/raid1/www/Hosts/bankrupt/TCRAP_Public/190513.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, May 13, 2019, Vol. 22, No. 95
Headlines
A U S T R A L I A
CANBRON DEVELOPMENTS: First Creditors' Meeting Set for May 17
ETA AUSTRALIA: S&P Assigns B Issuer Credit Rating, Outlook Stable
FRIENDS FAMILY: First Creditors' Meeting Set for May 17
GOLDSKY GLOBAL: Court Rules Cos. Ran Unlicensed Financial Services
IMPULSE RETAILING: First Creditors' Meeting Set for May 21
KOBE JONES: First Creditors' Meeting Set for May 17
LYON SOLAR: First Creditors' Meeting Set for May 15
PICTON PRESS: Hearing on ATO Case Moved Until Later This Month
SECTOR GROUP: First Creditors' Meeting Set for May 17
SFG EMPLOYMENT: First Creditors' Meeting Set for May 16
SOLOMONS MINES: First Creditors' Meeting Set for May 17
STONE CLIFF: Court Declines to Order Probe Into Sydney Liquidators
C H I N A
LESHI INTERNET: Listing Suspended as Delisting Looms
I N D I A
AHUJA AUTOMOBILES: CARE Maintains D Rating in Not Cooperating
BABA BHUMAN: CARE Maintains B Rating in Not Cooperating Category
BALAJI POLYCOT: CARE Keeps BB- Rating in Not Cooperating Category
ERA INFRASTRUCTURE: ICICI Bank's Insolvency Petition Tossed
GAJANAN INDUSTRIES: Insolvency Resolution Process Case Summary
GVR ASHOKA: Ind-Ra Cuts Sr. Proj. Term Loan Rating to 'D'
HT GLOBAL: Moody's Affirms CFR & $368MM Senior Notes at 'Ba3'
IMPACT LEASING: CARE Reaffirms BB- Rating on INR5.50cr Loan
JAYPEE INFRATECH: Lenders Ask NBCC to Withdraw Some Clauses
JET AIRWAYS: Lenders May Re-initiate Rescue Talks with Tata
JET AIRWAYS: SBI Receives Two Unsolicited Bids for Airline
LALCHAND GEM: Ind-Ra Withdraws BB+ Issuer Rating on INR200MM Loan
NAKSHATRA CREATIONS: CARE Assigns BB- Rating to INR7cr LT Loan
P.K. METAL: CARE Rates INR6.45cr Loan Rating at B+, Outlook Stable
RATNAKAR ISPAT: Ind-Ra Withdraws BB- LT, Non-Cooperating Rating
RELIANCE INFRATEL: Insolvency Resolution Process Case Summary
SACHDEV STEEL: CARE Assigns D Rating to INR10.33cr LT Loan
SAMRUDDHI REALTY: Insolvency Resolution Process Case Summary
SAPS INFRASTRUCTURE: Insolvency Resolution Process Case Summary
SHARWIN COTTEX: CARE Keeps B+ Rating in Not Cooperating Category
SHREE GANPATLAL: Ind-Ra Maintains BB LT Rating in Non-Cooperating
SHRI LAXMI: CARE Keeps BB- Rating in Not Cooperating Category
SILVEROAK COMMERCIALS: Insolvency Resolution Process Case Summary
SPLENDID METAL: CARE Keeps D Rating in Not Cooperating Category
SRI VENKATESWARA: CARE Keeps D, Not Cooperating Rating
SRINIVASA EDIFICE: CARE Keeps BB Rating in Not Cooperating Category
TAGORE EDUCATIONAL: CARE Keeps D, Not Cooperating Rating
UMANG BOARDS: CARE Reaffirms BB+ Rating on INR41.39cr Loans
[*] INDIA: Srinivas Says NBFCs Sector Faces "Imminent Crisis"
I N D O N E S I A
ABM INVESTAMA: Moody's Cuts CFR & $350MM Senior Unsec. Notes to B1
M A L A Y S I A
SERBA DINAMIK: Fitch Rates $300MM Sukuk due 2022 Final 'BB-'
N E W Z E A L A N D
RIOT FOODS: Co-Founder Wants to Return to Run the Company
S I N G A P O R E
HYFLUX LTD: In Talks with Oyster Bay as New Potential White Knight
V I E T N A M
VIETNAM: Fitch Affirms 'BB' Long-Term IDR, Alters Outlook to Pos.
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A U S T R A L I A
=================
CANBRON DEVELOPMENTS: First Creditors' Meeting Set for May 17
-------------------------------------------------------------
A first meeting of the creditors in the proceedings of Canbron
Developments Pty Ltd will be held on May 17, 2019, at 11:30 a.m. at
the offices of Farnsworth Shepard, at Level 5, 2 Barrack Street, in
Sydney, NSW.
Benjamin Michael Carson of Farnsworth Shepard was appointed as
administrator of Canbron Developments on May 7, 2019.
ETA AUSTRALIA: S&P Assigns B Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to ETA
Australia Holdings III Pty Ltd. (MYOB). S&P also assigned its 'B'
issue ratings to the company's A$920 million term loan B and A$50
million revolving credit facility (RCF). The recovery ratings on
these facilities are '3', reflecting meaningful (50%-70%; rounded
estimate: 60%) recovery prospects in a payment default.
The rating on MYOB principally reflects the company's established
brand and incumbent position in the niche accounting software
market in Australia and New Zealand. Tempering these strengths are
the company's highly leveraged capital structure, significant
competition from rival cloud-based players, execution risks
associated with migrating legacy desktop customers to the cloud,
and limited product and geographic diversity.
MYOB's highly leveraged capital structure is a constraint on the
rating. S&P expects pro forma S&P Global Ratings-adjusted leverage
to be in the mid-10x to low-11x range over the next two years post
the capital transaction given the company's reinvestment
objectives. Excluding the impact of the A$443 million shareholder
loan, which S&P treats as debt, it forecasts adjusted leverage to
be approximately 7.5x.
Supporting the 'B' rating is S&P's expectation that MYOB will
generate meaningful revenue growth over the next 12-24 months and
sustain EBITDA cash interest coverage above 2x (excluding the
shareholder loan). Further supporting the rating is MYOB's
relatively capital-light operating model and S&P's expectations
that the company will generate sustainably positive free operating
cash flow (FOCF) during its period of elevated investment
spending.
S&P said, "Also constraining the rating is MYOB's ownership by
financial sponsor Kohlberg Kravis Roberts & Co L.P. (KKR). Having
said that, we expect KKR to remain committed to MYOB's existing
growth strategy, including retaining the company's senior
leadership team. Importantly, we note that KKR is reinvesting
earnings in organic long-term growth opportunities and not pursuing
an aggressive short-term cost-out strategy.
"We treat the company's A$443 million redeemable preference shares
(RPSs) as debt. However, we note that these instruments do display
some equity-like characteristics, such as not paying cash coupons;
structural subordination to senior debt; and ownership by funds
controlled by KKR. Furthermore, we reclassify MYOB's research and
development (R&D) expenditure as an operating expense, given our
view that it represents a recurring cost to the business. While our
analytical treatment of the RPSs and R&D expenditure increases
adjusted leverage, we note that neither affects free cash flow
generation.
"Our assessment of MYOB's business risk reflects the company's
narrow product offering, limited geographic diversification, and
significant competitive threats. MYOB's relatively late adoption of
cloud-based technologies is somewhat offset by its established
brand and incumbent market position. That said, we believe that
MYOB has a credible strategy to migrate the more than 400,000
nonpaying desktop users to paying cloud-based services. This
includes an elevated period of investment as the company augments
its software development functions and bolsters its sales and
marketing efforts. Our rating also incorporates the risk that this
migration will result in elevated rates of customer churn."
MYOB's appeal among accounting practices is likely to be a key
determinant of success. This is because accounting practices tend
to promote a single software platform to their small to medium
enterprise (SME) clients. Cloud-based technologies have rapidly
improved the analytical capabilities of accounting software,
allowing accountants to spend less time on rudimentary compliance
and more time on value-add advisory services. To this end, it is
important that MYOB continues to invest in product innovation that
supports advisory services and the integration of SME end-users.
S&P said, "We believe that MYOB has a competitive product offering.
However, the current market dynamic requires MYOB to continually
innovate in end-user functionality and usability, including the
integration of third-party software applications. We also believe
that MYOB is well-positioned to participate in payment solutions
that have the potential to generate steady recurring income over
time. While we view some of the increased investment as
nondiscretionary as MYOB seeks to close the technological gap, we
nevertheless believe that the level of reinvestment is sufficient
to stabilize market share and support revenue growth.
"We view a data or cybersecurity breach as a material event risk,
given the magnitude and sensitivity of confidential data held by
the company. The impact of a breach could result in reputational,
legal, and/or financial damage that could impinge on the overall
creditworthiness of the business. That said, MYOB has a robust
security framework, which should help protect against
cyber-attacks.
"The stable outlook reflects our view that MYOB will generate
sustained revenue growth, driven by increased product innovation as
well as its bolstered sales and marketing efforts.
"We expect EBITDA growth to remain subdued over the next few years
given the company's reinvestment objectives and our treatment of
R&D as an operating expense. Nevertheless, we expect FOCF to remain
positive during the peak investment period, supported by the
company's low capital intensity and improving levels of recurring
income.
"We could lower the rating if an erosion of market share or reduced
profitability result in negative FOCF, or if EBITDA interest
coverage (excluding the shareholder loan) is sustained below 2x. We
could also lower the rating if corporate activity results in debt
to EBITDA increasing above 7.5x (excluding the shareholder loan)."
More immediate downward rating pressure could occur if capital is
returned to either common or noncommon equity holders, unless it is
supported by the company's underlying financial performance.
S&P considers an upgrade to be unlikely given MYOB's current
ownership structure and organic growth objectives.
FRIENDS FAMILY: First Creditors' Meeting Set for May 17
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Friends
Family Practice Pty Ltd, trading as 'Mannat Residency Inn' &
'wagonga St Medical Clinic' will be held on May 17, 2019, at 11:00
a.m. at the offices of Mackay Goodwin, at Level 2, 10 Bridge
Street, in Sydney, NSW.
Grahame Robert Ward of Mackay Goodwin was appointed as
administrator of Friends Family on May 7, 2019.
GOLDSKY GLOBAL: Court Rules Cos. Ran Unlicensed Financial Services
------------------------------------------------------------------
The Queensland Supreme Court made declarations that Goldsky Global
Access Fund Pty Ltd, Goldsky Asset Management Australia Pty Ltd and
Goldsky Investments Pty Ltd (the Goldsky entities), companies which
Kenneth Charles Grace is the sole Director and a shareholder of,
have breached the Corporations Act by operating a financial
services business without an Australian Financial Services
Licence.
ASIC had earlier obtained orders placing the Goldsky entities into
liquidation and freezing the assets of Mr. Grace, after suspecting
he used new investor funds to make payments to previous investors,
which Mr. Grace represented were returns, in a ponzi scheme
arrangement.
Following an ASIC investigation, the Court found that the companies
carried on a financial services business without holding an
Australian Financial Services Licence.
Although Mr. Grace claimed to operate in the US, he resided in
Tweed Heads, New South Wales. Investors included those from Mr.
Grace's local area as well as high-profile cyclists and AFL current
and former players.
The Court accepted that the companies' bank accounts showed
approximately AUD1 million in suspicious transactions, where funds
appeared to have been used for personal purposes. The court
appointed receiver noted that the estimated shortfall of investor
funds is AUD12,547,904.
'ASIC has pursued this case to ensure the investments were halted,
so that further investors were not harmed. ASIC's investigations
into Mr Grace and the Goldsky entities are ongoing,' said ASIC
Commissioner Sean Hughes.
Mr. Chris Baskerville from Jirsch Sutherland has been appointed as
liquidator of the Goldsky entities. Investors and creditors should
direct their enquiries to: admin@jirschsutherland.com.au.
Mr. Grace, through his company, Goldsky Asset Management LCC, a
US-based company, commenced operating a financial services business
in Australia in March 2017. Goldsky Asset Management LCC purported
to rely on an exemption to hold an Australian Financial Services
licence due to an 'investment advisor' authority which he had
obtained from the United States Security and Exchange Commission
(SEC).
On Jan. 2, 2019, the SEC obtained judgment against Goldsky Asset
Management LLC and Kenneth Grace for making false and misleading
statements about its business. Goldsky Asset Management LLC and Mr.
Grace were ordered to pay penalties totaling US$75,000.
ASIC acknowledges the assistance of the SEC in its investigation.
IMPULSE RETAILING: First Creditors' Meeting Set for May 21
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Impulse
Retailing Pty Ltd will be held on May 21, 2019, at 2:00 p.m. at
Level 7, 616 St Kilda Road, in Melbourne, Victoria.
Gideon Rathner and Matthew Sweeny of Lowe Lippmann were appointed
as administrators of Impulse Retailing on May 9, 2019.
KOBE JONES: First Creditors' Meeting Set for May 17
---------------------------------------------------
A first meeting of the creditors in the proceedings of Kobe Jones
Sydney Pty Ltd, trading as Kobe Jones Sydney and Wharf Teppanyaki,
will be held on May 17, 2019, at 3:00 p.m. at the offices of
Chartered Accountants Australia and New Zealand, at Level 1, Fraser
Room, 33 Erskine Street, in Sydney, NSW.
Shabnam Amirbeaggi of Crouch Amirbeaggi was appointed as
administrator of Kobe Jones on May 8, 2019.
LYON SOLAR: First Creditors' Meeting Set for May 15
---------------------------------------------------
A first meeting of the creditors in the proceedings of Lyon Solar
Pty Ltd, Lyon Battery Storage Pty Ltd, and Lyon Infrastructure
Investments 1 Pty Ltd, will be held on May 15, 2019, at 4:00 p.m.
at the offices of Deloitte, at Level 23 Riverside Centre, 123 Eagle
Street, in Brisbane.
Richard Hughes and David Orr of Deloitte were appointed as
administrators of Lyon Solar on May 3, 2019.
PICTON PRESS: Hearing on ATO Case Moved Until Later This Month
--------------------------------------------------------------
Wayne Robinson at Print21.com reports that the long-running battle
between the Australian Tax Office (ATO) and Picton Press is set to
continue for a few more weeks, with the judge ordering the case
into court later this month following Consent Orders.
A consent order is made after parties, who have reached their own
agreement, have applied to a court for consent orders. Consent
orders, if they become a formal court order, have the same status
as if the order had been made after a hearing by a judicial
officer.
According to Print21.com, the ATO has been challenging the Deed of
Company Arrangement (DOCA) organised by administrator Cor Cordis,
the terms of which would see at least 98 per cent of Picton's
AUD1.3 million tax debt wiped out, leaving the tax office with
between AUD13,000 and AUD26,000.
"The matter's been adjourned to a date between the fifteenth and
the twenty-second of May, so the parties can continue to discuss
it," the report quotes a spokesperson from Cor Cordis as saying.
Under the terms of the controversial DOCA, all creditors owed more
than AUD10,000--which includes the ATO and a major paper
supplier--will receive between one and two cents in the dollar,
while all those under will get 100 cents, Print21.com says.
Print21.com relates that the DOCA went through in October, and the
ATO has been challenging it ever since through a succession of
court hearings. Following the court's knockback of the ATO's case
in December, it appealed and named the administrators Jeremy Nipps
and Cliff Rocke as defendants, as well as the company itself and
the two directors.
According to Print21.com, the terms of the DOCA have also caused
uproar in the rest of the Perth printing community, which says it's
having to price jobs on paying 100 per cent of their tax and paper
bills, while Picton is able to operate on a different basis.
