/raid1/www/Hosts/bankrupt/TCRAP_Public/200624.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
Wednesday, June 24, 2020, Vol. 23, No. 126
Headlines
A U S T R A L I A
CUPPA EDGE: First Creditors' Meeting Set for July 1
MACLEAN-LOWER CLARENCE: First Creditors' Meeting Set for July 1
RENU WASTE: First Creditors' Meeting Set for July 1
TANSACHA PTY: First Creditors' Meeting Set for July 2
TEXTURE MASTERS: Second Creditors' Meeting Set for July 1
VIRGIN AUSTRALIA: Bondholders Prepare Last Ditch Bid
[*] Taking Action on Australia's Class Actions
C H I N A
AGILE GROUP: S&P Assigns BB Rating to New USD Sr. Unsec. Notes
CHENGDU AIRPORT XINGCHENG: Fitch Ups LT IDRs to BB+, Outlook Stable
POSTAL SAVINGS: Fitch Affirms Additional Tier 1 Notes Rating at BB+
H O N G K O N G
CLSA PREMIUM: To Put Forward Vote on Winding Up Operations
CONCORD NEW ENERGY: S&P Withdraws B+ LT Issuer Credit Rating
I N D I A
ADVAITH BIO: ICRA Keeps D Debt Ratings in Not Cooperating
ALLIANCE GRANIMARMO: ICRA Keeps D Debt Ratings in Not Cooperating
ANAND CRANKS: ICRA Keeps B+ Debt Ratings in Not Cooperating
BALAJI TEXTILES: ICRA Keeps B- INR5cr Debt Rating in Not Coop.
BHATIA & COMPANY: ICRA Lowers Rating on INR58.5cr Loan to B+
CHARTERED HOUSING: Ind-Ra Withdraws BB LT Issuer Rating
DARWIN PHARMA: ICRA Keeps B INR10cr Debt Rating in Not Cooperating
DOLPHIN POLY: ICRA Withdraws B+ Rating on INR6.50cr Cash Debt
DOSHI CERAMIC: ICRA Keeps D Debt Ratings in Not Cooperating
ELECTROPATH SERVICES: ICRA Keeps D Debt Ratings in Not Cooperating
GLOBCON INDUSTRIES: ICRA Withdraws B+ Rating on INR8.70cr Loan
GVK JAIPUR: ICRA Reaffirms B Rating on INR330.27cr Term Loan
JONAS PETRO: ICRA Keeps D Debt Ratings in Not Cooperating
KAY BOUVET: ICRA Lowers Rating on INR110cr LT Loan to D
MADRAS FERTILIZERS: ICRA Withdraws C Rating on INR191.40cr Loan
MODERN CONSTRUCTION: ICRA Assigns B+ Rating to INR42.50cr LT Loan
NECTAFRESH AGRO: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
OSWAL OVERSEAS: ICRA Withdraws C Rating on INR62.82cr LT Loan
PARINEE DEVELOPERS: Insolvency Resolution Process Case Summary
R.K. CITY: ICRA Keeps D INR18cr Debt Rating in Not Cooperating
ROYALS MARINE: ICRA Moves B+ INR10cr Debt Rating to Not Cooperating
SATURN PREFAB: Insolvency Resolution Process Case Summary
SHARMA CARS: ICRA Reaffirms B+ Rating on INR19.20cr Loan
SREE CHAITANYA: ICRA Keeps D INR8cr Debt Rating in Not Cooperating
SRI LAKSHMI SRINIVASA: ICRA Keeps B+ Debt Ratings in Not Coop.
SRI MURUGAR: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
SRI RAM INDUSTRIES: ICRA Reaffirms B+ Rating on INR8.0cr Loan
SUNGLOW SUITINGS: ICRA Lowers Rating on INR24.73cr Loan to B+
TASHIDING HYDRO: ICRA Cuts Rating on INR45.05cr Loan to D
TULIP TELECOM: ICRA Keeps D INR150cr NCD Rating in Not Cooperating
VARDHMAN VITRIFIED: ICRA Keeps D Debt Ratings in Not Cooperating
VEERABHADRA EXPORTS: ICRA Lowers Rating on INR40cr Loan to B+
[*] INDIA: Rally in Bank Debt Under Threat on Increasing Defaults
I N D O N E S I A
MODERNLAND REALTY: Moody's Cuts CFR to Caa1, Outlook Negative
N E W Z E A L A N D
IAG NEW ZEALAND: Proposes to Close All 53 AMI Stores in NZ
[*] NEW ZEALAND: 73 Businesses Fail After Claiming Wage Subsidy
S I N G A P O R E
ZENROCK COMMODITIES: Yields to HSBC's Judicial Management Filing
S O U T H K O R E A
CYWORLD KOREA: Fate Depends on Court Decision
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A U S T R A L I A
=================
CUPPA EDGE: First Creditors' Meeting Set for July 1
---------------------------------------------------
A first meeting of the creditors in the proceedings of Cuppa Edge
Pty Ltd, trading as Fika by Cuppa Flower, will be held on July 1,
2020, at 11:00 a.m. via teleconference.
Christopher Damien Darin of Worrells Solvency & Forensic
Accountants was appointed as administrator of Cuppa Edge on June
19, 2020.
MACLEAN-LOWER CLARENCE: First Creditors' Meeting Set for July 1
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of
Maclean-Lower Clarence Services Club Ltd will be held on July 1,
2020, at 3:00 p.m. via webinar.
Andrew Thomas Sallway and Duncan Clubb of BDO were appointed as
administrators of Maclean-Lower Clarence on June 19, 2020.
RENU WASTE: First Creditors' Meeting Set for July 1
---------------------------------------------------
A first meeting of the creditors in the proceedings of Renu Waste
Pty Ltd will be held on July 1, 2020, at 12:00 p.m. via
teleconference.
Desmond Teng and Gavin Moss of Chifley Advisory Pty Ltd were
appointed as administrators of Renu Waste on June 20, 2020.
TANSACHA PTY: First Creditors' Meeting Set for July 2
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Tansacha Pty
Ltd will be held on July 2, 2020, at 2:30 p.m. via telephone
conference facilities.
Jason Walter Bettles of Worrells Solvency & Forensic Accountants
was appointed as administrator of Tansacha Pty on June 23, 2020.
TEXTURE MASTERS: Second Creditors' Meeting Set for July 1
---------------------------------------------------------
A second meeting of creditors in the proceedings of Texture Masters
Pty Ltd has been set for July 1, 2020, at 12:30 p.m. via
teleconference facilities.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 29, 2020, at 4:00 p.m.
Grahame Ward and Domenico Alessandro Calabretta of Mackay Goodwin
were appointed as administrators of Texture Masters on May 26,
2020.
VIRGIN AUSTRALIA: Bondholders Prepare Last Ditch Bid
----------------------------------------------------
Patrick Hatch at The Sydney Morning Herald reports that Virgin
Australia's bondholders are preparing to tip the bankrupt airline's
sale process on its head by lobbing an eleventh-hour proposal to
swap their AUD2 billion of debt for equity and become the new
owners in a relaunched airline.
SMH relates that the proposal is expected to be presented to
Virgin's administrators Deloitte this week and comes after warnings
that unsecured bondholders would be wiped out if Virgin was sold to
the shortlisted bidders, Bain Capital and Cyrus Capital Partners.
According to the report, the two American private equity firms will
submit their binding offers for Virgin on Monday and each want to
relaunch a simplified and stripped-back version of the carrier
after it collapsed in April with debts of AUD6.8 billion.
But Deloitte will be asked to compare their bids to a proposal put
together by Sydney based advisory Faraday, which has rallied some
of Virgin's bondholders and developed an alternative deal that it
believes will deliver a better return on the AUD2 billion they are
owed.
With the airline up for sale in the middle of an unprecedented
crisis in global aviation due to the COVID-19 pandemic, observers
and even some bondholders have said they could receive as little as
10 cents in the dollar or nothing at all, according to SMH.
Faraday declined to comment. But sources close to the process, who
spoke on the condition of anonymity because the dealings are
confidential, said Faraday was expected to propose swapping
bondholder debts for equity in a relaunched business, SMH reports.
A recapitalisation could include bondholders putting more cash into
the business.
SMH relates that Virgin could also remain listed on the ASX, the
sources said, which would be one structure to manage the
distribution of shares to thousands of new owners.
According to SMH, Faraday has brought in Rob Sherrard, who
co-founded Virgin Australia 20 years ago (then called Virgin Blue),
and lawyers from Corrs Chambers Westgarth to its 50-person team.
One bondholder, who declined to be named because he was not
authorised to speak to the media, said on June 21 that while he did
not have any details of Faraday's proposal, "anything would be
better that what Cyrus or Bain will offer".
According to SMH, Steven Wright, a director at Morgans who is
advising around 500 retail investors who bought Virgin bonds
through the stockbroker as part of a AUD325 million issuance in
November, said there had been "comments in the press downplaying or
trying to prepare retail investors for something that is worse than
what they really should be entitled to". However he also did not
know the details of Faraday's proposal.
Faraday, lead by former Lazard and Goldman Sachs banker Lachlan
Edwards and ex-Herbert Smith Freehills partner John Nestel, was
only admitted to Virgin's dataroom two weeks ago to start assessing
the business, whereas Cyrus and Bain have been working on their
detailed bids since May, the report states.
SMH adds that Transport Workers Union national secretary Michael
Kain said Virgin's employees wanted certainty about how the
administration would proceed and a bondholder-led deal could
disrupt that.
"Anything that injects uncertainty at this point in time is
unhelpful," the report quotes Mr. Kain as saying. "We want see this
process complete in the way the administrators envisaged, with full
government support."
Deloitte will choose a preferred bidder by the end of June and then
present that to a vote of Virgin's 12,000 creditors in mid-August,
the report notes.
About Virgin Australia
Brisbane, Queensland-based Virgin Australia is Australia's
second-largest airline. It commenced services in 2000 as Virgin
Blue, wholly owned by the Virgin Group.
As reported in the Troubled Company Reporter-Asia Pacific on April
22, 2020, Bloomberg News related that Virgin Australia Holdings
Ltd. became Asia's first airline to fall to the coronavirus after
the outbreak deprived the debt-burdened company of almost all
income. Administrators at Deloitte, who have taken control of the
Brisbane-based carrier, aim to restructure the business and find
new owners within months. More than 10 parties have expressed an
interest, Deloitte related on April 21.
Virgin Australia, which has furloughed 80% of its 10,000 workers,
will continue to operate some flights for essential workers,
freight and the repatriation of Australians, Bloomberg said. The
airline's frequent flyer program is a separate company and is not
in administration.
Richard John Hughes, John Greig, Vaughan Strawbridge and Sal Algeri
of Deloitte were appointed as administrators of Virgin Australia,
et al., on April 20, 2020.
The company owes AUD6.8 billion to lenders, bondholders, aircraft
lessors, trade creditors and employees.
On April 29, 2020, the company and certain affiliates filed
petitions pursuant to Chapter 15 of the Bankruptcy Code in the U.S.
Bankruptcy Court for the Southern District of New York.
[*] Taking Action on Australia's Class Actions
----------------------------------------------
Paul Hodkinson at Law.com's The Global Lawyer reports that an
important class action battle is taking place in Australia. It is
not a class action itself, but a debate about the future of such
litigation.
According to The Global Lawyer, the Australian Institute of Company
Directors last week told Australian Parliament's inquiry into class
actions and litigation funding that regulators should pursue
companies and directors for breaches of continuous disclosure laws
instead of allowing securities class actions. This would follow the
lead of Hong Kong, where continuous disclosure laws are not linked
to a class action regime.
Their call comes amid a busy market for litigation of that sort,
which is linked to Australia's rise in litigation funding too. In
the first 14 years after Australia introduced class actions, eight
securities class actions were filed, the report says. But over the
following 14 years, 114 securities class actions were filed,
Law.com's Australia correspondent Christopher Niesche wrote.
The Global Lawyer says the same inquiry last week heard that an
affiliate of the U.S. Chamber of Commerce has argued for tighter
regulation of litigation funders. That led Australian plaintiffs
law firm Slater and Gordon to say: "The unprecedented interference
of the powerful and notorious U.S. Chamber of Commerce in the
Australian political process should be rejected by all
parliamentarians."
As one might expect, a debate about class actions could get as
fierce as, well, a class action itself, The Global Lawyer states.
The Global Lawyer relates that the government has already moved
this year to regulate litigation funders to reduce the number of
class actions. This inquiry is examining the impact of class
actions on the economy and vulnerable businesses already suffering
from the COVID-19 pandemic and the outcome could have global
ramifications, The Global Lawyer notes.
=========
C H I N A
=========
AGILE GROUP: S&P Assigns BB Rating to New USD Sr. Unsec. Notes
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term issue rating to a
proposed issue of U.S. dollar-denominated senior unsecured notes by
Agile Group Holdings Ltd. (BB/Negative/--). The China-based
property developer intends to use the proceeds mainly to refinance
its existing debt. The issue rating is subject to our review of the
final issuance documentation.
S&P said, "We equalize the issue rating with our issuer credit
rating on Agile, given the debt is not significantly subordinated
relative to other debt in the company's capital structure. As of
Dec. 31, 2019, Agile's capital structure consisted of Chinese
renminbi (RMB) 43.5 billion of secured debt, RMB60.2 billion of
unsecured debt issued at the parent level, and RMB13.4 billion of
unsecured debt (including financial guarantees for borrowings of
joint ventures and associates) issued by its subsidiaries. The
company's priority debt ratio of 48.6% is below our notching-down
threshold of 50%.
