/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/200730.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Thursday, July 30, 2020, Vol. 23, No. 152 Headlines A U S T R A L I A ABOUT LIFE: Second Creditors' Meeting Set for Aug. 5 PENNANT CORP: First Creditors' Meeting Set for Aug. 5 PRECISION AUTO: Second Creditors' Meeting Set for Aug. 6 WARATAH GROUP: Retailer Disputes Print Bill Liquidators Called In C H I N A REDCO PROPERTIES: Fitch Alters Outlook on 'B' LT IDR to Positive SUNAC CHINA: Fitch Rates New USD Senior Notes 'BB' SUNAC CHINA: S&P Rates New USD Unsecured Notes 'B+' ZHONGLIANG HOLDINGS: Fitch Affirms 'B+' Foreign Currency IDR H O N G K O N G FOSUN INT'L: Moody's Cuts CFR to Ba3 & Alters Outlook to Negative GREENLAND HOLDING: Moody's Affirms Ba1 CFR, Outlook Stable SEASPAN CORP: Egan-Jones Withdraws B+ Sr. Unsecured Ratings I N D I A ABF RURAL: CARE Lowers Rating on INR10cr LT Loan to C ADEA POWERQUIPS: CARE Keeps D Debt Ratings in Not Cooperating AGNIBINA RICE: CARE Keeps D Debt Ratings in Not Cooperating ANJANI PIPES: CARE Lowers Rating on INR7.50cr LT Loan to C AZEN MEDICAL: CARE Keeps D on INR16.85cr Debt in Not Cooperating BALAJI ENGINEERING: CARE Assigns D Rating to INR10cr LT Loan CHHAJED FOODS: CARE Lowers Rating on INR51.87cr Loan to D CRUX BIOTECH: CARE Lowers Rating on INR55.06cr LT Loan to C EMCER TILES: CARE Lowers Rating INR71.36cr LongTerm Loan to D EMI TRANSMISSION: CARE Keeps D Debt Ratings in Not Cooperating FIROZABAD CERAMICS: CARE Cuts Rating on INR13.63cr LT Loan to D GOYAL CATTLE: CARE Keeps D on INR5.25cr Debt in Not Cooperating GOYAL ENTERPRISES: CARE Lowers Rating on INR11.25cr Loan to D J.M. HOUSING: CARE Reaffirms D Rating on INR74cr LT Loan KAVITA EXIM: CARE Reaffirms D Rating on INR12cr LT Loan LIOLI CERAMICA: CARE Lowers Rating on INR93.63cr Loan to D MORGAN CREDITS: CARE Lowers Rating on INR106.30cr Loan to D MOTI RAM: CARE Keeps D on INR6.67cr Debt in Not Cooperating NAKODA TECHNOFIBE: CARE Lowers Rating on INR8.48cr Loan to D NEUEON TOWERS: CARE Keeps D Debt Ratings in Not Cooperating NOVELTY REDDY: CARE Lowers Rating on INR10cr LT Loan to C P.K. INDUSTRIES: CARE Keeps D on INR10cr Loans in Not Cooperating PLATINUM ISPAT: CARE Keeps D on INR18.57cr Debt in Not Cooperating POWER TELEVENTURES: CARE Keeps D Debt Ratings in Not Cooperating RAJASTHAN DURGS: CARE Keeps D Debt Ratings in Not Cooperating RAJIVA EXPORTS: CARE Lowers Rating on INR4cr LT Loan to C RAMAKRISHNA ELECTRONICS: CARE Keeps D Debt Rating in NonCooperating REDDY AND REDDY MOTORS: CARE Cuts Rating on INR10.10cr Loan to C REDDY AND REDDY: CARE Lowers Rating on INR10cr LT Loan to C RR FAB CONSTRUCTIONS: CARE Lowers Rating on INR3.8cr LT Loan to C SANKHESWARAA GOLD: CARE Keeps D on INR12cr Debt in Not Cooperating SHIVALIK INFRA: CARE Keeps D on INR5.0cr Debt in Not Cooperating SICO INDIA: CARE Lowers Ratings on INR5cr Loans to D SPLENDID METAL: CARE Keeps D Debt Ratings in Not Cooperating SUZUKI TEXTILES: CARE Keeps D Debt Ratings in Not Cooperating VANTAGE SPINNERS: CARE Keeps D on INR68cr Debt in Not Cooperating VIJAYA DURGA: CARE Keeps D on INR8cr Debt in Not Cooperating VTP CORP: CARE Reaffirms and Then Withdraws D Debt Ratings [*] INDIA: HC Seeks Centre Stand on Insolvency Code Ordinance Bid J A P A N LAOX CO: To Close 12 Stores in Japan as Number of Tourists Drop NISSAN MOTOR: Warns of Record Loss as Pandemic Hits Turnaround M A L A Y S I A PRESS METAL: S&P Affirms 'B+' LT ICR on Proposed Tender Offer P H I L I P P I N E S BDO UNIBANK: Posts Rare Loss, Braces for Defaults NATIONAL AGRIBUSINESS: PHP4.8MM in Irregular Disbursement Returned S I N G A P O R E HIAP SENG: Applies for Judicial Management T H A I L A N D THAI AIRWAYS: Has Defaulted on Nearly $3 Billion Worth Of Debt - - - - - ================= A U S T R A L I A ================= ABOUT LIFE: Second Creditors' Meeting Set for Aug. 5 ---------------------------------------------------- A second meeting of creditors in the proceedings of About Life Foodservice Pty Ltd has been set for Aug. 5, 2020, at 11:00 a.m. at the offices of Cor Cordis, One Wharf Lane, Level 20, 171 Sussex Street, in Sydney, NSW. The purpose of the meeting is (1) to receive the report by the Administrator about the business, property, affairs and financial circumstances of the Company; and (2) for the creditors of the Company to resolve whether the Company will execute a deed of company arrangement, the administration should end, or the Company be wound up. Creditors wishing to attend are advised proofs and proxies should be submitted to the Administrator by Aug. 4, 2020, at 4:00 p.m. Andre Lakomy of Cor Cordis was appointed as administrator of About Life on July 1, 2020. PENNANT CORP: First Creditors' Meeting Set for Aug. 5 ----------------------------------------------------- A first meeting of the creditors in the proceedings of Pennant Corp Pty Ltd will be held on Aug. 5, 2020, at 11:00 a.m. at the offices of HLB Mann Judd (NSW) Pty Ltd, Level 19, at 207 Kent Street, in Sydney, NSW. Barry Anthony Taylor of HLB Mann Judd was appointed as administrator of Pennant Corp on July 24, 2020. PRECISION AUTO: Second Creditors' Meeting Set for Aug. 6 -------------------------------------------------------- A second meeting of creditors in the proceedings of Precision Auto Group Pty Ltd has been set for Aug. 6, 2020, at 2:30 p.m. via teleconference. 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 Aug. 5, 2020, at 5:00 p.m. Domenico Alessandro Calabretta and Grahame Robert Ward of Mackay Goodwin were appointed as administrators of Precision Auto on July 2, 2020. WARATAH GROUP: Retailer Disputes Print Bill Liquidators Called In ----------------------------------------------------------------- David Richards at ChannelNews reports that the Spotlight Group who snared Harris Scarf from the liquidators and were then accused of trying to "screw" appliance and consumer electronic suppliers has again found themselves in the spotlight this time for unpaid printing bills. Back in April, department store chain Harris Scarfe was sold to Spotlight Group, leaving unsecured creditors in the lurch for millions, now the new owner is set to face fresh legal action over several unpaid bills amounting to over AUD1.3 million. According to ChannelNews, the liquidator for the collapsed printing company Waratah Group whose owners and directors include former Carlton premiership captain Stephen Kernahan and teammate Craig Bradley, has left behind a messy tangle of more than 1,300 invoices for work totaling about AUD4.5 million. Now liquidator Shane Deane, of insolvency firm Dye & Co, is preparing to launch legal action to recover debts he says are owed for work completed ahead of Waratah's collapse, ChannelNews relates. Among the biggest disputed bills is AUD1.13 million of invoices issued to Spotlight, which operates the Spotlight and Anaconda stores. ChannelNews relates that the retailer has told Dye & Co it does not owe the money as the debt was cancelled out by debts Waratah owes it. The retailer has not identified what those debts relate to. Mr. Deane said his investigations showed those debts were owed by businesses outside the Waratah group of companies. "We are very confident in our legal position and will be taking legal action on this account and several others," the report quotes Mr. Deane as saying. Spotlight declined to comment on the matter, the report notes. The Spotlight Group whose shareholders are linked with Kogan acquired Harris Scarf back in May. ========= C H I N A ========= REDCO PROPERTIES: Fitch Alters Outlook on 'B' LT IDR to Positive ---------------------------------------------------------------- Fitch Ratings has revised the Outlook on China-based Redco Properties Group Ltd's Long-Term Foreign-Currency Issuer Default Rating to Positive from Stable and affirmed its IDR and senior unsecured rating at 'B'. The agency has also affirmed the rating on Redco's outstanding US dollar senior unsecured notes at 'B' with a Recovery Rating of 'RR4'. The Outlook revision reflects Redco's consistent growth in attributable contracted sales, indicated by the 29% increase to CNY14.5 billion in 2019 and our expectation of CNY18.1 billion in attributable contracted sales in 2020, helping its sales scale expand to close to that of higher-rated peers. Redco also continued its geographical diversification with 89 projects in 25 different cities. Redco's leverage, measured by net debt/adjusted inventory, including adjustments to joint ventures and associates, fell to 15% in 2019, from 29% in 2018, and is better than that of 'B' rated peers. Fitch believes Redco can maintain a low leverage ratio as the company continues to build up a sufficient land bank size to sustain rising contracted sales. Redco has saleable resources for around four years of development. Profitability remained strong as Redco delivered higher-margin projects and kept cost of unsold gross floor area at only CNY1,978 per sq m. KEY RATING DRIVERS Small Scale but Strong Growth: Redco's rating is constrained by its attributable sales scale of CNY14.5 billion in 2019, which is small relative to that of peers in the higher 'B+' category, although Fitch expects Redco's attributable sales to rise to at least CNY18 billion in 2020. Redco has transitioned to a fast-churn model, which entails swifter sales turnover and faster sales growth. Total contracted sales, including joint ventures, rose by 25% to CNY27.4 billion in 2019 and by more than 65% in 2018. Attributable contracted sales accounted for slightly over 50% of the total in 2019, similar to the 2018 level. Redco maintained its sales efficiency in 2019, with attributable sales/total debt, including joint-venture debt, at 0.9x and attributable sales/adjusted inventory at 0.7x. Leverage Remains Low: Fitch expects Redco to continue to increase contracted sales to develop a sustainable market presence. This means the company is likely to acquire land to