Print21.com says the ATO first sought a winding-up order a year
ago, with Picton director Gary Kennedy and Dennis Hague putting the
business into voluntary administration. Cor Cordis first tried to
sell the business with no success, then went for the DOCA.
SECTOR GROUP: First Creditors' Meeting Set for May 17
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Sector Group
Pty Ltd will be held on May 17, 2019, at 10:30 a.m. at Level 15,
114 William Street, in Melbourne, Victoria.
Con Kokkinos of Worrells Solvency & Forensic Accountants was
appointed as administrator of Sector Group on May 8, 2019.
SFG EMPLOYMENT: First Creditors' Meeting Set for May 16
-------------------------------------------------------
A first meeting of the creditors in the proceedings of SFG
Employment Services Pty Ltd will be held on May 16, 2019, at 11:00
a.m. at 165 Camberwell Road, in Hawthorn East.
Roger Darren Grant and Shane Leslie Deane of Dye & Co. were
appointed as administrators of SFG Employment on May 8, 2019.
SOLOMONS MINES: First Creditors' Meeting Set for May 17
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Solomons
Mines Investments Pty Ltd, trading as Kincraig Hotel, will be held
on May 17, 2019, at 10:30 a.m. at the offices of DuncanPowell, at
Level 4, 70 Pirie Street, in Adelaide, SA.
Stephen James Duncan and Andrew Langshaw of DuncanPowell were
appointed as administrators of Solomons Mines on May 7, 2019.
STONE CLIFF: Court Declines to Order Probe Into Sydney Liquidators
------------------------------------------------------------------
Australian Securities and Investments Commission notes the decision
of the Supreme Court of NSW, which declined to order an inquiry
into the conduct of former Sydney liquidator Andrew Hugh Jenner
Wily and current Sydney liquidator David Anthony Hurst concerning
the performance of their duties as joint liquidators of 12
companies to which they had been appointed.
Stone Cliff Pty Ltd ACN 098 024 714 (Deregistered)
Sjain Pty Ltd ACN 127 505 720 (Deregistered)
Htbong Pty Ltd ACN 127 505 873 (Deregistered)
Mboa Pty Ltd ACN 128 067 489 (Deregistered)
Vbrkic Pty Ltd ACN 127 507 564 (Deregistered)
Kgifford Pty Ltd ACN 127 506 129 (Deregistered)
Msrour Pty Ltd ACN 127 505 579 (Deregistered)
Schauhan Pty Ltd ACN 127 508 034 (Deregistered)
Rgoel Pty Ltd ACN 127 508 221 (Deregistered)
Mhaigh Pty Ltd ACN 127 508 365 (Deregistered)
Pkhouri Pty Ltd ACN 127 505 908 (Deregistered)
Psingh Pty Ltd ACN 127 507 813 (Deregistered)
At the time of their appointment to the Companies, Mr. Wily and Mr.
Hurst were partners of Armstrong Wily. In 2017, Mr. Wily did not
renew his registration and is no longer a registered liquidator.
Mr. Hurst remains a registered liquidator.
ASIC had concerns about the administration of the Companies and
sought a court inquiry regarding the liquidation of the Companies
by Mr. Wily and Mr. Hurst.
In a judgment delivered on May 9, 2019, the Court dismissed ASIC's
application with costs.
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C H I N A
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LESHI INTERNET: Listing Suspended as Delisting Looms
----------------------------------------------------
Zhang Yu and Denise Jia at Caixin Global report that the listing of
embattled tech conglomerate LeEco's Shenzhen-listed unit will be
suspended from May 13 after its trading was halted for eight days.
Caixin relates that the Shenzhen Stock Exchange decided to suspend
the listing of Leshi Internet Information & Technology because the
company triggered a trading suspension under exchange rules, the
bourse said on May 10 in a statement.
According to Caixin, the move was expected since Leshi April 26
reported negative net assets in its annual report, a key indicator
to trigger a trading suspension and possibly an eventual delisting.
On its last day of trading April 25, Leshi's shares fell to CNY1.69
($0.25), leaving its market value at CNY6.74 billion, down from a
peak in 2015 of CNY170 billion.
A listed company can experience multiple stages for
delisting--suspension, resumption, or compulsory or voluntary
termination of listing--under rules of the exchange, the report
notes.
Caixin says Leshi may face compulsory delisting if its 2019 annual
report fails to meet regulatory requirements for resumption of
listing, such as turning in another year of net loss and negative
net assets.
After suspension, the company would have to issue its annual report
on time the following year and have an audit report issued without
any reservations before it can apply to resume trading, Caixin
notes.
Leshi reported a net loss of CNY4.1 billion ($594 million) in 2018,
narrower than a net loss of CNY13.9 billion for 2017, Caixin
discloses. However, it posted negative net assets of CNY3 billion
at the end of 2018, compared with net assets of CNY663 million a
year earlier.
Leshi's founder and largest shareholder, Jia Yueting, has fled
China to the U.S. and has not returned since the summer of 2017,
leaving behind debts that reached CNY11.9 billion at the end of
2018. Jia has been blacklisted as a debt defaulter by a Chinese
court. He holds a 24.43% stake in Leshi, most of which has been
frozen or pledged as collateral, Leshi's annual report showed,
Caixin relays.
Leshi said in a regulatory filing April 29 that it has received
notices from the China Securities Regulatory Commission (CSRC)
saying the regulator has launched a formal investigation into Leshi
and Jia for suspected information disclosure violations, Caixin
discloses. The company said it will cooperate with the
investigation and disclose information as needed.
There is speculation that Jia may be forced to return to China
because of the investigation.
At a briefing discussing the company's annual report, Leshi
Chairman Liu Shuqing said Jia has agreed to cooperate with the
investigation, but the company has not received any itinerary from
its founder.
Caixin relates that Leshi also said there's no detailed plan for
debt or asset restructuring and Jia hasn't come up with a debt
payment timetable.
The formal investigation could mean a faster delisting for Leshi,
people close to the regulator told Caixin.
If Leshi is found with serious violations that trigger a delisting,
the one-year suspension period will be shortened to six months,
during which the company cannot resume listing even after
rectification and compensation measures are taken, Caixin discloses
citing new delisting rules released in November.
During the suspension of listing, Leshi's operation will continue
as normal, Liu said, adds Caixin.
Leshi Internet Information & Technology Corp., Beijing engages in
Internet video, and film and television production and distribution
businesses in China.
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I N D I A
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AHUJA AUTOMOBILES: CARE Maintains D Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Ahuja
Automobiles continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 13.30 CARE D; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 14, 2018, placed
the rating(s) of Ahuja Automobiles (AA) under the 'issuer
non-cooperating' category as AA had failed to provide information
for monitoring of the rating. AA continues to be noncooperative
despite repeated requests for submission of information through
e-mails, phone calls and email dated April 22, 2019. In line with
the extant SEBI guidelines, CARE has reviewed the rating on the
basis of the best available information which however, in CARE's
opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
On going delays in debt servicing
There are ongoing delays in the servicing of the debt obligations.
The delays are on account of weak liquidity position as the company
is unable to generate sufficient funds in a timely manner.
Established in 2008, Ahuja Automobiles (AA) is a partnership entity
based in Amritsar, Punjab. The entity is currently being managed by
Mr Harish Ahuja, Mr Gagan Ahuja and Mrs Madhu Ahuja, sharing profit
and loss in an equal proportion The entity is operating 3S
facilities (Sales, Service and Spares) of Hyundai Motor India
Limited (HMIL), with an authorized dealership of entire range of
passenger vehicles (PV), since 2008. AA operates through its three
showrooms-cumworkshops in Amritsar and Distt. Tarn Taran, Punjab.
BABA BHUMAN: CARE Maintains B Rating in Not Cooperating Category
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Baba Bhuman
Shah Ji Rice Mills continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 14.28 CARE B; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 22, 2018, placed
the rating(s) of Baba Bhuman Shah Ji Rice Mills (BBS) under the
'issuer non-cooperating' category as BBS had failed to provide
information for monitoring of the rating. BBS continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and email dated April 22,
2019. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on February 19, 2018 the following were
the rating strengths and weaknesses
Key Rating Weaknesses
Limited experience of partners
The partners have limited experience in agro processing industry.
BBS was established in 2013 and its day to day operations are
looked after by its six partners jointly. Mr. Kharait lal, Mr.
Rajinder Kumar and Mr. Surinder Kumar have an industry experience
of around one and a half decades through their association with BBS
and Swami Chita Rice Mill (entity engaged in trading of paady). Mr.
Kewal Krishan has an industry experience of 30 years as an
agriculturalist and Mr. Subhash Chander has an industry experience
of 22 years as an agriculturalist and commission agent. Mr. Sandeep
Kumar has an experience of 4 years through his association with
Swami Chita rice Mill.
Small scale of operations
Owing to short track record of operations, the firm's scale of
operations has remained small in the past
Weak solvency position and elongated operating cycle The capital
structure of the firm stood leveraged, as on March 31, 2016.
Furthermore, the debt coverage indicators of the firm also remained
weak, as on March 31, 2016. The operating cycle of the firm stood
elongated at 263 days, as on March 31, 2016.
Susceptibility to fluctuation in raw material prices and monsoon
dependent operations
Agro-based industry is characterized by its seasonality, due to its
dependence on raw materials whose availability is affected directly
by the vagaries of nature. The price of rice moves in tandem with
the prices of paddy. Availability and prices of agro commodities
are highly dependent on the climatic conditions.
Adverse climatic conditions can affect their availability and leads
to volatility in raw material prices. Since there is a long time
lag between raw material procurement and liquidation of inventory,
the firm is exposed to the risk of adverse price movement resulting
in lower realization than expected.
Fragmented nature of industry coupled with high level of government
regulation
The commodity nature of the product makes the industry highly
fragmented with numerous players operating in the unorganized
sector with very less product differentiation. There are several
small scale operators which are not into endto-end processing of
rice from paddy, instead they merely complete a small fraction of
processing and dispose-off semiprocessed rice to other big rice
millers for further processing. Furthermore, the concentration of
rice millers around the paddy growing regions makes the business
intensely competitive. Additionally, the raw material (paddy)
prices are regulated by government to safeguard the interest of
farmers, which in turn limits the bargaining power of the rice
millers.
Partnership nature of constitution
BBS's constitution as a partnership firm has the inherent risk of
possibility of withdrawal of the partners' capital at the time of
personal contingency and firm being dissolved upon the
death/retirement/insolvency of partners. Moreover, partnership
firms have restricted access to external borrowing as credit
worthiness of partners would be the key factors affecting credit
decision of the lenders.
Key Rating Strengths
Location advantages
BBS's manufacturing unit is located in Fazilka, Punjab. The area is
one of the hubs for paddy/rice, leading to its easy availability.
The unit is also in proximity to the grain market resulting in
procurement at competitive rates and lower logistical costs. The
presence of BBS in the vicinity of paddy producing regions gives it
an advantage over competitors operating elsewhere in terms of easy
availability of the raw material as well as favorable pricing
terms. The favorable location also puts the firm in a position to
cut on the freight component on raw materials.
Analytical approach: Standalone
Baba Bhuman Shah Ji Rice Mills (BBS) was established in 2013 as a
partnership firm. The commercial operations started from November
2013. The firm is engaged in processing of paddy at its
manufacturing facility located in Fazilka, Punjab, with an
installed capacity of 7,000 Metric Tonnes per annum, as on December
30, 2017.
BALAJI POLYCOT: CARE Keeps BB- Rating in Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Balaji
Polycot Private Limited continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 11.50 CARE BB-; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 09, 2018, placed
the rating(s) of Balaji Polycot Private Limited. (BPPL) under the
'issuer non-cooperating' category as BPPL had failed to provide
information for monitoring of the rating for the rating exercise as
agreed to in its Rating Agreement. BPPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and an email dated March
04, 2019, April 01, 2019, April 05, 2019, April 05, 2019, April 16,
2019, April 18, 2019 In line with the extant SEBI guidelines, CARE
has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account its moderate scale of operations,
thin profitability, leveraged capital structure, moderate debt
coverage indicators and modest liquidity position. The rating also
factored in its presence in highly fragmented and competitive
industry with low entry barriers along with vulnerability of its
profits to fluctuation in raw material prices. The ratings,
however, derives comfort from experienced promoter coupled with
coupled with established presence of the group company into the
textile industry and presence in the textile cluster with easy
access to raw material and labour.
Detailed description of the key rating drivers
At the time of last rating on February 09, 2018, the following were
the rating strengths and weaknesses (Updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
Moderate scale of operations, thin profitability, leveraged capital
structure, moderate debt coverage indicators and modest liquidity
position Scale of operation of BPPL stood moderate as marked by
total operating income of Rs.68.41 crore during FY18 against
Rs.62.04 crore in FY17. The profitability remained thin marked by
below unity PAT margin. BPPL has reported net profit of Rs.0.14
crore during FY18 as against net loss of Rs.0.02 crore in FY17.
Capital structure of BPPL stood leveraged as marked by overall
gearing ratio of 2.37 times on account of moderate networth base as
on March 31, 2018. On account of moderate debt outstanding, the
debt coverage indicators stood moderate as marked by total debt to
GCA ratio of 4.63 times as on March 31, 2018. The liquidity
position also stood modest as marked by current ratio of 0.68 times
as on March 31, 2018. Cash and bank balance stood low at 0.19 crore
and cash flow from operations remained at Rs.4.53 crore as on March
31, 2018.
Presence in highly fragmented and competitive industry with low
entry barriers
Being part of textile industry BPPL is exposed to inherent risk of
textile industry characterized by highly fragmented in nature with
presence of huge number of organized as well as unorganized players
into the weaving segment. BPPL being into weaving segment faces
high degree of competition from numerous weaving players in the
Gujarat textile market.
Furthermore, due to the fragmented nature of the fabric industry,
bargaining power of fabric manufacturers with raw material
suppliers and customers are restricted which is also reflected in
the low profit margins.
Vulnerability of its profits to fluctuation in raw material prices
BPPL has limited presence in textile value chain as it is engaged
in the business of processing and weaving of denim cloth only. It
weaves denim fabric which is primarily used for making denim pent
and suiting. BPPL purchases raw material from South and Gujarat
region. The price of key raw material has been volatile in nature
and BPPL is exposed to the raw material price fluctuation risk due
to high inventory holding period.
Key Rating Strengths
Experienced promoter coupled with coupled with established presence
of the group company into the textile industry Mr. Anuj Mittal and
Mr. Gaurav Mittal are key management of BPPL, who have long
standing experience of more than one decade into the textile
industry. Mr. Anuj Mittal is also director in Mahak Synthetic Mills
Private Limited which has established presence into manufacturing
of finished fabrics and processing of denim fabric for more than
two decades.
Presence in the textile cluster with easy access to raw material
and labor BPPL is based in Ahmedabad, Gujarat which is one of the
largest textile manufacturing hubs in India. The region comprises
of a large number of textile manufacturing and processing units.
BPPL's presence in the textile manufacturing region results in
benefit derived from lower logistics cost (both on transportation
and storage), easy availability and procurement of raw materials at
effective prices.
ERA INFRASTRUCTURE: ICICI Bank's Insolvency Petition Tossed
-----------------------------------------------------------
PTI New Delhi reports that the National Company Law Tribunal (NCLT)
rejected ICICI Bank's plea to initiate insolvency proceedings
against Era Infrastructure (India) Ltd on the grounds of
"duplicacy" of claims on May 12.
A two-member bench headed by NCLT President Justice M M Kumar
observed that ICICI Bank has already raised similar claims against
its parent company Era Infra Engineering, which is currently
undergoing resolution process, PTI relates.
