA Lowers Rating on INR50.95cr Loan to D
--------------------------------------------------------------
ICRA has downgraded the long-term rating to [ICRA]D 'ISSUER NOT
COOPERATING' from [ICRA]BB- (Stable) 'ISSUER NOT COOPERATING' and
has also downgrade the short term rating to [ICRA]D 'ISSUER NOT
COOPERATING', from [ICRA]A4 'ISSUER NOT COOPERATING', for the fund
based bank facilities of INR50.95 crore of Gandhi Enterprises
(GENTP). The rating continues to be in the 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based limits 50.95 [ICRA]D/[ICRA]D ISSUER NOT
COOPERATING; downgraded from
[ICRA]BB- (Stable)/[ICRA]A4;
Rating continues to be in
'Issuer not cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Rationale
The rating downgrade follows the delays in debt servicing by Gandhi
Enterprises to the lender, as confirmed by them to ICRA.
Key rating drivers
Credit challenges
Delays in debt servicing: Delays in debt servicing owing to
stretched liquidity position.
Liquidity Position: The liquidity position of the company is
expected to remain stretched owing to delays in debtors'
realisations.
Mr. Mahendra Gandhi and his two cousins, Mr. Bhupendra Gandhi and
Mr. Chandresh Gandhi, established M/s. Gandhi Enterprises in 1984
as a partnership firm. The principal business of this firm is to
export CPD. Concurrently, the Gandhi family also set up M/s Chayya
Gems for the CPD business. Mr. Mahendra Gandhi was the senior
partner of both these firms, and over the years, most of the
business was routed through M/s Chayya Gems. In FY2006, Mr.
Mahendra Gandhi and Mr. Chandresh Gandhi decided to part ways with
M/s Chayya Gems. Subsequent to the separation, both cousins
concentrated their efforts on promoting the business of M/s. Gandhi
Enterprises till FY2011. In FY2012, GENTP's business was further
split into two companies—Gandhi Enterprises and Akshar Impex
Private Limited (AIPL). Currently, GENTP's business is driven by
Mr. Mahendra Gandhi, while AIPL is managed by Mr. Chandresh Gandhi.
GENTP operates its CPD business through facilities in Gujarat
(Surat, Ahmedabad and Vishnagar), while its head office is in
Mumbai.
GAYATH INDUSTRIES: ICRA Assigns 'B+' Ratings to INR7cr Loans
------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Gayath
Industries, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-
Fund-based 3.40 [ICRA]B+ (Stable); Assigned
Long-term-
Unallocated 3.60 [ICRA]B+ (Stable); Assigned
Rationale
The assigned rating is constrained by Gayath Industries' modest
scale of operation, which restricts benefits arising from the
economies of scale. The rating also considers the moderate net
worth position of the firm and the same is exposed to the risk of
profit or capital withdrawals associated with its proprietorship
nature. The rating takes into consideration the expected weakening
of the firm's capital structure owing to the sizeable debt-funded
capital expenditure envisaged in the near term towards expansion of
its manufacturing facility. Nonetheless, the capital expansion is
likely to support its ability to scale up operations at a healthy
pace with the expected receipt of sizeable orders from new
customers and steady improvement in order flow from its existing
customers. The rating derives comfort from the extensive experience
of the promoter in the precision-machined components industry for
over two decades and the firm's extensive and proven operational
track record in the business, which facilitated in establishing
strong association with its key customers and suppliers. The rating
considers the firm's healthy profitability because of its control
over the manufacturing cost, aided by advanced technology machinery
in place and supported by considerable proportion of its revenues
derived from job-work operations. The rating also considers the
firm's comfortable coverage indicators on the back of adequate
operational cash flows.
Outlook: Stable
The Stable outlook reflects ICRA's expectation that Gayath
Industries will continue to benefit from the promoters' extensive
experience in the precision-machined components segment and its
proven operational track record. The outlook may be revised to
Positive if the company scales up its operations significantly
while maintaining its profit margins and efficiently managing its
working capital requirements. The outlook may be revised to
Negative, if cash accruals are lower than expected and result in
weakening of its debt coverage indicators or if any stretch in the
working capital cycle weakens the firm's liquidity.
Key rating drivers
Credit strengths
Extensive experience of the promoter in the precision components
business: The firm's promoter, Mr. Muthu P, has an established
presence of over two decades in the precision-machined components
business. Gayath Industries' extensive presence in the business and
the promoter's vast experience enabled the firm in establishing a
strong association with its key customers and suppliers.
Comfortable profitability and coverage indicators: The firm's
profitability has been healthy in the past, supported by the firm's
manufacturing facility, which is equipped with advanced technology
machinery that facilitated in better operational efficiency.
Besides, considerable proportion of revenues derived from
margin-accretive job-work operations (nearly 50% of its operating
income in general) has also supported the firm's profitability. The
firm's coverage indicators have also been comfortable in the past,
aided by adequate cash flows from operations on the back of its
healthy profitability.
Credit challenges
Modest scale of operations restricts economies of scale benefits:
The firm's modest scale of operations, as characterised by an
operating income (OI) of INR7.44 crore in FY2018, restricts the
benefits arising from the economies of scale. Nevertheless, the
expected receipt of sizeable orders from newly acquired customers
and steady improvement of order flow from its existing customers
are likely to support the firm's revenue growth.
Moderate financial profile: Gayath Industries' net worth position
remains low and its working capital cycle is adversely impacted by
the stretched receivables. Besides, given the sizeable debt-funded
capital expenditure envisaged by the firm in the near term towards
enhancement of its manufacturing facility, its capital structure
and coverage indicators are expected to weaken to some extent.
Risk of profit and capital withdrawal: The firm is exposed to the
risk of profit or capital withdrawals associated with its
proprietorship status, as witnessed in the past.
Liquidity position
Gayath Industries' liquidity position is tight with limited buffer
in its working capital facilities and modest cash balances
maintained by the firm. Any stretch in its receivables position is
likely to result in further deterioration of the firm's liquidity
position.
Gayath Industries was established in 2006, with Ms. Latha Muthu as
its proprietor. The firm manufactures precision-machined
engineering components such as windmill components, railway coach
couplers, tunnel boring machine components, value components and
manifolds, among others. The day-to-day operations are managed by
Mr. Muthu P, who has an extensive experience of over two decades in
the precision components segment.
The firm reported a profit after tax (PAT) of INR0.52 crore on an
Operating Income (OI) of INR7.44 crore in FY2018 compared to a PAT
of INR0.98 crore on an OI of INR6.22 crore in the previous year.
IL&FS LTD: SFIO Arrests Former Chairman Sankaran
------------------------------------------------
Reuters reports that India's Serious Fraud Investigation Office
(SFIO) has arrested the former chairman of debt-laden
Infrastructure Leasing and Financial Services Limited (IL&FS) in
connection with an ongoing investigation into the lender, a
government official said on April 1.