sustain its rising contracted sales. Fitch expects this to heighten leverage, but it should remain at less than 40% - the level below which Fitch would consider positive rating action - as leverage fell to 15% in 2019 from 29% in 2018 due to a more conservative land acquisition strategy. Land Bank Supports Growth: Fitch estimates Redco's land bank is sufficient for around four years of attributable sales. Redco would need to continually secure low-cost land to sustain a healthy land-bank life if it were to reach its higher contracted sales target. Redco boosted its land bank to around 14.6 million sq m in 2019, from 10.0 million sq m in 2018 and 4.9 million sq m in 2017, with the cities of Tianjin, Nanchang, Hefei, Zhejiang and Jinan accounting for the majority of the GFA. Healthy Profit Margin: Redco's EBITDA margin narrowed to 25% in 2019, from 27% in 2018, due to higher average land-acquisition costs of CNY2,641/sq m in 2019, against CNY1,829/sq m in 2018. Redco mainly acquires land through M&A, allowing it to keep the average cost of its unsold land bank at around CNY2,000/sq m. Its sales are concentrated in non-prime locations in second-tier cities and its product mix is targeted at first-time purchasers, insulating the company from price-ceiling policies. This helps Redco maintain healthy margins at a high churn rate. DERIVATION SUMMARY Redco's attributable contracted sales of CNY14.5 billion in 2019 were lower than those of 'B' rated peers, such as Modern Land (China) Co., Limited's (B/Stable) CNY19.5 billion. However, Redco's leverage was lower than that of Modern Land and it has a longer land-bank life. Modern Land also has a lower margin than Redco. Redco's high sales efficiency has made it easier for the company to transform to a fast-churn business model while controlling leverage. Companies rated one notch above Redco, at 'B+', generally have proven sustainable business models, with attributable sales of over CNY20 billion. Redco's similarities are a land bank of more than three years of development and stable leverage of below 45%. Some 'B+' rated homebuilders have a stronger nationwide presence, with better regional project diversification. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer: - Total contracted sales, including joint ventures, reaching CNY33 billion in 2020, CNY38 billion in 2021 and CNY42 billion in 2022. Attributable sales at 55% of total. - Gross profit margin from property development maintained at between 30% and 35% during 2020-2023. - Land premium accounting for 45%-50% of annual sales receipts in 2020-2023 and average land acquisition cost increasing at 3% annually from 2021. - 6% decrease in contracted sales average selling price in 2020 and no increase in 2021-2023. - Construction costs accounting for around 45% of annual sales receipts in 2020-2023. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that Redco would be liquidated in a bankruptcy rather than reorganised as a going-concern because it is an asset-trading company. Fitch has assumed a 10% administrative claim. Liquidation Approach - The liquidation estimate reflects Fitch's view of the value of balance-sheet assets that can be realised in a sale or liquidation process conducted during a bankruptcy or insolvency proceeding and distributed to creditors. - Cash balance is adjusted such that only cash in excess of the higher of accounts payable and three months of contracted sales is factored in. - Advance rate of 70% is applied to its adjusted inventory, as Redco has an EBITDA margin of above 20%. - Property, plant and equipment advance rate at 50%. - 75% advance rate applied to accounts receivable. - Advance rate of 100% applied to restricted cash, which is mainly guarantee deposits for construction and buyers' mortgages for pre-sold properties. Based on its calculation of adjusted liquidation value after administrative claims, Fitch estimates the recovery rate for the offshore senior unsecured debt to be within the 'RR4' recovery range. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Annual attributable contracted sales sustained above CNY20 billion, while maintaining available-for-sale land bank at 2.5 years of development. - Net debt/adjusted inventory sustained below 40%. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Failure to reach its Positive Outlook guidelines would lead to the Outlook reverting to Stable. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate 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. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: Redco's liquidity remains healthy, with total cash of CNY 15 billion (including restricted cash of CNY4.0 billion), compared with short-term debt of CNY12 billion at end-2019. 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). SUNAC CHINA: Fitch Rates New USD Senior Notes 'BB' -------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Sunac China Holdings Limited's (BB/Stable) proposed US dollar senior notes. The proposed notes are rated at the same level as Sunac's senior unsecured rating because they will constitute its direct and senior unsecured obligations. Sunac's rating reflects Fitch's expectation that the company will continue deleveraging until it sustains more headroom below 40%, the leverage threshold above which Fitch may consider negative rating action. Sunac's leverage, measured by net debt/adjusted inventory with proportional consolidation of joint ventures and associates, was 38% at end-2019. Sunac's large attributable land bank of more than 153 million square metres of saleable gross floor area is well-diversified across various regions in China, which should support contracted sales and further deleveraging. KEY RATING DRIVERS Leverage to Decrease: Sunac's leverage was maintained at around 38% at end-2019, which is at a similar level as end-2018. Debt at the consolidated level rose by around CNY90 billion, but the company's stable leverage ratio reflects the increasing trend of funding JVs and associates at the parent level, leading to relatively low leverage at the JVs and associates. Fitch expects Sunac to continue to control the pace of land acquisition, which will give it some headroom below the 40% leverage level. Fitch expects Sunac to maintain steady growth in attributable contracted sales, leading to sustained cash generation and lower leverage. Attributable contracted sales rose by 18% to CNY383.9 billion in 2019. Sunac's trade payables have also risen significantly in line with its expanding scale. Nevertheless, its trade payables/inventory ratio was manageable at around 0.2x in 2018 and 2019, which was lower than that of peers that rely on trade payables to fund construction. Fitch believes Sunac's trade payables/inventory ratio will not rise significantly. Diversified Land Bank: Sunac's land bank is diversified across China, including northern, south-west and south-east China, the Beijing area and the Yangtze River Delta. It also has a presence in central China, the Greater Bay Area and Hainan province. Over 82% of Sunac's land bank, based on saleable value, is situated in tier one and two cities, where pent-up demand is more robust than in lower-tier cities. The remaining land bank is in strong third-tier cities. Geographical diversification helps mitigate local policy restrictions, as each local government implements differing home-purchase limits. Strong Sales and Margin: Fitch forecasts Sunac's average selling price to be CNY14,000-14,500/sq m in the next few years. The company maintained its ASP at around CNY14,500/sq m in 2019, reflecting its focus on higher-tier cities. Sunac's attributable contracted sales are comparable with that of other large Chinese homebuilders, including China Vanke Co., Ltd. (BBB+/Stable) and Poly Developments and Holdings Group Co., Ltd. (BBB+/Stable). Sunac's large scale also allows it to trim construction costs, leading to a strong EBITDA margin - including the proportional share of EBITDA from JVs and associates - of around 27% in 2019, or 30% if valuation gains from acquired projects are removed from costs of goods sold. Fitch expects an EBITDA margin, including valuation gains in COGS, of around 25% in the medium term. Non-Development Contribution: Fitch forecasts Sunac will spend CNY15 billion in 2020 to ramp up its property management, rental and decoration businesses as well as the cultural and tourism business it acquired in 2017. Fitch expects the projects to be fully funded by the sale of properties in the same area. Revenue contribution from Sunac's non-development business was CNY9.9 billion in 2019, with a gross margin of about 38%. Sunac also aims to improve the operating efficiency of the cultural and tourism business after the acquisition of the operational and management company from Dalian Wanda Commercial Management Group Co., Ltd. (BB+/Stable). DERIVATION SUMMARY Sunac's homebuilding attributable sales scale and geographical diversification are comparable with that of large 'BBB' rated homebuilders, such as Vanke and Poly, and are also comparable with or superior to that of Longfor Group Holdings Limited (BBB/Stable) and Shimao Group Holdings Limited (BBB-/Stable). Country Garden Holdings Company Limited (BBB-/Stable) has larger attributable scale and geographic coverage than Sunac. However, its land bank is more concentrated in lower-tier cities, where demand is susceptible to negative sentiment, while the majority of Sunac's land bank is situated in tier one and two cities, as reflected in Sunac's higher margin. Sunac's financial profile is more volatile than that of investment-grade peers; its non-development EBITDA interest coverage of 0.2x is less than Longfor's 0.7x and Shimao's 0.5x. Its leverage forecast for Sunac of 35%-40% is more comparable with 'BB' rated issuers, such as Sino-Ocean Group Holding Limited (BBB-/Stable; Standalone Credit Profile: bb+), Seazen Group Limited (BB/Stable) and its subsidiary, Seazen Holdings Co., Ltd. (BB/Stable), as well as CIFI Holdings (Group) Co. Ltd. (BB/Stable) and China Aoyuan Group Limited (BB-/Positive). KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer: - Land bank replenishment to maintain a land-bank life of 4.0-4.5 years - Capex of CNY15 billion a year in 2020, decreasing thereafter - Contracted ASP of CNY14,000-14,500/sq m - EBITDA margin, including the effect of revaluation of acquired projects from COGS, of 22%-26% RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Net debt/adjusted inventory below 30% for a sustained period (2019: 38%) - EBITDA margin, excluding the effect of revaluation of acquired projects from COGS, sustained above 25% (2019: 30%) Factors that could, individually or collectively, lead to negative rating action/downgrade: - Net debt/adjusted inventory above 40% for a sustained period - EBITDA margin, excluding the effect of revaluation of acquired projects from COGS, of below 20% for a sustained period - Change in management strategy to refocus on aggressive acquisitions, away from Sunac's stated objective to reduce its leverage ratio BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate 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. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: Fitch expects Sunac to maintain sufficient liquidity for its operations and debt repayment, as contracted sales reached CNY384 billion on an attributable basis in 2019. Sunac had a cash balance of CNY126 billion at 2019, which was less than short-term debt of CNY136 billion. However, most of the short-term debt is secured bank loans, which Fitch expects to be rolled over. Sunac raised CNY 7.2 billion through an equity share placement earlier this year, as well as CNY10.4 billion from the disposal of its stake in Jinke Property Group Co., Ltd and USD1.54 billion from senior unsecured notes, excluding this issuance. 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. SUNAC CHINA: S&P Rates New USD Unsecured Notes 'B+' --------------------------------------------------- S&P Global Ratings assigned its 'B+' long-term issue rating to a proposed issue of U.S. dollar-denominated senior unsecured notes by Sunac China Holdings Ltd. (BB-/Stable/--). The China-based developer intends to use the net proceeds primarily to refinance its existing offshore debt maturing in the first quarter of 2021. S&P said, "We rate the notes one notch below the issuer credit rating on Sunac to reflect structural subordination risk. As of Dec. 31, 2019, Sunac's capital structure consisted of about Chinese renminbi (RMB) 252 billion in secured debt and RMB112 billion in unsecured debt (external guarantee included). As such, the company's secured debt ratio is around 69%, which is significantly above our notching-down threshold of 50% for issues. The issue rating is subject to our review of the final issuance documentation. "We do not expect the new issuance to significantly affect Sunac's credit profile. We forecast the company will manage to deliver a mid-single-digit growth in contracted sales for 2020, despite a moderate 9% year-on-year decline in sales to about RMB195 billion during the first half of 2020 owing to the disruptions from the COVID-19 outbreak. This is supported by Sunac's salable resources of about RMB820 billion for 2020 and its strong record of sales execution. "We anticipate the company will maintain sustainable profitability, while continuing to gradually improve its financial leverage through cash collection and more controlled spending in its core development business. This tempers the leverage surge in 2019 stemming from a debt spike for land replenishment, and is reflected in our stable rating outlook on the company." ZHONGLIANG HOLDINGS: Fitch Affirms 'B+' Foreign Currency IDR ------------------------------------------------------------ Fitch Ratings has affirmed China-based homebuilder Zhongliang Holdings Group Company Limited's Long-Term Foreign-Currency Issuer Default Rating at 'B+' with a Stable Outlook. Fitch has also affirmed Zhongliang's senior unsecured rating at 'B+' with a Recovery Rating of 'RR4'. Zhongliang's ratings are underpinned by its contracted sales scale, which is comparable with 'BB' category homebuilders. The group's projects spread across five core economic regions in China, mitigating regional economic and policy risks. Zhongliang adopts an ultra-fast-churn model and aims to begin sales soon after acquiring land, leading to a low net inventory base. This, together with guarantees to joint ventures and associates, could increase the volatility of the company's financial profile and is a constraint on Zhongliang's ratings. KEY RATING DRIVERS Geographically Diversified Homebuilder: Zhongliang's 458 property projects were located in 142 cities across five core economic regions in China as of end-2019. The majority were in third- and fourth-tier cities, which have weaker demand fundamentals than higher-tier cities. Zhongliang is responsive to changing market conditions and has increased its presence in second-tier cities in the past 18 months; 62% of the land it acquired in 1H20 was in tier-two cities. The improved diversification mitigates regional economic and policy shocks. Strong Growth: Fitch expects attributable contracted sales to continue to grow, after increasing to CNY99 billion in 2019, from CNY16 billion in 2016, to help the company become one of China's top-20 property developers. Zhongliang's standardised operational procedures, which cover its entire property-development value chain - including land-acquisition, marketing, design and product lines - have aided its rapid expansion. Its improving land bank quality is evident from its average selling price of CNY12,000/square metre in 1H20, up from CNY10,300 in 2019. Low Margin to Edge Higher: Fitch expects its EBITDA margin to edge up to around 20%-22% in coming four years, from 18% as of end-2019. This is aided by improving SG&A expense as a result of internal structure streamline and economies of scale. Its earned but not booked development property revenue carries 22-25% gross profit margin. Low Net Inventory: Zhongliang's ultra-fast-churn model allows for sound capital utilisation. It enters the pre-sale phase quickly after land is acquired. Its projects are small and aimed at the mass market, enabling the company to de-stock and achieve positive cash flow generation within a short period. Internally generated cash flow supports capital needs for land acquisition and development, reducing the need for large debt funding. The model results in a landbank life of 2.8 years and higher-than-peer contracted liabilities as a proportion of inventory, resulting in a low net inventory base of CNY23 billion at end-2019. Nevertheless, Zhongliang's gross inventory of around CNY140 billion is in line with higher-rated peers. Leverage May Increase: Fitch believes continued growth in scale amid a moderating property market may increase pressure to replenish land, leading to volatile land acquisition expenditure. This may result inswings in leverage, especially if contracted sales slow significantly. Zhongliang's leverage, measured by net debt/adjusted inventory, with proportional consolidation of JVs and associates, was a low 27% at end-2019. Fitch expects leverage to increase to around 40% in the next few years, but this depends on Zhongliang's execution of balancing fast-churn contracted sales and land acquisitions. Fitch estimates that unsold attributable land bank at end-2019 was sufficient for around 2.8 years of development and expects Zhongliang to maintain its land bank life at around 2.5-3.0 years. JV Guarantees: Zhongliang provides guarantees to its JVs and associates. The guarantees, which totalled CNY10.2 billion at end-2019, were large relative to consolidated net debt of CNY13.7. Fitch assesses Zhongliang based on proportionate consolidation, but if Fitch was to measure leverage based on consolidated net debt and guarantees/consolidated adjusted leverage, leverage would have been 67% at end-2019, which is higher than that of most 'B+' rated peers. This difference is due to low net leverage at JVs and associates. Fitch expects the gap to narrow, as the company plans to lower its guarantees. Minority Shareholders: Fitch expects non-controlling interests as percentage of Zhongliang's equity to edge down in the medium term; total non-controlling interests in the company's balance sheet accounted for 58% of total equity in 2019, which was higher than that of 'B+' peers. This reflects Zhongliang's reliance on cash from contracted sales and capital contributions from non-controlling shareholders, who are mainly developers, as a source of financing to expand scale. This lowers Zhongliang's need for debt funding, but creates potential cash leakage. DERIVATION SUMMARY Zhongliang's attributable contracted sales are at the high-end of the 'B+' peer range in terms of scale. Its land bank is also spread more widely across China's core economic regions than peers such as Hong Kong JunFa Property Company Limited (B+/Stable). However, more than 70% of Zhongliang's gross floor area is in tier three and four cities, which Fitch believes have less resilient demand than first- and second-tier cities. Zhongliang's land bank quality is also slightly weaker than that of 'B+' rated peers, with an average selling price of CNY10,300/square metre in 2019. Fitch estimates that Zhongliang's unsold attributable land bank at end-2019 was equivalent to around 2.8 years of gross floor area sold, which is shorter than that of fast-churn peers, such as Risesun Real Estate Development Co.,Ltd. (BB-/Stable), with a land bank life of 3.5 years. This pressures Zhongliang to acquire land, even when prices are not optimal, to maintain moderate growth. Zhongliang's attributable contracted sales are at a similar scale to that of CIFI Holdings (Group) Co. Ltd. (BB/Stable), but