"We believe Agile's proposed issuance will boost its offshore
capital as the company repaid its US$500 million senior notes in
May with internal resources. In our view, Agile's strong access to
capital markets and bank funding, both onshore and offshore, is key
to lengthening its maturity profile and meeting its sizable
maturities in 2020.
"The negative outlook on Agile reflects our view that the company's
deleveraging efforts may be weaker than we expect, such that its
leverage does not improve materially over the next six to 12
months. We believe Agile's deleveraging is highly reliant on a
recovery in gross margins and an acceleration of revenue growth as
contributions from its Hainan project and non-property segments
increase. We also believe its continued investments in and outside
property development could hamper its control on debt growth."
CHENGDU AIRPORT XINGCHENG: Fitch Ups LT IDRs to BB+, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has upgraded China-based Chengdu Airport Xingcheng
Investment Group Co., Ltd.'s Long-Term Foreign- and Local-Currency
Issuer Default Ratings to 'BB+', from 'BB'. The Outlook is Stable.
Fitch has also upgraded CAXIG's USD500 million 6.5% senior
unsecured notes due 2022 to 'BB+', from 'BB'.
The upgrade reflects stronger expectations of government support
for CAXIG, which has been newly designated as an integrated city
operator and is expanding into industrial investment, healthcare
and education. The wider public-service role should strengthen the
socio-political implications of default.
KEY RATING DRIVERS
'Very Strong' Status, Ownership and Control: Fitch believes the
government of Shuangliu district, located in the city of Chengdu -
the capital of Sichuan province -is highly likely to extend support
to CAXIG, if needed, based on strong ties and the public-service
nature of CAXIG key projects. CAXIG was established as a
state-owned limited liability company under Chinese company law.
The local government maintains full ownership and exerts strong
control over the company through the district's State-owned Assets
Supervision, Administration and Financial Bureau. It appoints its
senior management, approves major investment and financing plans,
and monitors operating and financial performance.
'Strong' Support Record and Expectations: Fitch expects continued
government support in light of CAXIG's significant role in the
public-service sector. The local government has granted continuous
financial support to CAXIG through assets injections and operating
subsidies. Accumulated capital injections during 2014-2019 amounted
to CNY23.4 billion, equivalent to 55% of 2019 shareholder equity.
'Strong' Socio-Political Implications of Default: CAXIG is
expanding its public-service function from an urban developer to an
integrated city operator, covering infrastructure development,
industrial investment, healthcare and education, under local
state-owned enterprise reform. There is no other government-related
entity with a similarly comprehensive function and flagship status
in the region; hence, it would be difficult for the government to
find an immediate substitute without severe service disruption.
'Very Strong' Financial Implications of Default: Fitch believes a
default of CAXIG would severely damage the local government's
reputation and constrain its financing capability. CAXIG is the
district's largest GRE, accounting for more than 60% of the total
assets of local GREs. It has issued multiple bonds in the domestic
and offshore markets. Most of its debt is raised to finance local
urban-infrastructure projects that serve the public.
'b' Standalone Credit Profile: Fitch assesses CAXIG's revenue
defensibility and operating risk as 'Midrange' and its financial
profile as 'Weaker', constrained by net adjusted debt/EBITDA of
around 25x in 2019, of which it does not expect a significant
improvement in near term. Nevertheless, continuous government
support and ample liquidity could mitigate refinancing risk.
DERIVATION SUMMARY
CAXIG' rating is derived from the four factors under Fitch's
Government-Related Entities Rating Criteria, combined with the 'b'
Standalone Credit Profile under its Public Sector,
Revenue-Supported Entities Rating Criteria.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upward revision in Fitch's credit view of the Chengdu
Shuangliu district's ability to provide subsidies, grants or other
legitimate resources allowed under China's policies and
regulations.
- A stronger assessment of the socio-political implications of a
default, enhancing the government's incentive to provide legitimate
support.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A lowering of Fitch's credit view of the Chengdu Shuangliu
district's ability to provide subsidies, grants or other legitimate
resources allowed under China's policies and regulations.
- A significant weakening of the socio-political or financial
implications of a default, its assessment of the government's
support record or a dilution of the government's shareholding or
control.
Rating action on CAXIG would lead to similar action on the US
dollar notes.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance issuers have a
best-case rating upgrade scenario (defined as the 99th percentile
of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating
downgrade scenario (defined as the 99th percentile of rating
transitions, measured in a negative direction) of three notches
over three years. The complete span of best- and worst-case
scenario credit ratings for all rating categories ranges from 'AAA'
to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
Chengdu Airport Xingcheng Investment Group Co., Ltd.
- LT IDR BB+; Upgrade
- LC LT IDR BB+; Upgrade
- Senior unsecured; LT BB+; Upgrade
POSTAL SAVINGS: Fitch Affirms Additional Tier 1 Notes Rating at BB+
-------------------------------------------------------------------
Fitch Ratings has affirmed Postal Savings Bank of China Co., Ltd.'s
Long-Term Issuer Default Rating of 'A+', Short-Term IDR of 'F1+'
and Viability Rating of 'bb+'. The Outlook is Stable. Fitch has
also affirmed the bank's Basel III-compliant Additional Tier 1
notes at 'BB+'.
KEY RATING DRIVERS
IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR
The bank's Long-Term IDR is at its Support Rating Floor and
reflects the bank's strong linkage to the China sovereign
(A+/Stable/F1+). This underpins Fitch's expectations of an
extremely high probability of timely extraordinary support from the
state to the bank in the event of stress. The SRF is driven by the
bank's systemic importance and quasi-policy role in providing
banking services to China's rural population, as well as supporting
its parent, China Post Group. CPG is a state conglomerate solely
owned by the Ministry of Finance.
PSBC was established in 2007 as a commercial bank in China, but it
effectively performs several policy-related functions and operates
a unique business model through the use of direct outlets and
agency outlets under its parent, CPG. The China Banking and
Insurance Regulatory Commission reclassified PSBC as a state
commercial bank since 2019, but Fitch does not view this change as
having a material impact on PSBC's business model and policy
functions. PSBC is 65% owned by CPG at end-March 2020, down from
68.9% prior to its A-share domestic listing in December 2019. In
April 2020, CPG committed to additional share purchases to support
PSBC's operations. Fitch expects CPG to maintain its majority stake
in and control over PSBC given its integral role within the group.
The policy role for PSBC extends beyond its market shares within
the banking system, as it provides basic but essential financial
services to China's rural population and supports CPG's postal
services. PSBC's commercial operations are compromised by its
policy focus on serving China's rural population through a network
of nearly 40,000 outlets, the largest among Chinese banks. Many of
PSBC's outlets are in the same premises as postal enterprises under
CPG. The bank's customer base covers over 40% of China's
population, at over 600 million customers. Many of the customers
live in deep rural areas and would otherwise not have access to the
basic but essential financial services that the bank provides.
PSBC's retail deposit base also makes it a significant net provider
of liquidity in China's interbank market. PSBC plays a key role in
the provision of financial services to micro-finance and rural
customers, which supports China's stimulus and urbanisation
efforts. Fitch believes PSBC plays a vital role in promoting
financial inclusion in China, and substitutability would be
difficult given PSBC's presence in deep rural areas.
CPG has a government-protected monopoly and is responsible for the
provision of nationwide postal services, as stipulated in the China
Postal Law. The high integration between PSBC and its agency
outlets under CPG underpins the bank's very high systemic
importance, especially in rural areas. Fitch believes PSBC plays a
larger policy role than other state banks in promoting rural and
inclusive finance, as well as indirectly supporting China's postal
services. PSBC is the fifth-largest commercial bank in terms of
assets and fourth-largest in terms of retail deposits, and its
rural presence extends far deeper into the sub-county regions than
the Agricultural Bank of China Limited (A/Stable/bb).
In Fitch's view, the state has a higher propensity to extend
extraordinary state support to PSBC than to other state banks. This
is due to the bank's large policy role - both as a rural financial
services provider and as a key subsidiary under CPG. However, there
are differences between PSBC and China's pure policy banks,
including China Development Bank (A+/Stable), Agricultural
Development Bank of China (A+/Stable), and The Export-Import Bank
of China (A+/Stable), in terms of ownership structure and services
provided.
PSBC's Short-Term IDR is at the higher of the two options for a
Long-Term IDR of 'A+'. This is the same as the Chinese sovereign's
Short-Term IDR and consistent with Fitch's criteria, which states
that the propensity to support is more certain in the near term.
VIABILITY RATING
PSBC's VR of 'bb+' takes into account its lower credit exposure
(both loan and non-loan) and better reported asset quality
(impaired loan ratio of 0.9% at end-2019) against its lower
profitability and capitalisation (common equity Tier 1 capital
adequacy ratio of 9.6% at end-1Q20 under the standardised
approach), compared with other state-owned commercial banks in
China. The lower profitability is because of the high operational
cost of PSBC's business model, which includes paying agency fees to
its parent. That said, funding and liquidity is a relative rating
strength for PSBC, thanks to its extensive network (including
agency outlets) and niche retail focus, particularly in rural
areas. Nearly 88% of its deposits and 55% of loans are from retail
customers - a large portion of which are from rural areas.
PSBC's loan-to-deposit ratio rose to around 53% by end-2019 (45% at
end-2017), but the ratio remained well below that of other state
banks. PSBC has reduced its entrusted investments, which are a
bank's investments in asset or wealth-management products managed
by other financial institutions, to around 3% of assets by end-2019
compared with a peak of 16% in 2016.
PSBC plans to seek approval to adopt the advanced capital approach,
which should bring its reported CET1 ratio more in line with that
of other state banks. However, Fitch revised PSBC's capitalisation
and leverage assessment to 'bb-'/stable from 'bb-'/positive, as
benefits of a higher reported CET1 ratio may be offset by faster
capital consumption relative to other state banks. As such, Fitch
expects PSBC's capitalisation to continue to lag that of state
peers, but this is mitigated by its lower overall risk profile and
its higher expectations of ordinary support from the state due to
its ownership structure and policy-related roles.
Fitch expects leverage in China's financial system to hit a new
record high in 2020 given the sharp slowdown in GDP growth caused
by the coronavirus pandemic. However, Fitch expects the increase in
leverage to be short-lived as economic recovery in 2021 should see
overall system leverage remain stable in 2021. The outlook on the
operating environment for China is stable, reflecting its view that
the 'bb+' mid-point adequately captures systemic risk. That said,
Fitch expects Chinese banks, including PSBC, to face sharp
asset-quality and profitability pressures in the near term, as
Fitch estimates China's GDP growth will slow to 0.7% in 2020 before
recovering to 7.9% in 2021. The extent of the deterioration will
depend on the duration of the economic disruption, both
domestically and abroad. Various regulatory relief measures have
been extended, such as liquidity support to small enterprises, loan
rollovers and interest waivers for affected sectors, and repayment
holidays for troubled retail borrowers, to mitigate the
coronavirus-related impact. Fitch expects these measures will delay
recognition of asset impairment to 2H20 and 2021.
HYBRID DEBT
Fitch uses PSBC's support-driven IDR as the anchor rating for its
Basel III-compliant AT1 notes. Notching from the anchor is limited
to only two for loss severity, but the rating on the notes is
capped at 'BB+' as per its criteria. The anchor rating is based on
its expectations that extraordinary support from the sovereign is
likely to be extended down the capital structure into more junior
obligations like AT1 notes, if required. This is due to PSBC's and
CPG's close relationships with the state and the state effectively
being likely to act as an institutional shareholder would, as well
as the policy role that PSBC plays in providing essential financial
services to over 40% of China's population.
RATING SENSITIVITIES
IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
Negative rating action on the sovereign rating would result in
similar rating action on PSBC, as this would likely reflect the
state's weakened ability to provide support and because PSBC's IDR
cannot be rated higher than the sovereign. The one-notch difference
between the IDRs of PSBC and other state commercial banks may
change, depending on how their policy roles evolve.
Negative rating action could also be taken should there be any
weakening in the perceived willingness of the state to support the
bank. This could arise from a significant fall in state ownership
that results in meaningfully less policy influence; a significant
reduction in PSBC's systemic importance or policy role; or changes
in the support mechanism that affects PSBC's relationship with CPG
or with the state.
PSBC's Short-Term IDR will be downgraded if the sovereign's
Short-Term IDR is downgraded. A downgrade in PSBC's Long-Term IDR
may not lead to a downgrade in its Short-Term IDR, as long as there
is no change to the state's propensity and ability to support the
bank in the near term.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Positive rating action on PSBC's Support Rating Floor and its
support-driven IDRs is unlikely as these are already at the same
level as the sovereign rating. Positive action on the sovereign
Long-Term IDR would not automatically result in similar action on
PSBC's Long-Term IDR. PSBC's Short-Term IDR cannot be upgraded as
it is already at the highest rating level of 'F1+'.
VIABILITY RATINGS
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
PSBC's VR may come under pressure from deterioration in the
operating environment in light of the coronavirus as well as
broader economic challenges and system leverage in China, should it
become a more binding constraint on PSBC's intrinsic profile.
