/raid1/www/Hosts/bankrupt/TCRAP_Public/190722.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, July 22, 2019, Vol. 22, No. 145
Headlines
A U S T R A L I A
CLAREMONT WA: First Creditors' Meeting Set for July 29
GEE ADVANCED: First Creditors' Meeting Set for July 29
ILUM-A-LITE PTY: First Creditors' Meeting Set for July 29
ISLAND RESOLUTION: First Creditors' Meeting Set for July 30
LED DISTRIBUTION: First Creditors' Meeting Set for July 29
MAULEX INDUSTRIES: First Creditors' Meeting Set for July 29
SKM RECYCLING: Warns of Landfill Crisis if Company Goes Under
SPI ENERGY: Appoints Anthony Chan as Chief Financial Officer
VIVID INDUSTRIAL: First Creditors' Meeting Set for July 29
VIVID TECHNOLOGY: First Creditors' Meeting Set for July 29
WOOLWORTHS GROUP: Three Big W Stores Set to Close Doors
C H I N A
CAMSING GLOBAL: More Financial Firms Exposed to Fraud Scandal
CHINA GRAND: Fitch Affirms BB- LongTerm IDR, Outlook Stable
CHINA HONGQIAO: Fitch Rates $300MM Unsec. Notes Due 2022 'BB-'
CHINA MINSHENG: Unit Defaults Payment on US$500MM Bond
CIFI HOLDINGS: Fitch Rates CNY1.6B Sr. Notes Due 2022 'BB'
COOLPAD GROUP: Shares Crash After Two-Year Suspension Ends
KAISA GROUP: Fitch Rates $300MM Sr. Notes Due 2023 'B'
ORIGIN AGRITECH: Posts RMB1.2 Million Net Income in H1 FY2019
RONSHINE CHINA: Fitch Rates $300MM Sr. Notes Due 2023 'B+'
[*] CHINA: Debt Ratio is Growing as Economy Loses Steam
I N D I A
AMARTEX INDUSTRIES: CRISIL Maintains D Ratings in Not Cooperating
CMC TEXTILES: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
DEMANDSHORE SOLUTIONS: Ind-Ra Keeps 'B+' Rating in Non-Cooperating
DEWAN HOUSING: In Talks With Bondholders on Rescue Plan
EASTERN MATTRESSES: CRISIL Lowers Ratings on INR15cr Loans to B
EXOTICA BAR: Ind-Ra Migrates 'B+' Issuer Rating to Non-Cooperating
GMA PINNACLE: Ind-Ra Assigns BB+ LT Rating to INR50MM Loans
JET AIRWAYS: Taps Grant Thornton as New Resolution Professional
JMG AUTOMOBILES: CRISIL Lowers Rating on INR8.3cr Loans to B+
KIRAN INDUSTRIES: Ind-Ra Migrates BB+ LT Rating to Non-Cooperating
KOTHARI PRIMA: Ind-Ra Migrates B Issuer Rating to Non-Cooperating
MAHAKALESHWAR INFRATECH: Ind-Ra Affirms BB+ LongTerm Issuer Rating
MANGALORE MARKETING: CRISIL Lowers Rating on INR9cr Loan to B+
MEGHA AGROTECH: Ind-Ra Moves BB+ on INR45MM Debt to Non-Cooperating
NIMBUS MOTORS: CRISIL Lowers Ratings on INR30cr Loans to B+
ORAGADAM CITY: Insolvency Resolution Process Case Summary
PARAMOUNT IMPEX: Insolvency Resolution Process Case Summary
PAWAR PATKAR: CRISIL Keeps D on INR15cr Loans in Not Cooperating
PCI LIMITED: CRISIL Maintains D Ratings in Not Cooperating
PRIYANKSHI FASHIONS: CRISIL Lowers Ratings on INR18cr Loans to B+
R. L. AGRO: CRISIL Maintains D Ratings in Not Cooperating Category
RAMAN AGRO: CRISIL Lowers Rating on INR19cr Loans to B+
RASHMI REALTY: CRISIL Keeps D on INR32cr Debt in Not Cooperating
ROYALE MANOR: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
SAISREE ENGINEERS: CRISIL Keeps D Ratings in Non-Cooperating
SHAH MOTILAL: CRISIL Lowers Ratings on INR20cr Loans to 'B+'
SHITAL GEMS: Ind-Ra Affirms 'D' LT Issuer Rating on INR220MM Loan
SHRIRAM TRANSPORT: Fitch Rates $250MM Sr. Sec. Notes Due 2022 'BB+'
SRI SAI BUILDERS: CRISIL Assigns B+ Rating to INR6cr Term Loan
TAIYO FEED: CRISIL Lowers Rating on INR7.5cr Loans to B+
TRYCON INFRASTRUCTURE: CRISIL Cuts Rating on INR10.9cr Loan to B+
UKS COLD: CRISIL Lowers Ratings on INR6cr Loans to B+
WELGA FOODS: CRISIL Lowers Ratings on INR13.5cr Loans to B+
I N D O N E S I A
AGUNG PODOMORO: Fitch Lowers LT IDR to CCC-, Off Watch Negative
DUNIATEX GROUP: Fall in Dollar Bond Shows Cracks in Asia Junk Bonds
J A P A N
AKEBONO BRAKE: To Receive JPY20BB Fresh Fund From Japan Industrial
JAPAN DISPLAY: In Talks With Potential Chinese Investors
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A U S T R A L I A
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CLAREMONT WA: First Creditors' Meeting Set for July 29
------------------------------------------------------
A first meeting of the creditors in the proceedings of Claremont WA
Consolidated Pty Ltd will be held on July 29, 2019, at 3:00 p.m. at
the offices of Chartered Accountants Australia and New Zealand,
Level 11, at 2 Mill Street, in Perth, WA.
Jack Robert James and Paula Lauren Smith of Palisade Business
Consulting were appointed as administrators of Claremont WA on July
17, 2019.
GEE ADVANCED: First Creditors' Meeting Set for July 29
------------------------------------------------------
A first meeting of the creditors in the proceedings of Gee Advanced
Technologies Pty Ltd will be held on July 29, 2019, at 1:00 p.m.
at Level 17, 200 Queen Street, in Melbourne, Victoria.
Richard Cauchi and Peter Gountzos of SV Partners were appointed as
administrators of Gee Advanced on July 17, 2019.
ILUM-A-LITE PTY: First Creditors' Meeting Set for July 29
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Ilum-A-Lite
Pty. Limited (Trading As "Vivid Ilumalite") will be held on July
29, 2019, at 11:30 a.m. at Level 17, 200 Queen Street, in
Melbourne, Victoria.
Richard Cauchi and Peter Gountzos of SV Partners were appointed as
administrators of Ilum-A-Lite Pty on July 17, 2019.
ISLAND RESOLUTION: First Creditors' Meeting Set for July 30
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Island
Resolution Pty Ltd formerly known as Couran Cove Island Resort Pty
Ltd will be held on July 30, 2019, at 11:00 a.m. at Level 4, 26
Wharf Street, in Brisbane, Queensland.
Travis Pullen of B&T Advisory was appointed as administrator of
Island Resolution on July 18, 2019.
LED DISTRIBUTION: First Creditors' Meeting Set for July 29
----------------------------------------------------------
A first meeting of the creditors in the proceedings of LED
Distribution Network Pty Ltd will be held on July 29, 2019, at
12:30 p.m. at Level 17, 200 Queen Street, in Melbourne, Victoria.
Richard Cauchi and Peter Gountzos of SV Partners were appointed as
administrators of LED Distribution on July 17, 2019.
MAULEX INDUSTRIES: First Creditors' Meeting Set for July 29
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Maulex
Industries Australia Pty Ltd will be held on July 29, 2019, at
11:00 a.m. at the offices of Mackay Goodwin, at Level 2/10, Bridge
Street, in Sydney, NSW.
Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay
Goodwin were appointed as administrators of Maulex Industries on
July 17, 2019.
SKM RECYCLING: Warns of Landfill Crisis if Company Goes Under
-------------------------------------------------------------
ABC News reports that SKM Recycling, a major Australian recycling
company, said hundreds of thousands of tonnes of recyclables are
destined for landfill if it collapses, warning of a "major crisis"
if China stops recycling Australian waste.
ABC relates that SKM Recycling, which is contracted to more than 30
Victorian councils, is facing liquidation as creditors claim they
are owed millions of dollars.
Logistics company Tasman has taken the recycler to court, claiming
SKM owes it AUD3.35 million, the report relates.
Its action, which seeks to wind the company up due to insolvency,
has been joined by five other companies, which are all seeking
hundreds of thousands of dollars, according to the report.
The case will be heard on July 24, the report notes.
A 2017 fire at SKM's Coolaroo plant led to a crackdown by the
Environmental Protection Authority (EPA), and the temporary closure
of two of its sites in February forced councils to send tonnes of
waste into landfill, ABC recalls.
SKM has not responded to ABC requests for comment, but has now
warned in a submission to the Government there is the potential for
an additional 400,000 metric tonnes of recyclables to be sent to
landfill each year if a major recycler like SKM ceases business.
According to ABC, the huge increase would "impact on existing
landfill capacity", the company said in a submission to the state's
parliamentary inquiry into recycling and waste management.
It said there was "market volatility" affecting recyclers, and it
blamed the Government for an uncertain regulatory framework.
"The recyclers effectively have 100 per cent responsibility and
accountability for the system which is not a fair or accurate
reflection on how the industry is overseen and regulated," the
submission, as cited by ABC, said.
"If the Victorian Government believes that an effective recycling
system is critical to the Victorian community, then financial,
regulatory and education support needs to be provided to the
industry."
According to ABC, treasurer Tim Pallas hit back at SKM, saying they
had a business model that "doesn't appear to be particularly
robust".
He ruled out bailing out the company if it did go under, and said
the industry would ultimately adjust to losing it from the market.
"We've consistently said that if they don't smarten up their act,
then ultimately people should seriously consider whether or not
this is an appropriate repository of these materials," the report
quotes Mr. Pallas as saying.
ABC, citing court documents, discloses that the company could have
a lifeline after it signed a "highly confidential and commercially
sensitive" term sheet with a proposed purchaser on June 28.
The documents show SKM is fighting the action and is arguing it
will be able to pay its debts "within a reasonable time," ABC
relates.
ABC adds that the submission said SKM supports up to 600 jobs
across Australia through direct employment and its supply chain,
with most of those in Victoria.
It flagged ongoing uncertainty with China's apparent plans to stop
importing solid waste by the end of next year and said the industry
was left shouldering the risk, ABC says.
SPI ENERGY: Appoints Anthony Chan as Chief Financial Officer
------------------------------------------------------------
SPI Energy Co., Ltd. has appointed Anthony S. Chan as its chief
financial officer, effective July 15, 2019.
Mr. Chan is a seasoned CPA and an established executive with 30
years of professional experience in auditing and SEC reporting, SOX
and FCPA compliance, enterprise risk management, business
reorganization and mergers and acquisitions. Since 2013, Anthony
has advised public and private companies across various industries
as their CFO or CFO consultant, focusing on business
reorganization, capital raise as well as internal controls and risk
management. He was an audit partner specializing in the delivery
of assurance and advisory services to public companies with
operations in China; and had spent more than a decade at Big Four
accounting firms delivering assurance and M&A consulting services.
Currently, Mr. Chan is a member of the Board of Directors of the
New York State Society of CPAs, Board of Trustees of the Foundation
for Accounting Education and the editorial advisory board for the
CPA Journal.
Mr. Xiaofeng Peng, chief executive officer of SPI Energy, stated,
"We are delighted to have Anthony step into the role of CFO.
Anthony is a proven leader and we believe his audit background
along with his public company experience will help us establish a
solid foundation for effective corporate governance and risk
management; strengthen our compliance culture and internal control
environment; streamline our process flow and improve our
operational efficiency." Mr. Peng added, "Anthony's appointment is
critical to the successful re-build of SPI Energy as we expand our
business platform in the U.S. and refine our business plan to focus
on sustainable earnings growth and profitability."
About SPI Energy
SPI Energy Co., Ltd. -- http://www.spisolar.com/-- is a global
provider of photovoltaic solutions for business, residential,
government and utility customers and investors. The Company
develops solar PV projects that are either sold to third party
operators or owned and operated by the Company for selling of
electricity to the grid in multiple countries in Asia, North
America and Europe. The Company's subsidiary in Australia
primarily sells solar PV components to retail customers and solar
project developers. The Company has its operating headquarters in
Hong Kong and Santa Clara, California and maintains global
operations in Asia, Europe, North America, and Australia.
SPI Energy reported a net loss attributable to shareholders of the
Company of $12.28 million for the year ended Dec. 31, 2018,
compared to a net loss attributable to shareholders of the Company
of $91.08 million for the year ended Dec. 31, 2017. As of Dec. 31,
2018, SPI Energy had $188.73 million in total assets, $188.65
million in total liabilities, and $70,000 in total equity.
Marcum Bernstein & Pinchuk LLP, in Beijing, China, the Company's
auditor since 2018, issued a "going concern" opinion in its report
dated April 30, 2019, on the Company's consolidated financial
statements for the year ended Dec. 31, 2018, citing that the
Company has a significant working capital deficiency, has incurred
significant losses and needs to raise additional funds to meet its
obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
VIVID INDUSTRIAL: First Creditors' Meeting Set for July 29
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Vivid
Industrial Pty Ltd (Trading As "Metrolight Australia") will be held
on July 29, 2019, at 1:00 p.m. at Level 17, 200 Queen Street, in
Melbourne, Victoria.
Richard Cauchi and Peter Gountzos of SV Partners were appointed as
administrators of Vivid Industrial on July 17, 2019.
VIVID TECHNOLOGY: First Creditors' Meeting Set for July 29
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Vivid
Technology Limited (Trading As "Greenearth Power" "Greenearth
Renewable Energy" "NewCo2Fuels", "NewCo2" and "Vivid Technology
Group") will be held on July 29, 2019, at 10:00 a.m. at Level 17,
200 Queen Street, in Melbourne, Victoria.
Richard Cauchi and Peter Gountzos of SV Partners were appointed as
administrators of Vivid Technology on July 17, 2019.
WOOLWORTHS GROUP: Three Big W Stores Set to Close Doors
-------------------------------------------------------
Michael Mehr at The West Australian reports that three Big W stores
in western Sydney have become the first confirmed targets for
closure as owner Woolworths prepares to whittle down the number of
outlets of the struggling discount retailer.
The Big W in Auburn Central shopping centre will close at the end
of January 2020, Elanor Retail Property Fund said in an
announcement to the ASX on July 18, the report relates.