Zhongliang's net inventory is only 36% of that of CIFI. This narrows its headroom to weather the business cycle and explains its two-notch lower rating. Zhongliang's land bank penetration is comparable to that of Guangzhou R&F Properties Co. Ltd. (B+/Stable), which has a much longer operating history. Zhongliang has higher consolidated leverage, including guarantees to JVs and associates, but also a stronger cash/short-term debt ratio. Zhongliang's churn rate is higher, but its EBITDA margin is lower. Zhongliang has higher non-controlling interests as a percentage of total equity, reflecting its greater reliance on minority shareholders for funding. Zhongliang's fast-churn model resulted in a contracted sales/total debt ratio of 2.4x in 2019, one of the highest among Fitch-rated Chinese homebuilders. Its EBITDA margin is at the lower end of 'B+' rated peers and it has minimal investment-property interest coverage. The company's 2019 IPO on the Hong Kong stock exchange enhanced its financial transparency, leading to better regulatory oversight compared with unlisted 'B+' peers, such as Helenbergh China Holdings Limited (B+/Stable) and JunFa. Zhongliang's proportionately consolidated leverage is lower than that of peers, but guarantees to JVs and associates are large relative to consolidated net debt and constrain its ratings. KEY ASSUMPTIONS - Land bank life of three years till 2023 - Gross floor area acquired is 1.1x-1.3x of gross floor area sold in 2020-2023 - Average selling price to rise by 17% in 2020 and 3% in 2021 - Attributable contracted sales to rise by 5% a year in 2020-2021. - Development-property cost of goods sold kept at 77% of sales in 2020-2023 (2019: 74%) - Selling, general and administrative expenses at 4.8% of contracted sales in 2020-2023 (2019: 4.8%) - Dividend payout ratio of 40% in 2020-2023 (2019: 40%) Key Recovery Rating Assumptions - Zhongliang to be liquidated in a bankruptcy, as it is an asset-trading company - 10% administration claims - 70% advance rate to accounts receivable - 60% advance rate to adjusted net inventory of Zhongliang and its JVs. Applied a 20% discount to customer deposits when calculating adjusted net inventory to reflect the around 20% gross profit margin. For JV-adjusted net inventory, Fitch calculates investment in JVs + amount due from JVs - amount due to JVs. - 20% advance rate to investment properties - 60% advance rate to net property, plant and equipment - 100% advance rate to restricted cash - 0% advance rate to cash RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Proportionate consolidated leverage sustained below 40% without a large increase in guarantees to debts of JVs and associates - Available cash/short-term debt sustained above 0.8x Factors that could, individually or collectively, lead to negative rating action/downgrade: - Proportionate consolidated leverage above 40% for a sustained period - Large increase in guarantees to debts of JVs and associates BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate 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. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Zhongliang's short-term debt amounted to CNY21.5 billion, or 54% of total debt, at end-2019. Liquidity, as measured by cash/short-term debt, was 0.7x. Total cash of CNY26.5 billion, after taking into account restricted cash, was enough to cover short-term debt by a multiple of 1.2x. 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). ================= H O N G K O N G ================= FOSUN INT'L: Moody's Cuts CFR to Ba3 & Alters Outlook to Negative ----------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of Fosun International Limited to Ba3 from Ba2. At the same time, Moody's has downgraded the senior unsecured rating on the bonds issued by Fortune Star Limited to Ba3 from Ba2. The bonds are unconditionally and irrevocably guaranteed by Fosun. The outlook has been changed to negative from ratings under review. This rating action concludes the review for downgrade initiated on April 23, 2020. "The downgrade and negative outlook reflect Moody's expectation that Fosun's businesses will continue to face a challenging operating environment amid the coronavirus-led economic downturn, adding pressure to its weak liquidity, and leverage will remain elevated over the next 12-18 months," says Lina Choi, a Moody's Senior Vice President. RATINGS RATIONALE Fosun's Ba3 corporate family rating reflects its (1) large and diversified investment portfolio; (2) proven investment track record; and (3) holdings of substantial amount of marketable securities. However, the rating is constrained by Fosun's (1) high and increasing debt leverage due to its debt-funded investment strategy, (2) reliance on short-term funding for long-term investments, (3) weak interest coverage at the holding company level, and (4) increasing credit contagion risk. Moody's expects Fosun's funding gap -- the difference between its investments and divestures -- will persist over the next two to three years. Consequently, its market value-based debt leverage ratio is expected to rise and exceed 40% over the same period, despite the measures that the company has taken to speed up its asset recycling. Fosun has weak liquidity -- as measured by adjusted (funds from operations + interest)/interest coverage ratio -- at the holding company level. Moody's expects this ratio will remain well below 1x over the next 12-18 months as its recurring income -- i.e. mainly dividends from underlying investments -- will be inadequate to cover its interest and operating expenses. Additionally, Fosun relies heavily on short-term debt to fund its long-term investments, and its cash on hand is insufficient to cover its short-term debt maturing over the next 12 months. While Fosun has maintained good access to domestic funding markets to meet its refinancing needs and holds a large amount of marketable securities which could provide alternative liquidity, Moody's expects the volatile financial market conditions will make funding access and asset disposals more challenging for Fosun. Moreover, Moody's expects the challenging economic and operating environment will pose increasing credit contagion risk for Fosun due to the reduced cash flow and weakened credit quality of its key investments in tourism and consumer-related businesses in the next 12-18 months. In terms of environmental, social and governance factors, 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 Fosun of the breadth and severity of the shock, and the deterioration in credit quality it has triggered. In terms of governance risk, Moody's has also considered the concentrated ownership of Fosun in its controlling shareholder and chairman, Mr. Guo Guangchang, who held a 60.3% stake in the company as of December 31, 2019. Moreover, while the company has a complex and evolving investment portfolio, there is limited transparency around its investments for public investors. These risks are partially mitigated by the company's listing on the Hong Kong Stock Exchange, and by the presence on its 12-member board comprising of two non-executive directors and four independent non-executive directors. Furthermore, the company has provided regular training to its directors, and has audit, remuneration and nomination committees in place to support the functioning of the board. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, an upgrade of the ratings is unlikely in the near future. However, the outlook could return to stable if Fosun (1) strengthens its liquidity position, including a lower reliance on short-term funding, and (2) maintains its adjusted MVL below 45-50% or consolidated adjusted debt/capitalization below 55%, all on a sustained basis. Moody's could downgrade Fosun's rating if (1) the quality of the company's investment portfolio deteriorates or contagion risk from its investees rises, (2) its adjusted MVL remains in excess of 45-50% or consolidated adjusted debt/capitalization stays above 55%, (3) the company's reliance on short-term funding increases, which results in short-term debt to total reported debt rising above 50%, or (4) the company's investment portfolio transparency weakens, with the percentage of listed assets falling below 40% of the total investment portfolio value, all on a sustained basis. The principal methodology used in these ratings was Investment Holding Companies and Conglomerates published in July 2018. Fosun International Limited is headquartered in Shanghai and was listed on the Hong Kong Stock Exchange in 2007. Fosun has diversified businesses spanning three broad categories: (1) integrated finance (Wealth); (2) tourism, leisure and consumer (Happiness); (3) and pharmaceuticals, medical services and health products (Health). The estimated market value of Fosun's investment portfolio totaled around RMB244 billion at the end of 2019. The consolidated group's revenue totaled RMB143 billion in 2019. GREENLAND HOLDING: Moody's Affirms Ba1 CFR, Outlook Stable ---------------------------------------------------------- Moody's Investors Service has affirmed the following ratings: - The Ba1 corporate family rating on Greenland Holding Group Company Limited; - The (P)Ba2 backed senior unsecured rating on Greenland Global Investment Limited's (Greenland Global) medium-term note (MTN) program, with the notes unconditionally and irrevocably guaranteed by Greenland Holding; - The Ba2 backed senior unsecured ratings on Greenland Global's senior unsecured notes, which are unconditionally and irrevocably guaranteed by Greenland Holding; - The Ba2 CFR on Greenland Hong Kong Holdings Limited; - The (P)Ba3 backed senior unsecured rating on Greenland Hong Kong's MTN program; and - The Ba3 senior unsecured and backed senior unsecured rating on Greenland Hong Kong's USD notes. - The MTN program of Greenland Hong Kong and the related notes are supported by a deed of equity interest purchase