According to PTI, the tribunal held that "on account of duplicacy"
of the claims, the petition filed by ICICI Bank cannot be
entertained.
The tribunal observed that the application filed by ICICI Bank to
initiate insolvency proceedings against Era Infrastructure was
based on the same sets of facts and documents which the resolution
professional (RP) of Era Infra Engineering had earlier rejected,
PTI notes.
Later, NCLT had on December 6, 2018 directed the RP of Era Infra
Engineering to admit the said claims as financial debt of the
company, PTI discloses.
ICICI Bank had given a loan of INR240 crore to Era Infrastructure
India, PTI states. For the loan, its parent firm Era Infra
Engineering had guaranteed the payments, which were later defaulted
on, PTI relays.
Meanwhile, corporate insolvency was initiated against the parent
firm Era Infra Engineering by NCLT and its RP had invited claims,
PTI discloses.
CICI Bank had lodged its claim before the RP placing reliance on
securities and contractual comfort provided by Era Infra
Engineering towards the entities and group companies related to it,
PTI relays.
However, the RP had rejected its claims on September 13, following
which ICIC Bank approached the NCLT, PTI states.
GAJANAN INDUSTRIES: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: Gajanan Industries Limited
Registered office:
902, Hubtown Viva Western Express Highway
Jogeshwari (E), Mumbai City 400060
Insolvency Commencement Date: May 1, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: October 28, 2019
Insolvency professional: Shivan Raju Palavesam
Interim Resolution
Professional: Shivan Raju Palavesam
214-215, Second Floor, Om Dutta C.H.S.
Khamdeo Nagar, 90 Feet Road
Sion - Bandra Link Road
Mumbai 400017
E-mail: shivan.raju@gmil.com
Last date for
submission of claims: May 14, 2019
GVR ASHOKA: Ind-Ra Cuts Sr. Proj. Term Loan Rating to 'D'
---------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded GVR Ashoka
Chennai ORR Limited's senior project term loan rating to 'IND D'
from 'IND B+'. The Outlook was Stable.
The instrument-wise rating action is:
-- INR10.8 bil. Senior project term loan (long-term) due on
January 2029 downgraded with IND D rating.
KEY RATING DRIVERS
The downgrade reflects a delay in interest servicing by GVR Ashoka
Chennai ORR during April 2019 due to the non-receipt of annuity
that was due on April 27, 2019.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months will be positive for the rating.
COMPANY PROFILE
GVR Ashoka Chennai ORR is a special purpose vehicle incorporated by
GVR Infra Projects Ltd and Ashoka Buildcon Ltd to develop and
operate a six-lane road project, Chennai Outer Ring Road Phase II
in Chennai, Tamil Nadu. It has a 20-year concession, which expires
in March 2034, from the Highways and Minor Ports Development and
the government of Tamil Nadu to implement the project under the
build-operate-transfer annuity model.
HT GLOBAL: Moody's Affirms CFR & $368MM Senior Notes at 'Ba3'
-------------------------------------------------------------
Moody's Investors Service has affirmed HT Global IT Solutions
Holdings Limited's Ba3 corporate family rating and the Ba3 rating
on its $368 million 7% senior notes due 2021.
The outlook is maintained at stable.
RATINGS RATIONALE
"The rating affirmation reflects the strong operating performance
at its 62.6%-owned operating company, Hexaware Technologies
Limited, HT Global's only investment, balanced against the
aggressive financial position at HT Global that limits the
financial flexibility available for Hexaware to pursue growth,"
says Saranga Ranasinghe, a Moody's Assistant Vice President and
Analyst.
Hexaware continues to perform in line with Moody's expectations,
with revenue and EBITDA growth of around 12% and 7%, respectively
in 2018. Moody's expects Hexaware to continue to grow organically
in 2019 and 2020.
Moody's expects the global IT services industry to grow strongly
over the next 12-18 months and for Hexaware to benefit from robust
demand for its services. However, despite solid growth projections,
the industry is facing challenges such as rising competition,
pricing pressure and increasing employment costs, which has
resulted in margin erosion at most companies in the industry,
including Hexaware.
In August 2018, HT Global reduced its stake in Hexaware to 62.8%
from 71.2% and repaid around $17 million of notes outstanding
before paying a dividend to the private equity owner, Baring
Private Equity Asia V Mauritius Holdings (4) Limited (BPEA).
Following the stake reduction, the absolute dividends that Hexaware
needs to pay to service HT Global's debt increased by around 9%.
The stake reduction follows an $85 million increase in debt in
August 2017 for a dividend recapitalization.
Following the stake sale and increase in debt, both HT Global and
Hexaware have limited capacity for further debt incurrence because
the covenants for debt incurrence are now tighter given the lower
ownership of the opcos. HT Global must satisfy the $1 debt test,
where its leverage is less than the result of 3.75x (the leverage
requirement for the initial 71.2% ownership stake) multiplied by an
adjustment factor defined as HT Global's current ownership (62.6%)
divided by its initial ownership (71.2%). HT Global's leverage at
the end of 2018 at 3.2x provides limited headroom against the
permitted level of 3.3x based on its 62.6% interest in Hexaware.
"Lower retained cash flows and restrictions on debt constrain
Hexaware's ability to respond to changing industry dynamics," adds
Ranasinghe.
HT Global's Ba3 CFR reflects the debt-free financial position and
high EBITDA-to-cash flow conversion rates at Hexaware, and the
strong liquidity profile of both HT Global and Hexaware. The rating
also reflects Hexaware's mid-sized scale relative to large global
IT and BPM service providers and its high customer and geographic
concentration. In 2018, Hexaware generated 41.6% of revenue from
its top 5 clients. While such customer concentration poses a key
risk, it is balanced by the company's long-term relationships with
these customers, the multiple contracts for each customer, and the
integrated nature of its services in its customers' operations.
The stable outlook reflects Moody's expectation that revenue and
EBITDA growth at Hexaware will support leverage levels within the
thresholds set for the Ba3 rating. In addition, the rating reflects
Moody's expectation that dividend payments by Hexaware to HT
Global, combined with existing cash balances at HT Global, will
comfortably cover HT Global's debt service requirements on an
ongoing basis.
The Ba3 rating does not incorporate incremental dividends to HT
Global's shareholders over the next 12 months, without meaningful
EBITDA and cash flow growth at Hexaware.
Upward rating pressure is unlikely in the next 12 to 18 months, but
could emerge if Hexaware diversifies its customer base and
operations while improving its EBITDA margins to over 20% on a
sustained basis. In addition, its credit profile would also need to
strengthen, such that HT Global's leverage falls below 2.5x on a
consolidated basis, proforma for any BPEA dividends.
The rating could be downgraded if Hexaware shifts its financial
strategy from one focused on organic growth to an overly aggressive
acquisition-driven strategy. Specifically, Moody's could downgrade
the rating if; (1) Hexaware's consolidated leverage rises above
3.5x; (2) the company's combined cash holdings at HT Global and
Hexaware fall below $40 million; (3) cash flow from operations at
Hexaware falls below $60 million on a rolling 12-month basis; and
(4) dividends to HT Global shareholders increase further and/or
there are further stake reductions by HT Global over the next 12-18
months, without a meaningful increase in EBITDA and cash flow at
Hexaware.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
HT Global IT Solutions Holdings Limited is a company incorporated
under the laws of Mauritius--formed by Baring Private Equity Asia V
Mauritius Holdings (4) Limited (BPEA)--to invest in the IT and BPM
service provider, Hexaware Technologies Limited. The company has no
other operations, employees or real investments.
Incorporated in India, Hexaware provides IT and BPM outsourced
services largely to US-based multinational corporations. Hexaware
listed on the Mumbai Stock Exchange in 2001.
IMPACT LEASING: CARE Reaffirms BB- Rating on INR5.50cr Loan
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Impact Leasing Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 5.50 CARE BB- Reaffirmed
Detailed Rationale
The rating assigned to the bank facilities of Impact Leasing
Private Limited (ILPL) remains constrained by the small scale of
operations, high reliance on debt to fund operations and product
concentration risk in the revenue stream. The rating further
remains constrained by the limited geographical reach, high level
of competition and high regulatory risk in the industry.
The rating, however, derives strength from the experienced
promoters & long track record of operations, basic risk management
in place, comfortable asset quality and moderate capital adequacy.
The ability of the company to profitably scale-up its operations,
while further improving the asset quality & capital adequacy,
along-with geographical diversification of portfolio, expansion of
resource base and continued funding support from the promoter group
would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters and long track record of operations: The
directors of the company include Mr. Pankaj Malhotra and Mr.
Karanjit Bajwa, who have been associated with ILPL since its
incorporation in 1993, and Mrs. Meera Bajwa, who has been
associated with the ILPL since 2018. Mr. Pankaj Malhotra and Mr.
Karanjit Bajwa hold an experience of over four decades each in
diverse industries through their directorship in ILPL & its various
group concerns including Impact Agencies Private Limited (IAPL).
Mr. Malhotra is also directly involved in the day to day operations
of ILPL. The same are being headed by Mr. Dalip Kumar, acting as
the assistant general manager in the company who has also been
working with ILPL since its incorporation. ILPL has been engaged in
the industry for over two and a half decades now. It derives ~80%
of its lending business each year from customers of IAPL which
operates a Bajaj Auto Limited dealership in Ludhiana, Punjab.
Fully operational risk management system in place: The company has
in place a functional Management Information System (MIS) and
systems for risk management viz. appraisal, documentation, approval
of loans, fund management etc.
Comfortable asset quality and moderate capital adequacy: The
company deals primarily in financing of new twowheelers with a low
ticket size of up to Rs.50,000; and loan to vehicle ratio of around
85%. The lending is completely under the hire - purchase model with
hypothecation of the underlying asset. Owing to these control
systems, coupled with the efficient collection system in place has
led to a comfortable asset quality with the Gross NPA ratio and Net
NPA ratio at 0.81% and 0.45% respectively, as on March 31, 2018.
The same, stood at 0.59% and 0.37% respectively, as on November 30,
2018. The collection efficiency also remained high at ~94% in the
twelve months ended January-2019.
Further, the Capital Adequacy Ratio (CAR) remained moderate at
35.07%, as on March 31, 2018.
Key rating weaknesses
High reliance on debt to fund operations leading to a leveraged
capital structure: ILPL avails a cash credit limit of Rs.5.50 Cr.,
along with unsecured loans from the promoter's relatives and other
related parties, to fund its various business requirements. The net
worth base of the company remained small at Rs.3.94 Cr., as on
March 31, 2018, leading to leveraged capital structure marked by
overall gearing ratio of 2.01x, as on March 31, 2018.
Small scale of operations: The company's scale of operations
remained small, constrained by its limited geographic reach and
single product offering. The loan portfolio of the company remained
modest at Rs.11.14 Cr. as on March 31, 2018.
The total income of the company therefore remained small at Rs.3.42
Cr. in FY18 (refers to the period April 01 to March 31). The same,
though fluctuating in the past, grew by ~11% from FY17. This was
primarily owing to the increased net interest margins; from 16.34%
in FY17 to 18.40% in FY18 along with the increase in loan portfolio
of the company. In 8MFY19 (Prov.), the company has achieved an
income of Rs.2.25 Cr. while the outstanding loan portfolio stood at
Rs.13.50 Cr. as on November 30, 2018.
Product concentration risk in the revenue stream & limited
geographical reach: The company deals primarily in vehicle finance
providing loans for new two wheelers only. Most of the loans are
sanctioned to customers of IAPL which operates a single dealership
in Ludhiana for Bajaj. The remaining lending is also done through
two wheeler dealerships in the Ludhiana district only. This leads
to a product & geographical concentration risk in the revenue
stream of the company.
Further, the borrowers are individuals belonging primarily to the
low and middle income group which is highly susceptible to economic
downturns.
High level of competition: The company faces stiff competition from
the presence of a number of players in the Ludhiana region viz.
small Asset Finance Companies, established NBFCs as well as banks.
Regulatory risk: Operations of NBFCs like ILPL remain highly
regulated with RBI guidelines impacting their business directly.
Over the last few years, the NBFC sector has gained systemic
importance with increase in share of NBFC total assets to bank
total assets. The same has resulted in the RBI taking various
policy actions resulting in NBFCs attracting higher support and
regulatory scrutiny.
Analytical Approach: Standalone
Liquidity Profile
The average utilisation of the working capital limits remained
moderate at ~87% in the twelve months ended January2019. The
company had free cash and bank balances of Rs.0.97 Cr. as on March
31, 2018. The tenor of the loans extended by the company ranges
from 8 to 36 months while the company's external debt obligation
comprised of vehicle loans of Rs.0.07 Cr. only, as on December 31,
2018. To fund the company's operations, the promoter's relatives
and other related parties have infused unsecured loans with an
outstanding amount of Rs.2.14 Cr. as on March 31, 2018. Though
unsecured loans of Rs.1 Cr. were repaid during FY18, additional
unsecured loans of Rs.0.56 Cr. have been infused in 8MFY19
(Provisional) to support the operations of the company. The company
has a scheduled term debt (vehicle loan) repayment obligation of
Rs.0.02 Cr. for FY20 proposed to be funded through the internal
resources.
Company Background
Incorporated in 1993, ILPL is registered as a Non-Deposit accepting
NBFC (Asset Finance Company) with the Reserve Bank of India (RBI).
The company is engaged primarily in lending for vehicle financing
(two wheelers) on hire and purchase basis. The group concerns of
the company include IAPL, Impact Projects Private Limited, Impact
Motors Private Limited, Impact Senior Living Estates Private
Limited etc. IAPL is currently operating a dealership for Bajaj
Autos in the Ludhiana district. The remaining entities of the group
are engaged primarily in the real estate business.
JAYPEE INFRATECH: Lenders Ask NBCC to Withdraw Some Clauses
-----------------------------------------------------------
PTI reports that lenders of Jaypee Infratech have asked state-owned
NBCC Ltd to withdraw some clauses, like exemption from tax
liability, that make its revised offer conditional and non-binding
for acquiring the debt-ridden realty firm, sources said.
Lenders wrote a letter to NBCC late on May 10 regarding this
matter, they said, adding that the public sector firm has been told
to reply by May 13 as the lenders' meet has been fixed for May 14,
PTI relates.
In its revised offer, NBCC has proposed infusion of INR200 crore
equity capital, transfer of 950 acres of land worth INR5,000 crore
to banks and completing construction of flats by July 2023 to
settle an outstanding claim of INR23,723 crore of financial
creditors, PTI discloses.
However, NBCC has put several conditions for the implementation of
its plan, including a demand to extinguish an estimated income-tax
liability of INR33,000 crore over a period of 30 years arising out
of the transfer of land parcels from Yamuna Expressway Industrial
Development Authority (YEIDA) to Jaypee Group, PTI notes.
On these relief and concessions, the IRP pointed out that the
insolvency process approved by the CoC in December last year
provided that the resolution plans from potential bidders should be
binding and non-conditional, PTI states.
Meanwhile, the court-mandated deadline for completing the
resolution plan for Japyee Infratech ended on May 6 and the CoC has
sought an extension of the deadline, PTI relays.
The Allahabad bench of NCLT has posted the matter for hearing on
May 21 and maintained status quo until then, according to PTI.