PSBC's VR is also sensitive to a change in Fitch's assumptions
regarding PSBC's risk appetite and asset quality. A significant
increase in PSBC's risk appetite, for example, through large
increases in its loan-to-deposit ratios or aggressive growth in
shadow-banking activities, could have a direct impact on its asset
quality as well as the level of capital buffers, which could in
turn lead to a downgrade in the bank's VR. A sustained
deterioration in the bank's financial metrics could also lead to a
VR downgrade, including a combination of the following core
metrics:
- Impaired loans/gross loans increasing to around 3% for a
sustained period, although Fitch's assessment of asset quality will
also consider other indicators, such as "special-mention" loans,
loan loss provisioning, and whether (and to what extent) Fitch
believes reported metrics understate any deterioration in asset
quality;
- Evidence of a higher risk appetite, for example if the
loan/deposit ratio rises towards the state bank average (around 75%
at end-2019), without commensurate increases in its underlying
capitalisation;
- CET1 ratio falling to around 9% on the standardised approach
without a clear path to return to existing levels, or a widening of
its CET1 gap versus other state peers (under the same measurement
approach) over an extended period of time.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Positive action on the VR is less likely until there is an upward
revision to China's operating environment score, which would
signify an easing of structural pressures constraining its
assessment of the bank's corporate governance and financial
metrics. Sustained improvements in PSBC's risk-adjusted earnings
and profitability and capital despite its larger policy role
relative to other state commercial banks would also support a
higher VR.
HYBRID DEBT
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
The rating for PSBC's Basel III AT1 notes is sensitive to a change
in the anchor rating or relative notching for non-performance risk,
potentially from a change in Fitch's assumptions around the state's
ability and propensity to prevent PSBC from triggering the notes'
loss-absorption features. The rating for PSBC's AT1 securities will
be downgraded if its Support Rating Floor and IDR (as anchor) are
downgraded to below 'BBB'.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
The rating on PSBC's AT1 notes is sensitive to changes in the
bank's Long-Term IDR (as anchor). An upgrade of PSBC's Long-Term
IDR to 'AA-' or higher would result in an upgrade of the note
ratings to 'BBB' under Fitch's criteria.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The bank's support-driven Issuer Default Ratings are driven by its
view of the likelihood of support from the Chinese sovereign.
ESG CONSIDERATIONS
PSBC has an ESG Relevance Score of 4 for Financial Transparency due
to under-reporting of non-performing loans and risk-weighted assets
stemming from the use of off-balance-sheet transactions. This
negatively affects the bank's credit profile and is relevant to the
rating in conjunction with other factors.
The bank also has an ESG Relevance Score of 4 for Governance
Structure risk, as there is potential for significant influence by
the government, which is the major shareholder, or regulatory
influence given the lack of independence from the state. This
negatively affects the banks' credit profile and is relevant to the
rating in conjunction with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity(ies),
either due to their nature or the way in which they are being
managed by the entity(ies).
Postal Savings Bank of China Co., Ltd.
- LT IDR A+; Affirmed
- ST IDR F1+; Affirmed
- Viability bb+; Affirmed
- Support 1; Affirmed
- Support Floor A+; Affirmed
- Subordinated; LT BB+; Affirmed
=================
H O N G K O N G
=================
CLSA PREMIUM: To Put Forward Vote on Winding Up Operations
----------------------------------------------------------
Finance Magnates reports that CLSA Premium Limited, a foreign
exchange (forex broker), has received a requisition from a
shareholder for the proposed winding up of the company and to hold
an extraordinary general meeting (EGM).
According to a statement filed through the Hong Kong Exchanges and
Clearing Limited (HKEX), the Board of CLSA Premium received the
Requisition Letter on the 1st of June 2020, in which the
shareholder asked to convene an EGM to pass the special resolution
if deemed fit, Finance Magnates says.
Finance Magnates relates that in particular, the letter said that:
"That in view of the failure by the Company to comply with Rule
13.24 of the Rules Governing the Listing of Securities on the Stock
Exchange of Hong Kong Limited due to its insufficient level of
operations and its poor financial situation, the Company be wound
up by the Grand Court of the Cayman Islands and the available
surplus assets on liquidation be distributed amongst the members of
the Company in accordance with its articles of association and the
Companies Law (2020 Revision) (the "Requisition Resolution")."
Having considered the details of the letter, the Board of the
broker has decided to put forward the Requisition Resolution at the
EGM for the Shareholders, Finance Magnates relays. The Shareholder
who made the request, at the date of the deposit of the latter,
represented around 14.75 per cent of the total issued share capital
of the company, according to the statement.
As Finance Magnates reported, CLSA Premium was formerly known as
KVB Kunlun Financial Group Limited. The FX broker announced that it
had decided to change its name in September of last year, in order
to better reflect that the Group is part of the substantial
shareholder's group of entities, which includes CLSA group.
The name change followed on the heels of some of the broker's
senior leadership team leaving the company. Specifically, the
firm's CEO -- Stefan Liu stepped down from the brokerage. As
Finance Magnates highlighted, Mr. Liu left the firm back in July of
2019. He reportedly left due to his disagreement with the Board of
the brokerage over disclosure of certain matters relating to the
business involving Chinese clients. The CFO of the broker also left
not long after, Finance Magnates notes.
CLSA Premium Ltd is an investment holding company principally
engaged in the provision of leveraged foreign exchange, commodity
and index trading services.
CONCORD NEW ENERGY: S&P Withdraws B+ LT Issuer Credit Rating
------------------------------------------------------------
S&P Global Ratings said that it had withdrawn its 'B+' long-term
issuer credit rating on Concord New Energy Group Ltd. at the
company's request.
S&P also withdrew the 'B' long-term issue rating on Concord's
senior unsecured notes.
The outlook on the issuer credit rating was negative at the time of
the withdrawal.
=========
I N D I A
=========
ADVAITH BIO: ICRA Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------
ICRA said ratings for the INR6.00 crore bank facilities of Advaith
Bio Remedies continue to remain under Issuer Not Cooperating
category. The ratings are denoted as [ICRA]D ISSUER NOT
COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 3.00 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based/CC Rating continue to remain under
the 'Issuer Not Cooperating'
category
Long Term- 3.00 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based TL Rating continue to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Advaith Bio Remedies is a partnership firm based out of Bangalore
manufacturing herbal-based products for pharmaceutical and cosmetic
industry. The firm sells hair care, face care, baby care products
in cosmetic segment and products for diabetes, neurological, heart
diseases in pharmaceutical segment under the brand name BIO CARE.
It has its own research and development center and is closely
associated with laboratories in India like Bangalore Test House for
research and analysis to ensure high quality products. This ensures
sterilized raw material for highly sensitive Pharmaceutical and
Ayurveda formulations.
ALLIANCE GRANIMARMO: ICRA Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
ICRA said ratings for the INR58.00-crore bank facilities of
Alliance Granimarmo Private Limited (AGPL) Continues to remain
under 'Issuer Not Cooperating' category'. The Long term ratings and
Short Term ratings are denoted as "[ICRA]D ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 17.97 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based Rating Continues to remain under
Term Loan 'Issuer Not Cooperating' category
Short Term- 33.50 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based Rating Continues to remain under
'Issuer Not Cooperating' category
Short Term- 2.00 [ICRA]D; ISSUER NOT COOPERATING;
Non Fund Based Rating Continues to remain under
'Issuer Not Cooperating' category
Long Term/ 4.53 [ICRA]D/[ICRA]D; ISSUER NOT
Short Term– COOPERATING; Rating Continues
Unallocated to remain under 'Issuer Not
Limits Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Incorporated in 1998, Alliance Granimarmo Private Limited is
engaged in quarrying and processing of rough granite blocks into
slabs and tiles. The Company exports the granites slabs and tiles
to the USA, Europe, Africa, and Middle East. The company's
manufacturing facility is located in Tada, Andhra Pradesh, with a
processing capacity of 38 lakh square foot of granite slabs per
year. AGPL is part of the Gimpex group, which is mainly engaged in
sales of barite, coal, iron ore, mill scale, clinker, and
bentonite. The company's name was changed from Alliance Minerals
Private Limited to Alliance Granimarmo Private Limited, in November
2014.
ANAND CRANKS: ICRA Keeps B+ Debt Ratings in Not Cooperating
-----------------------------------------------------------
ICRA said the rating for the INR10.00 crore bank facilities of
Anand Cranks (ANC) continue to remain under 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]B+
(Stable)/A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term 7.00 [ICRA]B+ (Stable) ISSUER NOT
Fund based/ COOPERATING; Rating continues
Cash Credit to remain under 'Issuer Not
Cooperating' category
Long-Term 1.00 [ICRA]B+ (Stable) ISSUER NOT
Fund based/ COOPERATING; Rating continues
Term Loan to remain under 'Issuer Not
Cooperating' category
Unallocated 2.00 [ICRA]B+ (Stable)/A4 ISSUER NOT
COOPERATING; Rating continues to
remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Started off in 2012 as a partnership firm, Anand Cranks (ANC) is
engaged in the manufacturing of forged parts such as linkage parts,
transmission gears, tie rods, propeller shafts, stub axles and half
axles. The firm is a group concern of Inderjit Forgings (P) Ltd.
which is engaged in a similar business. ANC manufactures forged
parts such as linkage parts, transmission gears, tie rods,
propeller shafts, stub axles and half axles.
BALAJI TEXTILES: ICRA Keeps B- INR5cr Debt Rating in Not Coop.
--------------------------------------------------------------
ICRA said the ratings for the INR5.00-crore bank facilities of Sri
Balaji Textiles (SBT) Continues to remain under 'Issuer Not
Cooperating' category'. The Long term ratings are denoted as
"[ICRA]B-(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 5.00 [ICRA]B-(Stable); ISSUER NOT
Fund Based COOPERATING; Rating Continues
Facilities to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Promoted in 1994 by Mr. C. Rajendran, Sri Balaji Textiles (SBT) is
proprietorship firm engaged in manufacturing of Melange yarn,
predominantly in the 20- 40's count range, which is used by garment
industries in manufacturing of Tshirts. SBT has its manufacturing
unit located in Coimbatore district (TN).
BHATIA & COMPANY: ICRA Lowers Rating on INR58.5cr Loan to B+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Bhatia &
Company (BAC), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-Term 10.37 [ICRA]B+ (Stable); ISSUER NOT
Fund Based/ COOPERATING; Rating downgraded
Term loan from [ICRA]BB+ (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Long-Term 58.50 [ICRA]B+ (Stable); ISSUER NOT
Fund based/ COOPERATING; Rating downgraded
Cash Credit from [ICRA]BB+ (Stable) and
continues to remain under
'Issuer Not Cooperating'
Category
Long-Term/ 7.37 [ICRA]B+ (Stable)/A4; ISSUER NOT
short term/ COOPERATING; Rating downgraded
Unallocated from [ICRA]BB+ (Stable)/A4+ and
continues to remain under
'Issuer Not Cooperating'
Category
Short-Term 12.00 [ICRA]A4; ISSUER NOT COOPERATING;
Non-Fund based Rating downgraded from [ICRA] A4+
and continues to remain under
'Issuer Not Cooperating' category
Rationale
The rating downgrade is because of lack of adequate information
regarding BAC's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Bhatia & Company, ICRA has been trying to seek information
from the entity so as to monitor its performance, but despite
repeated requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
BAC was founded as a partnership firm by Late Mr. J C Bhatia1 in
1979 as an agency of Kirloskar Tractors. Subsequently they also
obtained dealership of Enfield Motorcycle in 1982-83 in Bhatia
Automobiles Private Limited which was subsequently closed and the
company forayed into a business wherein it installed CNG cylinders
in cars. The company obtained the dealership of MSIL in 1986. Since
then, it has received several awards in recognition of their
consistent performance. In 2006, it was converted into private
limited company.
CHARTERED HOUSING: Ind-Ra Withdraws BB LT Issuer Rating
-------------------------------------------------------
India Ratings and Research (Ind-Ra) has Withdrawn Chartered Housing
Private Limited's Long-Term Issuer Rating of IND BB. The Outlook
was Stable.
The instrument-wise rating action is:
-- INR140 mil. Term loan due on July 2019 is withdrawn.
Ind-Ra is no longer required to maintain the ratings, as it has
received a no-due certificate from the lender. This is consistent
with the Securities and Exchange Board of India's circular dated
March 31, 2017, for credit rating agencies.
COMPANY PROFILE
Incorporated in 1989, Chartered Housing is engaged in real estate
development. Balakrishna Hegde is the promoter.
DARWIN PHARMA: ICRA Keeps B INR10cr Debt Rating in Not Cooperating
------------------------------------------------------------------
ICRA said ratings for the INR10.00-crore bank facilities of Darwin
Pharma Pvt. Ltd. continues to remain under 'Issuer Not Cooperating'
category'. The ratings are denoted as "[ICRA]B(Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term 10.00 [ICRA]B(Stable); ISSUER NOT
Unallocated COOPERATING; Rating Continues
to remain under issuer not
cooperating category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Darwin Pharma Pvt. Ltd. was incorporated in the year 2009 by Mr.
Devenini Venkata Kiran, Mr. China Venkata Ratnam and Mr.
Rajashekhara Reddy for setting up an oral therapeutic manufacturing
unit at Nuziveed, Krishna district of Andhra Pradesh. The project
cost for establishing the unit is INR19.80 crore which will be part
funded by the term loan of INR12.90 crore (not yet sanctioned) and
remaining through equity. The manufacturing plant would have 2
lines and the combined capacity of 30,000 liters per day.