undertaking and a keepwell deed between Greenland Holding, Greenland Hong Kong and the bond trustee. All the outlooks of the companies remain stable. "The rating affirmation reflects its expectation that Greenland Holding will continue to benefit from its close linkage with the Shanghai government, despite the latter's plans to divest part of its shareholdings in Greenland Holding," says Danny Chan, a Moody's Assistant Vice President and Analyst. "Moody's expects Greenland Holding will maintain its strong funding access as a result, which will help support its business growth," adds Chan. On July 26, Greenland Holding announced that Shanghai Urban Construction Investment and Shanghai Real Estate Group, the two state-owned companies that together own 46.37% of Greenland Holding's shares, plan to divest up to a 17.5% stake in Greenland Holding. If fully executed, the divesture could reduce the two state-owned companies' effective ownership in Greenland Holding to 28.87% from 46.37%. SEASPAN CORP: Egan-Jones Withdraws B+ Sr. Unsecured Ratings ----------------------------------------------------------- Egan-Jones Ratings Company, on July 24, 2020, withdrew its 'B+' foreign currency and local currency senior unsecured ratings on debt issued by Seaspan Corporation. EJR also withdrew its 'B' rating on commercial paper issued by the Company. Headquartered in Hong Kong, Seaspan Corp. operates a fleet of containerships. ========= I N D I A ========= ABF RURAL: CARE Lowers Rating on INR10cr LT Loan to C ----------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of ABF Rural Godown (ABFRG), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 10.00 CARE C; Issuer not cooperating; Facilities Revised from CARE B; Stable; ISSUER NOT COOPERATING on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 3, 2019, placed the rating(s) of ABFRG under the 'issuer noncooperating' category as ABFRG had failed to provide information for monitoring of the ratings. ABFRG continues to be noncooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 15, 2020 to June 23, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The ratings have been revised on account of non-availability of financial statements from last three years. Detailed description of the key rating drivers At the time of last rating on May 3, 2019 the following were the rating strengths and weaknesses Key Rating Weaknesses * Project implementation risk: The firm is undertaking a project for construction of Warehouse at Karnataka on land area of 12 acres comprising of one Godown with an area of 143,070 sq. ft. having storage capacity of 50,000 MT. The project was started by the firm during February 2016 and expected to be completed by April 2017. The total cost of project is INR15.03 crore which is expected to be funded through promoter fund of INR4.13 crore and term loan of INR10.90 crore. Financial closure of the project has been achieved, as on December 31, 2016. The firm has incurred expenses of INR8.00 crore which was funded through partners' capital of INR3.43 crore and term loan of INR4.57 crore. Though 53% of the project has been completed, the ability of the firm to complete the project without any cost or time over run will remain critical from a credit perspective. * Constitution of the entity as a proprietorship concern: ABF, being a proprietorship concern, is exposed to inherent risk of the proprietor's capital being withdrawn at the time of personal contingency which will affect its capital structure and the firm being dissolved upon the death/retirement/insolvency of the promoter. * Highly fragmented industry with number of players: The Warehousing industry is highly fragmented and competitive, marked by the presence of numerous players in India. The players in the industry do not have pricing power and are exposed to the competition induced pressures on profitability. Key Rating Strengths * Experience of the promoters for a more than two decades in various sectors: ABF is promoted by Mr. Mohammed AslamKazi. He is a qualified graduate having an experience of more than two decades in various sectors i.e. Steel, Logistics, Leather and Hardware. * Well established associate companies: ABF has around nine associate companies, in diversified sectors with reach in India, UAE (United Arab Emirates), KSA (Kingdom of Saudi Arabia) and China. Mr. Mohammed AslamKazi is Proprietor/Managing Director in these nine associate companies. ABF Rural Godown (ABF) was established in the year 2016, as a proprietorship concern, by Mr. Mohammed AslamKazi. The firm is engaged in constructing warehouse for lease rental purpose. ABF has started constructing the Godown in Tyamagondlu Hobli, NelamangalaTaluk, Bangalore Rural District. The firm has started its commercial operations in May 2017. ADEA POWERQUIPS: CARE Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Adea Powerquips Private Limited (APPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 6.06 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 1.40 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from APPL to monitor the ratings vide letters/emails dated July 6, 2020, July 8, 2020, July 10, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on APPL's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating in May 15, 2019 the following were the rating strengths and weaknesses (updated the information available from Ministry of Corporate Affairs) Key Rating Weaknesses * On-going delays in debt servicing: There are on-going delays in the debt servicing of the company. Adea Powerquips Private Limited (APPL) was incorporated on November 18, 2010 with its registered office and manufacturing plant situated at Hooghly, West Bengal and the company started its commercial operations since January 2016. The company is engaged in manufacturing of overhead transmission line hardware, fittings, conductor accessories, bus bar clamps and connectors ranging from 11kV to 1200kV lines and substations. AGNIBINA RICE: CARE Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Agnibina Rice Mills Private Limited (ARMPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 7.65 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 0.35 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from ARMPL to monitor the rating vide e-mail communications/letters dated July 8, 2020, July 9, 2020 July 10, 2020 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on entity's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Further, the banker could not be contacted. Users of these rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The rating takes into account on-going delays in debt servicing obligations of the company. Detailed Rationale & Key Rating Drivers At the time of last rating in May 9, 2019, the following were the rating weaknesses: Key Rating Weaknesses * Ongoing delays in debt servicing: There are continues overdrawal in the cash credit account for more than 30 days, further, there are ongoing delays in term loan repayment. Agnibina Rice Mills Private Limited (ARMPL) was incorporated as a Private Limited Company on May 10, 2013. However, after remaining dormant for almost five years, the company started commercial operation from April, 2018. The company has set up a rice milling and processing unit at Burdwan, West Bengal with an installed capacity of 24,000 MTPA. Mr. Nazrul Islam Miya looks after the day to day activities of the company and has around two decades of experience in the same line of business through other similar companies and they are equally supported by other directors and a team of experienced professionals who are having adequate experience in the similar line of business. ANJANI PIPES: CARE Lowers Rating on INR7.50cr LT Loan to C ---------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Sri Anjani Pipes Industries (SAPI), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 7.50 CARE C; Issuer not cooperating; Facilities Revised from CARE B; Stable; ISSUER NOT COOPERATING on the basis of best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 9, 2019, placed the rating(s) of SAPI under the 'issuer not cooperating' category as SAPI had failed to provide information for monitoring of the rating. Sri Anjani Pipes Industries continues to be non-cooperative despite repeated requests for submission of information through phone calls and e-mails dated June 16, 2020 to July 10, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The ratings have been revised on account of non-availability of last 3 year financials. Detailed description of the key rating drivers At the time of last press release dated May 9, 2019 the following were the rating strengths and weaknesses: Key Rating Weakness * Elongated operating cycle leading to working capital intensive nature of operations: The operating cycle of the firm was elongated in FY16 due to high inventory and late realization from the debtors, as the firm receives 35% of the total income as subsidy under micro irrigation system scheme from the government of Telangana. * Short track record of operations: The firm, though established in May 2013, started commercial operations from October 2015. The firm has completed 6 months of operations and has short track record of operations. * Profitability margins are susceptible to fluctuation in raw material prices: The firm is engaged in manufacturing of various types of pipes (HDPE, PVC, & LLDPE), the main raw-material, i.e. Polyethylene, resins, Ethylene is the largest cost component of SAPI, accounting for around 75% of total cost of sales. So any fluctuation in the above raw material prices can impact the profitability of the firm. * Constitution of the entity as a partnership firm with inherent risk of withdrawal of capital and limited access to funding: The firm being in a partnership entity is exposed to inherent risk of capital withdrawal by partners due to its nature of constitution. Any significant