Hari Sankaran, the former chairman and managing director of IL&FS,
was arrested for "abusing his powers in IL&FS Financial Services
Ltd through his fraudulent conduct" and will be in SFIO's custody
until April 4, the official told Reuters on condition of
anonymity.
IL&FS, a major infrastructure financing and construction company,
has a total debt of INR910 billion (US$12.97 billion) and has been
trying to sell its assets to repay debt after several defaults
forced the government to overhaul its management.
Sankaran granted loans to entities, which were not creditworthy or
have been declared non-performing assets, causing wrongful loss to
the company and its creditors, the official added, Reuters relays.
IL&FS Financial Services had borrowings of more than INR170 billion
(US$2.46 billion) from debt instruments, bank loans and other
investment firms, the official said.
A third of the total outstanding loans by a unit of IL&FS to
borrowers were either unsecured or had inadequate collateral, a
Grant Thornton India audit of the firm reported last month, Reuters
discloses.
Bad loans at Indian banks reached a record $150 billion at the end
of March, with state-run banks accounting for the lion's share. The
huge pile of bad debt has hurt the bottom lines of state-run banks
and hindered their ability to issue new loans.
About IL& FS
Infrastructure Leasing & Financial Services Limited (IL&FS)
operates as an infrastructure development and finance company in
India. It focuses on the development and commercialization of
infrastructure projects, and creation of value added financial
services. The company operates in Financial Services,
Infrastructure Services, and Others segments. Its Financial
Services segment engages in the commercialization of
infrastructure; investment banking, including corporate finance,
advisory, capital market, and other financial services; and
securities trading, venture capital, and trusteeship operations.
As reported in the Troubled Company Reporter-Asia Pacific on Oct.
3, 2018, the Indian Express said that the government on Oct. 1
stepped in to take control of crisis-ridden IL&FS by moving the
National Company Law Tribunal (NCLT) to supersede and reconstitute
the board of the firm which has defaulted on a series of its debt
payments over the last one month. This was said to be an attempt to
restore the confidence of financial markets in the credibility and
solvency of the infrastructure financing and development group.
INDURE PRIVATE: ICRA Lowers Ratings on INR1,650cr Loans to D
------------------------------------------------------------
ICRA has downgraded the long term rating of fund based bank
facilities of Indure Private Limited (IPL) to [ICRA]D ISSUER NOT
COOPERATING from [ICRA]BB- ISSUER NOT COOPERATING. ICRA has also
downgraded the short term rating of non-fund based bank facilities
of IPL to [ICRA]D ISSUER NOT COOPERATING from [ICRA]A4 ISSUER NOT
COOPERATING. The rating continues to be in the 'Issuer Not
Cooperating' category. The rating is now denoted as "[ICRA]D ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 250.00 [ICRA]D ISSUER NOT COOPERATING;
downgraded from [ICRA]BB-
(Negative); rating continues
to be in 'Issuer not
cooperating' category
Non-Fund Based 1,400.00 [ICRA]D ISSUER NOT COOPERATING;
Limits downgraded from [ICRA]A4;
rating continues to be in
'Issuer not cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity,
despite the downgrade.
Rationale
The rating downgrade follows the delays in debt servicing by IPL to
the lenders, as confirmed by them to ICRA.
IPL is a part of the Desein-Indure Group of Companies and was
promoted by late Mr. O. P. Gupta in 1970. Since its establishment,
IPL has been associated with installation of over 230 ash handling
plants catering to a total generating capacity of more than 70,000
MW. Over years Indure has also established its presence in
international market by executing turnkey contracts in Australia,
Vietnam, Indonesia and Malaysia. Since 2002, the company has been
involved in EPC contracting for complete power plants and balance
of plant packages by entering in consortium bidding/execution of
EPC with focus on Balance of plant (BoP) and where in BHEL/Tata
projects did BTG activities and Reliance Energy undertook Civil
part.
JALANNAGAR DEVELOPMENT: ICRA Assigns D Rating to INR10cr Loans
--------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Jalannagar
Development Pvt. Ltd.'s (JDPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based-
working capital
facilities 5.61 [ICRA]D assigned
Fund-based-
term loan 3.11 [ICRA]D assigned
Unallocated
Limits 1.28 [ICRA]D assigned
Rationale
The assigned rating considers the company's stretched liquidity
position due to cash losses incurred during the last three years,
which led to irregularity in repayment of term loan from September
2018. ICRA has also considered the sustained deterioration in the
company's cost structure resulting from a significant increase in
employee costs following revision in the wage rate of tea workers
in Assam. The rating also considers the risk associated with tea
for being an agricultural commodity due to dependence of the volume
and quality of the harvest on agro-climatic conditions. Besides,
inherent cyclicality of the fixed-cost intensive tea industry leads
to variability in profitability and cash flows of bulk tea
producers. Additionally, JDPL small scale of operations and
geographical concentration of its tea estates in Assam, intensify
risks for the company. ICRA also notes that Indian tea is
essentially a price taker in the international market and hence
global supply-demand dynamics would continue to have a bearing on
domestic price levels, to an extent.
ICRA, however, notes the significant experience of JDPL's
management in the tea industry and the superior quality of its tea,
commanding a premium over the industry averages. Going forward,
regularisation of debt servicing and improvement in the company's
profitability and cash flows would be the key rating
sensitivities.
Key rating drivers
Credit strengths
Significant experience of the management in the tea industry: JDPL
is a relatively small player in the tea industry, however, the
promoters have long experience in the business. The promoters have
been able to establish JDPL as a producer of good quality crush,
tear, curl (CTC) variety of tea.
Good quality of tea evident from the significant premium commanded
by its produce compared to industry averages: The average
realisation of the company's tea increased from INR162 per kg in
FY2017 to INR174 per kg in FY2018, which was at a premium of over
20% than the North Indian auction averages, indicating superior
quality of JDPL's tea. During April 2018 to January 2019, the
average realisation of the company's tea stood at INR186 per kg
compared to INR177 per kg during the corresponding period of the
previous year and continued to command a significant premium over
the North Indian auction prices.
Credit challenges
Stretched liquidity position due to significant cash losses led to
irregularity in debt servicing: Significant cash losses during the
last three years adversely impacted the company's liquidity
position. This led to a depletion of the company's liquid
investments and delays in repayment of term loan from September
2018.
Weak financial risk profile: JDPL's turnover and profitability have
been adversely impacted from FY2016 due to a decline in tea
production post FY2015, a significant increase in input costs and
unfavourable market prices of tea. Thus, the company has
continuously incurred losses during the last three years, resulting
in a significant erosion of its tangible net worth and depressed
debt coverage metrics. ICRA notes that tea production as well as
average realisation of the company's tea have improved in the
current financial year till date. However, an adverse cost
structure, mainly due to increased labour costs, is likely to
result in a net loss and depressed debt coverage indicators in
FY2019 as well.