According to the report, Woolworths said in April it planned to
shut about 30 underperforming Big W stores and two distribution
centres during the next three years.
The West Australian relates that ERF said the lease for the 7159sqm
department store in Auburn had been due to expire in June 2024.
The closure of the store was "a positive catalyst for the
transformation of Auburn Central into a Sydney metropolitan, dual
supermarket, neighbourhood shopping centre," the investment and
funds management business said.
Big W confirmed on July 18 it would also close stores in Chullora
and Fairfield in January after reaching deals with landlords.
"These are not decisions we take lightly and we regret the impact
the closures will have on affected team members," the report quotes
BIG W managing director David Walker as saying. "We would like to
acknowledge the support of the communities of Chullora, Auburn and
Fairfield and the hard work and commitment of our store team
members."
The West Australian relates that Mr. Walker said the company would
"explore redeployment opportunities with team members who choose to
continue their career at Big W or with other Woolworths Group
brands".
Woolworths has 183 Big W stores, including 17 in WA, and the
division lost AUD110 million in the last financial year. It employs
16,000 people.
"Big W will continue to work with landlords over the coming months
as part of the network review and remain committed to building a
strong and sustainable Big W that meets the needs of Australian
families," the retailer said in a statement.
Woolworths Group Limited operates retail stores. It operates
through Australian Food, New Zealand Food, Endeavour Drinks, BIG W,
Hotels, and Other segments.
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C H I N A
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CAMSING GLOBAL: More Financial Firms Exposed to Fraud Scandal
-------------------------------------------------------------
Liang Hong and Han Wei at Caixin Global report that shockwaves
caused by the detention of Camsing Global founder Lo Ching
continued spreading through China's finance sector as more
institutions disclosed exposure to Lo's alleged supply-chain
financing fraud.
According to Caixin, Shenzhen-listed metal products manufacturer
Jiangsu Fasten Co. Ltd. on July 16 said its wholly owned subsidiary
Shanghai Mosan Factoring Co. Ltd. held outstanding asset management
products worth CNY2.9 billion (US$422 million) involving financing
for Guangdong Zhongcheng Industrial Holdings Co., a Camsing
subsidiary controlled by Lo, as of June 30.
It was the first time Shanghai Mosan confirmed its exposure to
risks linked to scandal-ridden Camsing since Chairwoman Lo was
detained by Shanghai police on fraud allegations, Caixin says. The
detention sparked fears that billions of yuan raised by Camsing and
affiliates through asset management products are backed by
falsified transactions and accounts receivable with business
partners, including e-commerce giant JD.com and Suning.com,
according to Caixin.
As the scandal unfolds, Caixin learned that the China Banking and
Insurance Regulatory Commission on July 11 issued a set of
guidelines to financial institutions regarding supply-chain
financing. The document outlined 22 measures including requirements
to enhance transaction verification and logistics monitoring to
prevent risks in the sector.
Caixin relates that the case sheds light on loopholes and potential
risks in China's often opaque supply-chain finance market, which
involves more than more than CNY500 billion of securities backed by
corporate accounts receivable.
Shanghai Mosan is one of the four biggest asset managers doing
business with Camsing, Caixin learned. Altogether, the four
companies have a combined CNY9 billion (US$1.3 billion) of products
outstanding.
More than a dozen nonbanks and asset management companies also have
business dealings with Camsing, raising funds for the company and
its affiliates backed by their accounts receivable. But the
legality of the underlying assets is now in doubt, Caixin states.
According to Caixin, Shanghai Gopher Asset Management, a subsidiary
of Noah Holdings Ltd. and another major fund manager of Camsing,
said earlier that its CNY3.4 billion of asset management products
linked to Camsing are in danger of default. Noah levied fraud
accusations against Camsing over the products and triggered the
detention of Lo.
Ms. Lo founded Camsing in 1996 and acquired Stan Lee's POW!
Entertainment in 2017. Ms. Lo is the controlling shareholder of
Shanghai-listed Boxin Investing & Holdings Co. Ltd., Hong
Kong-listed Camsing International Holding Ltd. and Singapore-listed
Camsing Healthcare.
According to Caixin, Fasten said Shanghai Mosan has engaged in
invoice factoring business with Guangdong Zhongcheng, formerly
known as Guangzhou Camsing, since 2015. Fasten is 15% owned by
Zhongzhi Capital, a private investment conglomerate.
Caixin relates that Fasten said it formed an emergency group to
deal with the risk and sent staff to Guangdong Zhongcheng to seek
recovery of potential losses. Fasten has engaged lawyers and will
take legal measures if there is any suspicion of fraud, the company
said.
Everbright Trust, a unit of China Everbright Group, manages three
products involving Guangdong Zhongcheng, Caixin discloses citing
data from China Trust Registration Co. But Everbright Trust told
Caixin that the three products are entrusted by a third party and
Everbright Trust doesn't bear any obligation or risk related to the
products.
Sources close to the matter said Everbright Trust is managing the
products for Xiangcai Securities, which has partnered with Camsing
in supply-chain financing since 2015. Xiangcai didn't respond to
Caixin's inquiry on the matter.
However, Shanghai-listed Harbin High-Tech (Group) Co., a company
set to be acquired by Xiangcai, said in a filing two weeks ago that
Xiangcai manages CNY557 million of outstanding products backed by
Camsing's accounts receivable. Harbin High-Tech said Xiangcai has
reported the case to police, Caixin relates.
Jiangsu International Trust Corp. is also likely to be hit by the
Camsing scandal with its CNY750 million investment for 49.97% in a
joint venture with Guangdong Zhongcheng in 2017, adds Caixin.
Caixin says the venture, Hangzhou Jintou Camsing Investment
Management Co., raised about CNY1.5 billion to fund Ms. Lo's
acquisition of Boxin Investing in 2017. In return, Ms. Lo pledged
all her holdings of Boxin Investing to Hangzhou Jintou. However,
the market value of the stake has since shrunk more than 33% to
CNY868 million as Boxin Investing's share price declined. The stake
was frozen by a court after Ms. Lo's detention.
Jiangsu International and its state-owned parent Jiangsu Guoxin
Corp. have yet to comment on the matter, Caixin notes.
A financial report of Guangdong Zhongcheng showed that by the end
of 2018, the company had payables of CNY1.5 billion to Hangzhou
Jintou Chengxing Investment Management Company, CNY1.48 billion to
Everbright Trust, CNY1.1 billion to Yunnan International Trust Co.
Ltd., CNY500 million to Xiangcai Securities and CNY178 million to
National Trust, Caixin discloses.
Camsing International Holding Limited, formerly Fittec
International Group Limited, is an investment holding company
principally engaged in the development, sales and distribution of
intellectual property rights (IP) derived products and mobile
devices. The Company provides IP licensing and comprehensive
services.
CHINA GRAND: Fitch Affirms BB- LongTerm IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed China Grand Automotive Services Group
Co., Ltd.'s Long-Term Foreign-Currency Issuer Default Rating of
'BB-'. The Outlook is Stable. Fitch has also affirmed the auto
dealer's foreign-currency senior unsecured rating and the rating on
its outstanding senior notes at 'BB-'.
The rating affirmation reflects the company's leading position in
China's competitive auto-dealership market, the long-term outlook
of the business and CGA's high leverage. The entity was previously
called China Grand Automotive Services Co., Ltd.
KEY RATING DRIVERS
Market-Leading Position Intact: China's passenger vehicle market
contracted for the first time in more than two decades in 2018 and
continued to decline in early 2019. Despite the difficult market
environment, CGA successfully consolidated its market-leading
position and further expanded into the structurally attractive
China premium auto segment. In the long run, CGA's large operating
scale allows it to use its store network more efficiently to
develop new revenue sources, such as commission income, leasing and
used-car sales.
Tight Leverage and Coverage Headroom: CGA's leverage levels were
higher than expected, with FFO adjusted net leverage rising to 5.2x
by end-2018 from 4.0x in 2017. The prolonged downturn in China's
passenger-vehicle market has negatively affected on CGA's working
capital, which resulted in lower-than-expected cash generation. At
the same time, CGA could face rising funding costs as some of the
company's lower-cost borrowings mature. Fitch believes CGA's
leverage and coverage headroom could remain tight in the near
term.
Viable Deleveraging Plan: Fitch believes CGA's near-term
deleveraging plan is viable. Management has detailed cost-cutting
measures to rein in variable costs, and Fitch expects 2019 working
capital to improve on better inventory management. CGA has also
suspended acquisition activities and strictly controlled capex.
Management also highlighted the potential of cash recovery from its
leasing arm, Huitong Xincheng, as the subsidiary increasingly
partners banks to fund leasing assets, which should free up
capital.
Competitive Industry, Low Margins: China's auto-dealership industry
is highly fragmented and competitive. CGA is the country's largest
dealership but has around 4% market share by sales volume across
the country. Industry margins are low as bargaining power with
suppliers is weak and the regulatory environment historically
favoured automakers over dealers. Chinese auto dealers generally
have mid-single-digit EBITDA margins, comparable with US peers, and
Fitch believes the industry's low margin trend will persist in the
medium term.
Leasing Subsidiary Deconsolidated: CGA carries out auto-leasing
services via Huitong Xincheng. Fitch continues to deconsolidate
Huitong Xincheng for the purposes of its analysis in accordance
with its Corporate Rating Criteria. Huitong Xincheng's
debt-to-equity ratio was below 2.0x at end-2018, which Fitch sees
as healthy.
DERIVATION SUMMARY
CGA's ratings are supported by its leading market position and
large operating scale but constrained by its relatively high
leverage. Its peers include AutoNation, Inc. (BBB-/Stable), the
largest automotive retailer in the US, with over 360 new-vehicle
franchises across 16 states. CGA has a similar operational scale
and margin as AutoNation, but weaker financial metrics and lower
free cash-flow generation.
eHi Car Services Limited (B/Stable), the second largest car-rental
company in China, has a similar leverage ratio but CGA has a much
larger operating scale, lower capex requirements and a more stable
competitive environment. Against Golden Eagle Retail Group Limited
(BB/Stable), a Chinese department-store operator, CGA has a better
market position but weaker leverage ratio, lower margins and
smaller FCF generation.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Deconsolidation of CGA's finance-service (leasing) entity is
contingent on the assumption that there will be no significant
deterioration in the quality of the company's lease assets against
historical reported figures.
- Revenue growth slow to 0% in 2019 and return to low single
digits in 2020-2022
- Average EBITDA and EBITDAR margin of 5.5% and 6.1%,
respectively, in 2019-2022
- Capex (inclusive of acquisitions) per annum to decline to
CNY1.5 billion in 2019 and return to CNY3.0 billion by 2022
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to
Positive Rating Action
- FFO adjusted net leverage (excluding leasing) below 3.5x for a
sustained period (2018: 5.2x)
- Total adjusted net debt/operating EBITDAR (excluding leasing)
below 3.0x for a sustained period (2018: 4.7x)
Developments That May, Individually or Collectively, Lead to
Negative Rating Action
- Sustained decline in market share, revenue and/or margin
- FFO adjusted net leverage (excluding leasing) above 5.0x for a
sustained period
- FFO fixed-charge cover (excluding leasing) below 2.0x for a
sustained period (2018: 2.2x)
- Total adjusted net debt/operating EBITDAR (excluding leasing)
above 4.5x for a sustained period
- Significant deterioration in liquidity or financial access
LIQUIDITY
Reliance on Short-Term Funding: At the end of 2018, CGA had CNY50
billion of debt (excluding its leasing business), of which CNY33
billion was due within 12 months. This was partially covered by
CNY13 billion in unrestricted cash. Fitch expects the company to
remain reliant on short-term funding in the near term, which will
require it to continuously roll over maturing debt. According to
management, total available and unused credit facilities were CNY40
billion, of which unused banking facilities were CNY34 billion, as
of end-May 2019.
FULL LIST OF RATING ACTIONS
China Grand Automotive Services Group Co., Ltd
- Foreign-Currency Issuer Default Rating affirmed at 'BB-';
Outlook Stable;
- Senior unsecured rating affirmed at 'BB-'
China Grand Automotive Services Limited
- USD100 million 8.625% senior unsecured notes due 2022 affirmed
at 'BB-'
Baoxin Auto Finance I Limited
- USD800 million senior perpetual notes guaranteed by CGA
affirmed at 'B+' with Recovery Rating of 'RR4'
CHINA HONGQIAO: Fitch Rates $300MM Unsec. Notes Due 2022 'BB-'
--------------------------------------------------------------
Fitch Ratings has assigned aluminium manufacturer China Hongqiao
Group Limited's (BB-/Stable) USD300 million 7.125% senior unsecured
notes due 2022 a final 'BB-' rating.
The notes are rated at the same level as Hongqiao's senior
unsecured debt as they represent its unsecured and unsubordinated
obligations of the company.
The final rating follows the receipt of documents conforming to
information already received and is line with the expected rating
assigned on July 14, 2019.
Net proceeds from the issue will mainly be used for refinancing
existing debt and general corporate purposes.
KEY RATING DRIVERS
Leading Producer, Stable Capacity: Fitch expects Hongqiao's total
primary aluminium smelting capacity and production to remain stable
at around 6.5 million tonnes per year as its current capacity is
legal and compliant with the latest government policies. The
company has retained its domestic market share of around 15% and
remains one of the largest aluminium smelters in the world.
Hongqiao's size allows it to enjoy large economies of scale, making
it one of the most profitable aluminium smelters in China.
Lower Margins: Hongqiao's EBITDA margin narrowed to 22% in 2018,
from 25% in 2017, driven by weaker aluminium prices and rising
input costs. Fitch expects Hongqiao's EBITDA margin to remain at
around 20% over 2019-2020, supported by Fitch's forecasts for
stable aluminium prices and lower coal prices. Hongqiao's
profitability should remain well ahead of that of other domestic
aluminium smelters due to its scale and high levels of input
self-sufficiency, as Hongqiao is 100% self-sufficient in alumina
production and also has access to overseas bauxite resources in
Guinea.
Positive FCF, Lower Leverage: Hongqiao's net leverage dropped to
2.1x in 2018, from around 2.3x in 2017 and 3.9x in 2016, on strong
free cash flow (FCF) generation, which was used to pay down debt.
Fitch expects Hongqiao's net leverage to remain at around 2.0x
between 2019-2021 as Fitch forecasts the company will continue to
post positive FCF, driven by strong funds from operations (FFO) in
its core aluminium business and limited capex despite higher
dividend payouts.
Surcharge Risk Weighs on Profitability: Fitch expects Hongqiao's
aluminium profitability to decrease if the company has to start
paying power surcharges to the government (such as a renewable
energy surcharge and cross-subsidies) for electricity generated by
its captive power plants.