withdrawals from the capital account would be impacted the net worth and thereby the firm's capital structure. Key rating strengths * Experienced partners with more than one decade of experience in plastic products (PVC pipes) industry: The firm was established in 2013 as a partnership firm, by Mr. G Sanjeeva Reddy (Managing Partner) and Mrs. G Madhavi. Mr. Sanjeeva Reddy is already having 12 years' experience in trading of PVC pipes and allied products which will keep an edge to grow the firm in future. * Satisfactory total operating income and profit margins during review period: The firm with only six month of operation in FY16 has achieved a reasonable total operating income of INR2.89 crore, coupled with comfortable PBILDT margin of 28.22%. In H1FY17 (Provisional), SAPI has achieved INR7.13 crore of TOI and PAT of INR0.40 crore. * Comfortable capital structure: The capital structure of the firm is at below unity level marked by debt equity and overall gearing ratio of 0.88x and 0.96x respectively as on March 31, 2016. The firm is having a term loan used for purchasing of plant and machinery. * Moderate debt coverage indicators: The debt coverage indicators of the firm is moderately comfortable marked by total debt/GCA and PBILDT interest coverage ratio of 8.10x and 4.95x respectively in FY16 on account of moderate total debt, profit levels and cash accruals considering size of operations. Sri Anjani Pipes Industries (SAPI) was established in the year 2013 as a partnership firm, by Mr. G Sanjeeva Reddy and Mrs G Madhavi. However, the firm achieved commercial operations from October 2015. The firm is engaged in manufacturing different types of pipes i.e HDPE pipes of various sizes starting 63mm to 315mm, PVC pipes ranging from 25 mm to 350 mm and LLDPE pipes ranging from 12 mm 16 mm, at Mehbubnagar district of Telangana state. These pipes are mainly used for irrigation works (micro and drip), water supply and gas supply. In addition to the said industries, the above mentioned pipes are also used in the following sectors like drainage and telephone cable pipes used by telecom operators. AZEN MEDICAL: CARE Keeps D on INR16.85cr Debt in Not Cooperating ---------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Azen Medical Welfare and Research Society continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 16.85 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from Azen Medical Welfare and Research Society to monitor the rating vide e-mail communications/letters dated July 8, 2020, July 9, 2020, July 10, 2020 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on entity's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Further, the banker could not be contacted. Users of these rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The rating takes into account on-going delays in debt servicing obligations of the company. Detailed Rationale & Key Rating Drivers At the time of last rating in May 31, 2019, the following were the rating weaknesses: Key Rating Weaknesses * Ongoing delays in debt servicing: There are ongoing delays in the term loan repayment obligations of the company. Azen Medical Welfare & Research Society (AMWRS), registered under Registration of Societies Act, 1860 was established in March, 2000. The society remained non-operational till 2011. In the year 2011, AMWRS has undertaken a project to setup a general hospital with cancer treatment centre with other facilities like pathology centre, outdoor and indoor patient treatment etc. at Dimapur in Nagaland. During June 2015 the project has got completed with a project cost of INR45.00 crore and the operation has started from July 2015. In this initial stage, the hospital has started with 100 beds and daily average 225 indoor and outdoor patient consultation. The day to day affairs of the hospital is looked after by Mr. Yashitsungba Ao, Chairman, with the help of the Managing Director Mr. Y. Along Aier and other 16 members. BALAJI ENGINEERING: CARE Assigns D Rating to INR10cr LT Loan ------------------------------------------------------------ CARE Ratings has assigned rating to the bank facilities of Balaji Engineering (BE), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 10.00 CARE D Assigned Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of BE takes into account delay in repayment of debt obligation. Rating Sensitivities Positive Factors * Demonstration of default free track record of over 90 days. Detailed description of the key rating drivers Key Rating weaknesses * Delay in servicing of debt obligation: There have been continuous delays in the repayment of term loan. The delays were on account of insufficient cash inflows and delay in receiving payment from receivables. Liquidity: Poor Poor liquidity marked by lower accruals when compared to repayment obligations, fully utilized bank limits and modest cash balance of INR 0.09 crore as on March 31, 2020 (Provisional). This has constrained the ability of the firm to repay its debt obligations on timely basis. Further, BE has availed moratorium for interest and principal repayments of term loan and interest payments of working capital limits from its lender for the period of 5 months from April 2020 to August 2020 as per Covid-19 Regulatory Package announced by RBI. Established in 2003, Balaji Engineering (BE) is an Aurangabad, Maharashtra based entity promoted by Mr. Santosh Lakhichand Runwal. The firm is primarily engaged as an auto ancillary unit for manufacturing of automobile components which include spare parts and accessories for 2 wheelers, 3 wheelers and 4 wheelers. CHHAJED FOODS: CARE Lowers Rating on INR51.87cr Loan to D --------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Chhajed Foods Private Limited (CFPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 51.87 CARE D; Issuer not cooperating; Facilities Revised from CARE B+; Stable; Issuer Not Cooperating Short Term Bank 1.00 CARE D; Issuer not cooperating; Facilities Revised from CARE A4; Issuer Not Cooperating Term Bank 12.00 CARE D/CARE D; Issuer not Facilities cooperating; Revised from CARE B+; Stable/CARE A4; Issuer Not Cooperating Detailed Rationale & Key Rating Drivers CARE had, vide press release dated September 17, 2019, placed the rating of CFPL under the 'Issuer Non-cooperating' category as the company had failed to provide information for monitoring of the ratings. CFPL continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/e-mail dated July 13, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. The revision in ratings assigned to the bank facilities of CFPL takes into account devolvement of letter of credit which remained over dues/ unpaid for a period exceeding 30 days from the due date, as per interaction with CFPL's lender. Key Rating Weakness * Delays in debt servicing: As per telephonic interaction with the lender of CFPL, the lender has confirmed that there was devolvement of letter of credit which remained unpaid for more than 30 days from the due date. Further, as indicated by the lender, CFPL has availed the moratorium on interest payment for working capital loans and principal and interest payment on term debt for the period of March-August 2020 as per RBI circular related to covid-19 crisis. Incorporated in 1996, CFPL is promoted by Ahmedabad based Chhajed family, and is engaged in manufacturing and sales of cereal and potato based snack pallets. Presently, the company has presence mainly in the wholesale business segment for 'ready-to-fry' products; however, it has recently launched its retail business segment for 'ready-to-eat' snacks. The company markets its products under the brands 'Frylo' and 'Pumpum'. CRUX BIOTECH: CARE Lowers Rating on INR55.06cr LT Loan to C ----------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Crux Biotech India Private Limited (CBIPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 55.06 CARE C; Stable; Issuer not Facilities cooperating; Revised from CARE B; Stable; ISSUER NOT COOPERATING based on best available information Detailed Rationale & Key Rating Drivers The revision in the rating assigned to the bank facilities of CBIPL is on account of delays reported in their monthly No Default statement in the repayment of term loan which are not rated by CARE. The lenders of the bank facilities rated by CARE have confirmed that the debt obligations with respect to same are met on time. Considering above development the rating on Crux Biotech India Private Limited bank facilities will now be denoted as CARE C; Stable; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. At the time of last rating on January 10, 2020 the following were the rating strengths and weaknesses. Key Rating Weaknesses * Decline in profitability margins: The PBILDT margin of the company declined by 329 bps from 12.35% during FY18 to 9.06% during FY19 due to increase in the cost of material consumed. The PAT margin of the company remained stable at 1.57% during FY19 (1.59% during FY18). * Seasonal availability of raw material and volatility in maize prices: Corn/Maize and broken rice is the raw material that is used in manufacturing maize starch and broken rice starch. The basic raw material i.e. maize, is a seasonal crop and is available only during the period of January-February of Rabi season and September–October of Kharif season. Thus, the profitability is exposed to vagaries of nature and fluctuation in input prices. * Susceptibility to government policies: The Indian liquor industry has been subjected to a high degree of governmental interference. Furthermore, it is a major revenue contributor to the state governments, most of which are cash - strapped today. Hence it is unlikely that the level of taxes or control exerted by the various governments would reduce in the medium term. So the regulatory risk is expected to remain high. Key Rating Strengths * Experienced and resourceful promoters: CBIPL is promoted by Mr. G. Ravi