Risks associated with tea for being an agricultural commodity: The
profitability and cash flows of bulk tea producers remain volatile
owing to the risks associated with tea for being an agricultural
commodity as the production volume and quality of tea depend on
agro-climatic conditions. Such risk is accentuated because of the
presence of both the gardens in the Upper Assam region. The
company's tea production declined by around 12% to 6.74 lakh kg in
FY2018 from 7.67 lakh kg in FY2017 owing to lower crop produced on
the back of adverse weather conditions and pest attacks. Although
the age profile of bushes remains favourable with over 90% of the
bushes being in the productive age group of 5-50 years, the average
productivity declined to 1,444 kg per hectare in FY2018 from 1,743
kg per hectare in the previous year.
Prices of Indian tea, in spite of its better quality, remain
vulnerable to price fluctuation in the international market: Prices
of domestic tea, despite its better quality, are impacted by
international prices to some extent. Hence, the demand-supply
situation in the global tea market, in ICRA's opinion, would
continue to have a bearing on the profitability of Indian players,
including JDPL.
Liquidity position
The company's liquidity position remained stretched due to
continuous cash losses during the last three years. This led to a
depletion of the company's liquid investments and delays in
repayment of term loan in the recent past. ICRA notes that the
average utilisation of the company's sanctioned working capital
limit also remained high at 96% during April 2018 to December
2018.
Jalannagar Development Private Limited (JDPL), incorporated in
April 1950, has two tea estates: Chota Tingrai Tea Estate and
Tingamira Tea Estate located in Tinsukia and Doomdooma districts of
Assam, respectively. The tea estate covers an area of around 427
hectares under cultivation of tea. JDPL primarily produces CTC
variety of black tea, which accounted for 93% of the company's
total tea production of 6.74 lakh kg in FY2018. In July 2016, JDPL
commenced its green tea manufacturing facility. The production of
green tea increased in FY2018 to 0.46 lakh kg from 0.33 lakh kg in
FY2017, though the same contributed only 7% to the company's total
tea production in FY2018.
JANA SMALL: ICRA Lowers Rating on INR750cr NCDs to B+
-----------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Jana Small Finance Bank Limited (JSFB, rated [ICRA]BBB-), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-convertible 750.00 PP-MLD [ICRA]B+ (Negative);
Debentures revised from PP-MLD
[ICRA]BB- (Stable)
Rationale
The revision in rating considers the deterioration in credit risk
profile of JSFB and increase in JHL's leverage; its gearing
increased to 0.8x as on February 28, 2019 compared to 0.6x as on
March 31, 2018 following the additional debt raise of about INR300
crore during Q3 and Q4 FY2019, which has been in turn infused as
equity in JSFB.
JHL is the non-operating financial holding company (NOFHC) of JSFB,
with a 44.4% stake as of February 2019. JSFB commenced banking
operations in March 2018 after it received licence from RBI to
setup small finance bank (SFB) in April 2017. The rating factors in
JHL's limited financial flexibility, its significant dependence on
JSFB's performance and the sensitive nature of the rated instrument
to any adverse changes in JSFB's valuation, given that the NCDs are
expected to be redeemed primarily from the sale of encumbered
shares of JSFB and JHL's parent, Jana Capital Limited (JCL). The
rating however draws comfort from the flexible structure of the
rated instrument with no committed annual coupons during the tenure
of the instrument.
Outlook: Negative
The Negative outlook factors the continued expected weakness in
JSFB's earnings and capital profile. The rating would be downgraded
further if JSFB's credit profile deteriorates or if JHL's or its
parent entity's leverage increases. The outlook would be revised to
stable in case of a steady revival in JSFB's performance and as
JHL' leverage moderates.
Key rating drivers
Credit strengths
Holding company of JSFB, which has a geographically diversified
presence: With a portfolio size of INR7,373 crore as on December
31, 2018, JSFB has a diversified portfolio with a presence in 18
states and two union territories across India with top 3 states
(Tamil Nadu, Karnataka and Maharashtra) accounted for 51.2% of its
portfolio as on November 30, 2018. JSFB commenced operations as a
small finance bank from March 28, 2018. Apart from group loans, the
bank offers individual loans like small business loans (nano and
super-nano), enterprise loans and housing loans among others, which
constituted the rest. The bank intends to scale up its exposure to
micro, small, and medium enterprises and housing finance, which
would support portfolio diversification over the medium term. As on
November 30, 2018, small batch loans (group loans) accounted for
71.2% of its portfolio of INR7,164 crore followed by nano loans
(8.6%), agri loans (7.2%) and loans to micro and small enterprises
(7.1%).
Credit challenges
Limited financial flexibility and increase in leverage: JHL has
limited financial flexibility given the unlisted nature of JSFB and
the low income expectation (dividend income) from JSFB over the
tenure of the debentures. The proceeds of these NCDs (INR 958 crore
till February 2019) were infused as compulsorily convertible
preference shares (CCPS) into JSFB (CCPS was later converted into
equity). The NCDs are secured by a) JSFB's shares held by JHL, over
and above the 40% regulatory requirement to be held by an NOFHC in
an SFB for five years and b) shares of JCL, to the extent of 33%,
held by Jana Urban Foundation. The redemption of these NCDs depends
on the valuations of JSFB and JCL at the time of maturity. Of the
two entities, JSFB is expected to be listed before the maturity of
the NCDs while JCL would remain unlisted.
ICRA also notes that, while JHL can borrow up to 125% of its net
worth (78% as of February 2019), its refinancing ability would be
constrained as it has to seek concurrence from current NCD holders
to raise any further debt (beyond an additional amount of INR10
crore). Accordingly, the company sought and received approval from
its existing NCD holders (TPG Asia VI SF Pte. Ltd, Caladium
Investment and Edelweiss) which has led to increase in borrowings
from INR658 crore as on March 31, 2018 to INR958 crore as on
February 28, 2019. As part of this additional debt raise, TPG Asia
VI SF Pte. Ltd has subordinated its debt at JHL to Edelweiss and
Caladium Investments and is on par with the new lenders onboarded
(Manipal Group and Centrum Group). However, considering the various
restrictions, including the majority domestic shareholding
requirement at JCL and JSFB, the ability to offload the shares in a
timely manner and at a reasonable valuation would be crucial.
Continued deterioration in JSFB's performance: JSFB's asset quality
has remained weak with 90+ dpd2 at 31.7% (INR2,336.4 crore
excluding write-off and INR3,264.4 crore including write-off) as on
December 31, 2018 compared to INR3,270.6 crore3 in March 2018
(including write-off) (INR 1,990 crore in March 2017) because of
modest collections from the overdue buckets and limited impact of
the various recovery programmes, thus far. ICRA takes note of the
bank's efforts to improve collections through various measures
including augmenting its collections field force, introducing
settlement programmes, engaging collection agencies and acting via
the legal route against delinquent borrowers. Nevertheless,
recoveries from harder buckets (455+ delinquencies) have remained
lower than expected. Against the estimated monthly principal
recoveries of about INR15-30 crore from the 455+ days bucket in
Q2FY2019, the bank's estimated recoveries were in the range of
INR8-10 crore. ICRA estimates the total provision/write-off for
FY2019 to be around INR1,400-1,500 crore, though this could
increase if the recoveries do not improve.