About Jaypee Infratech
Jaypee Infratech Limited (JIL) is engaged in the real estate
development. The Company's business segments include Yamuna
Expressway Project and Healthcare. The Company's Yamuna Expressway
Project is an integrated project, which inter alia includes
construction of 165 kilometers long six lane access controlled
expressway from Noida to Agra with provision for expansion to eight
lane with service roads and associated structures on build, own,
operate and transfer basis. The Company provides operation and
maintenance of Yamuna Expressway for over 36 years, collection of
toll and the rights for development of approximately 25 million
square meters of land for residential, commercial, institutional,
amusement and industrial purposes at over five land parcels along
the expressway. The Healthcare business segment includes
hospitals. The Company has commenced development of its Land
Parcel-1 at Noida, Land Parcel-3 at Mirzapur and Land Parcel-5 at
Agra.
On August 8, 2017, the National Company Law Tribunal (NCLT),
Allahabad bench accepted lender IDBI Bank's plea and classified JIL
as an insolvent company. With this, the board of directors of the
company remains suspended.
Anuj Jain was appointed as Interim Resolution Professional (IRP) to
manage the company's business. The IRP had invited bids from
investors interested in acquiring JIL and completing the stuck real
estate projects in Noida and Greater Noida.
In September 2017, the Supreme Court of India stayed the insolvency
proceedings initiated against JIL, after various associations of
homebuyers moved a batch of petitions fearing they will lose their
apartments and not get any compensation, according to Livemint.
The stay was later revoked by the court, which directed the
resolution professional to submit an interim resolution plan that
takes into account the interest of homebuyers.
The court also directed the parent company, JAL, to deposit
INR2,000 crore to protect the interest of homebuyers. Out of this,
only INR750 crore has been deposited so far, Livemint relayed.
JIL features in the Reserve Bank of India's first list of
non-performing assets accounts and had debt exposure of over
INR9,783 crore as of September 2017. The parent company, JAL owes
more than INR29,000 crore to various banks, the report added.
JET AIRWAYS: Lenders May Re-initiate Rescue Talks with Tata
-----------------------------------------------------------
The Hindu Business Line reports that with Etihad Airways looking to
exit the beleaguered Jet Airways, lenders are set to re-initiate
talks with the Tata Group as a possible new investor in the Indian
airline.
According to top sources, the lenders have already sent out feelers
to the Tatas and may make a formal offer soon. "All the
stakeholders and the government are keen to keep Jet Airways
afloat.
"The lenders will reach out to multiple players, including the
Tatas, as they have shown interest in acquiring Jet Airways in the
recent past," The Hindu Business Line quotes a source as saying.
In November, the Tata Group had said that it had held preliminary
talks with Jet though no proposal was made, The Hindu Business Line
recounts. The talks did not progress after the Tata board advised
the group to proceed with caution, The Hindu Business Line notes.
Since then there have been no conversations between the Tatas and
the Jet board, The Hindu Business Line states.
Etihad, which owns a 24% stake in Jet, is not keen to continue with
the investment, The Hindu Business Line discloses. According to
The Hindu Business Line, sources said it may offer to sell its
stake at INR150 per share to State Bank of India, the lender with
the largest exposure to Jet.
The lenders have also asked Jet Airways' current promoter group,
led by Naresh Goyal, to exit the company, The Hindu Business Line
relates. Following a debt-to-equity conversion, the lenders are in
control of the company, The Hindu Business Line notes.
About Jet Airways
Based in Mumbai, India, Jet Airways (India) Limited provides
passenger and cargo air transportation services. It also provides
aircraft leasing services. It operates flights to 66 destinations
in India and international countries.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
28, 2018, ICRA revised the ratings on certain bank facilities of
Jet Airways (India) Limited to [ICRA]C from [ICRA]B. The rating
downgrade considers delays in the implementation of the proposed
liquidity initiatives by the management, further aggravating its
liquidity, as reflected in the delays in employee salary payments
and lease rental payments to the aircraft lessors. Moreover, the
company has large debt repayments due over the next four months
(December-March) of FY2019 (INR1,700 crore), FY2020 (INR2,444.5
crore) and FY2021 (INR2,167.9 crore). The company is undertaking
various liquidity initiatives, which includes, among others, equity
infusion and a stake sale in Jet Privilege Private Limited (JPPL),
and the timely implementation of these initiatives is a key rating
sensitivity. Moreover, the company continues to witness a stress
in its operating and financial performance.
JET AIRWAYS: SBI Receives Two Unsolicited Bids for Airline
----------------------------------------------------------
Reuters Bengaluru reports that State Bank of India (SBI) said on
May 10 that it has received two unsolicited bids for ailing Jet
Airways, nearly a month after the airline was forced to ground all
operations due to funding troubles.
Jet, once India's largest private airline, stopped all flights on
April 17 after its lenders, led by SBI, declined to extend more
funds to keep the carrier going, Reuters relates.
"(We have) made disproportionate efforts to keep Jet flying,"
Reuters quotes the bank's chairman Rajnish Kumar as saying in
Mumbai.
About Jet Airways
Based in Mumbai, India, Jet Airways (India) Limited provides
passenger and cargo air transportation services. It also provides
aircraft leasing services. It operates flights to 66 destinations
in India and international countries.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
28, 2018, ICRA revised the ratings on certain bank facilities of
Jet Airways (India) Limited to [ICRA]C from [ICRA]B. The rating
downgrade considers delays in the implementation of the proposed
liquidity initiatives by the management, further aggravating its
liquidity, as reflected in the delays in employee salary payments
and lease rental payments to the aircraft lessors. Moreover, the
company has large debt repayments due over the next four months
(December-March) of FY2019 (INR1,700 crore), FY2020 (INR2,444.5
crore) and FY2021 (INR2,167.9 crore). The company is undertaking
various liquidity initiatives, which includes, among others, equity
infusion and a stake sale in Jet Privilege Private Limited (JPPL),
and the timely implementation of these initiatives is a key rating
sensitivity. Moreover, the company continues to witness a stress
in its operating and financial performance.
LALCHAND GEM: Ind-Ra Withdraws BB+ Issuer Rating on INR200MM Loan
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has withdrawn Lalchand Gem and
Jewellers Private Limited's Long-Term Issuer Rating of 'IND BB+'.
The Outlook was Stable.
The instrument-wise rating action is:
-- The 'IND BB+' rating on the INR200 mil. Fund-based limits are
withdrawn;
KEY RATING DRIVERS
Ind-Ra is no longer required to maintain the ratings, as the agency
has received a no dues certificate from the lender.
COMPANY PROFILE
Incorporated in 2015, Lalchand Gem and Jewellers is engaged in the
jewellery retail business.
NAKSHATRA CREATIONS: CARE Assigns BB- Rating to INR7cr LT Loan
--------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities Nakshatra
Creations Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 7.00 CARE BB- Stable Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Nakshatra Creations
Private Limited (NCPL) is primarily constrained on account of its
modest scale of operations with moderate profit margins, moderate
debt coverage indicators and working capital intensive nature of
operations during FY18 (refers to the period April 1 to March 31).
The rating, further, remains constrained on account of raw material
price volatility risk and fragmented nature of industry with low
entry barriers.
The rating, however, derives strength from its experienced
promoters, presence in cluster and moderate capital structure.
The ability of NCPL to increase its scale of operations with
improvement in profitability, solvency position and efficient
capital management are the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Modest scale of operations coupled with moderate profit margins
NCPL's scale of operations marked by total operating income (TOI)
remained modest at Rs.24.29 crore during FY18 as against Rs.24.76
crore during FY17. PBILDT margin of NCPL decreased marginally by 43
bps y-o-y and remained moderate at 8.42% in FY18 while PAT margin
of NCPL improved by 93 bps y-o-y; albeit stood low at 1.42% during
FY18.
Moderate debt coverage indicators
The debt coverage indicators remained moderate marked by total debt
to Gross Cash Accruals (GCA) of 9.09 years as on March 31, 2018
from 8.04 years as on March 31, 2017 due to increase in the debt
level. Further, interest coverage remained moderate at 2.40 times
during FY18 as against 1.97 times during FY17, the marginal
improvement is owing to decrease in interest and finance cost
during FY18.
Working capital intensive nature of operations
The operations of NCPL remained working capital intensive in nature
marked by elongated operating cycle at 132 days in FY18 as compared
to 134 days in FY17, owing to nature of business wherein it needs
to keep variety of materials and dresses for different kinds of
customer needs. Average working capital limits utilization also
remained high at ~92% during past twelve months period ended
February, 2019. The cash and bank balance remained at Rs.0.16 crore
as on March 31, 2018, while the net cash flow from operations
remained negative during FY18. However, the current ratio remained
moderate at 1.44 times as on March 31, 2018.
Raw material price volatility risk
The prices of inputs like fabrics, jari, grey fabric, yarn are
volatile in nature. Hence, any adverse fluctuation in the fabric
prices is likely to impact the profitability margins of NCPL.
Fragmented nature of industry with low entry barriers
NCPL operates in lower segment of the value chain and faces stiff
competition from other players in the area. The nature of the
product makes the industry highly fragmented with more than
two-third of the total number of players being in unorganized
sector with very less product differentiation. Furthermore, due to
low entry barriers the competition gets intensified, which might
put pressure for survival on existing as well as new players. Due
to the fragmented nature of the industry, bargaining power of NCPL
with customers is also restricted. Also, the product requires
meeting the current trends of fashion in the market.
Key Rating Strengths
Experienced promoters
Mr. Sizer Lakhani, Director is a graduate and has an experience of
more than a decade through his directorship in NCPL. Another
director Mr. Kanav Arora is a Textile Engineer and holds an
experience of around two decades in the similar line of business.
The vast experiences of both the directors have helped NCPL in
establishing the customer base in the market.
Presence in cluster
The operating facility of NCPL is located at Surat which is a
textile hub of India. Furthermore, raw materials and labour are the
two major cost components (~55-65%) in designing and stitching of
fabrics. NCPL has an added advantage of easy availability of raw
materials owing to its presence in textile hub. It also enjoys
benefits in terms of easy availability of labour.
Moderate capital structure
The capital structure of NCPL remained moderate marked by overall
gearing at 1.71 times as on March 31, 2018 [March 31, 2017: 1.79
times], the marginal improvement in the gearing ratio is owing to
increase in tangible net worth of the company.
Analytical approach: Standalone
Surat-based (Gujarat) NCPL was incorporated in 2006. It is mainly
engaged in the designing and stitching of sarees, salwar suit and
lehenga from different types of fabrics; under its own registered
brands namely "Nakkashi", "Mehreen", "Nairra" and "Womaniya". NCPL
is promoted by Mr. Sizer Lakhani and Mr. Kanav Arora who are having
an experience of more than a decade in the same line of business.
The designing process includes different types of embroidery work,
hand work, stitching etc. NCPL primarily procures the raw material
like fabrics and jari from local dealers of Surat while it sells
the final product pan-India as well as to merchant exporters. The
entity is also marketing through its website for online shopping
under the brand name "Nakkashi"
P.K. METAL: CARE Rates INR6.45cr Loan Rating at B+, Outlook Stable
------------------------------------------------------------------
CARE Ratings revised the rating for the bank facilities of P.K.
Metal Industries as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 6.45 CARE B+; Stable
Facilities Revised from CARE B;
Stable; ISSUER NOT
COOPERATING
In the absence of minimum information required for the purpose of
rating, CARE was unable to express an opinion on the rating of P.K.
Metal Industries (PKM) and in line with the extant SEBI guidelines,
CARE revised the rating of bank facilities of the firm to 'CARE B;
Stable; ISSUER NOT COOPERATING*'.
However, the firm has now submitted the requisite information to
CARE. CARE has carried out a full review of the rating and the
rating stands at 'CARE B+; Stable'.
Detailed Rationale & Key Rating Drivers
The revision in the rating of P.K. Metal Industries factors
improvement in the profitability margins and capital structure.
Further the rating continues to draw comfort from experienced
promoters. The rating continues to remain constrained by short
track record and small scale of operations with volatility in
prices of raw material and foreign exchange fluctuation risk. The
rating is further constrained by fortunes linked to the aluminium
industry and highly competitive nature of industry.
Going forward, PKM's ability to scale up its scale of operations
while improving its capital structure along with effective
management of its working capital requirements shall be the key
rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Short track record and small scale of operations
The firm commenced operations in September 2016 and has limited
track record in this industry. FY18 was the first full year of
operations for the firm. The scale of operations has remained small
marked by a total operating income and gross cash accruals of
Rs.18.29 crore and Rs.0.43 crore respectively during FY18 as
against Rs. 9.70 crore and Rs. 0.37 crore respectively during
7FY17. Further, the proprietor's capital was relatively small at
Rs.3.49 crore as on March 31, 2018. The small scale limits the
firm's financial flexibility in times of stress and deprives it
from scale benefits. During FY19 (refers to the period April 01 to
March 31, 2019) the firm has achieved total operating income of Rs.
9 crore.
Volatility in prices of raw material
The raw material price of aluminum is highly volatile in nature
which is the major cost driver and any southward movement of
finished goods price with no decline in raw material price is
likely to result in adverse performance. Though the company tries
to pass on the price volatility to the end users, any adverse
fluctuations in the prices may put pressure on the profitability of
the company .The risk is more evident now that the market has
considerable volatility and could leave the company carrying costly
inventory in case of sudden appreciation.
Foreign exchange fluctuation risk
The company procures the raw material i.e. aluminum scrap by way of
imports from Dubai and Israel. With initial cash out flow occurring
in foreign currency and the realization taking place in domestic
currency, the company is exposed to the fluctuation in the exchange
rates. Moreover, the company does not plan to hedge its foreign
exchange exposure and any adverse fluctuations in the currency
markets may put pressure on the profitability of the company.
Fortunes linked to the aluminum industry which is cyclical in
nature Prospects of aluminum industry are strongly co-related to
economic cycles. Demand for aluminum products is sensitive to
trends of particular industries such as construction,
infrastructure, etc. which are the key consumers of aluminum
products. These key user industries in turn depend on various
macroeconomic factors, such as consumer confidence, employment
rates, interest rates and inflation rates, etc. in the economies in
which they sell their products. When downturns occur in these
economies or sectors, aluminum industry may witness decline in
demand, which may lead to decrease in aluminum prices putting
pressure on the company.
Highly competitive nature of the industry
PKML operates in a highly competitive nature of industry where the
presence of large number of players in the organized sector. The
industry is characterized by low entry barriers due to low
technological inputs and easy availability of standardized
machinery for production. This further leads to high competition
among the various players and low bargaining power with the
suppliers.
Key Rating Strengths
Experienced Promoters
The operations of PKML are currently managed by Mr. Vishal Gaur who
is a civil engineer by qualification and look after the overall
management of the firm. The firm is further supported by a team of
qualified engineers and managers having good experience in the
similar line of the business.
Moderate Profitability margins and capital structure
The profitability margins of the firm stood moderate as marked by
the PBILDT margin and PAT margin of 5.05% and 1.07% in FY18 as
against 5.82% and 1.24% in 7MFY17.The marginal decline in the
margins was on account of increased finance charges.
The debt profile of the firm as on March 31, 2018 comprises of
rupee term loan of Rs. 1.77 crore, working capital borrowings of
Rs. 3.50 crore and unsecured loans of Rs. 1.03 crore.The capital
structure of the entity stood comfortable marked by debt-equity
ratio and overall gearing ratio of 0.51x and 1.81x respectively as
on March 31, 2018.
Analytical approach: Standalone
Uttarakhand based PKML was established in year 2016 and was
promoted by Mr. Vishal Gaur. Currently, the firm is engaged in
manufacturing of aluminum sections for aluminium doors, windows
etc. The manufacturing facility of the firm is located at
Bhagwanpur, Rurki having an installed capacity of 6.5 metric tonnes
per day. The firm mainly caters to the domestic market. The firm
imports its raw material i.e. aluminum scarp (around 50%) from
Israel and Dubai and rest is purchased domestically from local
traders. The firm is using extrusion technology to make the
aluminum sections.