DOLPHIN POLY: ICRA Withdraws B+ Rating on INR6.50cr Cash Debt
-------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Dolphin Poly Plast Pvt. Ltd. (DPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based–
Cash Credit 6.50 [ICRA]B+(Stable); Withdrawn
Fund-based–
Term Loan 5.06 [ICRA]B+(Stable); Withdrawn
Non-fund Based–
Letter of Credit 1.50 [ICRA]A4; Withdrawn
Unallocated
Limits 0.04 [ICRA]B+(Stable)/A4; Withdrawn
Rationale
The long-term and short-term ratings assigned to Dolphin Poly Plast
Pvt. Ltd. (DPPL) have been withdrawn at the request of the company,
based on the no-objection certificate provided by its banker. ICRA
is withdrawing the rating and that it does not have information to
suggest that the credit risk has changed since the time the rating
was last reviewed. ICRA has withdrawn the Stable outlook on the
long-term rating.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
Incorporated in 1999, Dolphin Poly Plast Pvt. Ltd. (DPPL)
manufactures HDPE pipes, sprinkler pipes, emitting pipes, lateral
pipes, PVC pipes and fittings and unplasticised PVC pipes. The
company also assembles micro irrigation system, i.e., sprinkler
irrigation system and drip irrigation system. The manufacturing
facility of the company is located in the Rajkot district of
Gujarat and has an installed capacity of manufacturing 7,500 MTPA
of HDPE pipes and 8,500 MTPA of PVC pipes. DPPL is promoted by the
Limbasiya and Kothiya family, who has been in the pipe
manufacturing business for over two decades.
In FY2019, on a provisional basis, the company reported a net
profit of INR0.4 crore on an operating income of INR42.2 crore
compared to a net profit of INR0.3 crore on an operating income of
INR29.0 crore in the previous year.
DOSHI CERAMIC: ICRA Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------
ICRA said the ratings for the INR5.58 crore bank facilities of
Doshi Ceramic Industries (DCI) continue to remain under Issuer Not
Cooperating category. The rating is denoted as '[ICRA]D/[ICRA]D
ISSUER NOT COOPERATING'; Rating continues to remain under 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 0.50 [ICRA]D; ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Term Loan 2.92 [ICRA]D; ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Bank Guarantee 0.20 [ICRA]D; ISSUER NOT COOPERATING;
Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Unallocated 1.96 [ICRA]D/[ICRA]D; ISSUER NOT
Limits COOPERATING; Rating Continues to
remain under the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Doshi Ceramic Industries (DCI) was incorporated on 1st April 2012
and is promoted by Mr. Bipinchandra Doshi and Mr. Rajesh Doshi. DCI
is based in the Thangadh (Morbi) region of Gujarat which undertakes
the manufacturing of ceramic sanitary ware products like wash
basins, closets, urinals, pans and related accessories. The plant
has an installed capacity of 10,800 MTPA. The unit commenced
commercial operations in January 2013 and initially the sale of the
firm was focused in domestic market with majority of the sales
being made to wholesalers as well as merchant exporters. However,
since FY2015 onwards, DCI is focusing more in overseas market with
better market scenario.
ELECTROPATH SERVICES: ICRA Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------------
ICRA has continued the long-term and short-term ratings for the
bank facilities of Electropath Services (India) Private Limited
(ESIPL) to the 'Issuer Not Cooperating' category. The rating is now
denoted as "[ICRA]D/[ICRA]D ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 21.27 [ICRA]D ISSUER NOT COOPERATING;
Fund Based/ Rating continues to remain in
Cash Credit the 'Issuer Not Cooperating'
category
Short Term- 28.73 [ICRA]D ISSUER NOT COOPERATING;
Non-Fund Based- Rating continues to remain in
Bank Guarantee the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Established in 2006, ESIPL is engaged in executing turnkey power
projects for Maharashtra State Electricity Distribution Company
Limited (MSEDCL). The company provides services like designing,
erecting, commissioning, testing for project like electricity
distribution and transmission lines, electricity distribution
transformer centers, substations, etc. The promoter, Mr. Sambhaji
Nathrao Gitte has experience of more than two decades in electrical
contracting.
GLOBCON INDUSTRIES: ICRA Withdraws B+ Rating on INR8.70cr Loan
--------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Globcon Industries Pvt. Ltd. (GIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 8.70 [ICRA]B+ (Stable); ISSUER NOT
Limits COOPERATING; Withdrawn
Rationale
The long-term assigned to GIPL have been withdrawn at the request
of the company, based on the No-Due certificate provided by its
banker. ICRA is withdrawing the rating and that it does not have
information to suggest that the credit risk has changed since the
time the rating was last reviewed. ICRA has withdrawn the Stable
outlook on the long-term rating.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
GIPL was initially established as a partnership firm – Globcon
Industries in 2012 and was subsequently converted into a private
limited company in November, 2013. The company manufactures AAC
blocks, which are used in the real estate industry. GIPL's
manufacturing facility is located at Pipodara in Mangrol Taluka
near Surat with an installed capacity of 1,50,000 cubic meter per
annum. In FY2018, the company reported a net profit of INR0.35
crore on an operating income (OI) of INR32.90 crore as against a
net profit of INR0.01 crore on an OI of INR22.36 crore in FY2017.
GVK JAIPUR: ICRA Reaffirms B Rating on INR330.27cr Term Loan
------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of GVK
Jaipur Expressway Private Limited (GVKJEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 330.27 [ICRA]B (Stable); Reaffirmed
Rationale
The rating continues to remain constrained on account of the
continued delays in debt servicing on INR150 crore top-up loan
availed by GVKJEPL. These loans were availed in FY2017 to fund cost
over runs in group companies. GVKJEPL could not secure no objection
certificate (NOC) from the existing consortium of lenders (with an
outstanding loan of INR330.27 crore being rated by ICRA) for the
top-up loan; however, still the same was drawn down. In the absence
of consent from existing lenders, GVKJEPL failed to honor its
repayment commitments towards this top-up loan in a timely manner
as the surplus funds from the escrow account after servicing the
repayments of existing lenders were not released. It is to be noted
that the escrow account has sufficient cash balances (INR64.52
crore as on May 28, 2020) in relation to debt servicing
requirements for top-up loan availed. Currently, the repayments on
the top-up loan is being serviced through funds infused by
promoters with delays.
Further, ICRA note that the continuous missed payments on the
top-up loan has not impacted the timely debt servicing ability of
the rated term loans on account of the tight escrow mechanism being
in place; though the risk of reference to National Company Law
Tribunal (NCLT) under Insolvency and Bankruptcy Code (IBC)
remains.
The rating also takes into account the depletion of liquid reserves
on account of dividend payout in the past coupled with the SPV
contracting additional debt which led to overall deterioration of
liquidity, financial flexibility and weakening of coverage
indicators. The rating remains constrained due to risks inherent in
toll-based projects which include uncertainties involved in
regulatory changes, estimating future traffic growth rates,
acceptability of annual toll rate hikes and the WPI-linked
escalation in toll rates, which could limit the growth in toll
collections during periods of low WPI rate as seen in the past.
The rating, however, factors in the long operational track record
of more than 19 years with established traffic density and growth
in traffic at a CAGR of 3.94% in Passenger Car Unit (PCU) terms
between FY2006 to FY2020. However, during FY2020, traffic declined
by 3.2% (in PCU terms) primarily on account of revision in axle
load norms in July 2018, slowdown in economy and suspension in
tolling in last week of March 2020. Post resumption of tolling on
April 20, 2020, after the Covid-19 triggered lockdown, the ramp up
in traffic has been good and reached 75% of pre-covid levels in
first week of June 2020. The project corridor falls along the busy
Delhi-Mumbai corridor wherein the movement of commercial traffic is
high. Commercial traffic accounts for around 61% of which
multi-axle vehicles is the major segment.
The rating also factors in the low alternate route risk with
minimal toll leakages and established willingness of users to pay
toll. Additionally, the presence of debt service reserve account
(DSRA) equivalent to two months of debt servicing in form of fixed
deposit provide credit support to the term loans. ICRA assumes the
surplus cash generated from FY2021 onwards to remain in the system
till complete repayment of debt.
GVKJEPL is expected to get three months extension in concession
period as per recent relief package announced by Ministry of Road
Transport and Highways (MORTH) for BOT toll concessionaires to
compensate for revenue loss during and after toll suspension due to
Covid-19. GVKJEPL has awarded the works for third major maintenance
(MM) activity in February 2020 at an estimated cost of ~INR151.2
crore which will be funded through project cash flows. In the
absence of MM reserve, any increase in costs pertaining to periodic
maintenance can adversely impact SPV's cash flows.
Key rating drivers and their description
Credit strengths
* Important route: The project stretch is part of Delhi - Mumbai
Corridor (connects Delhi with Mumbai and Gujarat). Further the
alternate route risk is low with minimal toll leakages and
established willingness of users to pay toll.
* Long operational track record: The toll road is operational for
more than 19 years years with established traffic density and
growth in traffic at a CAGR of 3.94% in Passenger Car Unit (PCU)
terms between FY2006 to FY2020. However, during FY2020, traffic
declined by 3.2% (in PCU terms) primarily on account of revision in
axle load norms in July 2018, slowdown in economy and suspension in
tolling in last week of March 2020. Post resumption of tolling on
April 20, 2020, after the Covid-19 triggered lockdown, the ramp up
in traffic has been good and reached 75% of pre-covid levels in
first week of June 2020.
* Presence of DSRA: The company maintains DSRA equivalent to two
months of debt servicing in form of fixed deposits with bank which
provides credit support to the term loans.
Credit challenges
* Continued delays in servicing top-up loan: Continued delays in
debt servicing on INR150 crore top-up loan availed by GVKJEPL.
These loans were availed in FY2017 to fund cost over runs in group
companies. GVKJEPL could not secure NOC from the existing
consortium of lenders (with an outstanding loan of INR330.27 crore
being rated by ICRA) for the top-up loan; however, still the same
was drawn down. In the absence of consent from existing lenders,
GVKJEPL failed to honor its repayment commitments towards this
top-up loan in a timely manner as the surplus funds from the escrow
account after servicing the repayments of existing lenders were not
released. It is to be noted that the escrow account has sufficient
cash balances (INR64.52 crore as on May 28, 2020) in relation to
debt servicing requirements for top-up loan availed. Currently, the
repayments on the top-up loan is being serviced through funds
infused by promoters with delays. Further, ICRA note that the
continuous missed payments on the top-up loan has not impacted the
timely debt servicing ability of the rated term loans on account of
the tight escrow mechanism being in place; though the risk of
reference to NCLT under IBC remains.
* Weakening of coverage metrics: Depletion of liquid reserves on
account of dividend payout in the past coupled with the SPV
contracting additional debt has led to overall deterioration of
liquidity, financial flexibility and weakening of coverage
indicators.
* Revenues dependent on traffic volume and movement in WPI: The
project remains exposed to the risks inherent in
build-operate-transfer (BOT) toll road projects, including risks
arising from variation in traffic volume over the project stretch
and its dependence on the economic activity in the surrounding
regions, movement in WPI (for toll rate hike), political
acceptability of toll rate hike over the concession period,
development/improvement of alternate routes and likelihood of toll
leakages. Any reduction in either of these will have an advese
impact on toll collections.
* Ensuring regular and periodic maintenance expenditure within
budgeted levels: GVKJEPL has awarded the works for third MM
activity in February 2020 at an estimated cost of ~INR151.2 crore
which will be funded through project cash flows. In the absence of
MM reserve, any increase in costs pertaining to periodic
maintenance can adversely impact SPV's cash flows.
Liquidity Position: Adequate
GVKJEPL's liquidity position is adequate for ICRA rated debt with
free cash balance of INR64.52 crore including DSRA of INR52 crore
as on May 28, 2020. The debt repayment obligation on ICRA rated
facilities stands at INR138.6 crore in FY2021, which can be
comfortably serviced through estimated cash flow from operations.
The third MM works have been started in March 2020 and will be
funded through project cash flows.
Rating sensitivities
Positive triggers – The crystallisation of scenarios for rating
upgrade is unlikely over the medium term. However, timely repayment
of debt servicing of the top-up loan and healthy growth of more
than 9% in traffic on a sustained basis, could be a scenario for
rating upgrade.
Negative triggers – Negative pressure on the rating could arise
if the traffic growth is lower than expected and/or the company
incurs higher-than-anticipated routine O&M and major maintenance
expense, support to group companies thereby weakening the liquidity
profile of GVKJEPL. Further slippages in servicing of top-up loan
would be a credit negative.
GVKJE is a special purpose vehicle promoted by GVK Transportation
Pvt Ltd (GVKTPL) (100%) for widening the existing two -lane section
of NH-8 between Jaipur and Kishangarh (from km 273.50 to 363.88) to
six lane in the state of Rajasthan through Design, Build, Finance,
Operate and Transfer (DBFOT - Toll) model. Concession period is 20
years (including a construction period of 2 years). The total
project cost incurred was INR622.30 crore which was funded through
INR121.17 crore equity, INR211 crore of grant from NHAI, INR7.8
crore of internal accruals and INR282.33 crore of debt. From May
2016 onwards, the toll collections on GVKJE's project stretch was
split into two toll plazas instead of one earlier.
JONAS PETRO: ICRA Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------
ICRA said ratings for the INR7.00-crore bank facilities of Jonas
Petro Products Private Limited (JPPPL) continues to remain under
'Issuer Not Cooperating' category'. The ratings are denoted as
"[ICRA]D/[ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term– 0.75 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long-term– 2.84 [ICRA]D ISSUER NOT COOPERATING;
Term Loan Rating continues to remain in
the 'Issuer Not Cooperating'
category
Long-term– 1.91 [ICRA]D ISSUER NOT COOPERATING;
Unallocated Rating continues to remain in
the 'Issuer Not Cooperating'
category
Short-term– 0.05 [ICRA]D ISSUER NOT COOPERATING;
Bank Guarantee Rating continues to remain in
the 'Issuer Not Cooperating'
category
Short-term– 1.45 [ICRA]D ISSUER NOT COOPERATING;
Unallocated Rating continues to remain in
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Jonas Petro Products Private Limited (JPPPL) was established in the
year 2010 and is engaged in conversion of waste oil to recycled
fuel oil/reclaimed fuel oil (RFO). JPPPL has a storage and
processing unit of 12000 kilo liter per annum situated in
Mangalore, Karnataka. The company also has a well-equipped
wastewater treatment facility. The company commenced its operations
in April 2012.