For H1 FY2019, JSFB reported pre-provision operating loss of
INR291.0 crore owing to operating inefficiencies attributed to a
sharp reduction in the performing loan book. The trend in operating
losses continued during Q3 FY2019 with operating loss of INR155
crore (as per unaudited results; operating loss of INR446 crore in
9M FY2019). This, along with credit costs of INR1,211 crore during
9M FY2019 has resulted in loss before taxes of INR1,658 crore
(compared to credit cost and loss before tax of INR1,000.8 crore
and INR1,291.8 crore respectively in H1 FY2019). ICRA expects
JSFB's net losses to be in the range of INR2,000 crore for FY2019.
Given the current suboptimal scale of its operations, ICRA notes
that the operating losses are expected to continue in FY2020 if the
bank does not scale up its advances book or if the operating
efficiencies do not improve further.
JSFB's capital profile is characterised by net worth and gearing of
INR413 crore and 17.1x respectively (as per unaudited results) as
on December 31, 2018 (compared to INR1,529 crore and 5.0 times,
respectively, as of March 2018). During the 9M FY2019, the bank
raised capital of INR451 crore; however, despite the same the
gearing has deteriorated significantly owing to substantial losses
during the period.
Risks related to adverse movement in JSFB's valuation: NCDs issued
(INR958 crore) are to be redeemed at the base IRR of 16.5% with a
cap of 25%, depending upon JSFB's valuation at the time of
redemption over the current valuation. This makes the instrument
highly sensitive to any adverse movement in JSFB's valuation as the
NCDs are expected to be redeemed primarily from the sale of shares
of JSFB on listing and from dividend income to be received from
JSFB. Additionally, JSFB will remain exposed to risks related to
adverse share price movements post the listing event, which in turn
may impact JCL's valuation.
Liquidity Position
JHL's liquidity position remains weak with entire fund raise at JHL
being down-streamed as equity capital into JSFB. However, flexible
structure of the rated instrument with no committed annual coupons
during the tenure of the instrument provides comfort.
Parent/Group Support
Rating factors in performance of Jana Small Finance Bank Limited
(rated [ICRA]BBB- (negative)) in which JHL held 44.4% as on
February 28, 2019. Consolidation / Standalone Rating is based on
standalone financial statements of the company
Incorporated on March 10, 2016, Jana Holdings Limited (JHL) is a
non-banking finance company: non-operative financial holding
company (NBFC-NOFHC), with a 44.4% stake in Jana Small Finance Bank
Limited ([ICRA]BBB- (negative)) as on February 28, 2019. The
company received its certificate of registration from the RBI on
January 27, 2017.
JHL is a wholly-owned subsidiary of Jana Capital Limited (JCL),
which is a non-deposit taking Systematically Important Core
Investment Company registered with the RBI. Jana Urban Foundation
holds a 43.9% stake in Jana Capital Limited, foreign investors hold
a 48.7% and domestic investors the rest.
In FY2018, JHL reported a net loss of INR41.7 crore on a total
managed asset base of INR1,889.6 crore as against a net profit of
INR12.1 crore on a total managed asset base of INR1,233.2 crore
during FY2017.
MOSER BAER: Sawasdee Group Acquires Land in Noida
-------------------------------------------------
Business Standard reports that the Sawasdee Group has acquired
Moser Baer India's 60,000 sq metre land through an online auction
for INR72 crore, the Noida-based real estate group said on
March 27.
Business Standard relates that the group, formally known as the
Galaxy Group, has been developing residential and commercial
projects in Greater Noida (West) and has now acquired this land
parcel in Noida's Sector 80, the group said in a statement.
"The deal is part of the e-auction, where Moser Baer India Ltd's
liquidation was ordered by the National Compnay Law Tribunal
(NCLT). We have purchased these assets for a value of INR72 crore
with other expenses," the report quotes Sawasdee Group Chairman
Pradeep Kumar Agrawalla as saying.
According to the report, the Sawasdee Group was declared the
successful bidder on March 26, and 25 per cent of the total amount
was paid within 24 hours, as per the terms of the auction. The rest
of the amount will be paid within 15 days, the group said in a
statement.
"The total size of the land is approx 60,000 sq metre and is an
industrial plot. Due to the financial crisis in Moser Baer India,
NCLT ordered its liquidation and the land was put to auction
through liquidator firm, facilitating the entire e-auction
process," it said.
Business Standard says the entire bid amount would be self-funded
by the group which soon plans to launch an industrial project at
the location that will create a lot of employment opportunities.
"With connectivity easing towards Noida and Jewar airport (coming
up soon), the industrial growth will be humongous at Noida in
coming times. We have already paid 25 per cent of the value of the
auctioned plot and will pay the rest amount as per the terms of the
auction. The entire investment would be self-funded and we will be
raising no debt to finance the project," Business Standard quotes
Mr. Agrawalla as saying.
About Moser Baer
MBIL, promoted in 1983 by Mr. Deepak Puri, began manufacturing time
recorder units in technical collaboration with Maruzen Corporation,
Japan, and Moser Baer Sumiswald, Switzerland. MBIL diversified
into optical data storage in 1986, and has evolved into the leading
manufacturer of removable data storage media such as floppy disks,
compact discs (CDs), and digital versatile discs (DVDs). MBIL is
India's largest, and among the world's three largest optical
storage media manufactures, with a capacity to manufacture 4.8
billion discs per annum at its manufacturing facilities at Noida
and Greater Noida (both in Uttar Pradesh).
The Honorable National Company Law Tribunal has allowed the
liquidation of Moser Baer India Limited in September 2018.
SAROJA AVIATION: ICRA Assigns B- Rating to INR29cr LT Loan
----------------------------------------------------------
ICRA has assigned rating to the bank facilities of Saroja Aviation
Limited (SAL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term loan 29.0 [ICRA]B- (Stable); assigned
Rationale
The assigned rating takes into account the high counter party
credit risk for SAL, which has leased its aircraft, Boeing 737-800,
MSN 37960, to Jet Airways (India) Limited (Jet Airways, rated
[ICRA]D/[ICRA]D). Owing to the weak credit profile of the lessee,
Jet Airways, which is facing severe liquidity issues, SAL has not
received the lease rentals since November 2018. Furthermore, SAL
does not have any other source of revenue, resulting in significant
dependence on Jet Airways for its business operations. Timely
inflow of lease rentals thus remains critical given the short time
gap (six-seven days) between the receipt of lease rentals and
scheduled repayment obligations.
The assigned rating also factors in the diversified business
profile of SAL's promoter Group (Tulshyan Group) which has infused
unsecured loans of ~US $ 1.3 million since November 2018 in SAL,
thereby enabling the latter to meet its scheduled debt repayment
obligations (term loan installment and interest payments) on time.