RATNAKAR ISPAT: Ind-Ra Withdraws BB- LT, Non-Cooperating Rating
---------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Ratnakar Ispat
India Private Limited's Long-Term Issuer rating of 'IND BB- (ISSUER
NOT COOPERATING)' in the non-cooperating category and has
simultaneously withdrawn the rating.
The instrument-wise rating actions are:
-- INR73.8 mil. Term loan* due on October 2022 maintained in the
cooperating category and withdrawn; and
-- INR100 mil. Fund-based working capital limit* maintained in
the cooperating category and withdrawn.
* Maintained in 'IND BB- (ISSUER NOT COOPERATING)' before being
withdrawn
KEY RATING DRIVERS
Ratnakar Ispat India did not participate in the rating exercise
despite continuous requests and follow-ups by the agency. Ind-Ra is
no longer required to maintain the ratings, as the agency has
received a no objection certificate from the rated facilities'
lenders. This is consistent with the Securities and Exchange Board
of India's circular dated March 31, 2017, for credit rating
agencies.
COMPANY PROFILE
Established in July 2012, Ratnakar Ispat India is promoted by Mr.
Shankar Lal Jat, Mrs. Prem Devi Jat, and Mrs. Geeta Devi. The
company has an 80,000-metric-ton-per-annum thermo-mechanically
treated bar and MS billet manufacturing facility in Khasra
(Rajasthan). The company commenced commercial production from April
2015.
RELIANCE INFRATEL: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Reliance Infratel Limited
H Block, 1st Floor, Dhirubhai Ambani Knowledge City
Navi Mumbai 400710, Maharashtra, India
Insolvency Commencement Date: May 15, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: November 3, 2019
Insolvency professional: Mr. Manish Dhirajlal Kaneria
Interim Resolution
Professional: Mr. Manish Dhirajlal Kaneria
C/o RBSA Advisors
21-23, T.V. Industrial Estate
248-A, S.K. Ahire Marg, Worli
Mumbai City, Maharashtra 400030
E-mail: manish@rbsa.in
ip.ritl@rbsa.in
Last date for
submission of claims: May 21, 2019
SACHDEV STEEL: CARE Assigns D Rating to INR10.33cr LT Loan
----------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities Sachdev
Steel Works Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 10.33 CARE D Stable Assigned
Detailed Rationale & Key rating Drivers
The rating assigned to the bank facilities of Sachdev Steel Works
Private Limited is constrained by its weak risk profile with
irregularities in servicing of debt repayment obligation.
Going forward, the ability to timely repay the debt servicing
obligations will be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Weaknesses
Weak risk profile with irregularities in servicing of debt
repayment obligation The financial profile of the company remained
weak on account of pervious instances of delays in debt servicing.
However, there are no ongoing delays as on April 23, 2019. Last
regularisation of the account has happened on April 16, 2019.
Analytical approach: Standalone.
Sachdev Steel Works Private Limited (SSWPL) was initially
established as a sole proprietorship firm (known as Union
Enterprises) by Mr. Raj Sachdev in 1975. The firm was reconstituted
as a private limited company with the name being rechristened to
current one in 1986. Currently, the second generation, as
represented by Mr. Bharat Bhushan Sachdev (son of Mr.Raj Sachdev)
manages the day-to day operations of the company. The company
manufactures mild steel bars and rods wherein MS Billets.
SAMRUDDHI REALTY: Insolvency Resolution Process Case Summary
------------------------------------------------------------
Debtor: M/s. Samruddhi Realty Limited
No. 1, Tate Lane, 2nd Floor
Richmond Road Cross
Bengaluru 560025
Insolvency Commencement Date: April 16, 2019
Court: National Company Law Tribunal, Bengaluru Bench
Estimated date of closure of
insolvency resolution process: October 13, 2019
Insolvency professional: Surender Devasani
Interim Resolution
Professional: Surender Devasani
1436, Anasuya Nilaya
2nd Floor, 8th Cross, 10th Main
BTM 2nd Stage, Bengaluru 560076
E-mail: surenderdevasani@gmail.com
- and -
#50, Ground Floor, Millenium Towers
Queen's Road, Bengaluru 560051
Classes of creditors: Home buyers
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Addanki Harish
#36/1, 2nd Floor, Munivenkappa Complex
Bellary Road, Ganganagar
Bengaluru 560032
E-mail: hareshblr@yahoo.com
Mr. Lakkimsetty Trinadh
No. 53rd Main, Timber Yard Layout
Bengaluru 560026
E-mail: ltrinadh@yahoo.com
Mr. R.S. Doddabyre Gowda
No. 350 1st Cross, Canarabank Layout
Kodigehalli Vidyaranyapura
Bengaluru 560097
E-mail: rsdgowda@yahoo.co.in
Last date for
submission of claims: May 13, 2019
SAPS INFRASTRUCTURE: Insolvency Resolution Process Case Summary
---------------------------------------------------------------
Debtor: SAPS Infrastructure Private Limited
401-B, Floor4, B Wing, Durvankur CHS Ltd
Dadoji Konddeo X Road
Opp Susex Indl Estate, Byculla (E)
Mumbai City MH 400027 IN
Insolvency Commencement Date: April 8, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: October 4, 2019
Insolvency professional: Kairav Anil Trivedi
Interim Resolution
Professional: Kairav Anil Trivedi
23 A 5th Floor Jyoti Building
Barquatali Dargah Margh, Wadala East
Mumbai 400037
E-mail: kairavtrivedi2002@yahoo.co.in
Last date for
submission of claims: April 21, 2019
SHARWIN COTTEX: CARE Keeps B+ Rating in Not Cooperating Category
----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sharwin
Cotte continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 14.50 CARE B+; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 09, 2018 placed the
ratings of Sharwin Cottex (SRC) under the 'issuer noncooperating'
category as SRC had failed to provide information for monitoring of
the rating as agreed to in its Rating Agreement. SRC continues to
be non-cooperative despite repeated requests for submission of
information through phone calls and emails dated April 08, 2019,
April 15, 2019, April 17, 2019, April 19, 2019 and numerous phone
calls. In line with the extant SEBI guidelines, CARE has reviewed
the rating on the basis of the best available information which
however, in CARE's opinion is not sufficient to arrive at a fair
rating. The rating on SRC's bank facilities will now be denoted as
CARE B+; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
At the time of last rating on February 09, 2018 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Susceptibility of profit margins to cotton price fluctuation and
presence in lowest segment of textile value chain and heavy
dependence on short term funds due to procurement of seasonal raw
material results The profitability of SRC is exposed to
fluctuations in raw cotton, which being an agricultural commodity
is subject to the vagaries of monsoon. Furthermore, it operates in
the lowest segment of textile value chain business having limited
value addition, while the operations are working capital intensive
in nature increasing its dependence of short term funding
requirements.
Partnership nature of constitution
Being a partnership firm, SRC is exposed to inherent risk of
partners' capital being withdrawn at time of personal contingency,
and firm being dissolved upon the death/retirement/insolvency of
partners.
Key Rating Strengths
Experienced promoters
Mr. Sukhdev Prajapati holds experience of more than 2 decades in
the field of financial services of agriculture commodities while
Mr. Soham Purohit holds experience of 3 years in cotton ginning
business.
Location advantage and eligibility to receive fiscal benefits from
the government SRC's manufacturing facilities are located in
Mehsana district of Gujarat which is the largest producer of raw
cotton in India. It enjoys benefits in terms of lower logistics
expenditure, easy availability of raw material, labour, water and
power connection. Also, cotton being an agro-commodity SRC is
eligible for government subsidies which are projected to increase
the cash flow in the short-term.
Ahmedabad-based (Gujarat), SRC was formed in February, 2016 by Mr.
Sukhdev Prajapati, Mrs. Manisha Purohit and Mr. Soham Purohit. The
firm is setting up a greenfield plant for cotton ginning and
pressing near Mehsana district in the area of 19,425 square meters.
The firm will operate with 36 double roller jumbo gin machines of
54" size for ginning and 5 cotton stripper machines for pressing.
Total installed capacity for ginning will be 45619.20 metric tons
per annum (MTPA) for raw cotton. For oil extraction process, 12
extruders of 33*6" will be installed and its installed capacity
will be of 24,192 MTPA of cotton seeds.
Total proposed project cost was Rs.14.93 crore which was proposed
to be funded through term loan of Rs.4.50 crore, unsecured loans
from relatives of Rs.4.43 crore and balance by partners' capital.
Total project cost incurred as on September 3, 2016 was Rs. 13.84
crore (92.70% of the project cost) which was financed through term
loan of Rs.4.50 crore, capital contribution of Rs.6 crore and
remaining amount through unsecured loans from promoters. Mrs.
Manisha Purohit and Mr. Soham Purohit are also associated with
another partnership firm namely Shiv Shakti Industries, engaged in
cotton ginning and oil extraction.
SHREE GANPATLAL: Ind-Ra Maintains BB LT Rating in Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained Shree Ganpatlal
Onkarlal Agrawal & Company's Long-Term Issuer Rating in the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will
continue to appear as 'IND BB (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR180 mil. Working capital loans maintained in non-
cooperating category with IND BB (ISSUER NOT COOPERATING) /
IND A4+ (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on May
25, 2018. Ind-Ra is unable to provide an update, as the agency does
not have adequate information to review the ratings.
COMPANY PROFILE
Shree Ganpatlal Onkarlal Agrawal & Company was originally formed as
a proprietary concern by Ms. Geeta Devi Bindal in 1988. It was
later reconstituted as a partnership firm in FY09. The firm
provides coal transportation, loading, unloading, and handling
services through its wide network of branches across India.
SHRI LAXMI: CARE Keeps BB- Rating in Not Cooperating Category
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shri Laxmi
Polycoat Private Limited continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 10.87 CARE BB-; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 09, 2018, placed
the rating(s) of Shri Laxmi Polycoat Private Limited. (SLP) under
the 'issuer non-cooperating' category as SLP had failed to provide
information for monitoring of the rating for the rating exercise as
agreed to in its Rating Agreement. SPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and an email dated March
04, 2019, April 01, 2019, April 05, 2019, April 10, 2019, April 16,
2019, April 18, 2019 In line with the extant SEBI guidelines, CARE
has reviewed the rating on the basis of the best available
information which however, in CARE's opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account its moderately leveraged capital
structure and its working capital intensive operations. The rating
also factored in Inherent risk associated with the highly
fragmented textile industry coupled with commoditized nature of
products. The ratings, however, derives comfort from Experienced
promoter coupled with established presence of the group company
into the textile industry along with Presence in the textile
cluster with easy access to raw material and labor, comfortable
scale of operations along with moderate profit margins and debt
coverage indicators
Detailed description of the key rating drivers
At the time of last rating on February 09, 2018, the following were
the rating strengths and weaknesses (Updated for the information
available from Registrar of Companies):
Key Rating Weaknesses
Moderately leveraged capital structure and its working capital
intensive operations albeit moderate liquidity position Capital
structure of SLP marginally improved and remained moderately
leveraged as marked by overall gearing ratio of 2.05 times on
account of declined in total debt due to schedules repayment of
term loan as on March 31, 2018. Liquidity position of SLP remained
moderate marked by current ratio of 1.27 times as on March 31, 2018
as against current ratio of 1.10 times as on March 31, 2017.
Working capital cycle remained in same line as compare to previous
year and remained at 22 days. Cash and bank balance stood low at
0.19 crore. Cash flow from operations remained at Rs.0.66 crore as
on March 31, 2018. Further net working capital to total capital
employed ratio remained moderate at 41% as on March 31, 2018
Inherent risk associated with the highly fragmented textile
industry coupled with commoditized nature of products
Being part of textile industry SLP is exposed to inherent risk of
textile industry characterized by highly fragmented in nature with
presence of huge number of organized as well as unorganized players
into the weaving segment. SLP being into weaving segment faces high
degree of competition from numerous weaving players in the Gujarat
textile market.
Furthermore, due to the fragmented nature of the fabric industry,
bargaining power of fabric manufacturers with raw material
suppliers and customers are restricted which is also reflected in
the low profit margins.
Key Rating Strengths
Experienced promoter coupled with coupled with established presence
of the group company into the textile industry The key management
of SLP includes Mr. Pratik Mittal and Mr. Gaurav Mittal who have
moderate experience of more than five years into the textile
industry. However, both the directors are assisted by elder
brothers, Mr. Anuj Mittal and Mr. S K Mittal who are director in
Mahak Synthetic Mills Private Limited which has established
presence into manufacturing of finished fabrics and processing of
denim fabric for more than two decades.
Presence in the textile cluster with easy access to raw material
and labor SLP is based in Ahmedabad, Gujarat which is one of the
largest textile manufacturing hubs in India. The region comprises
of a large number of textile manufacturing and processing units.
SLP's presence in the textile manufacturing region results
in benefit derived from lower logistics cost (both on
transportation and storage), easy availability and procurement of
raw materials at effective prices.
Healthy scale of operation with moderate profit margins and debt
coverage indicators
SLP commenced its commercial operations from February 2015 after
successful completion of its project within envisaged time and cost
parameters. Hence FY16 was the first year of operations. Further
during FY18, SLP reported a total operating income (TOI) of
Rs.102.95 crore as against 104.27 crore during FY17. Further,
Profit margins remained moderate as marked by PBILDT margin and PAT
margin of 5.49%. On account of moderate profitability, debt
coverage indicators also remained moderate as marked by total debt
to GCA ratio of 4.99 times and interest coverage ratio of 2.94
times as on March 31, 2018
Ahmedabad (Gujarat) based, SLP was incorporated in November, 2012
by Mr. Pratik Mittal and Mr. Gaurav Mittal. It is engaged in the
business of manufacturing of denim fabric from its recently
completed green-field weaving unit located at Ahmedabad which has
an installed capacity of 86.40 lakh Meters Per Annum (LMPA) for
weaving of denim fabrics. SLP commenced commercial production from
February 2015. It sells its entire grey denim fabric to its
associate concern namely Mahak Synthetic Mills Private Limited
(MSMPL; engaged into manufacturing of finished fabrics and
processes denim fabric). Further, the group has another entity
namely Balaji Polycot Pvt. Ltd. (BPPL) and it is also engaged into
weaving of denim fabrics wherein entire sells is made to MSMPL.
SILVEROAK COMMERCIALS: Insolvency Resolution Process Case Summary
-----------------------------------------------------------------
Debtor: M/s. Silveroak Commercials Limited
Plot No. F-24, MIDC Satpur, Nashik
MH 422007
Insolvency Commencement Date: May 2, 2019
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: November 5, 2019
(180 days from commencement)
Insolvency professional: Mr. Rajendra Kumar Khandelwal
Interim Resolution
Professional: Mr. Rajendra Kumar Khandelwal
302, Taramahal, Plot No. 756
5th Road, Khar (W)
Mumbai 400001
E-mail: rkkshashi@yahoo.co.in
Tel.: 7987900772
- and -
Office No. 3, 1st Floor
Mahalaxmi Building, Maruti Lane, Fort
Mumbai 400001
E-mail: rkirp02@gmail.com
Last date for
submission of claims: May 16, 2019
SPLENDID METAL: CARE Keeps D Rating in Not Cooperating Category
---------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Splendid
Metal Products Limited continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 1701.84 CARE D; Issuer Not Cooperating;
Facilities Based on best available
information
Long-term Bank 269.13 CARE D; Issuer Not Cooperating;
Facilities Based on best available
information
CARE had, vide its press release dated December 22, 2017, placed
the rating(s) of Splendid Metal Products Limited (SMPL) under the
'issuer non-cooperating' category as SMPL had failed to provide
information for monitoring of the rating as agreed to in its Rating
Agreement. SMPL continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter/email dated April 24, 2019. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Detailed description of the key rating drivers
At the time of last rating on December 22, 2017 the following were
the rating strengths and weaknesses:
Key Rating Weaknesses
Stretched liquidity position with ongoing delays in debt servicing
During FY18, liquidity position of the company continued to remain
stretched on account of slower realization from debtors. Given the
slow realization of debtors has resulted in stretched liquidity
position of the company leading to ongoing delays in meeting debt
obligation.