Its sensitivity analysis shows that a CNY0.029/kWh and
CNY0.0504/kWh increase in power tariffs could reduce the company's
aluminium gross profit per tonne by as much as CNY370 and CNY650,
respectively (2019 forecast gross profit per tonne: CNY2,200).
Hongqiao's net leverage could increase to 3.0x in 2020 and 2021 if
both surcharges are applied, although there is little clarity over
the government's plans for the surcharges.
DERIVATION SUMMARY
Hongqiao has a less sophisticated range of products than Alcoa
Corporation (BB+/Stable), but it maintains higher margins due to
the scale and efficiency of its core aluminium smelting business.
However, Hongqiao's net leverage remains higher than that of Alcoa,
even after the deleveraging in 2018.
KEY ASSUMPTIONS
- Aluminium capacity to remain at 6.5 million tonnes
- Capex of CNY3 billion a year between 2019 and 2021
- 50% dividend payout ratio
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Longer record of consistent financial reporting and adequate
internal controls
- FFO net leverage sustained below 2.0x (2018: 2.1)
- Greater clarity on the regulatory implications surrounding
Hongqiao's unpaid power tariffs or potential imposition of power
surcharges, which will not result in any negative impact on the
company's financial metrics.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Further delays in financial reporting or evidence of weak
internal controls
- FFO net leverage above 3.5x on a sustained basis
- Further capacity shutdowns or significant deterioration of
market position
- Significant increase in power surcharges paid or substantial
payment of previously unpaid tariffs
LIQUIDITY AND DEBT STRUCTURE
Hongqiao had around CNY46 billion in cash as of end-2018, which was
adequate to cover its short-term debt of around CNY28 billion.
CHINA MINSHENG: Unit Defaults Payment on US$500MM Bond
------------------------------------------------------
The South China Morning Post reports that a cash crunch at China
Minsheng Investment Group, one of China's best-known conglomerates,
is getting worse as the company said it will not be able to pay its
upcoming dollar notes.
According to the report, China Minsheng Investment Group's offshore
unit said in a filing that it won't be able to repay the principal,
as well as the interest on the 3.8 per cent US$500 million bond due
August, after considering its liquidity and performance. On July
18, the property-to-financial conglomerate announced it only
managed to repay part of the principal on a 6.5 per cent CNY1.46
billion note.
The Post relates that the development underscores the liquidity
crisis that has been pressuring the Shanghai-based company that
aspired to become China's answer to JPMorgan Chase & Co. It will be
the first time that the firm's dollar bond creditors will miss out
on repayment, the report says. Defaults have been on the rise among
Chinese firms, with the tally continuing its ascent in tandem with
the slowing economy.
CMIG in April said cross-default clauses were triggered on its
dollar notes totalling US$800 million. These include US$300 million
of debt that China Construction Bank repaid on the company's behalf
in June as the bank provided a standby letter of credit --
effectively a pledge to repay if the borrower cannot. Its dollar
bond due next month was quoted around 50 cents on the dollar on
Friday, down from about 75 cents earlier in the week, according to
credit traders.
The Post says CMIG is the brainchild of Dong Wenbiao, the former
chairman of China's largest non-state bank who's known as the
"godfather" of the nation's private sector. Mr. Dong convinced 59
private sector companies to join forces as the company's founding
shareholders.
CMIG's funding eventually dried up as its investments struggled and
lenders pulled back because of tighter regulation, the report
states.
The Post adds that the company said it's actively seeking
opportunities and is in discussions regarding possible disposals of
certain offshore assets to improve the group's current liquidity
situation. It's also planning to seek consent from its 2019 dollar
bond holders to amend certain terms.
About China Minsheng
China Minsheng Investment Group is a private equity firm. The firm
seeks to invest in solar energy industry, manufacturing,
sustainable energy, renewable energy, real estate, and business jet
services. The firm seeks to invest in Europe and the United
States.
As reported in the Troubled Company Reporter-Asia Pacific on April
22, 2019, Caixin Global said debt-mired private investment
conglomerate China Minsheng Investment Group Corp. Ltd. (CMIG) has
found itself in trouble with creditors -- this time with a cross
default on $800 million in dollar bonds. CMIG said on April 18
that cross-default clauses have been triggered on $300 million
worth of Hong Kong-listed bonds due in 2020 and $500 million worth
of Singapore-listed notes due in 2019.
CIFI HOLDINGS: Fitch Rates CNY1.6B Sr. Notes Due 2022 'BB'
----------------------------------------------------------
Fitch Ratings has assigned China-based property developer CIFI
Holdings Co. Ltd.'s (BB/Stable) CNY1.6 billion 6.7% offshore senior
notes due 2022 a final rating of 'BB'.
The notes are rated at the same level as CIFI's senior unsecured
rating, as they represent its direct, unconditional, unsecured and
unsubordinated obligations. CIFI intends to use the net proceeds to
refinance its existing debt. The final rating is in line with the
expected rating assigned on July 15, 2019.
KEY RATING DRIVERS
Higher Leverage, Land Replenishment Pressure: Fitch thinks that a
company of CIFI's size would usually have land bank enough for
three years of sales to be resilient in business cycles. Hence,
Fitch expects CIFI's land acquisitions to exceed management's
budget of around 55% of total cash receipts, or CNY52 billion, in
2019 and its leverage to remain above 45% in 2019-2020.
CIFI's leverage increased in 2018 mainly due to continued high cash
outflow for land acquisitions to support its expansion. CIFI spent
68% of total cash receipts from sales proceeds and its
non-development property (DP) segment, or CNY46 billion, on land
acquisitions in 2018, compared with 85% in 2017. CIFI had an
attributable land bank of 20.7 million sq m at end-2018, and Fitch
estimates that the available-for-sale portion is around 17.8
million sq m, equivalent to less than three years of sales, given
CIFI's aim to increase sales by 25% in 2019.
Strong Sales: Fitch believes CIFI will be able to achieve its
target of CNY190 billion in total sales, a 25% increase yoy, with
CNY350 billion of saleable resources in 2019. CIFI's total sales in
2018 rose by 46% to CNY152 billion, in line with its expectations,
with the average selling price (ASP) falling by 4% to CNY15,900/sq
m mainly due to more contracted sales from third-tier Chinese
cities. CIFI's attributable sales accounted for 50% of the total
sales and rose by about 40% to CNY76 billion in 2018, according to
management. CIFI aims to achieve 55% and 60% increase in
attributable sales, respectively, in the next two years to raise
profit attributable to shareholders.
Geographical Diversification, Regional Advantage: CIFI's resources
are diversified across different city tiers and cover most of
China's key cities, giving it greater operational flexibility in
managing its sales pace to achieve its sales target. CIFI has a
historical advantage in the Yangtze River Delta, with more than 40%
of its land bank in the region in 2015-2018. However, CIFI has
reduced its reliance on the region, which accounted for 48% of
total sales in 2018, compared with above 60% in 2015-2017.
CIFI has also significantly increased its presence in tier 3
cities, which made up 22% of total sales in 2018 compared with 3%
in 2017. This resulted in a 25% drop in average attributable new
land cost to CNY5,800/sq m in 2018. Management said CIFI will
continue to focus on second- and third-tier cities for residential
projects, as they have looser policies and larger land supply, and
will target commercial projects in tier 1 cities.
Margin to be Maintained: Fitch believes CIFI's diversified project
portfolio across cities of different tiers allows it to maintain
its fast-churn strategy without sacrificing overall project
margins. CIFI's EBITDA margin, after adding back capitalised
interest, fell to 21.6% in 2018, from 26.2% in 2017. The EBITDA
margin would have been higher at 31% in 2018 and 29% in 2017 if
adjusted for acquisition revaluations, according to the company.
Acquisition revaluations are likely to continue as CIFI has a
significant number of joint ventures (JV) and associates, which
will make margins appear more volatile.
Non-DP Segment Supports Interest Cover: Fitch believes CIFI's large
JV operations and reputable property products have created a stable
fee income stream, although the fees are not strictly recurring as
most are project-based. CIFI's CNY3.3 billion non-DP revenue in
2018 comprised around CNY2 billion from JV project-management fees
and CNY237 million of rental revenue from investment properties,
with the rest from construction services. CIFI's non-DP EBITDA
interest coverage was around 0.35x in 2017-2018 and Fitch expects
the ratio to reach 0.4x in 2020 as CIFI plans to increase its
investment-property operations to generate rental and continue to
expand its sales through JVs.
DERIVATION SUMMARY
CIFI's attributable sales reached CNY76 billion in 2018, similar to
Sino-Ocean Group Holding Limited's (BBB-/Stable, Standalone Credit
Profile: bb+) CNY68 billion, but are higher than the CNY40
billion-50 billion for most peers rated 'BB-', such as KWG Group
Holdings Limited (BB-/Stable), Times China Holdings Limited
(BB-/Stable) and Yuzhou Properties Company Limited (BB-/Stable).
Sino-Ocean has continued its geographic focus on tier 1 and
affluent tier 2 cities, while CIFI has increased its focus on tier
2 and 3 cities. CIFI's leverage of around 48% at end-2018 was
higher than Sino-Ocean's 40%. Sino-Ocean's recurring EBITDA
interest coverage from quality investment properties was at 0.4x,
while CIFI had non-recurring non-DP EBITDA interest coverage of
0.35x at end-2018.
CIFI's leverage is higher than that of KWG, Times China and Yuzhou,
but CIFI has a stronger business profile with better geographical
diversification and a nationwide presence. CIFI also generates
sizeable non-DP income to provide additional support to service
interest, while the others have minimal non-DP income.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales of CNY100 billion in 2019 and
CNY120 billion in 2020
- Attributable land purchases and construction cash costs at
around 60% and 25%, respectively, of contracted sales proceeds in
2019-2020
- DP gross profit margin, excluding capitalised interest and
remeasurement gain, at 30%-35% in 2019-2020
- Non-DP revenue to increase to CNY4.8 billion in 2019 and CNY6.0
billion in 2020.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory, including
proportionate consolidation of JVs, sustained below 40%
- Maintaining high cash flow turnover despite the JV business
model and consolidated contracted sales/debt at over 1.2x (2018:
1.0x)
- Land bank sufficient for three years of sales
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Substantial decrease in contracted sales
- Net debt/adjusted inventory, including proportionate
consolidation of JVs, above 50% for a sustained period
- EBITDA margin, not adjusting for the effect of acquisition
revaluation, below 25% for a sustained period
- Non-PD EBITDA/cash interest paid below 0.3x for a sustained
period
LIQUIDITY
Ample Liquidity, Low Funding Cost: CIFI had unrestricted cash of
CNY43.3 billion at end-2018, enough to cover short-term debt of
CNY13.5 billion. CIFI's average funding cost remained stable at
5.8% in 2018 (2017: 5.2%), and should stay low due to its
diversified onshore and offshore funding channels, as well as its
active management of its capital structure.
COOLPAD GROUP: Shares Crash After Two-Year Suspension Ends
----------------------------------------------------------
Qu Hui and Tang Ziyi at Caixin Global report that shares of Coolpad
Group Ltd. lost nearly half of their value on their first day of
trading in more than two years, as investors fretted over the
future of the sputtering Chinese handset-maker.
Coolpad's Hong Kong-listed shares plunged about 46.5% on July 19 to
close at HK$0.385 (US$0.049), rebounding slightly after opening the
day down 61%, Caixin discloses. The fall wiped out about HK$1.7
billion in market value, the report notes.
According to Caixin, the trading halt began on March 31, 2017,
after the company repeatedly postponed the release of its 2016
financial results citing auditing issues. The shares were to be
frozen until full financial figures were released.
They were ultimately published in April 2018, with the interceding
reports released over the next 12 months, the Post relates.
Between 2015 and 2016, Coolpad faced headwinds from intense market
competition and a cash crunch at LeEco - which was the company's
controlling shareholder - intensifying its financial woes and
management issues, Caixin says.
The Shenzhen-based company was once a leading domestic player
ranking among China's three biggest handset vendors in 2012 and
2013, according to the South China Morning Post. The company lost
its momentum in 2015, as it went into decline amid fierce
competition with homegrown rivals and Xiaomi, Huawei, Oppo and Vivo
took over the market.
The company sought revenue elsewhere, including from overseas
markets which contributed 85% of total sales in 2018, Caixin says
citing the company's latest financial report. But these also
stalled, with overseas revenue down 43% year-on-year to HK$1.08
billion in 2018.
Caixin notes that Coolpad has recently sold assets to offset its
financial losses. In April, it sold land in Xi'an, the capital of
Shaanxi province, for CNY236 million (US$34.3 million). Last year,
the company stripped assets including property and development
rights of commercial land projects in Shenzhen.
Coolpad booked losses of HK$410 million in 2018, narrowing from
HK$2.7 billion in 2017 and HK$4.4 billion in 2016, Caixin discloses
citing the company's financial report.
Net assets reached HK$414 million in 2018, down from HK$789 million
in 2017 and HK$3.5 billion in 2016, Caixin adds.
Coolpad Group Limited, an investment holding company, develops and
provides integrated solutions for smartphone sets, mobile data
platform systems, and value-added businesses in Mainland China and
internationally.
KAISA GROUP: Fitch Rates $300MM Sr. Notes Due 2023 'B'
------------------------------------------------------
Fitch Ratings has assigned China-based homebuilder Kaisa Group
Holdings Limited's (B/Stable) USD300 million 10.875% senior notes
due 2023 a final rating of 'B', with a Recovery Rating of 'RR4'.
The notes will be used to refinance existing medium- to long-term
offshore indebtedness which will become due within one year.
The notes are rated at the same level as Kaisa's senior unsecured
rating as they constitute its direct and senior unsecured
obligations. The final rating is in line with the expected rating
assigned on July 15, 2019.
Kaisa's ratings are underpinned by a strong asset base that
supports scale expansion, which is at a level comparable with 'BB'
category homebuilders. The company had a large and well-located
land bank consisting of over 150 projects in 45 cities across five
major economic regions at end-2018. Its geographical
diversification mitigates project and region-related risks and
gives it more flexibility when launching new projects to support
sales growth. Kaisa's ratings are constrained by high leverage -
measured by net debt/adjusted inventory (urban renewal projects
(URPs) and investment properties at original cost) - of 72.7% at
end-2018, although this is mitigated by high profitability.
Fitch believes Kaisa will start deleveraging from 2020, supported
by its enlarged scale and increased margin, with more high-margin
URPs being recognised. Kaisa is able to secure a large land bank at
low cost in China's Greater Bay Area through its URP business and
this supports its high EBITDA margin of over 30%. The wider margin
of the URP business, at over 40%, will help the company deleverage.