ICRA expects the promoter Group to continue to provide financial
support to SAL until it starts receiving the lease rentals from Jet
Airways on time or leases the aircraft to another airline. This is
a key rating sensitivity. Improvement in the credit profile of the
lessee (Jet Airways), thereby facilitating timely inflow of lease
rentals is critical for improvement in the credit profile of the
company.
Outlook: Stable
ICRA expects SAL to benefit from the diversified business profile
of its promoters with experience in leasing business. The outlook
may be revised to Positive in case of an improvement in the credit
profile of the lessee, leading to timely receipt of lease rentals
for SAL. The rating may be downgraded in case of any delay in funds
infusion by the promoter Group in SAL, resulting in delays in
servicing scheduled repayment obligations.
Key rating drivers
Credit strengths
Diversified business profile of the promoter Group: Mr. Rakesh
Shankarlal Tulshyan is the ultimate beneficiary of the company. He
is the promoter of the Tulshyan Group having presence in
diversified businesses such as ship breaking, ship owning/leasing
and real estate.
Financial support from the promoters, enabling timely servicing of
debt obligations: Mr. Rakesh Shankarlal Tulshyan is the ultimate
beneficiary of the company. He is the promoter of the Tulshyan
Group, having presence in diversified businesses such as ship
breaking, ship owning/leasing and real estate. Due to delays in
receipt of lease rentals from the lessee, the promoter Group has
infused unsecured loans of ~US $ 1.3 million since November 2018 in
SAL, thereby enabling the latter to meet its scheduled debt
repayment obligations (term loan installment and interest payments)
on time.
Credit challenges
Weak credit profile of the lessee: SAL has leased its aircraft,
Boeing 737-800, MSN 37960, to Jet Airways (rated [ICRA]D /
[ICRA]D). Owing to the weak credit profile of Jet Airways, which
has been facing severe liquidity issues, SAL has not received the
lease rentals from Jet Airways since November 2018.
Short time gap between receipt of lease rentals and scheduled
repayment obligations: Apart from lease rental income, SAL does not
have any other business, resulting in its significant dependence on
Jet Airways for its operations. Thus, timely inflow of lease rental
remains critical given the short time gap (six-seven days) between
the receipt of lease rentals and scheduled repayment obligations.
Expiry of aircraft lease agreement in October 2021, exposing SAL to
redeployment/renewal risk: The lease agreement with Jet Airways
will expire in October 2021. Any delays in renewal of the lease
agreement with Jet Airways or redeployment of its aircraft with
some other airline will impact the financial profile of SAL.
Liquidity position
The company has a term loan of US $ 29.0 million outstanding as on
January 31, 2019. The non-receipt of lease rentals from Jet Airways
since November 2018 has resulted in stretched liquidity for SAL.
However, the promoters have infused US $ 1.3 million in the last
few months to enable the company to service its scheduled debt
obligations on time. In the current scenario of weak credit profile
of the lessee, SAL's servicing of debt obligations is critically
dependent on the timely funds infusion by the promoter Group.
Incorporated in March 2017, SAL is engaged in the business of
aircraft leasing. As on date, the company owns one aircraft, Boeing
737-800, MSN 37960, which has been leased to Jet Airways till
October 2021. The company is managed by a Board of Directors and
does not have any employees. Administrative activities such as
maintenance of books and records are primarily outsourced to Canyon
Corporate and Trust Solutions Limited. BOC Aviation (lreland)
Limited act as the servicer and provides operational and technical
support services to the Company. Ratna Saroj Inc. holds 100% stake
in the company, with Mr. Rakesh Shankarlal Tulshyan as the ultimate
beneficiary.
SRINIVASAN CHARITABLE: ICRA Assigns D Rating to INR175cr Loan
-------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Srinivasa
Charitable and Educational Trust (SCET), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based
Term Loan 175.00 [ICRA]D; Assigned
Rationale
The assigned rating reflect the delays in meeting interest and
principal repayment obligations by the trust on bank loans due to
tight liquidity position arising from the mismatch in cash flows
between lumpy fee collections and periodical debt repayment
obligations. The debt levels have increased over years which have
been availed for undertaking large capital expenditure in the past.
The group's financial profile is weak characterised by cash losses,
stretched capital structure and coverage indicators. The rating
also considers the intense competition in the industry, and
presence of regulatory risks in having to comply with the standards
set by regulatory bodies, for the educational institutions. Going
forward, the group's ability to generate higher accruals would be
key to meet its debt repayment obligations.
Key rating drivers
Credit challenges
Delays in servicing debt obligations: There are delays in debt
repayment obligations (both interest and principal) of the trust.
Weak Financial risk profile and constrained liquidity: Owing to
large debt funded capex in the recent years, the group has elevated
debt levels, which coupled with net losses has resulted in
stretched capitalisation and coverage indicators with consolidated
gearing of 12.2 times as on March 31, 2018 and consolidated
TD/OPBITDA of 18.7 times for FY2018. With steady losses, the
group's liquidity position is tight and accordingly there are
delays in servicing interest and principal obligations.
Intense competition and regulatory risks: The group is exposed to
intense competition from other educational institutions / hotels in
the vicinity. Moreover, the education sector in India remains
highly regulated and the group's earnings remain vulnerable to
regulatory risks.
Liquidity Position:
The group's liquidity profile remains constrained by presence of
cash losses and high debt repayment obligations. The liquidity
position is expected to be constrained going forward as well, until
a turnaround happens in the group's operations.
DS group of trusts namely Dhanalakshmi Srinivasan Charitable and
Educational Trust (DSCET), Srinivasan Health and Educational
Trust(SHET), Srinivasa Charitable and Educational Trust (SCET) were
established in 1994 by Mr. Srinivasan, with the objective of
running charitable and educational institutions. Dhanalakshmi
Srinivasan Hotels Private Limited (DSHPL) was incorporated in 2008.
The group has 19 colleges, 2 hospitals, 3 schools and one 68 key
hotel.
In FY2018, on a consolidates basis, the group reported a net loss
INR48.2 crore on an operating income of INR276.0 crore, as compared
to a net loss of INR16.2 crore on an operating income of INR273.7
crore in the previous year.
SRINIVASAN HEALTH: ICRA Assigns D Rating to INR181cr Term Loan
--------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Srinivasan
Health and Educational Trust (SHET), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based
Term Loan 181.00 [ICRA]D; Assigned
Rationale
The assigned rating reflect the delays in meeting interest and
principal repayment obligations by the trust on bank loans due to
tight liquidity position arising from the mismatch in cash flows
between lumpy fee collections and periodical debt repayment
obligations. The debt levels have increased over years which have
been availed for undertaking large capital expenditure in the past.
The group's financial profile is weak characterised by cash losses,
stretched capital structure and coverage indicators. The rating
also considers the intense competition in the industry, and
presence of regulatory risks in having to comply with the standards
set by regulatory bodies, for the educational institutions. Going
forward, the group's ability to generate higher accruals would be
key to meet its debt repayment obligations.