Analytical approach: Standalone
Splendid Metal Products Limited (Erstwhile Sujana Metal Products
Limited), belongs to Hyderabad based Sujana Group. SMPL was
incorporated in May 1988 under the name of Sujana Steel Re-Rolling
Industries (P) Limited. The name of the company was later changed
to Sujana Steels Private Limited in March 1992 and got converted
into public limited company in April 1992. SMPL is engaged in
trading of steel products and manufacturing of TMT bars &
structural steel products at its facilities located at Hyderabad,
Chennai and Vizag. Sujana group, belonging to Y. S. Chowdhary, is a
South India based industrial house having about two decades of
experience in the steel industry. The group is involved in
manufacturing of Thermo Mechanical Treated (TMT) bars, Structural
Steels, Galvanised Steel towers (used in power transmission &
telecom sector) and steel trading through its companies; Sujana
Universal Industries Ltd, Sujana Towers Ltd. etc.
SRI VENKATESWARA: CARE Keeps D, Not Cooperating Rating
------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Sri
Venkateswara Constructions Private Limited continues to remain in
the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 14.00 CARE D; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated February 21, 2018, placed
the rating(s) of Sri Venkateswara Constructions Private Limited
(SVCPL) under the 'issuer non-cooperating' category as SVCPL had
failed to provide information for monitoring of the rating. SVCPL
continues to be non-cooperative despite repeated requests for
submission of information through phone calls and email dated April
22, 2019, April 23, 2019, April 24, 2019, April 29, 2019 and April
30, 2019. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
Detailed description of the key rating drivers
The rating revision to the bank facilities of Sri Venkateswara
Constructions Private Limited (SVCPL) is on account of ongoing
delays in servicing interest
Key Rating Weakness
On-going delays in servicing interest
There are ongoing delays in servicing the debt obligation on time
due to shortage of funds during the period under review on account
of insufficient cash accruals and stressed liquidity position.
Tender based nature of operations
The company receives 100% work orders from government
organizations. All these are tender-based and the revenues are
dependent on the company's ability to bid successfully for these
tenders. Profitability margins come under pressure because of
competitive nature of the industry. However, the promoter's long
industry experience of two decades mitigates this risk to some
extent. Nevertheless, there are numerous fragmented & unorganized
players operating in the segment which makes the civil construction
space highly competitive.
Key Rating Strengths
Experience of the promoters for more than two decades in
construction industry SVCPL was promoted by Mr S Srinivasa Reddy
and Mr K Bhaskar Kumar Babu. Both the directors are qualified
graduates and have more than two decades of experience in civil
construction business. Due to long term presence in the market,
the company has good relations with suppliers and customers.
Analytical Approach: Standalone
Andhra Based, Sri Venkateswara Constructions (SVC) was established
in the year 2006 as partnership firm. Later on, in the year 2012,
SVC change its constitution to current nomenclature Sri
Venkateswara Construction Private Limited (SVCPL). The company is
engaged in Civil construction works includes construction of
bridges for railway track, fabrication work, earth work,
construction of buildings to government organization, transmission
lines and canal works among others. The company purchase the raw
material like cement, steel, sand and concrete etc. within Andhra
Pradesh.
SRINIVASA EDIFICE: CARE Keeps BB Rating in Not Cooperating Category
-------------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Srinivasa
Edifice Private Limited continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 15.24 CARE BB; Issuer Not Cooperating;
Facilities Based on best available
information
CARE has been seeking information from Srinivasa Edifice Private
Limited (SEPL) to monitor the ratings vide letters/e-mail
communications from December 05, 2018 to May 01, 2019 and numerous
phone calls. Despite our repeated requests; the company has not
provided the requisite information for monitoring the ratings. In
the absence of minimum information required for the purpose of
rating, CARE is unable to express opinion on the rating. In line
with the extant SEBI guidelines, the rating on Srinivasa Edifice
Private Limited bank facilities will now be denoted as CARE
BB;ISSUER NOT COOPERATING*
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating takes into account experienced promoters, integrated
nature of operations, deterioration in scale of operations and
operating cycle during FY18, comfortable capital structure and debt
coverage ratios, volatile PBILDT margins with increase in FY18,
small scale of operations with business vulnerability to weather
conditions.
Detailed description of the key rating drivers
At the time of last rating in last Press Release dated January 04,
2018 the following were the rating strengths and weakness: (updated
for the information available from Registrar of Companies)
Key rating Strengths
Experienced promoters and management team: Mr Y. V. Krishna Mohan,
the Chairman & Managing Director of SEPL, has over two decades of
experience in working with different zones of the Indian Railways
and aggregate manufacturing industry.
Integrated nature of operations: SEPL has integrated operations
with its own quarries and crushing equipment for supplying stone
ballast and crushed aggregates to Railways, Power Projects, Ready
mix plants, Real Estate Builders, for road works, canal works etc.
Having crushers spread across India enables the company in
executing contracts with lower transportation costs and also
ensures ease in access to aggregates.
Moderate order book position resulting in medium term revenue
visibility albeit: SEPL has an order book of Rs.612.40 crore as on
January, 2019, which translates to 3.68x of the revenue for FY18
and the same provides medium term revenue visibility to SEPL.
Marginal improvement in profitability margins during FY18: During
FY18 PBILDT margin of the company increased marginally by 38 bps to
8.92% vis-à-vis 8.54% in FY17.PAT margin of the company also
increased marginally by 21 bps to 2.95% in FY18 vis-à-vis 2.74% in
FY17.
Comfortable capital structure and satisfactory debt coverage
indicators: The capital structure of the company indicated by
overall gearing has been improving over the past three financial
years with the overall gearing below unity as on March 31, 2018.
The other debt coverage indicators, viz, interest coverage and
total debt/GCA have been satisfactory and improving over the years.
Key Rating Weakness
Small scale of operations with business vulnerability to weather
conditions: The size and scale of company's operation is relatively
small with a low net worth base of Rs.27.78 crore as on March 31,
2018. Further Total operating income of the company decreased from
Rs.199.99 crore to Rs.166.57 crore (decline of 16.71%).
Additionally, the business of the company is vulnerable to weather
conditions and heavy rainfall may adversely impact the operations
of the crusher plants.
High client and geographical concentration risk: Majority of the
orders of SEPL are in the two states of Andhra Pradesh and
Telangana, which exposes the company to geographical concentration
risk. Additionally, the company is exposed to client concentration
risk as it derives majority of its revenue from few of its
clients.
High working capital utilization with deterioration in operating
cycle: SEPL operates in a working capital intensive industry and
the average working capital utilization in the 12 months ended
March 2019, was high at about 100%.
Operating cycle of the company deteriorated from 32 days in FY17 to
63 days in FY17 on account of increase in collection period from 27
days in FY17 to 57 days in FY18.
Weak Liquidity position: Liquidity position of the company is weak
on account low cash balance of Rs.1.28 crore as on March 31, 2018
and high dependence on external borrowings.
Highly fragmented industry with intense competition: As entry and
exit barriers in construction industry are low, the industry has
many organized as well as unorganized players and industry is
highly fragmented. As a result of this there is intense completion
among industry players.
Analytical approach: Standalone
Srinivasa Edifice Private Limited (SEPL) was incorporated in the
year 1984 as a subsidiary of Siddhartha Construction Private
Limited (SCPL) to carry out the business of supplying railway
ballast, stone aggregates, and sand to the Indian Railways. The
Managing Director of SEPL, Mr Y V Krishna Mohan, worked as
Executive Director in SCPL and later on, bought out SEPL from the
promoters of SCPL in the year 1996. SEPL is also registered as a
special class contractor with the Govt. of A.P and has executed
projects mostly for the Govt. of A.P and Telangana. The company
also undertakes minor civil works for various divisions of the
Indian Railways and municipal corporations. Apart from these, the
company does minor civil contracts for private clients, where the
works includes earth work, excavation of hard rocks and embankment
layout and grading works.
TAGORE EDUCATIONAL: CARE Keeps D, Not Cooperating Rating
--------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Tagore
Educational Trust continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank 41.34 CARE D; Issuer Not Cooperating;
Facilities Based on best available
information
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated March 28, 2018 placed the
ratings of Tagore Educational Trust (TET) under the 'issuer
non-cooperating' category as TET had failed to provide information
for monitoring of the rating. TET continues to be non-cooperative
despite repeated requests for submission of information through
e-mails, phone calls and a letter dated April 22, 2019. In line
with the extant SEBI guidelines, CARE has reviewed the rating on
the basis of the best available information which however, in
CARE's opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating.
The ratings have been revised on account of delays in debt
servicing by the company ascertained by CARE as part of its due
diligence exercise.
Detailed description of the key rating drivers
Key Rating Weaknesses
Delays in debt servicing:
CARE as part of its due diligence exercise interacts with various
stakeholders of the company including lenders to the company and as
part of this exercise has ascertained that there are delays in debt
servicing.
TET was founded in January 1997 under Indian Trust Act as a Telugu
minority institution, by Prof. Mala Jagathrakshagan (Chairperson)
with the main objective of rendering philanthropic and educational
services. The trust manages six institutions in Chennai, comprising
Tagore Engineering College (TEC), Tagore Arts & Science College
(TASC), Tagore Dental College & Hospital (TDCH), Tagore Medical
College & Hospital (TMCH), Hilton Higher Secondary School (HHSS)
and Hilton Teacher Training Institution (HTTI). TET's board of
trustees comprises of close family members of its chairperson.
UMANG BOARDS: CARE Reaffirms BB+ Rating on INR41.39cr Loans
-----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of
Umang Boards Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term Bank
Facilities 41.39 CARE BB+ Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of Umang Boards Limited
(UBL) continue to remain constrained on account of its modest scale
of operations, working capital intensive nature of operations and
vulnerability of margins to fluctuation in the raw material prices
and foreign exchange rate. The ratings are, further, constrained on
account of implementation risk associated with its on-going debt
funded project.
The ratings, however, continue to favourably take into account
experienced promoters with long track record of operations, healthy
profitability margins and comfortable solvency position. The
ratings, further, continue to derive strength from favorable demand
outlook of its products.
UBL's ability to increase its scale of operations while maintaining
the profitability margins and efficient management of working
capital would be the key rating sensitivities. Further, timely
completion of the project within envisaged time and cost parameter
and stabilization of same would also be the key ratings
sensitivities.
Detailed description of the key rating drivers
Key Rating Weakness
Modest scale of operations although growing
During FY18, Total Operating Income (TOI) of the company has
increased by 10.87% over FY17 owing to higher demand of the
products from the domestic markets. As per provisional result of
FY19, TOI of the company has improved by 25.14% over FY18 owing to
higher demand of its products from transformer manufacturers.
Despite continuous growth in TOI, the scale of operations of
company stood modest at Rs.38.73 crore in FY19.
Working Capital intensive nature of operations
The business of the company remained working capital intensive in
nature with elongated operating cycle of 175 days in FY19, however,
improved from 250 day in FY18 owing to low collection period and
high creditors period. The business of UBL is directly or
indirectly linked with State Power Utilities (SPU) which are facing
liquidity crunch and making delayed payments to its customers.
Further, the supplies to SEB's undergo several inspections like
designing, production, inspection before and after delivery, budget
allocations and final approval etc. This full process took 5-6
months to release payments by Electricity Boards to the suppliers
resulting in higher receivables period. UBL imports pulp as raw
material from USA and European countries as the availability of raw
material from domestic source is negligible. In order to have
uninterrupted production the company has to keep raw material
available. Due to higher inventory, quick ratio remained below
unity at 0.81 times as on March 31, 2019, although, the current
ratio stood moderate at 1.40 times as on March 31, 2019. It has
utilized average 56% of working capital bank borrowing in the last
12 months ended March 2019.
Volatility associated with raw material prices
The major raw material used for manufacturing of insulation paper
board is pulp which constitutes major portion of the total cost.
UBL has to keep inventory of 3 to 4 months in order to provide
timely delivery to its customers which exposes profitability to
adverse fluctuations in waste paper prices.
Project implementation risk offset to an extent with available
moratorium period UBL is engaged in manufacturing of pre-compressed
insulating boards, calendared boards, pre-compressed laminated
insulated boards, components, crape paper tube and diamond dotted
paper and finds its final application in the
transformer industry. Its group concern, Anup Insulation Private
Limited (AIPL), is engaged in the business of manufacturing of
double paper covered aluminum wire and super aluminum enameled
aluminum wires.
Earlier, majority of transformer manufacturers were using double
paper covered wire for coil winding, but due to advancement in
technology and change in methods of manufacturing transformers, now
demand is increasing for super enameled aluminum wires.
To cater the increase demand of super enameled aluminum wires, in
Q4FY19, UBL undertook a project to set up a new unit for
manufacturing of wire enamel (Aluminium) and enamel varnish. It has
envisaged total cost of Rs.24.49 crore towards the projects to be
funded through term loan of Rs.14.69 crore, Rs.2 crore from
unsecured loans and remaining from internal accruals. The company
envisaged that project to be completed by end of December 2019. It
has incurred project cost of Rs.10.67 crore towards the project
till March 06, 2019 funded through term loan of Rs.7.53 crore,
unsecured loans of Rs.1.01 crore and remaining through internal
accruals. The management has opined that it will start commercial
operation from September 2019.
Further, the term loan principal repayment envisaged to commence
from May, 2020. The expected moratorium period received by the
company will be of 7-8 months from the commencement date of its
production. Hence, UBL has sufficient time in order to stabilise
its operations and generate enough cash accruals to service its
debt obligations.
Key Rating Strengths
Experienced promoters having track record of operations for more
than a decade and reputed clientele base The management control of
UBL is in the hands of Mr S.K. Dhanuka, Mr Anup Kumar Dhanuka and
two other directors.
Mr S.K. Dhanuka and Mr Anup Kumar Dhanuka look after the overall
operations of the company.
UBL has presence in the business for more than a decade. UBL's
manufacturing unit is situated at Jaipur and has total installed
capacity of 6100 Metric Tonnes Per Annum (MTPA) of pre-compressed
insulated boards and 1800 MTPA of calendared boards as on March 31,
2018. Being present in the industry since long period of time, it
has helped it to create long term relationships with reputed
clients.
Favorable demand outlook
Insulation paper and paper board manufactured by UBL finds
application in transformers and is expected to benefit on account
of envisaged addition in power generation capacity in India.
Further, Ujwal DISCOM Assurance Yojana (UDAY) is helping in
financial turnaround and revival package electricity distribution
companies of India (DISCOMs) initiated by the Government of India
creating direct demand for its products.
The Chinese government is planning to levy a 25% tariffs on US
Shipments of Old Corrugated Cardboards (type of recyclable waste),
other recycled paper and recovered fiber. This will create
opportunities for the Indian companies in this segment not only to
flourish and expand but also to secure more sales realisation.
Healthy profitability margins
The profitability of UBL stood healthy with PBILDT and PAT margin
of 32.07% and 13.74% respectively in FY19. The healthy
profitability margin of the company is due to its market position
and high demand from its customers with diversified products
offerings to transformer manufacturers. During FY19, PBILDT margin
of the company has improved significantly by 451 bps over FY18;
however, PAT margin has declined marginally by 8 bps over FY18
mainly on account of higher interest and depreciation.