However, Kaisa's leverage will be sustained at a high level if it
expands its scale at the same pace as in 2017 and 2018, as URPs
only contributed to 30% of contracted sales in 2018.
KEY RATING DRIVERS
URPs a Business Strength: Fitch believes Kaisa's URP business
offers operational flexibility, as its high profitability enables
the company to sustain price cuts in a market downturn. Kaisa can
also sell the stakes in its URPs, if needed, at a profit because of
their low land cost. Kaisa's long experience in the URP business
has enabled it to secure a large land bank with a high gross profit
margin of over 40%, supporting the company's EBITDA margin,
excluding capitalised interest in cost of goods sold (COGS), of
30%-35%. A large URP pipeline of 119 projects (site area of 30
million sq m) also allows for a consistent stream of projects
entering the sales phase.
Kaisa has converted an average gross floor area (GFA) of 940,000 sq
m a year for the past 10 years and this also gives it some
operational flexibility with land replenishment. Nevertheless, the
URP business has limited scope to build scale and will become a
less important driver at higher rating levels. URPs require a
longer development cycle and thus funds will be trapped for a
longer period and incur higher funding without immediate cash flow
generation or profit contribution, raising Kaisa's leverage above
that of peers without as large an exposure to URPs. The nature of
the business and the high profitability mean Kaisa can operate at a
higher leverage than other Chinese homebuilders for a sustained
period.
High Leverage Constrains Ratings: Fitch expects Kaisa's leverage,
measured by net debt/adjusted inventory, to stay above 70% in 2019,
but to fall below 70% thereafter. Kaisa's sales scale in 2019 would
be insufficient to cover its high tax and interest burden. Its
reliance on the non-URP homebuilding business, which has a lower
margin, and growth at the business that is faster than Fitch
expects may limit its capacity to deleverage. However, Fitch thinks
there may be improvement once the company's attributable sales rise
above CNY100 billion from 2020, as its sales efficiency -
contracted sales/gross debt - will exceed 0.8x and support stronger
fund flow from operation.
Large and Premium Land Bank: Fitch believes Kaisa's quality land
bank will support its ability to meet its total sales target of
CNY90 billion in 2019. Its premium asset base can also provide a
buffer to liquidity at times when the conversion of its URP land
bank takes longer than the company expects, as it can easily find
buyers for its well-located URPs, especially those in Shenzhen.
Kaisa's land bank totalled 24.0 million sq m (estimated sellable
resources of CNY464 billion) at end-2018, of which 13.0 million sq
m, or 54.3%, was in the Greater Bay Area and 3.2 million sq m in
Shenzhen.
Robust Contracted Sales Growth: Fitch thinks Kaisa's 2019
contracted sales target is achievable due to the supportive
policies in the Greater Bay Area and the company's well-located
land bank. Kaisa had total sellable resources of CNY158 billion at
end-2018, implying a sell-through rate of 57% in 2019 to support
its 20% sales growth, close to its historical sell-through rate of
around 60%. Kaisa's attributable contracted sales rose by 57% to
CNY70.1 billion in 2018, supported by an average selling price
increase of 14% and GFA growth of 38%.
DERIVATION SUMMARY
Kaisa's attributable sales of CNY70 billion in 2018 is comparable
with that of 'BB' category peers, such as CIFI Holdings (Group) Co.
Ltd. (BB/Stable), Logan Property Holdings Company Limited
(BB-/Positive) and China Aoyuan Group Limited (BB-/Positive), and
exceeds the CNY40 billion-50 billion sales of Yuzhou Properties
Company Limited (BB-/Stable), KWG Group Holdings Limited
(BB-/Stable) and Times China Holdings Limited (BB-/Stable). Over
50% of Kaisa's land bank GFA is in the Greater Bay Area, similar to
that of Logan, China Aoyuan and Times China. Kaisa's EBITDA margin
of over 30% is at the higher end among the 'BB' category peers, due
to its high-margin URPs.
Kaisa's leverage of over 70% is similar to that of Oceanwide
Holdings Co. Ltd. (B-/Stable), Xinhu Zhongbao Co., Ltd. (B-/Stable)
and Tahoe Group Co., Ltd. (B-/Stable). Kaisa's business profile is
much stronger than that of Oceanwide and Xinhu, with a larger sales
scale and more diversified land bank. Its churn, measured by
contracted sales/total debt, of 0.64x is also healthier than the
ratios of those two companies, which are below 0.25x. Kaisa and
Tahoe, whose land bank is more exposed to the Pan-Bohai Area, the
Yangtze River Delta and Fujian province, have similar scale and
margin. However, Tahoe's shorter land-bank life of two to three
years puts pressure on its leverage and Tahoe's liquidity is much
tighter than that of Kaisa.
Kaisa's closest peer among 'B' rated issuers is Yango Group Co.,
Ltd. (B/Positive). Yango's sales of CNY118 billion in 2018 were
larger than Kaisa's CNY70 billion and its land bank is also more
diversified. However, Yango's EBITDA margin, excluding capitalised
interest, of less than 20% is narrower than Kaisa's more than 30%.
Yango's leverage, measured by net debt/adjusted inventory, was high
at 71% at end-2018, similar to that of Kaisa.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable contracted sales to rise by 20% in 2019 and 2020
- Attributable land premium/contracted sales at 28% in 2019 and
31% in 2020 (2018: 23%)
- Cash collection rate of around 80% in 2019 and 85% in 2020
(2018: 75%)
- Construction cost/sales proceeds at around 30% in 2019 and
2020 (2018: 30%)
- Dividend payout ratio of 20% of net income (2018: 19%)
ORIGIN AGRITECH: Posts RMB1.2 Million Net Income in H1 FY2019
-------------------------------------------------------------
Origin Agritech Limited announced its unaudited financial results
for the first half of FY2019 ended March 31, 2019.
The Company reported net revenue of RMB82.2 million (US$12.2
million) during the first half year of FY2019, compared to RMB3.6
million for the first half year of FY2018. The cancellation of the
second closing of the seed business sales announced in July, 2018
means that the Company is now back to the commercial corn seed
business. This seed business reported the total gross profit of
RMB19.0 million (US$2.8 million) for the first half of FY2019.
Total operating expenses for the first half year of FY2019 was
RMB18.1 million (US$2.7 million), down 57% from RMB42.0 million for
the same period a year ago. The decrease was mainly due to the
turnaround effort over the last year, especially in the general and
administrative expenses. Selling and marketing expense for the
first half year of FY2019 was RMB2.5 million (US$0.4 million),
compared to RMB0.7 million a year ago as the result of the
Company's returning to the seed business. General and
administrative expenses declined 70% to RMB8.4 million (US$1.3
million), down from RMB28.2 million a year ago. The significant
decline in G&A expenses resulted from the efforts to turn around
the business through strategic redirection and organization
restructuring. Research and development expenses for the first half
year of FY2019 was RMB7.1 million (US$1.0 million), down from
RMB13.1 million a year ago as the Company has been refocusing our
R&D efforts during our turnaround effort.
Total operating income for the first half year of FY2019 was RMB0.9
million (US$0.1 million), a significant turnaround from the
operating loss of RMB42.8 million reported a year ago.
Interest expense was RMB2.3 million (US$0.3 million) during the
first half year of FY2019, down from RMB4.1 million a year ago.
Other income of RMB2.3 million (US$0.3 million) was mainly the
rentals the Company received. The Company rents out portion of its
headquarters building. The other income of RMB18.4 million reported
for the first half year of FY2018 includes mainly the gain from an
asset sales, government subsidies, and the office rental income.
Net income attributable to the Company for the first half year of
FY2019 was RMB1.2 million (US$0.2 million), compared to the net
loss of RMB25.3 million, representing a significant turnaround,
especially in the operating expenses control as well as the gross
profit from the seed business.
Diluted earnings per share for the first half of FY2019 was RMB0.30
(or US$0.044), compared to the loss per share of RMB10.18 during
the same period a year ago.
As of March 31, 2019, the Company had RMB283.15 million in total
assets, RMB239.54 million in total liabilities, and RMB43.6 million
in total equity.
As of March 31, 2019, cash and cash equivalents were RMB5.8 million
(US$0.8 million), an increase of RMB3.8 million from the cash and
cash equivalents of RMB2.0 million as of Sept. 30, 2018.
The current portion of long-term debt is RMB78.6 million (US$11.7
million), which is secured with the Company's headquarters'
building. The advances from customers increased to RMB59.4 million
(US$8.8 million), compared to RMB6.3 million as of Sept. 30, 2018.
The increase in the advances from customers was due to the
Company's return to the seed business.
During the first half year of FY2019, the Company improved its
overall balance sheet by completing an equity financings of US$7.74
million through the announced deals with Longhan Investment
Management Co and Tiger Capital Fund SPC. The equity financing
includes the issuance of 1,397,680 ordinary shares and warrants to
purchase 1 million of the Company's ordinary shares. The total
equity of the Company increased to RMB43.6M (US$6.5 million),
compared to the negative equity of RMB23.3 million as of Sept. 30,
2018. Regarding the earlier equity financing with L2 Capital, the
Company has withdrawn the F3 registration statement filing with SEC
dated November 2018, and there are no further outstanding shares or
warrants relating to the equity financing with L2 Captial.
As of March 31, 2019, total current assets of RMB75.1 million
(US$11.2 million) largely were comprised of the inventories of
RMB64.4 million (US$9.6 million) and non-current assets of RB208.1
million (US$30.9 million) mainly represented the balance of plant
and equipment of RMB167.9 million (US$24.9 million), long-term
investment of RMB16.3 million (US$2.4 million), and land use rights
of RMB14.9 million (US$2.2 million).
As of March 31, 2019, total current liabilities of RMB218.2 million
(US$32.4 million) were mainly the balance of the current portion of
long-term debt of RMB78.6 million (US$11.7 million), which was
secured by the Company's headquarter building, and advances from
customers of RMB59.4 million (US$8.8 million).
A full-text copy of the press release is available for free at:
https://is.gd/Uzekp6
About Origin
Founded in 1997 and headquartered in Zhong-Guan-Cun (ZGC) Life
Science Park in Beijing, Origin Agritech Limited (NASDAQ GS: SEED)
-- http://www.originseed.com.cn/-- is an agricultural
biotechnology company, specializing in crop seed breeding and
genetic improvement, seed production, processing, distribution, and
related technical services. Origin operates production centers,
processing centers and breeding stations nationwide with sales
centers located in key crop-planting regions. Product lines are
vertically integrated for corn, rice and canola seeds.
Origin Agritech reported a net loss of RMB152.79 million for the
year ended Sept. 30, 2018, following a net loss of RMB106.26
million for the year ended Sept. 30, 2017.
BDO China Shu Lun Pan Certified Public Accountants LLP, in
Shenzhen, The People's Republic of China, the Company's auditor
since 2011, issued a "going concern" qualification in its report
dated June 3, 2019, on the Company's consolidated financial
statements for the year ended Sept. 30, 2018, citing that the
Company has suffered recurring losses from operations and has a net
capital deficiency that raise substantial doubt about its ability
to continue as a going concern.
RONSHINE CHINA: Fitch Rates $300MM Sr. Notes Due 2023 'B+'
----------------------------------------------------------
Fitch Ratings has assigned homebuilder Ronshine China Holdings
Limited's (B+/Stable) USD300 million 8.95% senior notes due 2023 a
final rating of 'B+' with a Recovery Rating of 'RR4'. The notes are
rated at the same level as Ronshine's senior unsecured rating
because they are unconditionally and irrevocably guaranteed by the
company. Ronshine intends to use the net proceeds to refinance
existing debt. The final rating follows the receipt of final
documentation conforming to information already received and is in
line with the expected rating assigned on July 16, 2019.
Ronshine's ratings reflect its high quality and diversified land
bank, which supported its fast contracted sales expansion in 2018.
Its ratings are constrained by its sustained moderately high
leverage of about 50%, as defined by net debt/adjusted inventory,
which is high among 'B+' rated peers. Fitch believes Ronshine's
ability to consistently source a low-cost land bank while
maintaining sales churn and profitability will affect the company's
deleverage progress to below 45%, the level that would trigger
positive rating action.
KEY RATING DRIVERS
Faster Scale Expansion: Ronshine's total contracted sales increased
by 143% to CNY122 billion in 2018 (equivalent to consolidated
contracted sales of about CNY74 billion). Ronshine's focus on the
Yangtze River Delta, with exposure to cities that are benefiting
from spillover demand from top-tier cities, was a key driver for
the strong sales growth. The company set a total contracted sales
target of CNY140 billion in 2019, supported by CNY200 billion in
saleable resources, of which 52% will be located in the Yangtze
River Delta.
High Quality, Diversified Land Bank: Ronshine's attributable land
bank remained largely stable at 12.9 million square metres (sq m)
as of end-2018, compared with 12.7 million sq m as of end-2017. Its
land-bank portfolio is well-diversified, covering 39 cities in
China with a focus on tier 1 and 2 cities, which accounted for 80%
of its land bank by area. Fitch believes the diversified land bank
has mitigated the impact from tighter home-purchase restrictions in
many high-tier cities. The company entered six new cities in 2018,
including Qingdao, Jiaxing and Huzhou.
Margin Recovery: Ronshine's EBITDA margin, after adding back
capitalised interest in cost of goods sold (COGS), recovered to 25%
in 2018, from 20% in 2017. The weak EBITDA in 2017 was due to the
revaluation of inventory to fair value following some acquisitions
during the year. Fitch expects the impact to diminish as the
company's scale expands. Ronshine's average land-bank cost was
CNY6,356/sq m, which accounted for 29% of its contracted average
selling price in 2018. The land cost appears reasonable in light of
the high-quality land bank, which should sustain the EBITDA margin
at around 25%.
Ratings Constrained Despite Lower Leverage: Leverage, measured by
net debt/adjusted inventory including guaranteed debt for joint
ventures (JV) and associates, had fallen to 50.1% by end-2018, from
56.6% at end-2017. Management expects to deleverage further as the
company's budget for land acquisition will remain low at about 30%
of contracted sales proceeds in 2019, as there is sufficient land
bank to maintain its contracted sales scale.
DERIVATION SUMMARY
Ronshine's consolidated contracted sales scale of about CNY80
billion a year and diversified land bank are equivalent to 'BB-'
rated homebuilders, such as Yuzhou Properties Company Limited
(BB-/Stable). However, Ronshine's leverage of 50% is higher than
that of 'BB-' rated peers, which usually have leverage of below
45%.