Key rating drivers
Credit challenges
Delays in servicing debt obligations: There are delays in debt
repayment obligations (both interest and principal) of the trust.
Weak Financial risk profile and constrained liquidity: Owing to
large debt funded capex in the recent years, the group has elevated
debt levels, which coupled with net losses has resulted in
stretched capitalisation and coverage indicators with consolidated
gearing of 12.2 times as on March 31, 2018 and consolidated
TD/OPBITDA of 18.7 times for FY2018. With steady losses, the
group's liquidity position is tight and accordingly there are
delays in servicing interest and principal obligations.
Intense competition and regulatory risks: The group is exposed to
intense competition from other educational institutions / hotels in
the vicinity. Moreover, the education sector in India remains
highly regulated and the group's earnings remain vulnerable to
regulatory risks.
Liquidity Position:
The group's liquidity profile remains constrained by presence of
cash losses and high debt repayment obligations. The liquidity
position is expected to be constrained going forward as well, until
a turnaround happens in the group's operations.
DS group of trusts namely Dhanalakshmi Srinivasan Charitable and
Educational Trust (DSCET), Srinivasan Health and Educational Trust
(SHET), Srinivasa Charitable and Educational Trust (SCET) were
established in 1994 by Mr. Srinivasan, with the objective of
running charitable and educational institutions. Dhanalakshmi
Srinivasan Hotels Private Limited (DSHPL) was incorporated in 2008.
The group has 19 colleges, 2 hospitals, 3 schools and one 68 key
hotel.
In FY2018, on a consolidates basis, the group reported a net loss
48.2 crore on an operating income of INR276.0 crore, as compared to
a net loss of INR16.2 crore on an operating income of INR273.7
crore in the previous year.
WELCOME DISTILLERIES: ICRA Cuts Rating on INR15cr Loan to B+
------------------------------------------------------------
ICRA has downgraded the long-term rating to [ICRA]B+ ISSUER NOT
COOPERATING from [ICRA]BB+ ISSUER NOT COOPERATING and short-term
rating to [ICRA]A4 ISSUER NOT COOPERATING from [ICRA]A4+ for the
bank facilities of Welcome Distilleries Private Limited (WDPL). The
outlook on the long-term rating is Stable. The ratings continue to
remain under ISSUER NOT COOPERATING category and are now denoted
as: "[ICRA]B+ (Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund Based- 15.00 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; downgraded from
[ICRA]BB+ (Stable); Rating
continues to remain in the
'Issuer Not Cooperating'
category
Fund Based- 1.80 [ICRA]B+ (Stable) ISSUER NOT
Stand by line COOPERATING; downgraded from
of credit [ICRA]BB+ (Stable); Rating
continues to remain in the
'Issuer Not Cooperating'
category
Non Fund Based- 2.00 [ICRA]A4 ISSUER NOT
Bank Guarantee COOPERATING; downgraded from
[ICRA]A4; Rating continues to
remain in the 'Issuer Not
Cooperating' category
Untied Limits 13.20 [ICRA]B+ (Stable)/[ICRA]A4
ISSUER NOT COOPERATING;
downgraded from [ICRA]BB+
(Stable)/[ICRA]A4+; Rating
continues to remain in the
'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Rationale
The downward revision in the ratings takes into account a petition
filed by an operational creditor against Welcome Distilleries Pvt.
Ltd. (WDPL) and the same being admitted by National Company Law
Tribunal (NCLT). The ratings continue to be constrained by the ban
on the production, sale and consumption of alcohol in Bihar,
adversely impacting the operations of the company. The ratings,
however, derive comfort from the long experience of the promoters
in the liquor industry.
Outlook: Stable
ICRA believes that the company will continue to benefit from the
experience of the promoters in the liquor industry.
Key rating drivers
Credit strengths
Experience of the promoters: The promoters of the company have a
long experience in the liquor industry.
Credit challenges
Risk arising from the admission of insolvency proceedings before
NCLT: The company is likely to face additional challenges, owing to
a petition filed by an operational creditor against Welcome
Distilleries Pvt. Ltd. (WDPL) and the same being admitted by
National Company Law Tribunal (NCLT).
Susceptibility to the changes in the Government's policies, given
the highly regulated nature of the industry: The ban imposed by
Government of Bihar on production, sale and consumption of country
liquor in the state has adversely impacted the operations of the
company.
Liquidity position
Information was not available on the liquidity position of the
rated entity.
Incorporated in 1986, Welcome Distilleries Private Limited (WDPL)
is promoted by Chhattisgarh-based Jaiswal family. The company is
involved in distillery business and operates a molasses/grain-based
distillery unit to manufacture RS, CL, ENA and IMFL. The
manufacturing facility of the company is located in Bilaspur
district of Chhattisgarh with an installed capacity of 60 kilo
litres per day (KLPD). The company had set up a unit at Rohtas,
Bihar for processing and packaging of country liquor, which became
operational in March 2015.
=================
I N D O N E S I A
=================
PAN INDONESIA: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDR) of Indonesia-based PT Bank Central Asia Tbk (BCA) at 'BBB'
and P.T. Bank Pan Indonesia Tbk (Panin) at 'BB'. At the same time,
Fitch Ratings Indonesia has affirmed the National Long- and
Short-Term Ratings on BCA and its subsidiary, PT BCA Finance
(BCAF). The Outlooks are Stable.
'AAA(idn)' Long-Term National Ratings denote the highest ratings
assigned by Fitch on its national rating scale for that country.
This rating is assigned to issuers or obligations with the lowest
expectation of default risk relative to all other issuers or
obligations in the same country.
'F1(idn)' Short-Term National Ratings indicate the strongest
capacity for timely payment of financial commitments relative to
other issuers or obligations in the same country. Under the
agency's National Rating scale, this rating is assigned to the
lowest default risk relative to others in the same country. Where
the liquidity profile is particularly strong, a "+" is added to the
assigned rating.
KEY RATING DRIVERS
IDRS, VIABILITY RATINGS AND NATIONAL RATINGS
BCA's IDRs, Viability Rating and National Ratings reflect its
leading and entrenched industry position as well as strong credit
fundamentals compared with those of domestic peers, which are
underpinned by its low-risk transactional banking business model
and management focus. Fitch expects these fundamentals to remain
favourable relative to domestic peers and comparable with
higher-rated banks in other emerging markets. BCA's performance
continues to benefit from high margins thanks to its large
lower-cost current and savings deposit base, which accounted for
77% of total deposits in 2018.
BCA's profitability and asset quality, as reflected in its return
on assets of 3.3% and non-performing loan ratio of 1.4%,
respectively, remain stable and superior against those of local
peers, even in softer economic times. BCA's Fitch Core Capital
ratio of 22.7% at end-2018 was one of the highest among peers,
supported by strong internal capital generation.