Chandran – Managing Director (B.E - Electronics & Communication Graduate) having two decades of experience in the line of Information Technology, Civil Construction and in trading of Liquor. He has more than a decade experience in liquor trade industry. The company is also getting support in improving the standards of production from other directors. Further the promoters of the company have been supporting and infusing the funds as and when required. * Growth in total operating income: The total operating income of the company improved by 12% from INR 131.28 crore during FY18 to INR147.05 crore during FY19. * Moderate financial risk profile: The overall gearing ratio of the company improved to 0.48x as on March 31, 2019 (0.77x as an March 31, 2018) due to reduction in total debt level. The PBILDT margin of the company improved to 2.76x during FY19 (2.03x during FY18) due to reduction in the interest expense. * Diversified product portfolio: CBIPL is engaged in manufacturing of extra neutral alcohol from maize starch and broken rice starch for the alcohol trade industry, Distillers Wet Grain Soluble (DWGS) and Distillers Dried Grain Soluble (DDGS) used for cattle feed and poultry feed and spirit supplied to pharmaceutical industry. Incorporated on May 20, 2010, Crux Biotech India Private Limited (CBIPL) is promoted by Mr. G. Ravi Chandran – Managing Director with more than two decades of experience in trading of liquor. Crux Biotech India Private Limited is into manufacture of extra neutral alcohol/potable alcohol (non-molasses based), pharma grade absolute alcohol, ethanol fuel, feeds and feed supplements. CBIPL is primarily engaged in manufacturing of extra neutral alcohol from maize starch and broken rice starch. The solid waste derived in the process of manufacturing starch is known as Distillers Wet Grain Solubles and Distillers Dried Grain Solubles which is used for cattle feed and poultry feed and contributes 25% of the total revenue of the company. The company also manufactures spirit which is supplied to the pharmaceutical industry. The company has an installed capacity of 60kl per day and also has a captive power plant of 2.5MW. EMCER TILES: CARE Lowers Rating INR71.36cr LongTerm Loan to D ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Emcer Tiles Private Limited (ETPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 71.36 CARE D Revised from CARE BB-; Facilities Stable Short-term Bank 4.25 CARE D Revised from CARE A4 Facilities Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities of ETPL takes into account delays in servicing of debt obligations on its bank loan facilities due to weak liquidity position. CARE also takes cognizance of the company availing the moratorium granted by its lender as a COVID-19 relief measure (as permitted by the Reserve Bank of India) on working capital and term loan facilities. The company has also availed COVID-19 emergency working capital loan of INR 2.30 crore from its lender. Key Rating Sensitivities Positive factors: * Improvement in overall liquidity position of the company along with timely repayment of its bank loans Negative Factors: Not Applicable Detailed description of the key rating drivers Key Rating Weaknesses * Weak liquidity position resulting in delays in debt servicing: Due to weak liquidity position, ETPL was irregular in servicing interest and term loan instalments till February 2020. The company has availed moratorium from the month of March 2020 till August 31, 2020. Incorporated on January 6, 2015, ETPL was incorporated to manufacture Glazed Vitrified Tiles (GVT) at Morbi (Gujarat). The greenfield project was completed in June 2018 and it commenced commercial operations from July, 2018 with an installed capacity of approx. 9000 Sq.Mt/Day. The total project cost of INR97.67 crore was funded through promoter contribution of INR35.77 crore and term debt of INR61.90 crore, translating into project debt/equity ratio of 1.73 times. ETPL is engaged in production of vitrified tiles in varied size of 800 mm x 800 mm, 800 mm x 2400 mm, 600 x 1200 mm, 1200 mm x 1200 mm and 1200 mm x 2400 mm. EMI TRANSMISSION: CARE Keeps D Debt Ratings in Not Cooperating -------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of EMI Transmission Limited (EMI) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 260.00 CARE D; Issuer not cooperating; Facilities Based on best available (Fund Based)–CC Information Short term Bank 52.00 CARE D; Issuer not cooperating; Facilities Based on best available (Fund based)–SLC Information Short term Bank 70.00 CARE D; Issuer not cooperating; Facilities Based on best available (Fund based)– Information Bills Short term Bank 465.40 CARE D; Issuer not cooperating; Facilities Based on best available (Non Fund based) Information - BG/LC Detailed Rationale & Key Rating Driver: CARE has been seeking information from EMI to monitor the rating(s) vide e-mail communications/letters dated July 10, 2020, July 14, 2020, July 15, 2020 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information. The long term and short term rating on EMI's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers * Delays in servicing the debt: Due to the weakened liquidity position there are on-going delays in servicing of interest and default in repayment of debt obligation by the company. Besides, as per publicly available information, the company was admitted to the Corporate Insolvency Resolution Process ('CIRP') by the National Company Law Tribunal (NCLT) vide order dated April 11, 2019. EMI Transmission Limited (EMI) was promoted by Mr. R. D. Sheth, in the year 1964 and managed by his son Mr. S. R. Sheth. The company is engaged in the manufacturing of hardware accessories and electrical fittings for High Voltage Transmission Lines upto 800kV.EMI is one of the leading manufacturers & suppliers in the hardware accessories and electrical fittings segment and is approved by the Power Grid Corporation of India Ltd. (PGCIL), the central transmission agency, for supply of hardware accessories and electrical fittings for power transmission lines. The company fulfills all relevant criteria for supply of its product in the domestic market as well as in overseas market. EMI is certified ISO 9001-2008 compliant by NQAQSR, New Delhi for quality and management systems. EMI'sinstalled capacity for the manufacture of hardware accessories and electrical fittings situated in Nashik (Maharashtra) was enhanced to 45,000 MTPA during FY15 (PY: 40,000 MTPA). FIROZABAD CERAMICS: CARE Cuts Rating on INR13.63cr LT Loan to D --------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Firozabad Ceramics Private Limited (FCPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank Facilities 13.63 CARE D Revised from CARE B+; Stable Short term Bank Facilities 2.50 CARE D Revised from CARE A4 Detailed Rationale & Key Rating Drivers The rating has been revised on account of ongoing delays in servicing of its debt obligations. Detailed description of the key rating drivers Key Rating Weakness * Delays in servicing of debt obligation: There have been delays in servicing of its debt obligations. The account has been classified as NPA, according to the banker feedback. Firozabad Ceramics Private Limited (FCPL) was incorporated in January 13, 1981. The company is currently managed by Mr. Rajendra Prasad Jain, Mr. Devendra Kumar Jain, Mr. Dheeraj Jain and Mr. Shyam Sundar Jain. It is engaged in the manufacturing of glass containers and tableware. The manufacturing facility of the company is located at Firozabad, Uttar Pradesh. The products manufactured are supplied to various companies and dealers based PAN India. The company is having three associate concerns namely; "Anand Glass Works (AGW)", "Eagle Glass Deco Private Limited" and "Raju Decorators". GOYAL CATTLE: CARE Keeps D on INR5.25cr Debt in Not Cooperating --------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Goyal Cattle Feed Industries (GCFI) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.25 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from GCFI to monitor the ratings vide letters/emails dated July 6, 2020, July 8, 2020, July 10, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on GCFI's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Users of these ratings (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating on May 15, 2019 the following were the rating strengths and weaknesses. Key Rating Weaknesses * On-going delays in debt servicing: There are on-going delays in the debt servicing of the entity and currently the account is classified as Non-Performing Assets. Goyal Cattle Feeds Industries (GCFI) was established in 1990 as a proprietorship entity by Mr. Rajendra Agarwal. Since its inception, the entity has been engaged in processing of pulses like Rahar Dal, Matar Dal and trading of Masur dal, Moong Dal. The processing plant of the entity is located at Raipur, Chhattisgarh with a processing capacity of 12000 metric ton per annum. GOYAL ENTERPRISES: CARE Lowers Rating on INR11.25cr Loan to D ------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Meerut based Goyal Enterprises (GE), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 11.25 CARE D; Issuer not cooperating; Facilities Revised from CARE B+; Stable; ISSUER NOT COOPERATING on the best available information Detailed Rationale & Key Rating Drivers The rating has been revised on account of ongoing delays in servicing of debt obligations. Detailed description of the key rating drivers Key Rating Weakness * Delays in servicing of debt obligation: There have been delays in servicing of debt obligations. As confirmed by the banker, the account has been classified as NPA. Meerut based Goyal Enterprises (GE) was established as proprietorship firm by Mr. Ambuj Goyal in 2001. GE is engaged in the wholesale trading of surgical equipment such as sputum container, urine container, slide box, dropping bottle