Ronshine has a smaller scale, thinner EBITDA margin and higher
leverage relative to China Evergrande Group (B+/Positive), but
Ronshine has relatively less trade payables and a stronger
liquidity position. Ronshine has a similar scale to 'B' category
peers, such as Yango Group Co., Ltd. (B/Positive), although
Ronshine's leverage is lower. Ronshine's normalised EBITDA margin
(adding back capitalised interest in COGS) of about 25% is
comparable with that of Yango.
KEY ASSUMPTIONS
- Total contracted sales of CNY140 billion in 2019 and CNY150
billion in 2020 (2018: CNY122 billion)
- EBITDA margin, after adding back capitalised interest in COGS,
of 25%-27% in 2019-2020 (2018: 25%)
- Land acquisitions to account for 30%-40% of contracted sales
proceeds in 2019-2020
No changes to its recovery rating assumptions
Fitch estimates the recovery rate of the offshore senior unsecured
debt to be 55%, based on its calculation of the adjusted
liquidation value after administrative claims. Fitch has rated the
senior unsecured debt at 'B+'/RR4. China falls into its 'Group D'
of creditor friendliness under its Country-Specific Treatment of
Recovery Ratings Criteria, and instrument ratings of issuers with
assets in this group are subject to a soft cap at the issuer's
IDR.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
- Leverage, measured by net debt/adjusted inventory including
guaranteed debt for its JVs/associates, sustained below 45% (2018:
50%)
- EBITDA margin, after adding back capitalised interest in COGS,
sustained at 25% or above (2018: 25%)
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
- Leverage, measured by net debt/adjusted inventory including
guaranteed debt for JVs/associates, above 55% for a sustained
period
- EBITDA margin, after adding back capitalised interest in COGS,
below 20% for a sustained period
LIQUIDITY
Sufficient Liquidity: Ronshine had a cash balance of CNY25 billion
at end-2018, sufficient to cover its short-term debt of CNY24.8
billion. It has issued in 2019 USD600 million of 11.25% senior
unsecured notes due 2021, a total of USD500 million of 10.5% senior
notes due 2022, and an additional USD235 million on its 8.75%
senior notes due 2022. All issuances were for refinancing
purposes.
[*] CHINA: Debt Ratio is Growing as Economy Loses Steam
-------------------------------------------------------
Bloomberg News reports that China's efforts to shore up sagging
economic growth are leading to a resurgence in indebtedness,
underlining the challenge President Xi Jinping's government faces
in curbing financial risk.
The nation's total stock of corporate, household and government
debt now exceeds 303% of gross domestic product and makes up about
15% of all global debt, Bloomberg discloses citing a report
published by the Institute of International Finance. That's up from
just under 297% in the first quarter of 2018.
Bloomberg says the real growth of the world's second-largest
economy slowed to a record-low pace in the second quarter amid the
negative effects of the trade war with the U.S. as well as
longer-term factors such as its aging society. In a bid to manage
the slowdown, the government has tried to funnel credit to the
private sector and encourage domestic consumption -- at the price
of higher debt.
According to Bloomberg, China's total debt-to-GDP ratio nears 310%
as of July 2019.
That's a turnaround from 2018's sweeping campaign to curb
off-balance sheet corporate borrowing from the so-called shadow
banking sector, a signature campaign by Xi, Bloomberg says. While
that effort did have some success, borrowing in other sectors
offset it, according to the IIF. The marked slowdown in the economy
also affects the burden that debt places on the economy.
With nominal GDP growth now running at about 8%, far outpaced by
the growth in aggregate financing at about 11%, means that the
debt-to-GDP ratio is bound to increase, according to Raymond Yeung
at Australia & New Zealand Banking Group Ltd, Bloomberg relays.
Real gross domestic product rose 6.2% in the April-June period from
a year earlier, a further slowdown compared with the 6.4% expansion
in the first quarter, Bloomberg discloses. For now, accelerated
debt growth appears to be a price policy makers are willing to pay
in order to brake the slowdown.
Policy makers have beefed up fiscal support, including easing the
rules for using government debt in some infrastructure projects.
Bloomberg recalls that the State Council, China's cabinet, said
last month that banks should try to sell more than CNY180 billion
(US$26.2 billion) of bonds to fund small firms in 2019 as well as
lend more to the manufacturing and services sector.
=========
I N D I A
=========
AMARTEX INDUSTRIES: CRISIL Maintains D Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Amartex Industries
Limited (AIL) continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 65 CRISIL D (ISSUER NOT
COOPERATING)
Letter of Credit 15 CRISIL D (ISSUER NOT
COOPERATING)
Overdraft 10 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 10 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with AIL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of AIL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on AIL is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of AIL continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
AIL, incorporated in 1988 and managed by Mr Arun Grover, undertakes
retailing, and weaving and dyeing, of fabrics. It has 40 stores
across northern India. It derives most of its revenue from suiting
and shirting fabrics, which are sold under its own brands Groviano
(for men's apparel) and Diana (for women's apparel).
CMC TEXTILES: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated CMC Textiles
Private Limited's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR68.90 mil. Term loan due on April 2023 migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING)
rating;
-- INR210.00 mil. Fund-based limits migrated to non-cooperating
category with IND BB+ (ISSUER NOT COOPERATING) / IND A4+
(ISSUER NOT COOPERATING) rating; and
-- INR18.90 mil. Non-fund-based limits migrated to non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
August 9, 2018. Ind-Ra is unable to provide an update, as the
agency does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2002 by Mr. Ajeet Yadav, Mr. Pawan Yadav, and Mr.
Dheerendra Yadav, the company manufactures texturized yarn and
fabrics with a total installed capacity of 10,030 metric tons per
annum.
DEMANDSHORE SOLUTIONS: Ind-Ra Keeps 'B+' Rating in Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has maintained DemandShore
Solutions Private Limited's (DSPL) Long-Term Issuer Rating of 'IND
B+ (ISSUER NOT COOPERATING)' in the non-cooperating category and
simultaneously withdrawn it.
The instrument-wise rating actions are:
-- INR18.2 mil. Long-term loans$ due on December 2018 maintained
in a non-cooperating category and withdrawn;
-- INR65 mil. Fund-based facilities* maintained in non-
cooperating category and withdrawn;
-- INR20 mil. Non-fund-based facilities# maintained in non-
cooperating category and withdrawn;
-- INR20 mil. Proposed fund-based facilities~ maintained in non-
cooperating category and withdrawn;
-- INR10 mil. Proposed non-fund-based facilities! maintained in
non-cooperating category and withdrawn; and
-- INR13 mil. Proposed long-term loans- maintained in non-
cooperating category and withdrawn.
$ Affirmed at 'IND B+ (ISSUER NOT COOPERATING)' before being
withdrawn
* Affirmed at 'ND B+ (ISSUER NOT COOPERATING)'/'IND A4 (ISSUER NOT
COOPERATING before being withdrawn
#Affirmed at 'IND A4 (ISSUER NOT COOPERATING)' before being
withdrawn
~ Affirmed at 'Provisional IND B+ (ISSUER NOT COOPERATING)'
/'Provisional IND A4 (ISSUER NOT COOPERATING)' before being
withdrawn
!Affirmed at 'Provisional IND A4 (ISSUER NOT COOPERATING)' before
being withdrawn
- Affirmed at 'Provisional IND B+ (ISSUER NOT COOPERATING)' before
being withdrawn
KEY RATING DRIVERS
DSPL 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 due
certificate from the rated facility's lender. This is consistent
with the Securities and Exchange Board of India's circular dated
March 31, 2017, for credit rating agencies.
COMPANY PROFILE
DSPL provides lead management services.
DEWAN HOUSING: In Talks With Bondholders on Rescue Plan
-------------------------------------------------------
Divya Patil and Suvashree Ghosh at Bloomberg News report that
cash-strapped Dewan Housing Finance Corp. is in discussions with
its bondholders to revamp its debt as the Indian mortgage lender
tries to shore up its financials after posting its first quarterly
loss in more than a decade.
In a meeting with its rupee bondholders two weeks ago, Dewan
Housing discussed an inter-creditor agreement that the consortium
of bankers has agreed to enter for a potential restructuring of its
liabilities, Bloomberg relates citing three people familiar with
the matter. The company also discussed the impact of the agreement
on its bond investors, and highlighted that as part of the
resolution plan, maturities of several bonds may be elongated
and/or interest rate be lowered, they said, Bloomberg relays.
Bloomberg relates that bond investors, including mutual funds, plan
to seek approval from the capital markets regulator to be part of
the inter-creditor agreement, said the people, who asked not to be
identified as the details are private. Mutual funds, which are big
investors of the beleaguered shadow lender's debt, will even
discuss and seek necessary board approvals to be a part of any
potential resolution plan, two of the people familiar with the
matter said.
According to Bloomberg, Dewan Housing is among the worst hit after
financier Infrastructure Leasing & Financial Services Ltd. group
defaulted for the first time in June 2018, shaking investor
confidence and shutting the door for financing for many shadow
banks. Dewan's credit rating was slashed to D from AAA this year as
it delayed repayments, the report notes.
The lender's ability to raise funds has been substantially impaired
and the business has been brought to a standstill, casting doubt on
its ability to continue as a going concern, it said in an exchange
filing on July 14, Bloomberg relays. The next day, Mumbai-based
Dewan said it is working with stakeholders and creditors to ensure
that there is a comprehensive resolution, without any haircut to
lenders.
About DHFL
Dewan Housing Finance Corporation Limited operates as a housing
finance company in India. The company's deposit products include
fixed deposit products for individuals, and trusts and
institutions; and corporate, recurring, and Wealth2Health deposits
products. It also offers home loans, which include home
improvement loans, home construction loans, home extension loans,
plot loans/land loans, plot and construction loans, and balance
transfer of home loans, as well as home loans for the self-
employed; small and medium enterprise loans, including property
term, plant and machinery, medical equipment, and business loans;
mortgage loans, such as loans against property, loan for purchase
of commercial premises, and loan through lease rental discounting;
and NRI home loans. As of March 31, 2018, the company operates
through a network of 347 locations, including 187 branches, 135
micro branches, 20 zonal/regional/CPU offices, 2 disbursement
hubs, and 1 collection center in India, as well as overseas
representative offices in London and Dubai.
As reported in the Troubled Company Reporter-Asia Pacific on June
21, 2019, ICRA downgraded the rating on the 850-crore
commercial paper programme of Dewan Housing Finance Corporation
Limited (DHFL) to [ICRA]D from [ICRA]A4. The rating has been
removed from Watch with Negative Implications.
EASTERN MATTRESSES: CRISIL Lowers Ratings on INR15cr Loans to B
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Eastern Mattresses Private Limited (EMPL) to 'CRISIL B/Stable'
from 'CRISIL B+/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 8 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
Long Term Loan 7 CRISIL B/Stable (Downgraded
from 'CRISIL B+/Stable')
The rating downgrade reflects weakening of EMPL's financial risk
profile as a result of weak operating performance. Operating margin
reduced substantially to around -15% in fiscal 2019 from -8% in
fiscal 2018. This is on account of higher selling expenses and
intense competition in the industry. Reduction in operating
performance has resulted in weakening of financial risk profile.
Networth is estimated to be around -10 crores in fiscal 2019.
The rating continues to reflect EMPL's modest scale of operations
and below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of EMPL's promoters in
the mattress manufacturing industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Revenue was around INR48 crore in
fiscal 2018. The modest scale of operations restricts the company's
bargaining capacity with suppliers and customers and exposes it to
competition from larger players.
* Below-average financial risk profile: Financial risk profile is
below average with modest networth and high gearing of INR3.01
crore and 4.57 times, respectively, as on March 31, 2018. Networth
is expected to be around -10 crores due to large operating losses
in fiscal 2019. Debt protection metrics are weak, with net cash
accrual to total debt and interest coverage ratio of -41% and -2.7
times, respectively, in fiscal 2018.
Strength:
* Extensive experience of the promoters: Benefits from the
promoters' near two decade-experience in the industry and
established relationships with suppliers and customers should
support the business.
Liquidity
* Moderate bank limit utilization
Bank limit utilization is moderate around 75 percent for the past
twelve months ended March 31, 2019. CRISIL believes that bank limit
utilization is expected to remain moderate on account large working
capital requirement.
* Cash accrual insufficient to meet debt obligation
Cash accrual are expected to be over less than 1 crores which are
insufficient against term debt obligation of INR2-2.5 crores over
the medium term. Repayment to be met through infusion of unsecured
loans
* Support from promoters in form of infusion of unsecured loan or
equity
The promoters are likely to extend support in the form of equity
and unsecured loans to the company to meet its working capital
requirements and repayment obligations.
Outlook: Stable
CRISIL believes EMPL will continue to benefit from the extensive
experience of its promoters. The outlook may be revised to
'Positive' if equity infusion or larger accretion to reserves
improve financial risk profile and thereby strengthens the capital
structure. The outlook may be revised to 'Negative' if decline in
revenue or profitability, stretch in the working capital cycle or
any large debt-funded capital expenditure (capex) weakens the
financial risk profile.
Incorporated in 1999, EMPL manufactures and sells rubberised coir
mattresses, spring mattresses and polyurethane foam mattresses
under its own brand, Sunidra. EMPL is based in Thodupuzha, Kerala
and its operations are managed by Mr Firoz Meeran and Mr Nawas
Meeran.
EXOTICA BAR: Ind-Ra Migrates 'B+' Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Exotica Bar and
Restaurant LLP's Long-Term Issuer Rating to the non-cooperating
category. The issuer did not participate in the rating exercise
despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND B+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR5 mil. Fund-based working capital limit migrated to non-
cooperating category with IND B+ (ISSUER NOT COOPERATING)
rating; and
-- INR59 mil. Term loan due on May 2025 migrated to non-
cooperating category with IND B+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 13, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in December 2016, EBR runs a bar-cum-restaurant in
Ranchi. The designated partners of the entity are Sanket Sarawagi,
Smarth Agarwal, and Rohit Agarwal.
GMA PINNACLE: Ind-Ra Assigns BB+ LT Rating to INR50MM Loans
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned M/s GMA Pinnacle
Automotives Private Limited (GMA) a Long-Term Issuer Rating of 'IND
BB-'. The Outlook is Stable.
The instrument-wise rating action is:
-- INR150 mil. Fund-based facilities assigned with IND BB-
/Stable/IND A4+ rating.
KEY RATING DRIVERS
The ratings reflect GMA's weak credit metrics and modest EBITDA
margin owing to the working capital-intensive nature of operations
and intense competition in the car dealership business. As per FY19
provisional financials, its net leverage (net adjusted
debt/operating EBITDAR) improved to 6.70x (FY18: 8.63x) due to an
increase in absolute EBITDA. However, interest coverage (operating
EBITDA/gross interest expense) deteriorated to 1.63x in FY19 (FY18:
2.24x) owing to an increase in gross interest expenses, resulting
from higher utilization of the working capital limits. The EBITDA
margin improved marginally to 2.37% in FY19 (FY18: 1.41%) on
account of an increase in service and sale of spare parts, which
account for higher margin. The company's return on capital employed
remained stable at 7% in FY19.