Panin's IDRs and Viability Rating reflect its moderate funding
profile, weakening asset quality and modest earnings, which are
lower than those of higher-rated Indonesian banks. This is
counterbalanced by a solid capitalisation position, with a Fitch
Core Capital ratio of 22.8% at end-2018. The assessment also
captures the bank's domestic franchise as a family-controlled
mid-sized bank. Panin's weaker funding profile compared with larger
peers is reflected in its lower proportion of lower-cost current
and savings deposits (end-2018: 37%, industry: 56%), while its
deteriorating asset quality is reflected in its
higher-than-industry average non-performing loan ratio of 3.0% at
end-2018 (2017: 2.8%, industry 2.4%) The bank's modest
profitability is highlighted in below-industry-average return on
assets of 1.5% (industry: around 2.0%).
SUPPORT RATINGS AND SUPPORT RATING FLOORS
The Support Ratings and Support Rating Floors for BCA and Panin
reflect Fitch's view of a moderate probability of extraordinary
state support being made available, if needed. Fitch believes the
banks are systemically important to Indonesia, as BCA and Panin are
Indonesia's third- and seventh-largest banks by assets,
respectively. BCA's higher Support Rating Floor reflects Fitch's
view of its greater systemic importance as the country's
transactional banking leader, with a larger market share of
industry assets (end-2018: 10.2%) relative to Panin (2.8%).
SUBSIDIARY RATING
BCAF's National Ratings reflect Fitch's expectation of a strong
probability of support from its parent in times of need. Fitch sees
BCAF as a core subsidiary supporting BCA's business expansion in
Indonesia's consumer-financing market. BCAF's important role in
managing its parent's entire portfolio of car loans makes it
integral to BCA's consumer-business chain. The car loan portfolio
constituted a significant 34% of BCA's consumer loans at end-2018.
BCA's support is manifested in the common brand name it shares with
BCAF and the provision of funding and operational alignment, such
as utilisation of BCA's branch network. Business referrals from BCA
are also significant, at around 40% of BCAF's new financing.
ISSUE RATINGS
BCAF's senior bonds are rated at the same level as its National
Long-Term Rating in accordance with Fitch criteria, as they
represent its direct and senior obligations and rank equally with
all its other senior obligations. Fitch has withdrawn the National
Long- and Short-Term Ratings on BCAF's debt programme, as it has
expired.
RATING SENSITIVITIES
IDRS, VIABILITY RATINGS AND NATIONAL RATINGS
BCA's ratings are sensitive to changes in its operating environment
and the bank's ability and strategy to manage it - especially if
the environment were to weaken. Deeper and less volatile financial
markets as well as sustained economic improvement could trigger an
upgrade of BCA's Viability Rating and, in turn, its IDR, if it
maintains or strengthens its lower-than-peer risk appetite and
above-peer financial profile. There is no rating upside for BCA's
National Ratings, as they are already at the highest point on the
scale. The bank's ratings are sensitive to a considerable change in
its business model, including greater risk appetite. However, Fitch
does not believe this prospect to be likely in the near-term
because of management's prudent approach, especially with regards
to asset quality, core capitalisation and liquidity.
For Panin, rapid and above-peer loan expansion, which could
negatively affect its capital and funding position in a difficult
economy, may result in a downgrade of its Viability Rating.
However, as Panin's IDR is at the same level as its Support Rating
Floor, the IDR would not be affected by a downgrade of its
Viability Rating unless considerations underpinning its Support
Rating Floor also weaken. Sustained improvement in Panin's funding
profile, asset quality and profitability would be positive for its
Viability Rating.
SUPPORT RATINGS AND SUPPORT RATING FLOORS
A change in Fitch's view of the government's ability and
willingness to provide extraordinary support would affect the
banks' Support Ratings and Support Rating Floors.
SUBSIDIARY RATING
Any significant dilution in BCA's ownership or perceived weakening
of support for its subsidiary would exert downward pressure on
BCAF's ratings, including the possibility of multi-notch
downgrades. However, Fitch sees this prospect as remote in light of
BCAF's core role in BCA's consumer-business strategy. There is no
rating upside, as the ratings are already at the highest point on
the scale.
ISSUE RATINGS
Any changes in BCAF's National Long-Term Ratings would affect its
issue ratings.
The full list of rating actions is as follows:
BCA:
Long-Term IDR affirmed at 'BBB'; Outlook Stable
Short-Term IDR affirmed at 'F3'
National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Viability Rating affirmed at 'bbb'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB+'
Panin:
Long-Term IDR affirmed at 'BB'; Outlook Stable
Short-Term IDR affirmed at 'B'
Viability Rating affirmed at 'bb'
Support Rating affirmed at '3'
Support Rating Floor affirmed at 'BB'
BCAF:
National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
National Long-Term Rating on senior bond programme of 'AAA(idn)'
withdrawn
National Short-Term Rating on senior bond programme of 'F1+(idn)'
withdrawn
National Long-Term Rating on tranches under the programme affirmed
at 'AAA(idn)'
=====================
N E W Z E A L A N D
=====================
SOCIAL MEDIA: Owes More Than NZ$670,000, Liquidator Says
--------------------------------------------------------
NZ Herald reports that Social Media Consultants, the company that
until recently owned the Whale Oil blog, owes creditors at least
NZ$670,986, liquidator Victoria Toon of Corporate Restructuring
says in her first report.
Social Media Consultants was put into voluntary liquidation on
March 29, NZ Herald discloses.
NZ Herald says Whale Oil founder Cameron Slater owned Social Media
Consultants until last month, when he transferred his shares to his
wife Juana Atkins.
At the same time, a new company was set up called Wobh Ltd, with
Atkins as the sole shareholder, on February 13.
According to NZ Herald, Mr. Slater declared bankruptcy on
February 27, saying a stroke had left him debilitated and unable to
work on his blog.
In her report, Ms. Toon - who could not be immediately reached for
comment - said Social Media Consultants has NZ$856 cash in the
bank.
"The value of the business lies in the brand "Whale Oil", the
associated blog and the domain name [website address]," she writes,
NZ Herald relays.
However, it is not clear at this point whether Social Media
Consultants or the new Wobh Ltd own any intangibles.
They were not listed on Social Media Consultants financial records,
and were transferred to other companies prior to the liquidation
(Atkins is also now the sole shareholder in a number of other
companies set up by the couple, including Frog Rock Management and
The Whale Meat Company), NZ Herald says.
NZ Herald relates that Mr. Toon said she has been advised that the
blog is being maintained by volunteers in the interim. It has more
than 300 paid subscribers, she says.
The liquidator says she has already fielded several offers for the
blog. However, ownership and valuation issues have to be resolved
before the site can be sold, she says.
At this stage, Ms. Toon said she doesn't have enough information to
say if creditors are likely to be paid, NZ Herald adds.
NZ Herald discloses that those owed money include former
Conservative Party leader Colin Craig, who took a successful
defamation case against Slater and businessman Matthew Blomfield,
who was embroiled in legal action against the Whale Oil blogger
(ultimately in Blomfield's favour) between 2002 and February this
year - making it New Zealand's longest-running defamation case.
Other creditors include Spark, Vodafone, Voyager, ACC, IRD and
Brian Henry's Chambers.