Comfortable solvency position
Capital structure of the company stood comfortable with an overall
gearing of 0.93 times as on March 31, 2019, improved from 1.09
times as on March 31, 2018 mainly due to higher accretion of
profits to reserves as against increase in total debt. Total debt
to GCA of the company has also improved from 4.15 times as on March
31, 2018 to 3.75 times as on March 31, 2019 mainly due to
proportionately higher increase in GCA than total debt. Interest
coverage stood comfortable at 4.18 times in FY19.
Jaipur (Rajasthan) based UBPL was promoted by Dhanuka family in the
year 1999 with an objective to manufacture precompressed insulating
boards. The promoters have presence in the business since 1978 as
initially, they have started with trading of pre-compressed
insulating boards. The promoters have also promoted other associate
concerns viz. Anup Insulation Private Limited (engaged in the
manufacturing of magnet wire, enameled round copper wire etc,),
Umang Boards BKK Co Limited, Thailand (engaged in the manufacturing
of compressed boards) and Umang Board Thailand Co Limited (engaged
in the trading business). UBPL has started commercial production of
pre-compressed insulating board in 2002 and further diversified its
product portfolio and has started manufacturing of large size of
pre-compressed insulating boards, calendared boards, pre-compressed
laminated insulated boards, components, crape paper tube and
diamond dotted paper.
On August 07, 2018, the constitution of UBPL was converted into
Public limited company and assumed its name, Umang Boards Limited
(UBL).
The products of UBL find its final application in the transformer
industry and the plant of the company is certified as ISO
9001:2008, 14001:2004, 18001:2007 and ISO/IEC 17025;2005. UBL's
manufacturing unit is situated at Jaipur and has total installed
capacity of 6100 Metric Tonnes Per Annum (MTPA) of pre-compressed
insulated boards and 1800 MTPA of calendared boards as on March 31,
2019.
[*] INDIA: Srinivas Says NBFCs Sector Faces "Imminent Crisis"
-------------------------------------------------------------
PTI News Delhi reports that there is an "imminent crisis" in the
non-banking financial companies (NBFCs) sector as misadventures by
some large entities and credit squeeze present a perfect recipe for
disaster, according to Corporate Affairs Secretary Injeti
Srinivas.
According to PTI, in recent months, the country's financial system
has been grappling with multiple woes in the wake of the turmoil at
the diversified IL&FS Group as well as debt defaults by some other
large entities.
"There is an imminent crisis in the NBFC sector. There is a credit
squeeze, over-leveraging, excessive concentration, massive mismatch
between assets and liabilities, coupled with some misadventures by
some very large entities, which is a perfect recipe for disaster,"
PTI quotes Mr. Srinivas as saying in an interview.
However, he added that "responsible" companies are managing the
risk well and are not facing such a dire situation, PTI notes.
Earlier this month, former Prime Minister Manmohan Singh said the
banking sector is "under severe stress" and the way out of "this
mess" is to reverse some "gross distortions", work closely with the
RBI, restart the process of credit delivery and ensure sufficient
liquidity and cash in circulation, PTI recounts.
=================
I N D O N E S I A
=================
ABM INVESTAMA: Moody's Cuts CFR & $350MM Senior Unsec. Notes to B1
------------------------------------------------------------------
Moody's Investors Service has downgraded to B1 from Ba3 the
corporate family rating of ABM Investama Tbk and the rating on its
$350 million senior unsecured notes due 2022.
The outlook has been revised to stable from negative.
RATINGS RATIONALE
"The downgrade reflects our expectation that ABM's credit profile
will weaken considerably following the loss of a key customer at
its mining services subsidiary, PT Cipta Kridatama (CK)," says
Maisam Hasnain, a Moody's Analyst.
In March 2019, CK stopped mining service operations at two mines
owned by Indonesian thermal coal producer Toba Bara Sejahtra Tbk.
This follows the early termination of a contract at Toba Bara's
third coal mine in December 2018. Moody's estimates these contracts
contributed around 22% of ABM's consolidated revenue and 17% of
reported EBITDA in 2018.
As a result of the lost earnings from these contracts, and based on
Moody's medium-term price assumptions for thermal coal, Moody's
estimates that ABM's adjusted leverage -- as measured by adjusted
debt/EBITDA -- will increase to around 3.6x in 2019 from around
2.0x in 2018. Consequently, ABM's leverage is no longer in line
with Moody's expectations for its previous Ba3 rating.
ABM's business profile has also become less diversified, and it is
increasingly reliant on coal sales, which in turn are subject to
considerable price volatility. Moody's estimates coal sales from
ABM's two operating mines will constitute around 50% of
consolidated revenue in 2019, compared to around 36% in 2018.
ABM aims to partially offset the lost revenue by obtaining new
customers. It plans to complete a $60 million minority investment
in an Indonesian thermal coal producer by June 2019. According to
ABM, the investment is subject to it obtaining service agreements
that provide for a minimum level of revenue and earnings from the
target company.
"However, the proposed $60 million investment, once completed, will
weaken ABM's liquidity buffer. Such reduced liquidity could weaken
the company's ability to fund a separate new acquisition of a
majority stake in another coal mine," says Maisam Hasnain, also
Moody's lead analyst for ABM.
ABM's B1 CFR incorporates Moody's expectation that ABM will
continue to seek a majority stake acquisition in a coal mine over
the next 6-12 months to offset the depleting coal reserves at its
Tunas Inti Abadi mine, which only had around 14 million tons of
coal reserves left as of December 2018.
ABM's business profile will weaken further if uncertainty continues
over the company's ability to acquire suitable coal assets in the
near term, or if it raises considerable debt to fund the
acquisition.
The stable outlook reflects Moody's expectation that ABM will
increase its coal production volumes and extend the mine life in
the next 12 months, while maintaining prudent financial policies.
A near-term upgrade is unlikely given today's downgrade. However,
upward rating pressure could develop over time if ABM improves its
operating performance and materially increases its coal reserves.
Credit metrics indicative of a rating upgrade include adjusted
debt/EBITDA below 3.0x, adjusted EBIT/interest above 2.5x, and
adjusted (CFO - dividends)/debt above 25% on a sustained basis.
On the other hand, the ratings could be downgraded if ABM: (1)
fails to improve consolidated earnings and cash flow; or (2) fails
to extend its mine life in the near term and/or increase its coal
production volumes; or (3) there is evidence of cash leakage to its
unrestricted power subsidiary, PT Anzara Janitra Nusantara.
Credit metrics indicative of a ratings downgrade include adjusted
debt/EBITDA above 4.0x, adjusted EBIT/interest below 2.0x, and
adjusted (CFO - dividends)/debt below 20% on a sustained basis.
The principal methodology used in these ratings was Mining
published in September 2018.
Listed on the Indonesian Stock Exchange since 2011, ABM Investama
Tbk is an integrated energy company with investments in coal
mining, mining services, engineering and logistics, and power
generation.
The Hamami family controls 79% of ABM through PT Tiara Marga
Trakindo (23%) and Valle Verde PTE LTD (56%). The remaining shares
are held by the public.
===============
M A L A Y S I A
===============
SERBA DINAMIK: Fitch Rates $300MM Sukuk due 2022 Final 'BB-'
------------------------------------------------------------
Fitch Ratings has assigned Malaysia-based Serba Dinamik Holdings
Berhad's (SDHB; BB-/Stable) USD300 million 6.3% sukuk due 2022 a
final rating of 'BB-'. The sukuk is issued by SDHB's wholly owned
subsidiary, SD International Sukuk Limited, and guaranteed by SDHB.
The sukuk is rated at the same level as SDHB's senior unsecured
rating as it represents the company's unconditional, unsecured and
unsubordinated obligations. The final rating follows the receipt of
documents conforming to information already received and is in line
with the expected rating assigned on 23 April 2019.
SDHB's rating reflects its strong market position in Malaysia,
where it is the fourth-largest provider of operation and
maintenance (O&M) services to the oil and gas industry by 2017
revenue. The rating is also supported by SDHB's solid financial
profile, short-to-medium term revenue visibility and relatively low
earnings cyclicality. Nevertheless, Fitch believes that the
company's small operating scale constrains its rating.
KEY RATING DRIVERS
Long-Term Issuer Default Rating (IDR):
Strong Market Position; Robust Orders: The company has built up a
record of securing new orders and an established reputation for
project completion. SDHB's order book more than doubled between
2015 and 2017 and reached MYR8.3 billion by end-2018. The company's
order book-to-revenue ratio increased to 2.5x in 2018 from an
average of 1.3x in 2015-2017, and Fitch expects it to remain at
2x-2.5x in the medium term, providing revenue visibility. Fitch
also believes SDHB is well-positioned to benefit from the trend in
vendor consolidation together with Malaysian national oil company
Petroliam Nasional Berhad's (PETRONAS; A-/Stable) rising capex in
the downstream segment.
Small Scale, High Capex: SDHB's rating is constrained by its small
operating scale relative to other Fitch-rated peers, and the need
for capex to support its growth, which limits its ability to
generate a neutral-to-positive free cash flow (FCF). The company
also focusses on mid-tier clients, which supports its bargaining
power and has translated into industry-leading profit margins.
Substitution Risks: The company's O&M contracts, which contribute
to the majority of revenue, are typically non-exclusive, which
exposes the company to the risk that it may be substituted by
competitors, especially those from outside Malaysia. Nevertheless,
Fitch believes the risk is mitigated by the various operating
licenses SDHB holds in different jurisdictions, its long-term
client relationships and its track record and reputation in the
industry. Fitch also believes substitution risks are likely to
improve along with the company's growing customer and sectoral
diversification. SDHB reduced its revenue concentration in Malaysia
to 28% from 55% in the six years to 2018.
Revenue Visibility; Resilient Operations: SDHB typically enters
into two- to five-year contracts for its O&M services and 1.5-year
to three-year contracts for engineering, procurement, construction
and commissioning (EPCC) projects, which provide the company with
some revenue visibility. SDHB's maintenance services, which tend to
have more resilient demand during industry downturns, provide some
offset to its exposure to the cyclical oil and gas sector, where
lower prices lead to curtailment in activities and spending. Over
60% of SDHB's order book is derived from the downstream oil and gas
segment, which makes its cash flow less sensitive to the
exploration business and, subsequently, to commodity price
fluctuations.
Temporary Leverage Increase; Expected Deleveraging: Fitch expects
SDHB's leverage (adjusted net debt/adjusted EBITDAR), after
adjusting for the key financials of associate entities to which
SDHB provides proportionate financial guarantees, to increase to
around 2.5x in 2019-2020 (2018: 1.7x) on higher working-capital
needs and expansionary capex requirements as it ramps up on new
order books. Leverage between 2019 and 2020 is also likely to be
affected by the increased debt from the guarantees for its
associate entities. Nevertheless, Fitch expects EBITDAR
contributions from the associate entities to be more meaningful
starting 2021 as they ramp up operations, causing leverage to
improve to around 2x in 2021-2022.
Sukuk Rating:
The rating on the sukuk is driven solely by SDHB's Long-Term IDR of
'BB-'. SDHB will be the guarantor of certain obligations of Serba
Dinamik International Ltd (SDIL), a 100%-owned subsidiary of SDHB,
under the sukuk documentation, and a default of the senior
unsecured obligations would reflect a default of SDIL and SDHB in
accordance with Fitch's rating definitions.
Fitch has rated SDHB on a consolidated basis on account of the
financial covenants in the sukuk documentation, which are based on
the consolidated group financials, and the cross-default clauses
within the US dollar sukuk issue, which includes SDHB's three main
operating subsidiaries. SDIL is one of SDHB's main operating
entities, contributing around 50% of group revenue and EBITDA in
2018.
Fitch has not considered any underlying assets or collateral
provided, as it believes the issuer's ability to satisfy payments
due on the certificates will ultimately depend on SDIL and SDHB
satisfying their unsecured payment obligations under the
transaction documents described in the prospectus and other
supplementary documents.
In addition to SDIL's and SDHB's propensity to ensure repayment of
the sukuk, Fitch believes the two companies would also be required
to ensure full and timely repayment of SDIS's sukuk obligations due
to their roles and obligations under the sukuk structure and
documentation:
- Pursuant to the commodity murabaha investment agreement and the
wakala agreement, SDIL shall pay to the transaction account an
amount which is intended to fund the periodic distribution amount
payable by the trustee under the certificates of the relevant
series on the periodic distribution date. Fitch notes that if there
is a shortfall, the trustee shall procure the service of a payment
by the guarantor specifying the distribution shortfall restoration
amount or value restoration amount (as the case may be) to be paid
in accordance with the terms of the guarantee.
- On the scheduled dissolution date or upon the occurrence of a
tax or a dissolution event (a) the outstanding deferred payment
price shall be immediately due and payable under the commodity
murabaha investment agreement and (b) the wakeel will liquidate the
wakala investment in accordance with the terms of the wakala
agreement, and these amounts shall be used to redeem the
certificates at the dissolution distribution amount.
The dissolution distribution amount equals the sum of i) the
outstanding face amount of the certificates; and ii) any due and
unpaid periodic distribution amounts for the certificates. The
payment obligations of SDIL (in any capacity) under the transaction
documents will be direct, unconditional, unsubordinated and
unsecured obligations of SDIL and shall at all times rank at least
equally with all other unsecured and unsubordinated obligations of
SDIL, present and future.
SDHB will provide an unconditional and irrevocable corporate
guarantee in respect of all sums expressed to be payable from time
to time by SDIL (i) in its capacity as obligor under the
declaration of trust, (ii) in its capacity as wakeel under the
wakala agreement and (iii) in its capacity as buyer under the
commodity murabaha investment agreement. Payment obligations under
the guarantee will constitute direct, unconditional, unsubordinated
and unsecured obligations of SDHB, and shall at all times rank at
least equally with all other unsecured and unsubordinated
obligations of SDHB, present and future.
The sukuk issuance includes negative pledge provisions, covenants,
as well as financial reporting obligations, change of control and
cross-default language.
The certificates, the declaration of trust, the deed of guarantee,
the agency agreement, the commodity murabaha investment agreement,
the wakala agreement and any non-contractual obligations arising
out of or in connection with them will be governed by, and
construed in accordance with, English law, while other aspects will
be governed by the laws of Malaysia and other jurisdiction laws
depending on the place of execution of the works. Fitch does not
express an opinion on whether the relevant transaction documents
are enforceable under any applicable law. However, Fitch's rating
on the certificates reflects its belief that SDHB would stand
behind its obligations. When assigning ratings to the sukuk
issuance, Fitch does not express an opinion on its compliance with
sharia principles.
DERIVATION SUMMARY
SDHB's rating may be compared with PT Bukit Makmur Mandiri Utama
(BUMA; BB-/Stable), PT ABM Investama Tbk (BB-/Negative), PT Wijaya
Karya (Persero) Tbk (WIKA; BB/Negative, standalone profile b+) and
Emeco Holdings Limited (B/Stable). BUMA is the second-largest
mining contractor in Indonesia with a 20% market share. Fitch
believes SDHB's higher customer and product diversification, lower
capex risks and lower earnings sensitivity to commodity price
fluctuations compensate for its thinner profit margin, which was
evident from SDHB's revenue growth during the low oil price
environment in 2014-2016 compared with BUMA's decline in scale
during low coal prices in 2012-2016.
Fitch believes while ABM - which focuses on coal production, mining
contracting services, integrated logistics and engineering services
- has an integrated business with wider profit margins and stronger
free cash flow generation, it is more exposed to commodity price
fluctuations. In contrast, SDHB's lower leverage profile, exposure
to the more stable downstream oil and gas segment and greater
geographical and customer diversification offset its smaller scale,
resulting in similar ratings.