KAY BOUVET: ICRA Lowers Rating on INR110cr LT Loan to D
-------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Kay
Bouvet Engineering Limited (Unit - I) (KBEL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 110.00 [ICRA]D ISSUER NOT COOPERATING;
Fund Based/CC Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING and Continued to
Remain under the 'Issuer Not
Cooperating' category
Long Term- 41.00 [ICRA]D ISSUER NOT COOPERATING;
Fund Based TL Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING and Continued to
Remain under the 'Issuer Not
Cooperating' category
Short Term- 300.00 [ICRA]D ISSUER NOT COOPERATING;
Non-Fund Based Rating downgraded from [ICRA]A4
ISSUER NOT COOPERATING and
Continued to remain under the
'Issuer Not Cooperating'
Category
Rationale
The ratings of KBEL are downgraded due to delays in debt servicing
as per publicly available information. KBEL continues to be in
"Issuer Not Cooperating" on account of lack of adequate information
regarding KBEL and hence the uncertainty around its credit risk.
ICRA assesses whether the information available about the entity is
commensurate with its rating and reviews the same as per its
"Policy in respect of noncooperation by the rated entity". The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with KBEL, ICRA has been trying to seek information from the entity
so as to monitor its performance, but despite repeated requests by
ICRA, the entity's management has remained non-cooperative. In the
absence of requisite information and in line with SEBI's Circular
No. SEBI/HO/MIRSD4/CIR/2016/119, dated November 01, 2016, ICRA's
Rating Committee has taken a rating view based on the best
available information.
KBEL was incorporated in 1993 to manufacture heavy engineering
fabrication and machining components. Prime objective of the
company was to manufacture machinery for sugar plants and erect
complete sugar plants on turnkey basis. KBEL had purchased a design
for cane crushing plant from Jean Bouvet and Associates, USA in
1998 but currently there is no transaction between the two
entities. Jean Bouvet and Associates has a small equity holding of
1.3% in KBEL. KBEL established a new division called Special
Products Division (SPD) in 2000. The division was established with
an intention to diversify into other business verticals. SPD serves
two categories. First category (SPD I) manufactures components of
Nuclear Power Plants, Defence equipment, Atomic research equipment
and refineries. The second category (SPD II) supplies components to
Cement and Steel plant OEMs. The company has three manufacturing
facilities located two in Satara, Maharshtra and one in
Yamunanagar, Haryana.
MADRAS FERTILIZERS: ICRA Withdraws C Rating on INR191.40cr Loan
---------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Madras
Fertilizers Limited (MFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 191.40 [ICRA]C; Rating Withdrawn
Fund-based
Facilities
Long-term 2.84 [ICRA]C; Rating Withdrawn
Proposed
facilities
Short-term 330.00 [ICRA]A4; Rating Withdrawn
Non-fund
Based
facilities
ICRA has withdrawn the long-term rating of [ICRA]C and short-term
rating of [ICRA]A4 assigned to the bank facilities of MFL. The
rating is withdrawn in accordance with ICRA's policy on withdrawal
and suspension at the request of the company and based on the no
objection certificate provided by its banker. ICRA does not have
adequate information to suggest that the credit risk has changed
since the time the rating was last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured for the rating withdrawal
due to inadequacy of incremental information since the time the
ratings were last reviewed
Liquidity position
Liquidity position has not been captured for the rating withdrawal
due to inadequacy of incremental information since the time the
ratings were last reviewed
Rating sensitivities
Rating Sensitivities have not been captured for the rating
withdrawal due to inadequacy of incremental information since the
time the ratings were last reviewed.
MFL was incorporated on December 8, 1966 as a joint venture between
the Government of India (GoI) and AMOCO India, incorporated of
U.S.A (AMOCO) in accordance with the Fertilizer Formation Agreement
executed on May 14, 1966 with equity contributions of 51% and 49%,
respectively. National Iranian Oil Company (NIOC), an undertaking
of the Government of Iran, acquired a part of AMOCO's shareholding
and with the company going public in 1997 the current shareholding
pattern is as follows: GoI – 59.5%; NIOC – 25.8%; Public –
14.7%. MFL is involved in manufacturing ammonia, urea, complex
fertilisers and bio-fertilisers. The company's plant facilities and
headquarters are located on 329 acres of freehold land in Manali,
about 20 km north of Chennai city.
MODERN CONSTRUCTION: ICRA Assigns B+ Rating to INR42.50cr LT Loan
-----------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Modern
Construction Company (Delhi) (MCCD), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term–
Fund Based–CC 42.50 [ICRA]B+ (Stable); assigned
Short Term–
Non-fund Based 32.50 [ICRA]A4; assigned
Rationale
The assigned ratings reflect the weak liquidity position of MCCD
which is further constrained by the susceptibility of the firm's
working capital position to any payment mismatches with clients and
sub-contractors, as well as the risk of underperformance by
sub-contractors. The firm has no buffer on its working capital
facilities and has limited cash and cash equivalents as on date.
This is likely to be further impacted by the Covid-19 pandemic.
Going forward, enhancement of its working capital facilities will
be crucial to manage its liquidity position and for timely
completion of its projects.
The ratings also consider the decline in MCCD's revenues in FY2020
as a result of the National Green Tribunal (NGT) ban on
construction activities for a part of FY2020, which stopped its
operations for upto 2 months. Further, because of disruptions
caused to its operations by the Covid-19 pandemic, the company's
OI, profitability, and liquidity position will continue to be
impacted over the near to medium term.
The ratings are also weakened by the limited geographical
diversification of MCCD's order book with all projects confined to
NCR. The firm is also exposed to risks associated with its
constitution as a partnership. Continuous capital withdrawals by
its partners in the recent fiscals has weakened its capital
structure.
Nonetheless, the ratings factor in the extensive track record of
MCCD in the civil construction industry. Its promoters have more
than four decades of experience and extensive technical know-how.
The firm has leveraged on its experience to develop healthy
relationships with its clients, suppliers and sub-contractors. The
ratings also consider the healthy outstanding order book of the
company. As most projects are expected to be executed over the next
24–36 months, it provides medium-term revenue visibility for the
firm.
The Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that MCCD will continue to benefit from the long track record of
its operations and strong order book.
Key rating drivers and their description
Credit strengths
* Extensive experience of promoters in civil construction business:
The promoters of MCCD have been in the civil construction business
for more than four decades and have extensive technical know-how.
This has enabled them to develop healthy relationships with its
clients, suppliers and sub-contractors. The firm receives repeat
projects from its major clients.
* Healthy OB/OI provides revenue visibility for medium term: As on
March 31, 2020, MCCD's outstanding order book position was INR937.2
crore (OB/OI of ~3.9 times based on the OI for FY2019). Most of
these projects are expected to be executed over the next 24–36
months, providing medium-term revenue visibility for the firm.
Credit challenges
* Weak liquidity owing to stretched receivables: MCCD's liquidity
is weak with no buffer in its working capital limits. The firm's
receivable cycle is also stretched with it receiving delayed
payments from its clients. As on March 31, 2019, its receivable
days were 152 times, which are likely to be further impacted by
Covid-19. Further, it has low cash and cash equivalents as on date.
Going forward, an enhancement in its working capital limits would
be crucial to maintain its liquidity position and for timely
completion of its projects.
* Deteriorated revenue in FY2020; further weakness likely in FY2021
owing to Covid-19 impact: MCCD's revenues deteriorated in FY2020.
Its operations had stopped during the NGT ban on construction
activities in November 2019, which impacted its top line. The
firm's revenues declined to approximately INR192 crore in FY2020
from INR243 crore in FY2019. Given the Covid-19 pandemic, the
firm's OI, profitability, and liquidity position will remain
impacted over the near to medium term.
* Limited geographical diversification with order book confined to
NCR: The firm's order book has high geographical concentration. As
on date, all of its pending projects are in NCR. In fact, ~33% and
~27% of its outstanding order book is for projects in Noida and
Ghaziabad, respectively.
* Risks associated with partnership constitution: MCCD also faces
risks associated with its status as a partnership firm. Continuous
capital withdrawal by its partners have weakened its capital
structure.
Liquidity position: Stretched
MCCD's liquidity is stretched owing to full utilisation of its
limits and low cash and cash equivalents. In the 12-month period
ending in March 31, 2020, the firm's average working capital
utilisation was 100%. This apart, its liquidity position is likely
to be further impacted by Covid-19. Going forward, an enhancement
in its working capital limits is crucial to maintain liquidity
position and for timely completion of its projects.
Rating sensitivities
Positive trigger: ICRA could upgrade MCCD's rating if the firm is
able to maintain consistent healthy order book position and timely
execution of the projects, leading to sustained revenue growth and
improvement in profitability and liquidity position. Specific
credit metrics could include TOL/TNW below 2.8 times on a sustained
basis.
Negative trigger: ICRA could downgrade MCCD's rating if there is
any delay in execution of the existing order book or a weaker order
book position due to prolonged impact of Covid-19, leading to lower
revenues and profitability than the anticipated levels, or if the
liquidity position worsens. Further, elongation of its working
capital cycle owing to stretched receivables could result in a
ratings downgrade. Specific credit metrics could include DSCR below
1.1 times on a sustained basis.
MCCD was set up as a proprietorship concern, Modern Construction
Co, in 1976 by the Late M K Jain. The firm got its current name in
1987 and is now a partnership firm managed by Mr. Nirmal Jain, Mr.
Manish Jain, and Ms. Ruchika Jain. It undertakes contracts to
construct multi-storied buildings, shopping malls, institutions,
schools, townships, administrative buildings, hostels, factories,
roads, bungalows, farmhouses, research laboratories, and hospitals
in NCR.
NECTAFRESH AGRO: Ind-Ra Moves BB- Issuer Rating to Non-Cooperating
------------------------------------------------------------------
India Ratings and Research (Ind-Ra) has migrated Nectafresh Agro
Foods' 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 action is:
-- INR39 mil. Term loan due on December 2023 migrated to non-
cooperating category with IND BB- (ISSUER NOT COOPERATING)
rating; and
-- INR20 mil. Fund-based limits migrated to non-cooperating
category with IND BB- (ISSUER NOT COOPERATING) rating.
Note: ISSUER NOT COOPERATING: The ratings were last reviewed on
June 28, 2019. Ind-Ra is unable to provide an update, as the agency
does not have adequate information to review the ratings.
COMPANY PROFILE
Incorporated in 2010, Nectafresh Agro Foods manufactures inverted
sugar syrup and cattle feed. It is managed by Rakesh Singh and
Vikesh Kumar.
OSWAL OVERSEAS: ICRA Withdraws C Rating on INR62.82cr LT Loan
-------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Oswal
Overseas Limited (OOL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 62.82 [ICRA]C; Withdrawn
fund based
limits
Rationale
The rating assigned to the bank facilities of OOL has been
withdrawn at the request of the company and based on the No
Objection Certificate received from its banker as also in
accordance with ICRA's policy on withdrawal and suspension. ICRA
does not have adequate information to suggest that the credit risk
has changed since the time the rating was last reviewed.
Key rating drivers
Key rating drivers have not been captured as the rated
instrument(s) are being withdrawn.
Incorporated in May 1984 as ANK Impex Private Limited, the company
changed its constitution to a public limited company and was
renamed to ANK Impex Limited in October 1984. On May 1992, the
company was again renamed to Oswal Overseas Limited. It
manufactures sugar in its plant in Bareilly (Uttar Pradesh) with an
installed production capacity 3,500 TCD. OOL's registered office is
in New Delhi. The shares of the company were listed on the Bombay
Stock Exchange (BSE) on September 1995.
PARINEE DEVELOPERS: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: Parinee Developers Private Limited
Registered office address:
201, 2nd Floor, Parinee Crescenzo
Plot No. C 38 & 39
G Block, BKC
Bandra (East)
Mumbai MH 400051
IN
Insolvency Commencement Date: June 19, 2020
Court: National Company Law Tribunal, Mumbai Bench-II
Estimated date of closure of
insolvency resolution process: December 16, 2020
(180 days from commencement)
Insolvency professional: Mr. Subhash Chandra Modi
Interim Resolution
Professional: Mr. Subhash Chandra Modi
1301/02, Silver Oak
Raheja Willows CHS Ltd
Akurli Road
Kandivali (East)
Mumbai Suburban
Maharashtra 400101
E-mail: subhash0658@gmail.com
- and -
Sumedha Management Solutions
Private Limited
809-810, 8th Floor
B-Wing, Trade World
Kamala Mills Compound
Lower Parel (West)
Mumbai 400013
Maharashtra
E-mail: pdpl@sumedhamanagement.com
Classes of creditors: Allotees under Real Estate Projects
Insolvency
Professionals
Representative of
Creditors in a class: Pradeep Kumar Chakravarty
Vijay Kumar Kulshrestha
Indrajit Mukherjee
Last date for
submission of claims: July 3, 2020
R.K. CITY: ICRA Keeps D INR18cr Debt Rating in Not Cooperating
--------------------------------------------------------------
ICRA said the rating for the INR18.00 crore bank facilities of R.K.
City Developers Pvt. Ltd. (RK City) continue to remain under
'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 18.00 [ICRA]D ISSUER NOT COOPERATING;
Limits Rating continues to remain under
'Issuer Not Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
R.K. City Developers Private Limited (RK City) is a closely held
company promoted by Mr Rakesh Kumar and his father Mr Vijay Kumar
who take up construction of real estate and commercial projects for
the group and other regional players. The company has been in this
line of business for the past four years and has completed
construction of a housing project for its promoter group comprising
74 apartments at Moga (Punjab).