The ratings are also constrained by the company's tight liquidity
position as indicated by near full utilization of the fund-based
facilities over the 12 months ended June2019, owing to an increase
in the scale of operations. GMA's working capital cycle was modest
at 54 days in FY19 (FY18: 45 days). Its cash flow from operations
deteriorated further to negative INR85 million in FY18 (FY17:
negative INR14 million), mainly due to changes in working capital.
The ratings also factor in GMA's medium scale of operations as
indicated by revenue of INR973 million in FY19 (FY18: INR1,216
million). The decline in revenue was due to the floods in Kerala
during August 2018, which impacted the sales for three-to-four
months.
However, the ratings are supported by promoter's experience of
almost a decade in automobile industry.
RATING SENSITIVITIES
Negative: A substantial decline in the profitability margin,
leading to deterioration in the credit metrics will be negative for
the ratings.
Positive: A substantial growth in the top line and profitability
margin, leading to an improvement in the credit metrics will be
positive the ratings.
COMPANY PROFILE
Incorporated in July 2016, GMA is the authorized dealer of Jeep
Brand in Kochi and Muvattupuzha.
JET AIRWAYS: Taps Grant Thornton as New Resolution Professional
---------------------------------------------------------------
Consultancy.in reports that as efforts continue to rescue Jet
Airways' financial situation, a new resolution professional (RP)
from professional services firm Grant Thornton has been called upon
to help with the process, while law firm Cyril Amarchand Mangaldas
has been selected to represent the firm legally.
Cyril Amarchand Mangaldas is the largest law firm in India, and is
well equipped to manage the Jet Airways project, given some of its
recent assignment, the report says. In 2017, the law firm was
called upon to help with the divestment of Indian public sector
airline carrier Air India, alongside EY and Rothschild.
Consultancy.in relates that the firm will now help the State Bank
of India (SBI) with resolving the situation at Jet Airways, after
the creditor made the decision to begin the insolvency process for
the airline. SBI has also brought on board Partner at Grant
Thornton Ashish Chawchharia as an RP for the insolvency process.
Mr. Chawchharia is currently a Partner and the Head of
Restructuring Services at Grant Thornton, and has previously been
the Practice Head for the Eastern Region, the report discloses. He
has a wealth of consulting experience at a number of illustrious
firms, including former accounting and advisory firm Arthur
Andersen.
According to Consultancy.in, the entry of Mr. Chawchharia and Cyril
Amarchand Mangaldas into the equation is the latest development in
a prolonged saga that has unfolded over the last year. Late in
2018, efforts were still being made to rescue operations at Jet
Airways, at which point in time McKinsey & Company & Jet Airways
were both brought on board.
Consultancy.in says McKinsey was tasked with helping to cut costs
at the airline, while BCG was tasked with working to boost revenues
at the giant. Nevertheless, the airline's finances continued to
deteriorate and consulting firm Alvarez & Marsal was involved in
the process to conduct due diligence to the firm to inform a
possible takeover from Etihad, the report states.
SBI, meanwhile, appointed Big Four accounting and advisory firm EY
to help the lenders consortium by conducting an audit. SBI has now
made the decision to enter insolvency proceedings with Jet, as the
creditors meet the potential to recover approximately INR8,400
crore.
Commenting on the move, Founder of Jet Airways Naresh Goyal said,
"I feel sad and deeply distressed mainly for our loyal employees
who have waited months and were anxiously and hopefully awaiting a
positive outcome to the Bank Led Resolution Plan," Consultancy.in
relays.
About Jet Airways
Based in Mumbai, India, Jet Airways (India) Limited --
https://www.jetairways.com/ -- provided passenger and cargo air
transportation services. It also provided aircraft leasing
services. It operated flights to 66 destinations in India and
international countries.
As reported in the Troubled Company Reporter-Asia Pacific on June
24, 2019, Reuters said the National Company Law Tribunal (NCLT), on
June 20 accepted an insolvency petition against Jet Airways Ltd
filed by its creditors as they attempt to recover some of their
dues. The insolvency process will allow lenders to sell the
company as a whole or in parts, laying out a fixed timeline for a
resolution around its future. Law firm Cyril Amarchand Mangaldas
will represent the interests of the lenders' consortium, Reuters
said. Indian financial newspaper Mint on June 19 reported that
lenders had named Ashish Chhawchharia of Grant Thornton India as
the resolution professional, Reuters added.
Jet Airways Ltd on April 17 halted all flight operations after its
lenders rejected its plea for emergency funds.
The total liabilities of the airline, including unpaid salaries and
vendor dues, are nearly INR15,000 crore, Livemint disclosed.
JMG AUTOMOBILES: CRISIL Lowers Rating on INR8.3cr Loans to B+
-------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
JMG Automobiles (JMG), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.75 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
Proposed Long Term .15 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
Term Loan .40 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with JMG for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of JMG, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on JMG is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of JMG Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
JMG is an authorized dealer of two-wheelers of HMCL in Cuttack,
Odisha.
KIRAN INDUSTRIES: Ind-Ra Migrates BB+ LT Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kiran Industries
Private Limited'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 the rating. The rating will now
appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating action is:
-- INR220 mil. Fund-based limits migrated to non-cooperating
category with IND BB+ (ISSUER NOT COOPERATING) / IND A4+
(ISSUER NOT COOPERATING) rating;
-- INR2 mil. Non-fund-based limits migrated to non-cooperating
category with IND A4+ (ISSUER NOT COOPERATING) rating; and
-- INR337 mil. Term loan due on April 2026 migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 18, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1986, Kiran Industries runs a yarn texturizing
business.
KOTHARI PRIMA: Ind-Ra Migrates B Issuer Rating to Non-Cooperating
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Kothari Prima
Private Limited's (KPPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND B (ISSUER NOT COOPERATING)' on the agency's website.
The instrument-wise rating action is:
-- INR90 mil. Fund-based limits migrated to non-cooperating
category with IND B (ISSUER NOT COOPERATING) / IND A4 (ISSUER
NOT COOPERATING) rating; and
-- INR110 mil. Long-term loan due on June 2022 migrated to non-
cooperating category with IND B (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 31, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2012, KPPL manufactures polyvinyl chloride pipes
and irrigation systems.
MAHAKALESHWAR INFRATECH: Ind-Ra Affirms BB+ LongTerm Issuer Rating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has revised Mahakaleshwar
Infratech Private Limited's (MIPL) Outlook to Stable from Negative
while affirming its Long-Term Issuer Rating at 'IND BB+'.
The instrument-wise rating actions are:
-- INR52 mil. Fund-based working capital limits affirmed; Outlook
revised to Stable from Negative with IND BB+/Stable/IND A4+
rating; and
-- INR578 mil. Non-fund-based working capital limits affirmed
with IND A4+ rating.
KEY RATING DRIVERS
The Outlook revision reflects MIPL's improved revenue visibility
due to its strong order book. According to the provisional numbers
for FY19, revenue remained moderate but improved to INR850 million
(FY18: INR345.88 million) because of increased order execution.
MIPL has a current order book of INR2,861.1 million (3.4x of
revenue), out of which projects worth INR1,296 million (1.5x of
revenue) have already been started and are to be completed by FY20.
MIPL's credit metrics are modest. Gross interest coverage
(operating EBITDA/gross interest expense) declined to 3.5x in FY19
(FY18: 5.37x) on an increase in interest cost. However, net
leverage (adjusted net debt/operating EBITDAR) improved to 1.91x in
FY19 (FY18: 3.02x) due to an increase in absolute EBITDA to
INR108.82 million (INR65.69 million).
The ratings also factor in MIPL's tight liquidity position,
indicated by 97% average utilization of the fund-based limits for
the 12 months ended May 2019. The working capital cycle of MIPL
improved to a negative 13 days in FY19 (FY18: five days) owing to
an increase in creditor days to 25 days (19 days). The cash flow
from operations (CFO) increased to INR51.48 million in FY19 (FY18:
INR32.70 million) due to an increase in absolute EBITDA. The CFO
remained positive during FY14-FY19 due to limited fluctuations in a
working capital cycle and timely realization of payments from the
government. Ind-Ra expects the cash flows to remain close to FY19
levels in the medium term.
The free cash flow (FCF) of the company was negative in FY18 and
FY19 on account of the debt-led capex undertaken by the company to
procure construction equipment. Also, on an average, MIPL incurs a
maintenance CAPEX of around INR10 million-20 million per year.
Ind-Ra expects the FCF to improve in the short-to-medium term on
account of (i) the expected stability in the EBITDA margins and,
(ii) the absence of any major CAPEX plans from FY20 onwards.
MIPL's operating margins remained healthy at 12.8% in FY19 (FY18:
18.99%) due to the execution of higher-margin projects despite an
increase in the price of its major raw material (bitumen) and the
procurement of other raw materials at higher costs. ROCE stood at
17.11% in FY19 (FY18: 12.15%).
The ratings are also supported by the founders' over two decades of
experience in road construction, the company's ownership of
state-of-the-art equipment and machinery, and the presence of
experienced engineers and skilled and unskilled laborers in its
workforce.
RATING SENSITIVITIES
Negative: A decline in the EBITDA margins leading to deterioration
in the credit metrics with interest coverage below 2.5x and/or
deterioration in the working capital cycle, all on a sustained
basis, will be negative for the ratings.
Positive: A significant increase in the scale of operations along
with stable EBITDA margins and credit metrics will be positive for
the ratings.
COMPANY PROFILE
MIPL undertakes engineering, procurement and construction
contracts, primarily road construction for various government
departments such as Uttar Pradesh Public Work Department and
National Highways Authority of India ('IND AAA'/Stable).
MIPL's registered office is in Lucknow. It is promoted by directors
Anuj Singh and Sunil Dewavidi.
MANGALORE MARKETING: CRISIL Lowers Rating on INR9cr Loan to B+
--------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
with Mangalore Marketing (MM), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with MM for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of MM, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on MM is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of MM Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
MM, set up in 2001 by Mr Basheer, is a partnership firm based in
Mangalore. The firm distributes electronics equipment of LG,
Preethi and Ajanta Stabilisers, and is the distributor for dish
TV.
MEGHA AGROTECH: Ind-Ra Moves BB+ on INR45MM Debt to Non-Cooperating
-------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Megha Agrotech
Private Limited's (MAPL) Long-Term Issuer Rating to the
non-cooperating category. The issuer did not participate in the
rating exercise despite continuous requests and follow-ups by the
agency. Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The rating will now
appear as 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR45 mil. Fund-based facilities migrated to non-cooperating
category with IND BB+ (ISSUER NOT COOPERATING) rating; and
-- INR5 mil. Non-fund based facilities migrated to non-
cooperating category with IND A4+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 31, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 1997, MAPL manufactures and trades drip irrigation
and sprinkler irrigation equipment used for agriculture and
horticulture purposes at its two sites in Bengaluru.
NIMBUS MOTORS: CRISIL Lowers Ratings on INR30cr Loans to B+
-----------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Nimbus Motors Private Limited (NMPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Drop Line 4 CRISIL B+/Stable (ISSUER NOT
Overdraft COOPERATING; Revised from
Facility 'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Electronic Dealer 25 CRISIL B+/Stable (ISSUER NOT
Financing Scheme COOPERATING; Revised from
(e-DFS) 'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Proposed Fund- 1 CRISIL B+/Stable (ISSUER NOT
Based Bank Limits 'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with NMPL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of NMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on NMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of NMPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
Established in 1998 by Mr Dewan, NMPL was the first authorised
dealer of HMIL in Noida. Currently, the company operates two
showrooms in Noida and Ghaziabad and four workshops.
ORAGADAM CITY: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Oragadam City Developers Private Limited
New No. 5, Old No. 3, Giri Road
T. Nagar, Chennai 600017
Insolvency Commencement Date: July 9, 2019
Court: National Company Law Tribunal, Special Bench, Chennai
Estimated date of closure of
insolvency resolution process: January 4, 2020
Insolvency professional: Ramadoss P.
Interim Resolution
Professional: Ramadoss P.
76/26-B2, Kuppusamy Raja Street
(West End – Near Vinayagar Temple)
Pudupalayam, Rajapalayam 626117
E-mail: ramadossca@gmail.com
Last date for
submission of claims: July 22, 2019
PARAMOUNT IMPEX: Insolvency Resolution Process Case Summary
-----------------------------------------------------------
Debtor: Paramount Impex Private Limited
Registered office:
312, Ansal Bhawan
16 Kasturba Gandhi Marg
New Delhi 110001
Works:
84th K.M. Stone, Village Siwah
G.T. Road, Panipat
Insolvency Commencement Date: July 11, 2019
Court: National Company Law Tribunal, Panipat Bench
Estimated date of closure of
insolvency resolution process: January 6, 2020
(180 days from commencement)
Insolvency professional: Vishal Malhotra
Interim Resolution
Professional: Vishal Malhotra
219-R, Model Town
Panipat 132103
Haryana
E-mail: malhotravishalca@yahoo.co.in
Last date for
submission of claims: July 25, 2019
PAWAR PATKAR: CRISIL Keeps D on INR15cr Loans in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Pawar Patkar and D.
S. Contractors Associates Private Limited (PAWAR) continues to be
'CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 2 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 10 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Long Term 3 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING)
CRISIL has been consistently following up with PAWAR for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PAWAR, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PAWAR is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of PAWAR continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
Established in 2010 by Mr. R D Pawar, Pawar undertakes
government-funded civil construction projects in Nashik,
Maharashtra.
PCI LIMITED: CRISIL Maintains D Ratings in Not Cooperating
----------------------------------------------------------
CRISIL said the ratings on bank facilities of PCI Limited (PCI)
continues to be 'CRISIL D/CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 28 CRISIL D (ISSUER NOT
COOPERATING)
Letter of credit & 52 CRISIL D (ISSUER NOT
Bank Guarantee COOPERATING)
Rupee Term Loan 5.93 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with PCI for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PCI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PCI is consistent
with 'Scenario 1' outlined in the 'Framework for Assessing
Consistency of Information with CRISIL BB' category or lower'.
Based on the last available information, the ratings on bank
facilities of PCI continues to be 'CRISIL D/CRISIL D Issuer not
cooperating'.