=================
S I N G A P O R E
=================
EZION HOLDINGS: Yinson to Buy Controlling Stake in Company
----------------------------------------------------------
Seatrade Maritime News reports that Malaysia's Yinson has announced
that it will take a controlling stake in Singapore's Ezion Holdings
via a proposed deal that includes shares subscription and debt
conversion.
Seatrade relates that Yinson Eden, wholly-owned by FPSO operator
Yinson, is in "advanced stage of discussions" with certain lenders
of Ezion to acquire up to $916 million of its existing loans.
"Tentatively, Yinson expects its cash outlay shall be in the region
of $200 million and some Ezion shares that will give Yinson Eden a
shareholding of not less than 70% in Ezion at the point of
completion of the proposed debt conversion and subscription," Kuala
Lumpur-listed Yinson stated, Seatrade relays.
"In any event, assuming all convertible securities of Ezion are
converted, Yinson expects its eventual shareholding in Ezion shall
be a controlling stake of at least 51%," it added.
According to Seatrade, the relevant debts equivalent to up to $916
million will be capitalised and converted to Ezion shares at an
issue price of SGD0.055 ($0.040) each.
Seatrade relates that Yinson Eden has also entered into a
conditional option agreement for the grant of approximately 3.36
billion unlisted and freely transferable share options in Ezion,
each carrying the right to subscribe for one new ordinary share at
an exercise price of SGD0.0605, or a total of SGD203.3 million.
Singapore-listed Ezion, which owns and charters offshore assets,
has net liabilities of $254.8 million and is in a net loss position
of $344.3 million for the financial year ended
Dec. 31, 2018.
Ezion has a total of 64 offshore assets comprising 12 liftboats, 17
rigs, five OSVs and 30 tugs and barges.
"The proposed acquisition of Ezion is a complementary acquisition,"
Yinson said.
"Post-acquisition, Yinson would be able to increase its range of
vessels offering as well as venturing into the liftboat segment.
With customers of both Yinson and Ezion from the oil and gas
industry, Yinson believes that synergies and cross selling
opportunities could be achieved with the enlarged entity," it
said.
Yinson noted reports that the offshore oil and gas production is
projected to increase going forward. Recent rig utilisation had
improved as a result of consolidation, rig retirements and
increased production activities. However, conditions are still
challenging with rates in general remaining low and the significant
oversupply of OSVs could continue to plague the sector.
"Nevertheless, Yinson believes that Ezion, post restructuring, as
one of the largest liftboat operators in Asia, is well positioned
to compete for chartering business for the offshore oil and gas
industry in the Asian region," Yinson said, Seatrade relays.
Singapore-based Ezion Holdings Limited --
http://www.ezionholdings.com/-- engages in investment holding and
provision of management services. The Company, along with its
subsidiaries, specializes in the development, ownership and
chartering of offshore assets to support the offshore energy
markets. Its segments include Production and maintenance support,
which is engaged in owning, chartering and management of rigs and
vessels involved in the production and maintenance phase of the oil
and gas industry; Exploration and development support, which is
engaged in owning, chartering and management of rigs and vessels
involved in the exploration and development phase of the oil and
gas industry, and Others, which includes assets or investments
involved in renewable energy and other oil and gas related
industry. The Company owns a fleet of multipurpose self-propelled
service rigs. It owns a fleet of service rigs in Southeast Asia for
use in offshore oil and gas industry, and offshore wind farm
industry.
HYFLUX LTD: Fall Adds to Roster of Business Stumbles in Singapore
-----------------------------------------------------------------
David Yong at Bloomberg News reports that Hyflux Ltd. will put its
debt restructuring plan to vote this week, leaving its fate in the
hands of unsecured creditors. Whatever the outcome, it will mark
another entry in the list of fallen Singapore companies, the report
says.
According to Bloomberg, the Singapore water-treatment and power
group is seeking to fix S$2.8 billion (US$2.1 billion) of
liabilities by asking senior lenders to accept haircuts of some 75
percent and junior retail investors of about 90 percent on their
claims. In an April 5 vote on the plan, the creditors will either
hand control of Hyflux over to a consortium of Indonesian
businessmen, or push the group closer to liquidation, Bloomberg
says.
Bloomberg reports that elsewhere this week in news on Singapore
companies that had previously stumbled, investors were told of the
potential for new foreign owners in the city-state's troubled
offshore oilfield services industry. Malaysian group Yinson
Holdings Bhd. is planning to take over Ezion Holdings Ltd., while
New York-listed Seaspan Corp. is proceeding with a plan to buy
Swiber Holdings Ltd.'s core assets.
In recent history, several home-grown regional champions have also
found new owners with financial power amid liquidity challenges,
Bloomberg states.
Chinese corporations have bought over semiconductor assembler STATS
ChipPac in 2015, while French group CMA CGM SA acquired container
liner Neptune Orient Lines Ltd. in the following year. Like Hyflux,
both counted state investment company Temasek Holdings Pte. as a
former investor, the report notes.
About Hyflux
Singapore-based Hyflux Ltd -- https://www.hyflux.com/ -- provides
various solutions in water and energy areas worldwide. The company
operates through two segments, Municipal and Industrial. The
Municipal segment supplies a range of infrastructure solutions,
including water, power, and waste-to-energy to municipalities and
governments. The Industrial segment supplies infrastructure
solutions for water to industrial customers.
As reported in the Troubled Company Reporter-Asia Pacific on May
24, 2018, Hyflux Ltd. said that the Company and five of its
subsidiaries, namely Hydrochem (S) Pte Ltd, Hyflux Engineering Pte
Ltd, Hyflux Membrane Manufacturing (S) Pte. Ltd., Hyflux Innovation
Centre Pte. Ltd. and Tuaspring Pte. Ltd. have applied To the High
Court of the Republic of Singapore pursuant to Section 211B(1) of
the Singapore Companies Act to commence a court supervised process
to reorganize their liabilities and businesses.
The Company said it is taking this step in order to protect the
value of its businesses while it reorganises its liabilities.
The Company has engaged WongPartnership LLP as legal advisors and
Ernst & Young Solutions LLP as financial advisors in this process.
INTERPLEX HOLDINGS: S&P Withdraws 'BB-' Issuer Credit Rating
------------------------------------------------------------
S&P Global Ratings withdrew its 'BB-' long-term issuer credit
rating on Interplex Holdings Pte. Ltd. at the issuer's request.
The stable outlook at the time of withdrawal indicates that the
company's master sale and purchase agreements will continue to
support revenue visibility and margins predictability, resulting in
an annual EBITDA of US$110 million-US$130 million over the next two
years. At the time of withdrawal, we expect the company's adjusted
debt-to-EBITDA ratio to be 3.6x-4.0x in 2019 (year ending June 30)
and 3.5x-3.8x in 2020.
Interplex is a Singapore-based manufacturer of customized and
high-precision interconnects and sensors.
*********
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 2019. 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.
*** End of Transmission ***