ROYALS MARINE: ICRA Moves B+ INR10cr Debt Rating to Not Cooperating
-------------------------------------------------------------------
ICRA has migrated the ratings for the INR10.00-crore bank
facilities of Royals Marine Food Pvt Ltd to 'Issuer Not Cooperating
category'. The ratings are denoted as "[ICRA]B+(Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term– 10.00 [ICRA]B+(Stable); ISSUER NOT
Unallocated COOPERATING; Rating Moved to
issuer not cooperating category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Royals Marine Food Private Limited was incorporated in December
2015 under the name of M/s. R.K. Builders & Developers India Pvt.
Ltd and had not undertaken any commercial operations. In FY2018,
the company changed its name to "M/s. Royals Marine Food Private
Limited". The company is setting up a shrimp feed manufacturing
unit with an initial capacity of 5T/ hr and subsequently double its
capacity by FY2020. The total project cost is estimated at INR33.0
crore which is proposed to be financed by term loan of INR10.0
crore (30.0%) and equity contribution of INR23.0 crore (70.0%) and
expected to begin commercial operations from February 2019. As on
November 30, 2018, the company has incurred INR16.54 crore (50.2%
financial progress) and is in line with the schedule.
SATURN PREFAB: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Saturn Prefab India Private Limited
Plot No. 727-728, Seector 3
Industrial Area
Pithampur Dhar
M.P. 454775
Insolvency Commencement Date: March 13, 2020
Court: National Company Law Tribunal, Indore Bench
Estimated date of closure of
insolvency resolution process: December 13, 2020
Insolvency professional: Mr. Gopal Krishana Saraswat
Interim Resolution
Professional: Mr. Gopal Krishana Saraswat
Dr. G.K. Saraswat (Retired IAS)
387F 114 Scheme Part 1
Behind Diksha Girls Hostel
Sant Nagar, Lasudia Mori
Dewas Naka, Indore
Madhya Pradesh 452010
E-mail: drgksaraswat@gmail.com
ip.saturnprefab@gmail.com
Last date for
submission of claims: June 30, 2020
SHARMA CARS: ICRA Reaffirms B+ Rating on INR19.20cr Loan
--------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Sharma
Cars Private Limited (SCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based Dropline 19.20 [ICRA]B+(Stable); reaffirmed
Overdraft facility
Fund-based/Non-fund 16.49 [ICRA]B+(Stable)/[ICRA]A4;
Based-Unallocated Reaffirmed
Limits
Rationale
The reaffirmation in ratings remains constrained by SCPL's weak
financial risk profile, characterised by thin margins, leveraged
capital structure, weak coverage indicators and tight liquidity
position, because of high reliance on working capital borrowings.
ICRA further expects SCPL's top line to decline by 15-20% and its
profitability to be under pressure in FY2021, due to weak demand
for passenger vehicles (PVs) which was further aggravated by the
Covid-19 pandemic and aligned lockdown; the company recorded
negligible sales in the first two months of the current fiscal. The
ratings are further constrained by the vulnerability of the
profitability to regulatory changes and the stiff competition from
other dealers of HMIL in the Ahmedabad region and other OEM
manufacturers. The ratings also take into account the commission
structure decided by the principal, which keeps the company's
margins under check.
The ratings, however, continue to favourably take into account the
promoters' extensive experience in the automobile dealership
business and SCPL's established market position in Ahmedabad as an
authorised dealer of Hyundai Motors India Limited (HMIL).
The Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that Sharma Cars Private Limited (SCPL) will continue to benefit
from the extensive experience of its promoters in the car
dealership industry.
Key rating drivers
Credit strengths
* Extensive experience of promoters in auto-dealership business:
SCPL's promoters have over two decade-long experience in the
automobile dealership business.
* Established position as authorised dealer of HMIL in Ahmedabad:
The company is among the leading and oldest dealers of Hyundai
Motors India Limited (HMIL) in Ahmedabad, dealing in the entire
range of passenger vehicles. It operates two showrooms with 3S
(sales, service and spares) facilities, one showroom with only
sales facility and one showroom for second-hand car sales.
Credit challenges
* Weak financial risk profile: The operating income of the company
stood flat, at INR231.40 crore in FY2019 vis-à-vis INR230.52 crore
in FY2018, because of lower average realisation despite higher
volumes. In FY2020, the operating revenue declined to INR194.90
crore (provisional) primarily on account of decrease in number of
units sold with slowdown in economy, tighter financing norms,
regulatory changes and lockdown on end of March 2020. The margins,
as typical in any dealership business, remained low; the operating
margin was 3.79% and the net margin was 0.18% in FY2019. The
capital structure continues to be highly leveraged, with gearing of
8.82 times as on March 31, 2019 (8.84 times as on March 31, 2019).
With high interest and finance cost and low profitability, the
coverage indicators have remained weak as reflected by interest
coverage ratio of 1.09 times (vis-à-vis 1.13 times in FY2018),
TOL/TNW of 9.86 times (vis-à-vis 9.56 times in FY2018), NCA/TD of
2% (vis-à-vis 2% times in FY2018) and total debt/OPBITA of 8.65
times (vis-à-vis 8.12 times in FY2017).
* Vulnerability to regulatory changes; bleak demand outlook due to
weak consumer sentiments and adverse impact of Covid-19 on
operations: The company's profitability remains vulnerable to
regulatory changes such as amendments in tax structure (like
migration to GST in FY2018) and emission norms (transition to BS
VI1 norms from BS IV in FY2021). Given the transition of emission
norms to BS VI by April 2020, auto OEMs and dealers had to sell
their vehicle inventory at a discount. Further, weak buying
sentiment due to the general economic slowdown is likely to dampen
the demand. The problem is compounded by the Covid-19 pandemic
induced lockdown. Accordingly, ICRA expects the company's top line
to decline by around 15-20% in FY2021. SCPL registered almost no
sales in the first two months of the current fiscal.
* Inherently low margins in auto dealership business due to
regulated commission structure: The operating profit margin of
auto dealers, including SCPL, remains inherently low because of the
high-volume and low-margin business. Moreover, as the OEMs decide
the commission structure, the margins of the auto dealers are
restricted to a significant extent.
* Intense competition in automobile dealership industry: SCPL is
one among six HMIL dealers in Ahmedabad. Besides this, it faces
stiff competition from dealers of other OEMs. The rising
competition forces the dealers to pass on higher discounts, thereby
further impacting the profitability.
Liquidity position: Poor
The liquidity profile of the entity remains poor, marked by low
cash accruals and almost fully utilised working capital limits.
Against the backdrop of significant repayments, promoter funding to
support the cashflow mismatches remains critical.
Rating sensitivities
Positive triggers – The ratings might be upgraded if there is a
revival in demand outlook of the automobile industry, which along
with substantial increase in the company's revenues and
profitability, leads to higher-than-expected cash accruals on a
consistent basis. Further, substantial equity infusion or
shortening of working capital cycle that leads to improved capital
structure, coverage indicators and overall liquidity position will
also be key for a rating upgrade.
Negative triggers – Downward pressure on the ratings could emerge
if significant decline in SCPL's revenues and profitability leads
to lower-than-expected cashflows or any major debt-funded capex
further deteriorates the capital BS IV/BS VI: Bharat Stage four/six
are emission standards instituted by the Government of India to
regulate the output of air pollutants from compression ignition
engines and spark-ignition engine equipment, including motor
vehicles (source : Wikipedia) structure and coverage indicators.
Also, further stress on liquidity due to elongation in working
capital cycle may also lead to a rating downgrade.
Incorporated in 1998, Sharma Cars Private Limited (SCPL) is the
automobile dealer of Hyundai Motors India Limited's (HMIL)
passenger vehicles. The company is promoted by Mr. Narendra Sharma,
Mr. Surendra Sharma and Mr. Subashchandra Sharma, who have around
two decades of experiences in the automobile dealership. SCPL has
presence in Ahmedabad (Gujarat), through two 3S (sales, service and
spares) showrooms, one 1S (sales) showroom and one used cars
outlet.
In FY2019, the company reported a net profit of INR0.42 crore on an
operating income of INR231.40 crore compared to a net profit of
INR0.37 crore on an operating income of INR230.52 crore in FY2018.
In FY2020, the company reported an operating income of INR194.90
crore on a provisional basis.
SREE CHAITANYA: ICRA Keeps D INR8cr Debt Rating in Not Cooperating
------------------------------------------------------------------
ICRA said the ratings for the INR8.00-crore bank facilities of Sree
Chaitanya Corporation Pvt. Ltd. continues to remain under 'Issuer
Not Cooperating' category'. The ratings are denoted as "[ICRA]D
ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term 8.00 [ICRA]D; ISSUER NOT COOPERATING;
Unallocated Rating Continues to remain under
Issuer not cooperating category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Setup in 2011 as a proprietorship concern, M/s. Chaitanya
Industries was later converted to private limited company in 2015.
SCCPL was promoted by Mr. R.Kanaka Rao for trading of iron ore
fines. Subsequently, several other commodities like coal, rice,
maize, granite blocks were added to the portfolio. SCCPL purchases
coal from local importers and supplies to traders who deal with end
customers across pharma and sponge iron units based out of
Visakhapatnam.
SRI LAKSHMI SRINIVASA: ICRA Keeps B+ Debt Ratings in Not Coop.
--------------------------------------------------------------
ICRA said ratings for the INR15.00-crore bank facilities of Sri
Lakshmi Srinivasa Raw & Boiled Rice Mill (SLSRBRM) Continues to
remain under 'Issuer Not Cooperating' category'. The ratings are
denoted as "[ICRA]B+(Stable)/[ICRA]A4 ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 11.25 [ICRA]B+(Stable); ISSUER NOT
Fund Based CC COOPERATING; Rating Continues
to remain under issuer not
cooperating category
Long Term/ 3.75 [ICRA]B+(Stable)/A4; ISSUER NOT
Short term COOPERATING; Rating Continues
Unallocated to remain under issuer not
cooperating category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available
information on the issuers' performance. Accordingly, the lenders,
investors and other market participants are advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity.
Sri Lakshmi Srinivasa Raw & Boiled Rice Mill (SLSRBRM) was
established as a proprietorship firm in 1983. In 2002, SLSRBRM was
reconstituted as partnership firm, SLSRBRM is engaged in the
milling of paddy, and produces raw and boiled rice. The firm has a
milling unit in Nellore District of Andhra Pradesh. SLSRBRM has a
milling capacity of 36000 MTPA of paddy.
SRI MURUGAR: Ind-Ra Assigns BB- LT Issuer Rating, Outlook Stable
----------------------------------------------------------------
India Ratings and Research (Ind-Ra) has assigned Sri Murugar
Spinning Mill's (SMSM) a Long-Term Issuer Rating of 'IND BB-'. The
Outlook is Stable.
The instrument-wise rating actions are:
-- INR21.3 mil. Term loan due on March 2024 assigned with IND BB-
/ Stable rating;
-- INR224.7 mil. Fund-based facilities assigned with IND BB-/
Stable/IND A4+ rating; and
-- INR24 mil. Non-fund-based facilities assigned with IND A4+
rating.
KEY RATING DRIVERS
The ratings reflect SMSM's modest EBITDA margin and poor liquidity.
The firm's EBITDA margin contracted to 2.9% in FY19 (FY18: 3.6%)
due to an increase in the raw material price and increased expenses
from the job work of blended polyester yarn. The firm's return on
capital employed stood at 7% in FY19. SMSM's margin expanded to
3.2% in 9MFY20 due to better absorption of fixed cost.
Liquidity Indicator- Poor: The firm utilized its fund-based
facilities at 98.7% during the 12 months ended in April 2019. Its
cash flow from operations improved to negative INR14 million in
FY19 (FY18: negative INR32 million) due to an increase in customer
advances and a slight improvement in the working capital cycle to
65 days (66 days). The firm had a cash balance of INR1 million as
at end-FY19 and INR20 million as at end-December 2019. Further, the
firm has to repay INR6 million during FY21.
The ratings are also constrained by SMSM's modest credit metrics.
Its interest coverage (operating EBITDA/gross interest expense)
improved to 1.8x in FY19 (FY18: 1.6x) due to a reduction in
interest expenses to INR24 million (INR31 million). Its net
leverage (total adjusted net debt/operating EBITDA), however,
deteriorated to 6.7x in FY19 (FY18: 5.0x) due to an increase in
debt to INR295 million (INR246 million) to fund the working capital
requirement and reduction in the absolute EBITDA to INR43.7 million
(INR49.6 million). In 9MFY20, the firm recorded interest coverage
of 2.2x due to an increase in the operating EBITDA.
The ratings are further constrained by SMSM's partnership nature of
business.
The ratings, however, are supported by the firm's medium scale of
operations, which grew to INR1,523 million in FY19, logging a CAGR
of 25.76% over FY16-FY19. The firm's revenue grew 11.4% YoY in FY19
due to higher orders as well as an increase in capacity to 33,500
spindles (FY18: 30,000 spindles). The firm recorded revenue of
INR1,851 million in FY20, driven by increased orders from existing
and new customers.
The ratings are also supported by the promoters' over two decades
of experience in cotton yarn manufacturing.
RATING SENSITIVITIES
Positive: Substantial growth in the revenue and EBITDA margin and
an improvement in the liquidity leading to an improvement in the
interest coverage above 2.0x could be positive for the ratings.
Negative: A substantial decline in the top line and profitability
and sustained deterioration in the overall credit metrics or
deterioration in the overall liquidity profile could lead to
negative rating action.