PCI, set up in 1986 by Mr Surinder Mehta, is the flagship company
of the Prime group. It provides technology-related solutions to
various industries, especially the power sector. Its activities
include marketing, distribution, and after-sales service support
for power testing, maintenance, and conditioning equipment, and
machine tools. Furthermore, it owns three windmills with combined
capacity of 4.5 megawatt in Kutch, Gujarat.
PRIYANKSHI FASHIONS: CRISIL Lowers Ratings on INR18cr Loans to B+
-----------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Priyankshi Fashions Private Limited (PFFL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
Proposed Cash 8 CRISIL B+/Stable (ISSUER NOT
Credit Limit COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with PFFL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of PFFL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on PFFL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of PFFL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
Incorporated in 2011, PFFL is promoted by Mr. Kishanbhai Khetan and
his wife, Ms. Ramta Khetan. The company trades in saris and dress
materials and carries out its operations in Surat (Gujarat).
R. L. AGRO: CRISIL Maintains D Ratings in Not Cooperating Category
------------------------------------------------------------------
CRISIL said the ratings on bank facilities of R. L. Agro Industries
(RLAI) continues to be 'CRISIL D Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (ISSUER NOT
COOPERATING)
Long Term Loan 1.13 CRISIL D (ISSUER NOT
COOPERATING)
Proposed Term Loan 2.37 CRISIL D (ISSUER NOT
COOPERATING)
Warehouse Financing 10.50 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with RLAI for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RLAI, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RLAI is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of RLAI continues to be 'CRISIL D Issuer not
cooperating'.
RLAI, a partnership firm set up by Mr Krishan Gopal and Mr Chanchal
Kumar in 2010, mills and processes basmati and non-basmati rice,
which it sells in the domestic market. Its plant is in Gurdaspur,
Punjab.
RAMAN AGRO: CRISIL Lowers Rating on INR19cr Loans to B+
-------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Raman Agro Exports Private Limited (RAEPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
Term Loan 7 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB-/Stable ISSUER
NOT COOPERATING')
CRISIL has been consistently following up with RAEPL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RAEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RAEPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of RAEPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
RAEPL, set up in 2008 by Mr. Raman Garg and his family,
manufactures cattle feed and de-oiled cake (DOC) majorly from
de-oiled rice bran and mustard cake for sale under the brand, Doodh
Dhara. The processing facilities at Rampur (Uttar Pradesh) and
Raigarh (Chhattisgarh) have aggregate capacity of around 300 tonne
per day, which is utilised at 65-70%.
RASHMI REALTY: CRISIL Keeps D on INR32cr Debt in Not Cooperating
----------------------------------------------------------------
CRISIL said the ratings on bank facilities of Rashmi Realty
Builders Private Limited (RRBPL) continues to be 'CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 32 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with RRBPL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of RRBPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on RRBPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of RRBPL continues to be 'CRISIL D Issuer not
cooperating'.
RRBPL was promoted in 2010 by the Bosmiya family of Mumbai and
undertakes development of residential real estate properties. The
Bosmiya family has been undertaking residential and commercial real
estate development projects and broking and contractual
construction since 1993 through its various group companies,
collectively referred to as the Rashmi group. The management of the
group rests with four brothers of the Bosmiya family: Mr. Deepak
Bosmiya, Mr. Yogesh Bosmiya, Mr. Hemendra Bosmiya, and Mr. Ashok
Bosmiya.
ROYALE MANOR: Ind-Ra Migrates BB+ Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Royale Manor
Hotels and Industries Limited'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 now
continue to be 'IND BB+ (ISSUER NOT COOPERATING)' on the agency's
website.
The instrument-wise rating actions are:
-- INR74.38 mil. Fund-based working capital limits migrated to
non-cooperating category with IND BB+ (ISSUER NOT
COOPERATING) / IND A4+ (ISSUER NOT COOPERATING) rating; and
-- INR1.94 mil. Term loan due on September 2018 migrated to non-
cooperating category with IND BB+ (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 12, 2018. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Royale Manor is a listed entity on Bombay Stock Exchange. It
operates a 91-room five-star hotel in Ahmedabad (The Ummed
Ahmedabad) and is primarily engaged in the hospitality business.
SAISREE ENGINEERS: CRISIL Keeps D Ratings in Non-Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of Saisree Engineers
Private Limited (SSEPL) continues to be 'CRISIL D/CRISIL D Issuer
not cooperating'
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 5 CRISIL D (ISSUER NOT
COOPERATING)
Cash Credit 5 CRISIL D (ISSUER NOT
COOPERATING)
Long Term Loan 5 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL has been consistently following up with SSEPL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SSEPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SSEPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of SSEPL continues to be 'CRISIL D/CRISIL D Issuer not
cooperating.'
Incorporated in 2010, Hyderabad-based SSEPL undertakes coal mining
works (digging and dumping) and civil construction works. The
company is promoted by Mr. Suryanarayana Raju and his family.
SHAH MOTILAL: CRISIL Lowers Ratings on INR20cr Loans to 'B+'
------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Shah Motilal Foods Limited (SMFL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Long Term Loan 7.67 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Long Term
Bank Loan Facility 2.33 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with SMFL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of SMFL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on SMFL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of SMFL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
Based in Hyderabad (Telangana) and set up in April 2012, SMFL is
engaged in processing and trading of milk and milk products. The
day-to-day operations of SMFL are managed by Mr. Rajesh Gandhi.
SHITAL GEMS: Ind-Ra Affirms 'D' LT Issuer Rating on INR220MM Loan
-----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has affirmed Shital Gems Pvt.
Ltd.'s (SGPL) Long-Term Issuer Rating at 'IND D (ISSUER NOT
COOPERATING)'. The issuer did not participate in the rating
exercise despite continuous requests and follow-ups by the agency.
Therefore, investors and other users are advised to take
appropriate caution while using these ratings. The ratings will
continue to appear as 'IND D (ISSUER NOT COOPERATING)' on the
agency's website.
The instrument-wise rating action is:
-- INR220 mil. Fund-based working capital limits (Long-
term/Short-term) affirmed with IND D (ISSUER NOT COOPERATING)
rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
July 12, 2016. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
KEY RATING DRIVERS
The affirmation reflects SGPL's classification as a non-performing
account by the lender since March 31, 2017.
RATING SENSITIVITIES
Positive: Timely debt servicing for at least three consecutive
months would be positive for the ratings.
COMPANY PROFILE
Incorporated in 2000, Mumbai-based SGPL imports and exports rough,
cut and polished diamonds.
SHRIRAM TRANSPORT: Fitch Rates $250MM Sr. Sec. Notes Due 2022 'BB+'
-------------------------------------------------------------------
Fitch Ratings has assigned a final rating of 'BB+' to India-based
Shriram Transport Finance Company Limited's (STFC, BB+/Stable)
USD250 million 5.95% senior secured notes due 2022, which carry a
fixed-rate coupon payable semi-annually.
This follows the completion of the securities issue and receipt of
final documents conforming to information previously received. The
final rating is the same as the expected rating assigned on July
11, 2019.
The notes are secured by a fixed-charge over specified accounts
receivable, in line with STFC's domestically issued secured bonds
and rupee-denominated senior secured bonds issued overseas. The
notes are also subject to maintenance covenants that require STFC
to meet regulatory capital norms at all times, maintain a net
non-performing loan ratio equal to or less than 7% and ensure the
security coverage ratio is equal to or greater than 1x at all
times.
STFC has issued the notes in the international market under the
central bank's new external commercial borrowings framework issued
in January 2019.
KEY RATING DRIVERS
STFC's US dollar-denominated bonds are rated the same level as its
Long-Term Foreign-Currency Issuer Default Rating in accordance with
Fitch's rating criteria.
Fitch considers the senior secured debt to be an obligation whose
non-payment would best reflect uncured failure, as most of STFC's
debt is secured. The company can issue unsecured debt in the
overseas market, but such debt is likely to constitute a small
portion of its funding and thus cannot be viewed as its primary
financial obligation.
SRI SAI BUILDERS: CRISIL Assigns B+ Rating to INR6cr Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facility of Sri Sai Builders And Developers (SSBD).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 6 CRISIL B+/Stable (Assigned)
The rating reflects low customer advances and susceptibility to
risks and cyclicality inherent in the real estate industry.
However, these rating weaknesses are offset by extensive experience
of the partners in the industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Low customer advances: As on June 2019, around 64 % of the units
are booked against which customer advances of only INR0.3 Cr is
received. Future flow of customer advances remain a key rating
sensitivity factor over the medium term.
* Susceptibility to risks and cyclicality inherent in the real
estate industry: The real estate sector in India is cyclical
because of sharp movements in prices and a highly fragmented market
structure. With increase in supply, attractive prices offered by
various builders, and constant regulatory changes, profitability of
real estate players is expected to come under pressure over the
medium term.
Strength:
* Extensive industry experience of partners: The partners of the
firm are into real estate development around a decade. Their
experience is expected to attract better salability of the
projects.
Liquidity
Repayment of term loan starts in December 2019 and all the units
are expected to be booked by the time. SSBD is expected to generate
adequate cash flows to meet repayment obligations over the medium
term.
Outlook: Stable
CRISIL believes that the SSBD will benefit over the medium term
from extensive experience of the partners in the real estate
industry. The outlook may be revised to 'Positive' in case of
higher than bookings and receipt of customer advances vis-a-vis
construction progress. Conversely, the outlook may be revised to in
case of delay in construction of the project or lower than expected
bookings which could affect the liquidity profile of the company.
SSBD is a partnership firm based out of Rajahmundry, Andhra
Pradesh. It is into residential real estate development. It is
managed by D V M Mohan and others.
TAIYO FEED: CRISIL Lowers Rating on INR7.5cr Loans to B+
--------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
Taiyo Feed Mill Private Limited (TFMPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.75 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Long Term Loan 1.50 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Long Term 4.25 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with TFMPL for obtaining
information through letters and emails dated December 31, 2018 and
June 12, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of TFMPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on TFMPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of TFMPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
Incorporated in 2002, TFM manufactures animal feed, primarily fish,
dog, and cat feed. The company, based in Periyapalayam (Tamil
Nadu), is promoted by Mr. R S Prabhakar and his family.
TRYCON INFRASTRUCTURE: CRISIL Cuts Rating on INR10.9cr Loan to B+
-----------------------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of Trycon
Infrastructure Private Limited (Trycon), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10.9 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with Trycon for obtaining
information through letters and emails dated February 26, 2019 and
June 24, 2019 among others, apart from telephonic communication.
However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of Trycon, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes information available on Trycon is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of Trycon Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
Trycon, based in Bihar, was established in 2006 by Mr. Manas Kumar
and Mr. Ravi Ranjan. The company is engaged in distribution of
mobile phones primarily of Micromax Informatics Ltd and recently
ventured into distributorship of Reliance mobile products and
accessories with the launch of Reliance Jio Infocomm Limited
products.
UKS COLD: CRISIL Lowers Ratings on INR6cr Loans to B+
-----------------------------------------------------
CRISIL has revised the ratings on certain bank facilities of
with UKS Cold Storage Private Limited (UKSCSPL), as:
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 3 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Cash 3 CRISIL B+/Stable (ISSUER NOT
Credit Limit COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL has been consistently following up with UKSCSPL for
obtaining information through letters and emails dated December 31,
2018 and June 12, 2019 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/reviewed with
the suffix 'ISSUER NOT COOPERATING'. These ratings lack a forward
looking component as it is arrived at without any management
interaction and is based on best available or limited or dated
information on the company.
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of UKSCSPL, which restricts
CRISIL's ability to take a forward looking view on the entity's
credit quality. CRISIL believes information available on UKSCSPL is
consistent with 'Scenario 1' outlined in the 'Framework for
Assessing Consistency of Information with CRISIL BB' category or
lower'.
Based on the last available information, the ratings on bank
facilities of UKSCSPL Revised to be 'CRISIL B+/Stable Issuer not
cooperating'.
UKSCSPL commenced operations in February 2016, and has set up a
cold storage unit with capacity of 5000 tonne.
UKSFM, set up in 1965, trades in fruits such as apples, oranges,
grapes, and pomegranates.
MAFIPL started operations in April 2016, and trades in fruits. The
UKS group is based in Coimbatore, Tamil Nadu, and is promoted by Mr
S K Mohamed Jaffer.
WELGA FOODS: CRISIL Lowers Ratings on INR13.5cr Loans to B+
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Welga Foods Limited (WFL) to 'CRISIL B+/Stable' from 'CRISIL
BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Long Term Loan 0.4 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Proposed Long Term 0.1 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
The downgrade reflects deterioration in financial risk profile of
WFL on account of loss estimated to have been reported to the tune
of INR3.33 crore in fiscal'19, majorly on account of change in
valuation of its inventory. The resulting net loss has deteriorated
net worth from INR5.06 crore as on March 31, 2018 to INR1.73 crore
as on March 31, 2019. Debt protection metrics were also inadequate
as reflected by interest coverage and net cash accrual to adjusted
debt estimated to have deteriorated to -1.2 times of -0.2 times for
fiscal 2019 compared to 1.6 times and 0.1 times respectively for
fiscal 2018.
The incremental funding requirements have thus been funded via
unsecured loan and cushion available in its bank lines of INR14.5
crore which were utilized at an average of 83 % in last 12 months
ending March, 2019.
The rating continues to reflect WFL's weak financial risk profile,
and large working capital requirement due to seasonal business.
These weaknesses are partially offset by the extensive experience
of the promoters in the frozen food industry and the company's
strong distribution network.
Analytical Approach
Unsecured loans of INR1.41 have been treated as neither debt not
equity.
Key Rating Drivers & Detailed Description
Weaknesses
* Weak financial risk profile: Capital structure is highly
leveraged, as reflected in estimated total outside liabilities to
tangible net worth (TOLTNW) ratio stood at 7.51 times as on March
31, 2019. The debt protection metrics are weak, with negative net
cash accrual to adjusted debt (NCAAD) ratio in fiscal 2019. CRISIL
believes the capital structure will remain leveraged over the
medium term.
* Large working capital requirement: Operations are working capital
intensive, as reflected in gross current assets of 382 days as on
March 31, 2019, driven by large inventory of 320 days as the
seasonal business results in substantial procurement in the last
quarter of the fiscal. With moderate credit from suppliers, the
company depends on bank lines to fund working capital.
Strengths
* Extensive industry experience of the promoters: The promoters'
experience of three decades has helped them develop a keen
understanding of the industry dynamics and establish strong
relationships with customers and suppliers.
* Strong distribution network: The company has a strong
distribution network of 400 dealers and distributors in Uttar
Pradesh, Maharashtra, Delhi, Rajasthan, Haryana, and Bihar.