Strong domestic market franchises support the ratings of both SDHB
and WIKA, which is one of Indonesia's largest and most diversified
state-owned contractors with an established track record in the
construction and EPCC activities of large infrastructure and
power-plant projects. Fitch believes SDHB's smaller operating scale
is compensated by its wider profit margin and greater geographical
diversification. Fitch thinks WIKA's order book, which focuses on
EPCC and infrastructure projects, is also more unpredictable than
SDHB's, which is based on O&M services. SDHB's lower business
volatility justifies the one-notch difference between its rating
and the standalone credit profile of WIKA.
SDHB and Emeco have comparable leverage profiles and operating
scales. Nevertheless, Fitch believes Emeco's highly volatile
business of heavy-machinery leasing and greater earnings
sensitivity to commodity prices, evident from the deterioration in
its profitability, cash flow generation and operating scale during
the last global commodity price downturn, warrant the two-notch
rating difference between the two companies.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Bid book annual growth rate of 10% in 2019 and beyond.
- New order-book win rate of 30% across 2019-2021.
- Order-book renewal rate of 25% from 2019
- EBITDA margin of around 17% over 2019-2021
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Negative Rating Action:
- Significant weakening of the order-book profile, primarily
driven by loss of key contracts or customers
- Net adjusted debt/EBITDAR above 2.5x on a sustained basis.
Fitch has adjusted the leverage metric by including the key
financials of the associate entities to which SDHB provides
proportionate financial guarantees
- EBITDA margin sustained below 12%
Developments That May, Individually or Collectively, Lead to
Positive Rating Action:
Fitch does not anticipate any positive rating action over the next
18-24 months. However, Fitch may consider positive rating action
should the company achieve a material improvement in operating
scale and generally neutral free cash flow, while maintaining a
stable financial profile
LIQUIDITY
Adequate Liquidity: As of end-2018, SDHB had readily available cash
of around MYR824 million, compared with short-term debt maturities
of MYR604 million, which mainly comprise revolving credit
facilities that may be rolled over during the normal course of
business. The company in September 2018 issued MYR800 million of
senior unsecured medium-term notes (MTN) from its MYR1.5 billion
MTN programme. This, combined with the company's recently issued US
dollar sukuk, may further improve its liquidity profile. The
company also plans to roll over and maintain the availability of
its MYR750 million revolving credit facility for an additional
liquidity buffer. Fitch also believes the company's liquidity
profile is supported by its strong domestic banking access given
its long-term relationships with both regional and global banks.
=====================
N E W Z E A L A N D
=====================
RIOT FOODS: Co-Founder Wants to Return to Run the Company
---------------------------------------------------------
Aimee Shaw at The New Zealand Herald reports that former Riot Foods
chief executive Ryan Kamins who left the snack food company at the
end of last year has resurfaced, claiming he wants to return to run
the business.
In a letter purportedly sent out to shareholders on May 8, Kamins
said he was "pursuing two options" which would see him return to
"run Riot in some capacity," the Herald relates.
He did not specify what options he intended to pursue and would not
provide further information or comment when asked by the Herald.
"Although both options being pursued will very likely improve the
returns shareholders are hoping for, I seem to have to jump through
some hoops first," he wrote, the Herald relays. "Whatever the
result of these, I will continue to help and support Art, the
remaining staff, and the remaining board, as best I can to turn the
business around and trade indefinitely."
Riot Foods, which makes cereals and dried meat snacks, was founded
by Mr. Kamins and reality TV star Art Green in 2014.
Mr. Kamins resigned as chief executive in November citing severe
alcohol addiction, and that he had checked himself into a rehab
facility.
According to the Herald, the Auckland company is currently
finalising a deed of company arrangement between creditors and the
company's directors which will see the business continue to trade
and handed back to management to run, with administrator
assistance.
The Herald relates that administrator Iain McLennan of McDonald
Vague said there were no plans for Mr. Kamins to return to run Riot
Foods but would assess any proposals on merit.
"[Mr. Kamins] says that he is pursuing two positive options which
would see him return in some capacity. We do not know what the
options are, or whether if he is successful with either of them,
what impact it could have on Riot, its staff, creditors, and
shareholders," he said in a statement.
According to the Herald, Mr. McLennan said the directors and
administrators would "assess any firm, funded proposal on its
merits if and when we are presented with it, and if a proposal has
merit the shareholders and creditors will be asked to consider
it."
The company was focused on making Clean Paleo products, he said.
Last month, administrators of Riot Foods were considering legal
action after confidential company emails and text messages were
sent to shareholders by Mr. Kamins, who at the time said this was a
"final call to explain what else really happened at Riot".
"I realise this letter has the potential to put off some potential
buyers, but if they have an issue with the truth now, it's highly
likely they will have an issue with it later," the report quotes
Mr. Kamins as saying.
The Herald cannot reveal details of the letter for legal reasons.
Mr. McLennan told the Herald the administrators did not agree with
Kamins' claims and were seeking legal advice on the contents of the
letter and attachments.
"Ryan has no role with the company. We are very concerned that
after his resignation from the companies, Ryan has undertaken an
unauthorised release of confidential company emails, in a selective
way."
Administrators have been working on sale options for the owner of
the CleanPaleo and Poppy & Olive brands since February, the report
states.
Riot Foods sells cereal, protein powders and dried meat snacks
under the CleanPaleo and Poppy and Olive brands. Riot was founded
by Ryan Kamins, former Black Cap Mitchell McClenaghan and
television personality Art Green in 2014.
The company was placed in voluntary administration in early
February after damage to a manufacturing plant left it desperate
for cash, The New Zealand Herald notes.
=================
S I N G A P O R E
=================
HYFLUX LTD: In Talks with Oyster Bay as New Potential White Knight
------------------------------------------------------------------
Marissa Lee at The Strait Times reports that another potential
investor has deepened talks with Hyflux Ltd as the insolvent water
treatment firm searches for fresh funds to stave off liquidation.
Oyster Bay Fund, a global multi-strategy investment fund, is
mulling over an investment and has given Hyflux a non-binding
letter of intent, the firm said on May 10. ST understands that the
fund is based in Bermuda.
As an indication of its good faith and intent, the fund is prepared
to buy preference and ordinary shares in HyfluxShop Holdings from
the company for up to SGD26 million, Hyflux said, ST relays. If a
definitive agreement is signed, this sum is expected to be used as
working capital.
According to the report, Hyflux said it envisions an investment of
up to SGD500 million in the group by the fund, subject to
regulatory clearance, due diligence and the execution of a
definitive agreement.
HyfluxShop is the consumer water business in which Hyflux owns a 30
per cent stake. HyfluxShop used to be wholly owned by Hyflux until
February last year.
In February last year--months before Hyflux filed for bankruptcy
protection in May--Hyflux distributed 70 per cent of the shares of
HyfluxShop to Hyflux shareholders via a dividend in specie,
resulting in Ms Olivia Lum, Hyflux's controlling shareholder,
owning 23.8 per cent of HyfluxShop. She then made a general offer
to buy up the remaining HyfluxShop shares from the rest of the
minority shareholders.
At the time, HyfluxShop was valued at SGD20 million, based on the
price per share she offered to pay. Hyflux also agreed to buy SGD20
million HyfluxShop preference shares with a 6 per cent annual
dividend.
Hyflux is racing to nail down a $400 million rescue deal with
Utico, the largest utilities provider in the United Arab Emirates.
ST relates that Hyflux said on May 10: "The letter of intent (from
Oyster Bay Fund) is stated to automatically terminate if a judicial
manager or liquidator is appointed over the company."
ST says the new development comes two weeks after Hyflux received a
non-binding letter of intent from Emirati utilities group Utico.
Discussions with Utico are based on a possible injection of SGD400
million to be used for equity and working capital purposes and
possible urgent interim funding.
During a hearing in the Singapore High Court on May 7, Hyflux was
asked to give more clarity on its planned timeline to get a
restructuring complete.
Lawyer Smitha Menon, who represents Hyflux, said she could not
provide more clarity yet, ST relays. "The investor (Utico) is doing
due diligence, it's a moving timeline. We are dealing with
information requests as well as negotiating a possible structure,"
she said.
According to the report, Hyflux also said on May 10 that it is
continuing to engage with other parties who have expressed an
interest to invest in the group.
Priority will be given to parties that are willing and able to
provide interim funding and reach a binding agreement with the
company within the shortest possible time, it added, ST reports.
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. It employs 2,300
people worldwide and has business operations across Asia, Middle
East and Africa.
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.
=============
V I E T N A M
=============
VIETNAM: Fitch Affirms 'BB' Long-Term IDR, Alters Outlook to Pos.
-----------------------------------------------------------------
Fitch Ratings has affirmed Vietnam's Long-Term Foreign-Currency
Issuer Default Rating at 'BB' and revised the Outlook to Positive.
KEY RATING DRIVERS
The revision of Vietnam's Outlook to Positive from Stable reflects
an improving track record of economic management, which is evident
in strengthening external buffers from persistent current account
surpluses, falling government debt levels, high economic growth
rates and stable inflation.
The authorities' continued commitment to containing debt levels led
to a decline in general government debt to 50.5% of GDP in 2018
from a peak of 53% in 2016, and Fitch expects this ratio to decline
further to around 46% by 2020. Vietnam's public debt (general
government debt including guarantees) has also been declining, to
around 58% of GDP by end-2018 after being close to the ceiling of
65% at end-2016. The decline has been facilitated by a reduction in
outstanding government guarantees to around 8% of GDP by end-2018
from 9.1% at end-2017. The reduction has also been aided by stable
receipts from privatisation of state-owned enterprises (known in
Vietnam as equitization), high nominal GDP growth and lower fiscal
deficits. The overall pace of equitization has slowed, but the
process has nevertheless continued to advance, with 28 state-owned
enterprises being equitized compared with 69 in 2017.
Fitch's debt and deficit estimates, which are more closely aligned
with the Government Finance Statistics standard of accounting, put
the budget deficit at 3.6% of GDP in 2020, compared with the
authorities' target of 3.5% of GDP by 2020 under their 2016-2020
medium-term budget plan.
The authorities are maintaining their policy focus on macroeconomic
stability. GDP growth improved to 7.1% in 2018 from 6.8% in 2017
while inflation remained stable at 3.5%, within the National
Assembly's target of below 4%. Growth remained supported by strong
foreign direct investment (FDI) into the manufacturing sector as
well as expansion in the services and agriculture sectors.
Fitch expects growth to slow in 2019 to around 6.7%, still within
the National Assembly's target of between 6.6% and 6.8%. Growth in
Vietnam, which has a high degree of trade openness, is likely to be
affected by slowing global growth and US-China trade tensions,
which will weigh on regional trade flows and sentiment. Vietnam
would nevertheless remain among the fastest-growing economies in
the Asia-Pacific and in the 'BB' rating category globally.
The 'BB' IDR also reflects the following key rating drivers:
Despite the stated shift to flexibility in January 2016, the
exchange rate remained broadly stable in 2018. The State Bank of
Vietnam (SBV) intervened in currency markets as the dollar
strengthened and investor sentiment towards emerging markets became
less favourable. This led to a temporary drawdown of
foreign-exchange reserves. Nevertheless, overall reserve level in
2018 rose by the end of the year and as per Fitch estimates was
equivalent to around 2.6 months of current external payments (CXP).
Fitch expects modest further reserve accumulation in 2019-2020, but
reserve coverage of CXP to remain below the historic peer median of
4.3 months.
Importantly, Vietnam's external liquidity ratio (foreign-exchange
reserves relative to external debt service obligations due in the
coming year) remains well above the current and historic medians
for the 'BB' sovereign rating category, in part reflecting modest
debt repayments associated with the concessional nature of its
outstanding debt. However, with Vietnam's recent graduation from
eligibility for loans from the International Development
Association, its funding costs are likely to increase over time.
Structural weaknesses in the banking sector continue to weigh on
the sovereign rating. The banking system's non-performing loans
remain under-reported and true asset quality is likely to be
weaker, although Fitch expects the under-reporting to be addressed
over the long term. Recapitalisation needs of the banking sector
remain a risk for the sovereign and sustained rapid credit growth
poses a risk to financial stability. Private sector credit-to-GDP
amounted to around 133% at end-2018.
Large FDI flows into the export-oriented manufacturing sector
remain a key growth driver. Registered capital in the manufacturing
sector increased to USD16.6 billion at end-2018 from USD15.9
billion in 2017. Fitch expects Vietnam to remain an attractive
destination for foreign investors given its low cost advantage.
Further, there is anecdotal evidence to suggest that US-China trade
tensions may, over time, accelerate trade diversion and production
shifts to Vietnam's benefit.
Contingent liability risks from legacy issues at large state-owned
enterprises remain a weakness for Vietnam's broader public
finances, although government debt and guarantees have fallen over
time. Government guarantees issued to state-owned enterprises and
potential banking sector recapitalisation costs also weigh on
Vietnam's public finances.
Vietnam's per capita income and human development indicators are
weaker than the peer medians. According to Fitch estimates, per
capita income was USD2,512 at end-2018, against the current 'BB'
median of USD6,188. Further, it fell in the 38th percentile on the
UN Human Development Index compared with the current 'BB' median of
the 58th percentile. The country's ranking on the composite
governance metric is at the 41st percentile, still below the peer
medians. On the Ease of Doing Business Index, however, Vietnam
ranks in the 64th percentile, above the current 'BB' median of 60th
percentile.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO)
Fitch's proprietary SRM assigns Vietnam a score equivalent to a
rating of 'BBB-' on the Long-Term Foreign-Currency (LT FC) IDR
scale.
Fitch's sovereign rating committee adjusted the output from the SRM
to arrive at the final LT FC IDR by applying its QO, relative to
rated peers, as follows:
- Structural Factors: -1 notch to reflect risks to macroeconomic
stability, including rapid credit growth and unresolved legacy
issues in the banking sector.
- Public Finances: -1 notch to reflect relatively high contingent
liability risks stemming from government guarantees for state-owned
enterprises and potential banking sector recapitalisation costs.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
RATING SENSITIVITIES
The main factors that could, individually or collectively, lead to
an upgrade are:
- An improvement in public finances, which will be reflected in a
decline in the general government debt ratio or contingent
liabilities.
- A material reduction in risks posed to the sovereign balance
sheet from weaknesses in the banking sector.
- Continued commitment to macroeconomic stability and a further
build-up of external buffers.
The main factors that, individually or collectively, could trigger
negative rating action are:
- A shift in the macroeconomic policy mix that results in
macroeconomic instability or an increase in macroeconomic
imbalances
- Depletion of foreign-exchange reserves on a scale sufficient to
destabilise the economy or deter foreign investment.
- Crystallisation of contingent liabilities on the sovereign's
balance sheet.
KEY ASSUMPTIONS
- Global economic assumptions are consistent with Fitch's latest
Global Economic Outlook.
The full list of rating actions is as follows:
Long-Term Foreign-Currency IDR affirmed at 'BB' ; Outlook Revised
to Positive from Stable
Long-Term Local-Currency IDR affirmed at 'BB' ; Outlook Revised to
Positive from Stable
Short-Term Foreign-Currency IDR affirmed at 'B'
Short-Term Local-Currency IDR affirmed at 'B'
Country Ceiling affirmed at 'BB' '
Issue ratings on long-term senior unsecured foreign-currency bonds
affirmed at 'BB'
Issue ratings on long-term senior unsecured local-currency bonds
affirmed at 'BB'
*********
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 ***