COMPANY PROFILE
SMSM, established in 1997, manufactures cotton yarn, polyester
yarn, and grey cloth with a capacity of 33,500 spindles.
SRI RAM INDUSTRIES: ICRA Reaffirms B+ Rating on INR8.0cr Loan
-------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Sri Ram
Industries (SRI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based–
Working Capital 8.00 [ICRA]B+(Stable); reaffirmed
Fund-based–
Term Loan 2.50 [ICRA]B+(Stable); reaffirmed
Rationale
The rating reaffirmation continues to factor in SRI small scale of
operations with a decline in its revenue in FY2020 due to reduced
sales volume in a highly fragmented and competitive rice milling
industry, which limits its pricing power. The rating remains
constrained by the susceptibility of the firm's revenues and
margins to volatile paddy prices and adverse changes in
agro-climatic conditions as well as Government regulation, which
can affect the availability of paddy. The rating factors in its
moderate gearing and coverage indicators, thus, limiting SRI's
financial flexibility.
The rating remains constrained by the risks associated with the
partnership nature of the firm. The rating, however, continues to
derive comfort from the extensive experience of its promoters in
the rice milling industry and easy availability of paddy because of
its proximity to major paddy-cultivating regions in northern
Karnataka.
ICRA considers the favourable demand prospects of the rice industry
because of India's growing population, with India being one of the
largest producers and consumers of rice. The Stable outlook on the
[ICRA]B+ rating reflects ICRA's opinion that SRI will continue to
benefit from the extensive experience of its promoters in the rice
milling business.
Key rating drivers and their description
Credit strengths
* Extensive experience of promoters in rice milling business:
Incorporated in 2007, SRI is a partnership firm involved in the
processing of raw rice and parboiled rice. The promoters have been
involved in the rice milling business for over two decades. The
sale of whole rice contributes to a major portion of its revenues.
* Proximity to rice-growing areas: The firm's plant is located at
Manvi, which is surrounded by areas such as Raichur, Sindhnoor and
Gangavathi, where a major part of the paddy is cultivated. This
results in low transportation cost for the firm and easy
availability of paddy.
* Favourable long-term demand outlook: The demand prospects of the
rice industry are expected to remain favourable supported by
India's growing population with rice remaining a staple food grain
in the country. Moreover, India is the world's second largest
consumer of rice.
Credit challenges
* Moderate scale of operations: SRI's revenues remained moderate
at INR30.3 crore in FY2020, which declined from INR35.1 crore in
FY2019 owing to lower sales volume. This, coupled with its low net
worth, restricts operational and financial flexibility to some
extent.
* Moderate capital structure and coverage indicators: The firm's
gearing remained moderate at 2.1 times in FY2020 (albeit an
improvement from 2.5 times in FY2019) due to its low net worth. The
debt coverage indicators remained moderate with interest coverage
of 2.0 times, DSCR of 1.3 times and TD/OPBITDA of 3.6 times in
FY2020.
* Intense competition marked by presence of large number of
players: Owing to low entry barriers, along with readily available
technology and proximity to rice-cultivating belt, there are more
than 100 rice milling units in and around Raichur, leading to
intense competition for paddy procurement. This affects volumes and
pricing flexibility of rice millers like SRI.
* Inherent agro-climatic risks and vulnerability to changes in
Government policies: In the agricultural business, industry players
continue to face inherent risks such as unfavourable monsoons,
availability of raw materials at reasonable prices, epidemics in
paddy crop or shift of farmers to other cash crops and cyclicality,
as well as changes in Government regulations.
* Inherent risks associated with partnership nature of business:
SRI is exposed to risks associated with partnership firms including
limited ability to raise capital and capital withdrawal by
partners, which could adversely impact its capital structure.
Liquidity position: Adequate
The firm reported INR0.55-crore outstanding term loan as on March
31, 2020. The same is scheduled to be fully repaid in FY2021. Its
cash accruals are estimated to be sufficient to meet the repayment
obligations. SRI has INR7.4-crore working capital limits and its
average utilisation remained moderate at 71% of the sanctioned
limits between March 2019 and April 2020. The undrawn working
capital limits are expected to be sufficient to meet any
contingencies. Overall, the liquidity position is likely to remain
adequate considering its moderate working capital requirements, low
debt repayment obligations and absence of any capital expenditure
plans.
Rating sensitivities
Positive triggers – ICRA could upgrade SRI's rating if the firm
demonstrates a sustained improvement in its revenues and profits,
leading to improved coverage indicators. Specific credit metrics
that may lead to an upgrade of its rating include interest coverage
of above 2.5 times on a sustained basis.
Negative triggers – Negative pressure on SRI's rating could arise
if a further decline in revenues or margins lead to weakened
coverage indicators. Specific credit metrics that could lead to a
downgrade include TD/OPBDITA more than 4.5 times. Any withdrawal of
capital or increase in working capital intensity leading to stretch
in liquidity position can also lead to a downgrade.
Incorporated in 2007, SRI is a partnership firm involved in the
milling of paddy and produces raw rice. The firm’s major products
include boiled rice, raw rice, bran, broken rice and husk. It has a
milling unit at Manvi in Raichur district, Karnataka with an
installed milling capacity of 4 MT per hour. SRI’s plant is
spread over 3.5 acres with a storage capacity of 80,000 bags (75 kg
each) of paddy and 250 MT of rice. It sells raw rice under eight
brands namely KDM, Ram, Shilpa, RSK, MVM, AKS, VTC and Double
Parrot. The firm sells broken rice under two brands namely Rabbit
and Helicopter.
In FY2020, on a provisional basis, the company reported a net
profit of INR0.7 crore on an operating income (OI) of INR30.3 crore
compared to a net profit of INR0.7 crore on an OI of INR35.1 crore
in FY2019.
SUNGLOW SUITINGS: ICRA Lowers Rating on INR24.73cr Loan to B+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sunglow
Suitings Private Limited (SSPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term– 24.73 [ICRA]B+ (Stable) ISSUER NOT
Fund-based COOPERATING; Rating downgraded
Limits from [ICRA]BB-(Stable) and
continues to remain under
'Issuer Not Cooperating' category
Rationale
The ratings downgrade is because of lack of adequate information
regarding SSPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sunglow Suitings Private Limited, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
SSPL manufactures woven fabrics for suitings. It is promoted by Mr.
Mahesh Hurkat, who has more than fifteen years of experience in the
textile industry. The company has 64 looms installed at its weaving
facility in Bhilwara, Rajasthan, and has a production capacity of
about 6.4 million metres of fabric per annum.
TASHIDING HYDRO: ICRA Cuts Rating on INR45.05cr Loan to D
---------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Tashiding Hydro Electric Project (THEP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term/ 45.05 [ICRA]D;ISSUER NOT COOPERATING;
Short Term Rating downgraded from [ICRA]B
Non Fund Based (Stable)/[ICRA]A4 and continues
to remain under 'Issuer Not
Cooperating' category
Short Term 4.95 [ICRA]D ISSUER NOT COOPERATING;
Non Fund Based Rating downgraded from [ICRA]A4
and continues to remain under
'Issuer Not Cooperating' category
Rationale
The rating downgrade reflects Delays in Debt Servicing. The rating
is based on limited information on the entity's performance since
the time it was last rated in March 2019. The lenders, investors
and other market participants are thus advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity, despite
the downgrade.
As part of its process and in accordance with its rating agreement
with Shiga Energy Private Limited, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Tashiding Hydro Electric Project (THEP) is being developed by SEPL
on the Build, Own, Operate and Transfer (BOOT) model. THEP is
located in West Sikkim envisages the utilization of the flow of
Rathong Chhu, a tributary of Rangit River for generating 97MW of
electric power through two units of 48.5MW each. SEPL has a MOU
with Sikkim Government which entails free sale of power to the
Sikkim Government. SEPL would supply free power to the extent of
12% of the power generated for the first fifteen years and 15% of
the power generated for the next twenty years.
TULIP TELECOM: ICRA Keeps D INR150cr NCD Rating in Not Cooperating
------------------------------------------------------------------
ICRA said the ratings for the INR150.00 crore NCD of Tulip Telecom
Limited (Tulip) continue to remain under Issuer Not Cooperating
category. The rating is denoted as [ICRA]D ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-Convertible 150.00 [ICRA]D; ISSUER NOT COOPERATING;
Debenture Rating continues to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Incorporated in 1992, by Retired Lt. Col. H.S. Bedi, as a private
limited company involved in trading of software, Tulip Telecom
Limited (Tulip), formerly Tulip IT Services Limited has since
diversified its operations to other related areas such as selling
of hardware products, network integration, VPN data connectivity
and managed services. The company became a public limited company
and was renamed to Tulip Software Ltd.; the name was further
changed to Tulip IT Services Ltd. in 2002 and to Tulip Telecom
Limited in 2008.
VARDHMAN VITRIFIED: ICRA Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
ICRA said the ratings for the INR19.00 crore bank facilities of
Vardhman Vitrified Private Limited continue to remain under Issuer
Not Cooperating category. The rating is denoted as '[ICRA]D/[ICRA]D
ISSUER NOT COOPERATING'; Rating continues to remain under 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based– 6.00 [ICRA]D; ISSUER NOT COOPERATING;
Cash Credit Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Fund-based– 3.00 [ICRA]D; ISSUER NOT COOPERATING;
Bank Guarantee Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Unallocated 10.00 [ICRA]D/[ICRA]D; ISSUER NOT
Limits COOPERATING; Rating Continues to
remain under the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Incorporated in July 2009, Vardhman Vitrified Private Limited
manufactures vitrified floor tiles of three sizes - 600 X 600 mm,
800 x 800 mm and 1000 x 1000 mm. The company started its commercial
operations from May 25, 2010. VVPL's manufacturing facility,
located at Morbi (Gujarat), has an annual manufacturing capacity of
37,800 MT. It sells its products under the brand name of
'Vardhman'. VVPL was promoted by Mr. Vitenkumar Kavar, who has
extensive experience in the ceramic industry by virtue of his
association with other companies engaged in a similar line of
business like New Vardhman Vitrified Private Limited and Comet
Ceramic.
VEERABHADRA EXPORTS: ICRA Lowers Rating on INR40cr Loan to B+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Veerabhadra Exports Private Limited (VEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 14.04 [ICRA]B+(Stable) ISSUER NOT
Fund Based TL COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating Continues to remain under
issuer not cooperating category
Long Term- 40.00 [ICRA]B+(Stable) ISSUER NOT
Fund Based/CC COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating Continues to remain under
issuer not cooperating category
Long Term- 6.00 [ICRA]B+(Stable) ISSUER NOT
Non Fund Based COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating Continues to remain under
issuer not cooperating category
Long Term– 4.96 [ICRA]B+(Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
from [ICRA]BB-(Stable) and
Rating Continues to remain under
issuer not cooperating category
Rationale
The rating downgrade is because of lack of adequate information
regarding VEPL Limited performance and hence the uncertainty around
its credit risk.
ICRA assesses whether the information available about the entity is
commensurate with its rating and reviews the same as per its
"Policy in respect of non-cooperation by the rated entity". The
lenders, investors and other market participants are thus advised
to exercise appropriate caution while using this rating as the
rating may not adequately reflect the credit risk profile of the
entity, despite the downgrade. As part of its process and in
accordance with its rating agreement with Veerabhadra Exports
Private Limited, ICRA has been trying to seek information from the
entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained
non-cooperative. In the absence of requisite information and in
line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119, dated
November 1, 2016, ICRA's Rating Committee has taken a rating view
based on the best available information.
Founded in 2011, Veerabhadra Exports Private Limited (VEPL) is
engaged in processing and export of cultured and sea caught
shrimps. The unit is located in Kakinada, Andhra Pradesh and
started commercial operations in January 2016 with a capacity of 40
tons per day (TPD). The firm is promoted and managed by Mr. D.
Veerabhadra Reddy. The company was earlier engaged in trading of
maize and aqua feeds. VEPL's end product is frozen shrimps
processed in various forms such as: shrimp head on, shrimp head
less and shrimps – peeled and undeveined (PUD), butterfly cut
etc.
[*] INDIA: Rally in Bank Debt Under Threat on Increasing Defaults
-----------------------------------------------------------------
Divya Patil at Bloomberg News reports that a rally in the debt of
Indian banks is running up against concern they'll need to take on
greater risks as the world's worst bad debt pile is set to weaken
further.
While average premiums on rupee-denominated Additional Tier 1 bonds
of the five biggest Indian banks have fallen to about 195 basis
points from the end of April, they are still up some 123 basis
points this year, Bloomberg relays. And some investors say the
rally has little room to continue amid concerns India companies are
getting downgraded like never before.
According to Bloomberg, Prime Minister Narendra Modi's $277 billion
stimulus package is heavily reliant on more lending from state
banks as he seeks to revive a sagging economy. Bloomberg says
Indian banks need to build up risk buffers to cushion against an
impending jump in corporate defaults tied to the pandemic, as
McKinsey & Co. forecasts an increase in the country's bad debt
ratio, which is already at 9.3%.
"I don't expect spreads on banks' Additional Tier 1 debt to
compress from current levels due to the risky nature of these bonds
and the worsening bad loan problem at lenders which will keep
demand low for such debt," Bloomberg quotes Aneesh Srivastava,
chief investment officer at Star Health and Allied insurance Co, as
saying. "It's rather time to exit banks' AT1 bonds."
India's bad debt ratio may rise by another 700 basis points due to
the coronavirus crisis, Bloomberg discloses citing McKinsey. The
country's lenders need to raise $20 billion of capital over the
next year, of which state banks will require $13 billion, to build
up cash cushions, Credit Suisse Group AG estimates.