Liquidity
Liquidity was stretched due to generation of -INR2.77 crore of cash
accruals in fiscal 2019 against repayment obligations of around
0.17 crore. It was supported by cushion available in bank lines
which were utilized at an average of 84% in the 12 months through
March 2019 and unsecured loan from the promoters, estimated to be
outstanding at INR1.41 crore as on March 31, 2019. Current ratio
was weak, estimated at 0.92 time as on March 31, 2019.
Outlook: Stable
CRISIL believes WFL will continue to benefit from its promoters'
extensive experience in the food processing industry. The outlook
may be revised to 'Positive' in case of significant improvement in
scale of operations and operating profitability improves the
financial risk profile especially capital structure. The outlook
may be revised to 'Negative' in case of stretch in working capital
requirement or deterioration in scale of operations or operating
profitability leads to lower than expected cash accrual generation
thus impacting financial risk profile of WFL.
Incorporated in 1984 by Mr Gyan Prakash and Mr Gaurav Prakash, WFL
manufactures and sells frozen peas and other vegetables under its
brand Welga's. Its processing plant is in Budaun (Uttar Pradesh).
=================
I N D O N E S I A
=================
AGUNG PODOMORO: Fitch Lowers LT IDR to CCC-, Off Watch Negative
---------------------------------------------------------------
Fitch Ratings has downgraded Indonesia-based developer PT Agung
Podomoro Land Tbk's (APLN) Long- Term Issuer Default Rating (IDR)
and the long-term rating on the company's USD300 million 5.95%
notes due 2024 to 'CCC-' from 'B-'. The Recovery Rating on the
notes remains at 'RR4'. The notes are issued by APLN's wholly owned
subsidiary, APL Realty Holdings Pte. Ltd., and guaranteed by APLN
and several of its subsidiaries. All ratings were removed from
Rating Watch Negative (RWN), on which they were placed on May 15,
2019.
The downgrades reflect APLN's heightened refinancing and liquidity
risks, following delays in its plan in May 2019 to raise funding,
which the company had intended to use to refinance its near-term
domestic bond maturities as well as to repay a IDR1.178 trillion
syndicated loan. APLN was only able to raise IDR750 billion in new
loans, which it used to repay a domestic bond maturing June 6,
2019. The partial fundraising has accelerated the maturity of the
IDR1.178 trillion syndicated loan from its original due date of
June 5, 2020. APLN has not secured adequate funding to date to
address the syndicated loan maturity and IDR550 billion in domestic
bonds maturing in December 2019 and January 2020.
KEY RATING DRIVERS
Heightened Liquidity Risks: APLN's inability to raise sufficient
funding has increased the company's near-term refinancing and
liquidity risks, in Fitch's view. The risk is worsened by APLN's
weak financial profile, and Fitch expects the company to continue
to have negative cash flow from operations (CFFO, calculated after
all operating costs including interest payments and construction
costs, but before factoring in discretionary land acquisition
costs) in the next 12-24 months. The company said it is working on
several options to meet its near-term debt maturities, which is
expected to culminate in the sale of one of its mature investment
properties in 4Q19, with the proceeds used to reduce a substantial
part of its debt.
The company also did not meet the debt incurrence test of 2.5x
EBITDA fixed-charge coverage on its US dollar bond indentures at
end-2018, which places additional constraints on its financial
flexibility, although Fitch estimates the permitted debt under the
indentures provides the company with sufficient headroom to draw
down on the required construction finance in the next 12 months.
APLN has IDR1.5 trillion of committed undrawn construction-finance
facilities for its near-term construction requirements.
Increase in ESG Score: APLN's weak financial discipline and
operational execution led to the delays in securing the requisite
funds for refinancing near-term maturities, in Fitch's view. Fitch
has therefore reassessed the company's management strategy and
increased the score for the highest level of credit relevance from
governance for APLN's rating under Fitch's Environmental, Social,
and Governance (ESG) framework to '5' from '4'. The score of '5'
indicates that APLN's weak management strategy, on an individual
basis, has a significant impact on its credit rating.
Pluit City Remains Uncertain: The Jakarta governor issued a permit
in June 2019 that allowed construction to resume on two reclaimed
islets, C and D. However, to date there has been no other
development on islet G where APLN's Pluit City development is
located. The company said it is still working on obtaining a
licence from the provincial government, but it did not provide
specific timelines.
Fitch has included in its forecast management's plan to refund part
of customer advances totalling around IDR1 trillion in 2019 and
2020 for the Pluit City development. Its estimates on the refunds
are conservative, considering APLN had to refund only around IDR140
billion of Pluit City advances as cash in the past few years up to
April 2019. The company switched an additional IDR1.4 trillion of
pre-sales from Pluit City to its other projects on the buyers'
request. Fitch has also excluded an inventory of IDR2 trillion on
island G in computing the company's leverage and Recovery Rating to
reflect the challenges the company may face in recovering costs in
a worst-case scenario amid the continued uncertainty and delays in
restarting this project
DERIVATION SUMMARY
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Attributable presales of IDR1.7 trillion in 2019 and IDR2.9
trillion in 2020, driven by recovering property demand after the
April 2019 presidential election, and industrial land sales
starting 2020
- Attributable capex of IDR1 trillion in 2019 and IDR850 billion
in 2020
Key Recovery Rating Assumptions:
- The recovery analysis assumes APLN would be liquidated in a
bankruptcy rather than continue as a going-concern because it is an
asset-heavy company. The analysis is based on audited accounts as
of December 31, 2018.
- Fitch assumes 75% recovery from accounts receivable.
- 75% recovery from inventory including from land for future
development. Fitch assumes high inventory recovery because land is
recognised at historical acquisition cost, and the current market
value is considerably higher.
- 60% recovery from investment property and land and building
component of fixed assets
- Fitch has deducted the minority shareholders' share of APLN's
assets and debt, and deducted inventory from islands G, I and F
from the recovery calculation.
- Fitch has added committed undrawn construction facilities
totaling IDR1.5 trillion as part of secured debt and inventory
- These assumptions result in a recovery rate for senior
unsecured notes within the 'RR2' range. However, because Indonesia
falls into Group D of creditor-friendliness under its
Country-Specific Treatment of Recovery Ratings Criteria, the
recovery rate is subject to a soft cap of 'RR4', which maps to a
senior unsecured rating of 'CCC-' in line with its Corporates
Notching and Recovery Ratings Criteria.
DUNIATEX GROUP: Fall in Dollar Bond Shows Cracks in Asia Junk Bonds
-------------------------------------------------------------------
Denise Wee at Bloomberg News reports that the wild ride in an
Indonesia textile maker's dollar bonds is putting a spotlight on
the risks that Asia junk bond buyers are taking.
According to Bloomberg, four months after a subsidiary of
Indonesia's Duniatex Group sold a $300 million bond, attracting
over $1 billion of orders, that bond has plummeted, losing nearly
67 cents on the dollar last week. The stunning fall, prompted by a
missed loan payment by another group subsidiary, has shocked bond
investors, Bloomberg says.
Bloomberg relates that the Indonesian firm's slump also highlights
risks that investors face as they buy into the region's junk bond
market, which has returned 11% so far this year, the most since
2016. Bloomberg says recent bond defaults out of China have raised
concerns about the quality of financial reports. One defaulter,
Chinese firm Kangde Xin Composite Material, was found to have faked
profit, Bloomberg discloses citing the nation's stock market
watchdog.
Bloomberg says S&P cut its credit score on Delta Merlin Dunia
Tekstil's dollar bonds by six steps to CCC- last week, citing its
"significant liquidity challenges." The ongoing U.S.-China trade
tensions are "significantly hurting" the Indonesian textile market,
and Duniatex's liquidity was affected by plummeting prices due to
the oversupply of imported cheap fabric from China, S&P also said,
S&P relays.
Fitch Ratings on July 18 cut Delta Merlin Dunia credit score to B-,
reflecting "heightened refinancing and liquidity risk." The company
faces "contagion risk" from affiliates that could limit its banking
and capital-market access, the ratings firm said, according to
Bloomberg.
Bloomberg says more stress is emerging in Indonesia. Fitch Ratings
on July 17 cut its credit score on notes sold by Agung Podomoro
Land's subsidiary, citing delays in raising funds for refinancing.
The company's $300 million 2024 bond fell 11 cents on the dollar to
70.2 on July 18, according to data compiled by Bloomberg.
The communication between Delta Merlin Dunia Tekstil and investors
also highlights the difficulties bond buyers can face when things
go sour, Bloomberg says.
Bloomberg notes that there have been concerns about disclosure in
recent defaults of unlisted companies including dollar bonds sold
by CEFC Shanghai International Group and Reward Science and
Technology Industry Group Co.
Neither Duniatex nor its subsidiary that sold the bond or the loan
are listed, Bloomberg states.
An email sent from a Duniatex executive to an investor that was
seen by Bloomberg News, said "We will try to ring fenced DMDT as
the bond issuer" from a missed payment on a loan.
"We will update later, please dont call or email at this time, as
my Inbox flooded with emails," the email also said.
BNP Paribas SA and Standard Chartered Plc arranged the bond sold in
March, Bloomberg discloses.
"This event reminds us of potential problems outside of China as
well, with a lack of disclosure for private companies," Bloomberg
quotes Raymond Chia, head of credit research for Asia excluding
Japan at Schroder Investment Management Ltd, as saying.
=========
J A P A N
=========
AKEBONO BRAKE: To Receive JPY20BB Fresh Fund From Japan Industrial
------------------------------------------------------------------
The Japan Times reports that struggling auto parts maker Akebono
Brake Industry Co. said on July 18 it will receive JPY20 billion in
fresh capital from Japan Industrial Solutions Co., a public-private
corporate turnaround fund.
According to the report, to accelerate its business reconstruction,
Akebono Brake will also accept an official from the fund as a board
director and seek debt waivers from its creditor banks.
The company plans to hold an extraordinary meeting of its
shareholders on Sept. 27 to seek approval for the measures, the
report notes.
The Japan Times says Akebono Brake will use the new funds on
structural reform measures, such as conducting a review of its
production systems both at home and abroad.
After its performance deteriorated sharply with a decrease in
orders from U.S. automakers, Akebono Brake applied in January for
an out-of-court business rehabilitation process known as
alternative dispute resolution, the report recalls.
Japan Industrial Solutions was jointly established by parties
including the country's top three commercial banks - MUFG Bank,
Sumitomo Mitsui Banking Corp. and Mizuho Bank - and the
government-affiliated Development Bank of Japan.
The value of the debt waiver Akebono Brake plans to seek from
creditor banks will total about JPY50 billion, the Japan Times
discloses citing sources with knowledge of the matter.
The company hopes to enter debt relief talks with the lenders after
explaining its turnaround plan at a meeting with creditors as early
as Monday, the sources, as cited by the Japan Times, said. Akebono
Brake aims to reach an agreement with the banks by September,
according to the sources.
The auto parts maker's interest-bearing debts currently total over
JPY100 billion, hampering its business reconstruction efforts, the
report discloses.
Akebono Brake Industry Co., Ltd. manufactureS components for
automobiles, motorbikes, trains, and industrial machinery.
JAPAN DISPLAY: In Talks With Potential Chinese Investors
--------------------------------------------------------
Peng Yanfeng and Isabelle Li at Caixin Global reports that Japan
Display Inc. (JDI), a major panel-maker and Apple supplier, is in
advanced negotiations with Chinese investors, according to sources
which requested anonymity.
Harvest Tech, the technology-focused arm of major fund firm Harvest
Fund Management, on July 12 sent delegates to Tokyo for the latest
of several rounds of negotiations, sources told Caixin earlier last
week.
"The trip to Tokyo was led by Harvest Tech's chairman and general
manager," said one person with close ties to the investment firm,
adding that the two parties are still discussing the deal's scale
and conditions, Caixin relays.
Electronics-maker TCL Corp., which has been interested in investing
in JDI for several years, is also involved in negotiations, though
no TCL representative was at the latest Tokyo meetings, a person
with knowledge of the negotiations told Caixin.
TCL, which is also a major panel-maker, is looking to become JDI's
controller, sources said. "TCL is hoping to be a dominant party in
the negotiations, instead of being constrained by other
participants," the person, who requested anonymity, told Caixin.
"JDI's mounting debts over the years appear to be complicated. The
Chinese parties requested a due diligence investigation, as they
hope to learn about JDI's real financial situation," said the
person.
The potential investors also hope to learn about JDI's client
structure and the ownership of the key patents, the person, as
cited by Caixin, said.
JDI has struggled to remain afloat after it failed to follow an
industry shift towards organic light-emitting diode (OLED)
displays. It reported a loss of $2.3 billion in 2018, up from $260
million the year before, due to the lackluster sales of Apple's
iPhone XR, Caixin discloses.
Caixin, citing the Financial Times, discloses that the iPhone XR is
the only recent Apple model that uses JDI displays.
Prior to this, Suwa Investment Holdings - a consortium jointly
established by Harvest Tech, Taiwan-based panel-maker TPK Holding
Co. Ltd. and Taiwan-based private investor CGL Group - offered
CNY80 billion ($737 million) for a 49.82% controlling stake in JDI,
according to an April announcement by the Japanese company, Caixin
relays.
However in May, both TPK and CGL Group withdrew without giving a
reason. JDI said that Harvest Tech remained, and increased its
planned investment from $190 million to $200 million, Caixin
discloses.
"It has been years since JDI started looking for investors, and
many rounds of talks have taken place. A more specific result might
emerge very soon," Caixin quotes an employee at a Chinese
panel-maker as saying. JDI's business has continually declined in
recent years, which means the company cannot hold out too long for
a better price, he said.
When JDI first started discussions with TCL back in 2016 it
rejected the Chinese firm proposal as it involved TCL taking a
controlling stake, said one person who was involved in negotiations
at the time, Caixin relays.
"JDI's position in the industry was still quite strong in 2016,
hence it was only considering financial investors," said the
person.
However, this seems to have changed, given the company's enthusiasm
for Suwa's deal, the employee at a Chinese panel-maker said, Caixin
adds.
Japan Display Inc. is engaged in the development, design,
manufacture and sale of small and medium-size displays and related
products. The Mobile Field provides displays for mobile equipment,
such as smart phone and tab terminals. The In-Vehicle Consumer and
Industry (C&I) and Others Field provides in-vehicle equipment,
including automobile dashboard and car navigation systems, consumer
equipment, such as digital cameras, video cameras and mobile game
machine, medical equipment such as x-ray photo interpretation
monitors, as well as industrial machinery.
The display company, established in 2012 with support from
state-backed fund INCJ Ltd, incurred a group net loss of JPY109.43
billion in the last fiscal year ended March 2019, the fifth
straight year of loss, Japan Today disclosed.
*********
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.
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