Sentiment toward lenders' perpetual notes, banks' first line of
defense against financial shocks after equity, weakened in March
when the government wrote down the bonds of India's fourth-biggest
private lender in an unprecedented move, according to Bloomberg.
Creditors' wariness deepened as a large mutual fund shut six debt
plans in April and on concerns a six-month deferral of loan
repayments until the end of August hides the extent of woes faced
by pandemic-hit borrowers.
While a central bank rate cut in late May helped spreads to
stabilize, they may not come in much further, investors said. And
it's just not the bond market which is cautious. India's benchmark
bank equity index has fallen about 32% since the start of the year,
outpacing the 15% drop in the broader market.
"Bitter experience of the past, and concerns asset quality of banks
will worsen further after the loan moratorium is withdrawn will
keep demand for lenders' Additional Tier 1 bonds low," Bloomberg
quotes Mahendra Jajoo, chief investment officer for fixed income at
Mirae Asset Investment Managers India Pvt, as saying. "For now, we
will not buy banks' capital bonds as the situation remains grim."
=================
I N D O N E S I A
=================
MODERNLAND REALTY: Moody's Cuts CFR to Caa1, Outlook Negative
-------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating of Modernland Realty Tbk (P.T.) to Caa1 from B3.
At the same time, Moody's has downgraded the backed senior
unsecured rating of the 2021 notes issued by JGC Ventures Pte. Ltd.
and the 2024 notes issued by Modernland Overseas Pte. Ltd. to Caa1
from B3. Both JGC Ventures Pte. Ltd. and Modernland Overseas Pte.
Ltd. are wholly owned subsidiaries of Modernland and the notes are
guaranteed by Modernland and most of its subsidiaries.
The outlook on all ratings remains negative.
RATINGS RATIONALE
"The downgrade reflects its expectation that Modernland's cash
flows will fall significantly because of coronavirus-led
disruptions, such that the company will be reliant on external
funds to cover ongoing cash needs and debt maturities in 2020 and
2021," says Jacintha Poh, a Moody's Vice President and Senior
Credit Officer.
"The negative outlook reflects Modernland's heightened liquidity
risk amid challenging market conditions for fund raising," adds
Poh.
Modernland held cash and cash equivalents of IDR554 billion ($37
million) as of December 31, 2019. Moody's expects the company to
have operating cash outflows of around IDR600 billion in 2020,
leaving it reliant on external funding to cover the cash flow gap
and address its IDR150 billion bond due July 2020 and $150 million
bond due August 2021.
Based on Moody's assumption that Modernland achieves marketing
sales of IDR1.5 trillion to IDR2.0 trillion in 2020, the company's
credit metrics will remain weak with adjusted debt/homebuilding
EBITDA above 9.0x and homebuilding EBIT/interest expense below
1.5x. For the year ended December 31, 2019, Modernland recorded
adjusted debt/homebuilding EBITDA of 5.9x and homebuilding
EBIT/interest expense of 1.7x.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The property
sector has been affected by the shock given its sensitivity to
consumer demand and sentiment.
More specifically, the expected weakening in Modernland's credit
profile and its exposure to Indonesia have left it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions, and the company remains vulnerable to the outbreak
continuing to spread.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Its action reflects the impact on Modernland of the
breadth and severity of the shock, and the broad deterioration in
credit quality it has triggered.
Moody's has considered governance risk around Modern Group's
history of debt restructuring. Moody's has also considered the
founding family's concentrated ownership of Modernland, although
this risk is mitigated by the oversight exercised through the board
which for the majority consists of independent commissioners.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook, a ratings upgrade is unlikely over the
next 12-18 months. Nevertheless, the outlook could return to stable
if Modernland is able to (1) generate sufficient operating cash
flow to cover basic cash needs; and (2) address the refinancing
risk of all debt maturities in 2020 and 2021.
Moody's could further downgrade the ratings if Modernland is unable
to address debt service requirements.
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Modernland Realty Tbk (P.T.) is an integrated property developer in
Indonesia that focuses on industrial town development, residential
development and township development. It also has small exposures
to the hospitality and commercial property segments. The company
listed on the Jakarta Stock Exchange in 1993, and is controlled by
the Honoris family through direct ownership and various holding
companies.
=====================
N E W Z E A L A N D
=====================
IAG NEW ZEALAND: Proposes to Close All 53 AMI Stores in NZ
----------------------------------------------------------
Damian Rowe at Stuff.co.nz reports that IAG New Zealand Limited is
proposing to close down all of its AMI insurance stores.
According to Stuff, IAG announced on June 23 that it would review
aspects of its direct distribution model, which would see 53 AMI
insurance stores close across New Zealand, along with its one
remaining State store in Christchurch.
Up to 65 retail management store roles would be dissolved under the
proposal, while 350 roles were expected to move into digital teams
and contact centres, the report says.
An IAG spokeswoman said that IAG would work with any affected
employees, with a commitment to retaining as many people as
possible, Stuff relays.
Stuf relates that customer and consumer executive general manager
Kevin Hughes said the proposal was not taken lightly, as the stores
had been in local communities for many years.
However, the review reflected growing customer expectations for
digital services, Mr. Hughes said.
"Covid-19 has accelerated many trends within the insurance industry
and in the broader operating environment," Stuff quotes Mr. Hughes
as saying. "Customers expect more digitally, and we are focussed
on delivering that for them."
The company was exploring new services, such as virtual
face-to-face meetings, and customers would still be able to contact
call centres, he said.
"For several years, we've seen a decline in visits to our retail
stores, as customers increasingly look to engage with us over the
phone, via email and through our online platforms and digital
channels."
The company was also planning to establish pop-up mobile stores, if
required, in events such as a natural disaster.
Its specialist customer care team, that was temporarily established
as part of Covid-19, would be made a permanent service, the report
notes.
There are 52 employees who work at the Oamaru, Queenstown, Dunedin,
Mosgiel, Gore and Invercargill stores across Southland and Otago
set to close down, the report adds.
IAG trades under the brands AMI, State, New Zealand Insurance
(NZI), National Auto Club Underwriters Agency (NAC), Lumley and
Lantern.
[*] NEW ZEALAND: 73 Businesses Fail After Claiming Wage Subsidy
---------------------------------------------------------------
Esther Taunton at Stuff.co.nz reports that wage subsidy payments of
almost NZD8 million weren't enough to keep 73 businesses from
folding in the wake of the coronavirus outbreak.
A Stuff investigation found 73 companies which received support
through the Government-funded scheme have gone into receivership or
liquidation since its launch on March 17.
Stuff, citing the Ministry of Social Development, disclose that the
companies were paid a total of NZD7,714,311 to support 1,164
employees. Payments ranged from NZD17,574 to a Foxton
refrigeration manufacturer to more than NZD3.1 million paid to
homeware retailer Smiths City. The average payment was
NZD105,675.50.
Stuff says the figures do not include more than NZD11 million paid
to Burger King operator Antares Restaurant Group to support 1918 of
the fast food chain's staff.
While its parent shareholding companies, Tango Finance, Tango New
Zealand and Antares New Zealand Holdings, are in receivership,
Antares Restaurant Group is not, the report notes.
Other large subsidy claims include NZD185,244 paid to high-end
stationery retailer Kikki.K, despite the company going into
liquidation on March 24, the day before lockdown began.
According to Stuff, liquidator Andrew McKay said the failure of the
business was partly caused by "a particularly low domestic
December-January 2020 trading period".
West Coast mining company Capital A & M also received NZD84,335
before its director, Jacobus Kotze, disappeared and the business
went into receivership, the report says.
Receiver Thomas Rodewald said NZD55,000 of that payment had been
recovered. The company's wage subsidy now stands at NZD36,384.80,
according to MSD.
Stuff relates that Mr. Rodewald said Capital A & M was not the only
receivership he had taken on which involved a wage subsidy and
there were others where "there would be questions" over the use of
the scheme.
According to the report, MSD group general manager for employment
Jayne Russell said employers were obligated to pass on the wage
subsidy to all employees named in their application for the
scheme.
"If a company has applied for a wage subsidy and passed on the
funding to their employee before going into liquidation, there is
no onus on the employee or employer to repay that money," the
report quotes Ms. Russell as saying. "In relation to any excess
wage subsidy that has not been passed on to named employees,
Government is an ordinary unsecured creditor."
At least a dozen others have had applications to liquidate filed
against them since March.
They include Diversity Foods, which claimed NZD659,234.40 in
subsidies, and Format Limited, which received NZD187,456 under the
scheme. Both applications were filed on March 19, Stuff discloses.
However, Format Limited is now in "Covid-19 Business Debt
Hibernation", a process allowing businesses affected by disruption
related to the pandemic to place their existing debts on hold for
up to seven months to help them start trading normally again,
rather than go into liquidation, the report states.
=================
S I N G A P O R E
=================
ZENROCK COMMODITIES: Yields to HSBC's Judicial Management Filing
----------------------------------------------------------------
Anita Gabriel at The Business Times reports that Zenrock
Commodities Trading has changed its tune and decided to not resist
HSBC Holdings' bid to place the troubled firm under judicial
management (JM).
The Business Times understands that the oil trader -- one of
several players in Singapore's sizeable commodities trading space
that have been bruised by an oil crisis spawned by Covid-19 - had
informed the Singapore High Court of its intention to not contest
the JM path about a week ago. The JM hearing is fixed for July 13.
It is not clear what had led to the change of heart, BT says.
In early May, when ZenRock, under mounting financial strain after
oil prices plumbed record lows, sought a six-month debt moratorium
from the court, its controlling owner Xie Chun had said in a court
document that its hand had been "forced" by HSBC's actions, BT
recalls. He also warned that the JM application by its biggest
creditor will "likely have damaging consequences" to the company
and its ability to trade once the news hits the market.
BT reported that at a lengthy virtual hearing around the same time,
HSBC's application was "heavily contested", although in the end,
HSBC, which is owed some US$50 million got its way.
BT relates that the court granted the application to place ZenRock
under the court-supervised proceedings and appointed three interim
judicial managers from KPMG.
Singapore-based ZenRock, which last year raked in US$8 billion
revenue and a gross profit of US$35 million, owes six banks about
US$147 million, BT discloses. The other lenders are Natixis Bank,
Crédit Agricole Corporate & Investment Bank, ING Bank, Bank of
China and Banque de Commerce et de Placements SA. The trader, whose
business is international with China accounting for a big part,
also has uncommitted and unutilised trade facilities from other
banks.
HSBC, in court documents, said that it had pushed for ZenRock to be
placed under JM as it was "clearly insolvent" and had very little
cash to repay debts, according to BT.
Moreover, the bank was seeking to oust the company's management
from any potential debt workout process as it has lost trust and
confidence in them after unearthing alleged "highly dishonest" and
"extremely suspicious" trade practices, BT relays.
According to BT, the UK-based bank accused the trader of "opaque
conduct" in withholding vital information from lenders. More
seriously, it alleged that ZenRock issued duplicate commercial
invoices with different payment instructions to obtain double or
multiple loans from banks on the same cargo.
Sarjit Singh Gill SC -- sarjit.gill@shooklin.com -- and Daniel
Tan -- daniel.tan@shooklin.com -- from Shook Lin & Bok are lead
counsel for HSBC, while Chelva Retnam Rajah SC from Tan Rajah &
Cheah -- crr@trc.com.sg -- represent ZenRock, BT discloses.
About ZenRock Commodities
Singapore-based ZenRock Commodities trades crude, oil products and
petrochemicals. ZenRock has offices in Singapore, Shanghai and
Geneva. The company was founded in Singapore in 2014 by a group of
veteran oil traders, including Xie Chun, formerly from Unipec, and
Tony Lin, formerly Vitol SA's China head.
Zenrock Commodities Trading Pte Ltd has been placed under the
management of a court-appointed supervisor following an application
by HSBC Holdings, the bank told Reuters on May 8, 2020.
=====================
S O U T H K O R E A
=====================
CYWORLD KOREA: Fate Depends on Court Decision
---------------------------------------------
The Korea Herald reports that the future of Cyworld, a social media
platform that was very popular years ago, depends on a final court
ruling on CEO Jeon Jae-wan, according to industry sources June 23.
The Korea Herald relates that Mr. Jeon has been indicted on charges
of failing to pay a total of KRW1 billion ($830 million) to his
former employees after the company suffered financial difficulties.
The trial is scheduled on July 25 at Seoul Eastern District Court.
If the court next month rules that Mr. Jeon is largely responsible
for the payment delays, it would make more difficult for him to
find investors to continue the business, the sources said, the
report relays.
Cyworld launched in 1999 and was purchased by SK Communications in
2003. It became one of the first social media companies in South
Korea to be profitable, and once had as many as 25 million users.
However, it began to lose appeal with the expansion of foreign
platforms like Facebook and Twitter. Regardless of efforts to
revamp the service, it failed to recover.
According to report, sources said Mr. Jeon is likely to take steps
to terminate operations if the court rules against him.
If the court rules in favor of Mr. Jeon, he will have more leeway
to find investors and revive the troubled business.
The Korea Herald says Mr. Jeon told the ICT Ministry that he is
currently looking for potential investors and wished to continue
the business. An official added that the ministry will check with
Mr. Jeon after the trial and ask him about his future plans.
The Cyworld domain will be open until Nov. 21, but users are
currently unable to login in through the official website, the
report notes.
The Korea Communications Commission has said that it would take
measures to protect user data should Mr. Jeon decide to terminate
operations, The Korea Herald adds.
*********
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 2020. All rights reserved. ISSN: 1520-9482.
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