etc and various type of scientific chemicals. The firm procures the products from domestic distributors and sells these products to pathology laboratory, hospitals and medical colleges across India. J.M. HOUSING: CARE Reaffirms D Rating on INR74cr LT Loan -------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of J.M. Housing Limited (JMHL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank Facilities 74.00 CARE D Reaffirmed Detailed Rationale and key rating drivers The rating assigned to the bank facilities of JMHL takes into consideration ongoing delays in debt servicing by the company on account of weak liquidity position and subdued real estate scenario. Key Rating Sensitivity Positive Factors * Timely completion of the project within the estimated timelines * Timely repayment of its debt on timely basis. Detailed description of the key rating drivers Key Rating Weaknesses * Delays in servicing of debt obligations: On account of overall subdued demand scenario in the real estate market, the company has been able to garner lower amount of project collections in its ongoing residential project named JM Florence based in Techzone-IV, Greater Noida West. This has led to a mismatch between project receipts vis a vis the debt repayment obligations, leading to delays in debt servicing. As per the banker, the firm has availed moratorium period of 6 months as provided by bank in lines with RBI guidelines. Liquidity: Weak The liquidity profile of JMHL remains weak. Due to mismatch between project receipts vis a vis the debt repayment obligations the liquidity of JMHL remains constrained. * Subdued real estate scenario: With the on-going economic conditions, the real estate industry is currently facing issues on many fronts, including subdued demand, curtailed funding options, rising costs, restricted supply due to delays in approvals, etc. thereby resulting in stress on cash flows of developers. The industry has seen low demand in the recent past, primarily due to factors like sustained high level of inflation leading to high interest rates and adverse impact on the buying power and affordability for the consumers. J.M. Housing Limited belongs to JM Group which was incorporated in the year 1990. JM Housing Ltd is engaged in real estate development in Delhi & NCR. Till now the group has completed many residential projects based in Vaishali and Noida regions such as JM Park Sapphire, JM Royal Legacy, JM Royal Park, JM Orchid, JM Aroma. Currently the group is building a residential project named JM Florence based in Techzone-IV, Greater Noida having total saleable area of 17.95lsf under J.M. Housing Limited. Currently, JM Housing is executing a residential project named JM Florence based in Techzone-IV, Greater Noida West. The project has a total saleable area of 17.95 lsf. Out of total project cost of INR537 cr, the company has incurred total INR490cr till March 31, 2020, which is 91% of the total project cost. Further, the company has incurred around 98% of the total construction cost till March 31, 2020, thereby reflecting satisfactory progress in project execution. KAVITA EXIM: CARE Reaffirms D Rating on INR12cr LT Loan ------------------------------------------------------- CARE Ratings reaffirmed ratings on certain bank facilities of Kavita Exim Private Limited (KEPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 12.00 CARE D; Reaffirmed Facilities In the absence of minimum information required for the purpose of rating, CARE was unable to express an opinion on the ratings of KEPL and in line with the extant SEBI guidelines, CARE revised the ratings of bank facilities of the company to 'CARE D; ISSUER NOT COOPERATING'. However, the company has now submitted the requisite information to CARE. CARE has carried out a full review of the ratings and the rating stand at 'CARE D'. Detailed Rationale & Key Rating Drivers The rating assigned to the bank facilities of Kavita Exim Private Limited (KEPL) are constrained by overdraws in working capital facilities for more than 30 consecutive days from December 2019 till February 2020. Positive Sensitivity * Improvement in liquidity position as reflected by the timely payment of interest obligation Key Rating Weakness * Continuous overdraws for more than 30 days: There has been continuous overdraws in cash credit facilities exceeding 30 days for period from December 2019 to February, 2020 and account was classified as SMA 01 in February 2020. However, as per the banker, account was regularized and all the over-dues were paid in full by March 21, 2020 and company has availed moratorium as provided by bank in lines with RBI guidelines in wake of COVID-19 pandemic. KEPL is engaged in trading of fabrics (mostly cotton based). Also, the company is engaged in plastic printing of clothes which is mainly done through job work. KEPL procures the fabrics from manufacturers located across India, predominantly from Mumbai. The company caters to wholesalers' located Delhi, Punjab, and Rajasthan etc. The company operates its business in the name "Kavita Exim" through its three showrooms located Gandhi Nagar, Delhi. LIOLI CERAMICA: CARE Lowers Rating on INR93.63cr Loan to D ---------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Lioli Ceramica Private Limited (LCPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 93.63 CARE D Revised from CARE B+; Facilities Stable Long-term/Short- 23.40 CARE D Revised from CARE B+; Term Bank Stable/CARE A4 Facilities Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities of LCPL takes into account ongoing delays in servicing of debt obligations on its bank loan facilities due to weak liquidity position. CARE also takes cognizance of the company availing the moratorium granted by its lenders as a COVID-19 relief measure (as permitted by the Reserve Bank of India) on working capital and term loan facilities. The company has also got the sanction of COVID-19 emergency working capital loan of INR 2.50 crore from its lenders. Key Rating Sensitivities Positive factors: * Improvement in overall liquidity position of the company along with timely repayment of its bank loans. Negative Factors: Not Applicable Detailed description of the key rating drivers Key Rating Weaknesses * Weak liquidity position resulting in delays in debt servicing: Due to weak liquidity position, debt servicing of LCPL was irregular as reflected by delays in servicing interest payments and term loan instalments till February 2020. The company has availed moratorium from the month of March 2020 till August 31, 2020. Incorporated in October 2016, Lioli Ceramica Private Ltd. (LCPL) is promoted by members of Detroja and Gadara families. LCPL implemented a green field project for manufacturing of large sized porcelain vitrified tile slabs at its manufacturing facilities located at Morbi, Gujarat with a total installed capacity of 106,920 metric tonnes per annum. The plant commenced commercial operations from June 2018. The project was completed at a total cost of INR160.65 crore, funded through term loan of INR92.82 crore, equity share capital of INR65.00 crore and balance INR2.83 crore through unsecured loans from promoters. MORGAN CREDITS: CARE Lowers Rating on INR106.30cr Loan to D ----------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Morgan Credits Pvt Ltd (MCPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Non-Convertible 106.30 CARE D Revised from CARE BB; Debenture Negative Detailed Rationale & Key Rating Drivers The revision in the rating of the above instrument is on account of company's inability to repay post exercise of the put option by the investor on account of stretched liquidity. Detailed description of the key rating drivers Key Rating Weaknesses * Delay in the monetization of the investments: MCPL had identified unlisted investments for divestment for the repayment of the balance outstanding debt. Additionally, MCPL had created a pledge on the unlisted shares of these identified investments in favor of the debenture trustee. However, there have been continues elongation in the timelines for the disinvestments which further escalated since March 2020. On account of the same, company witnessed liquidity stretch. Even though the maturity of the rated instrument was April 21, 2021, on account of put option exercise by the investor, the strain on the liquidity elevated further. The investor through the put option notice dated June 12, 2020 with the put option date being July 19, 2020, but as the put option date was falling on a non-business day, the payment was to be made on July 17, 2020. However, the company has failed to make the payment. * Nascent Stage of operation of the key operating subsidiaries with minimum recurring cash flows: The major operating companies of MCPL have a track record of maximum of three years. These non-financial businesses are presently in growth stage and are yet to break even. Some of the more mature companies such as RAVI Integrated Logistics, RAVI Renewables, DoIT Sports, DoIT Talent Ventures and Azure Entertainment are projected to start generating positive cash flows from FY20 onwards which would be utilized to pay dividend to MCPL. Morgan Credits Pvt Ltd (MCPL) is a holding company having investments in various non-financial businesses. The Directors of the Company are Ms. Radha K Khanna, Mrs Raakhe K Tandon and Ms Roshini Kapoor; they collectively hold 100% equity stake (split equally between the three) in MCPL. The Company has applied for Core Investment Company (CIC) to RBI as on September 26, 2016. The approval of RBI is awaited. MOTI RAM: CARE Keeps D on INR6.67cr Debt in Not Cooperating ----------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Moti Ram Sunil Kumar (MRS) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 6.67 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from MRS to monitor the ratings vide e-mail communications/letters dated July 14, 2020, July 6, 2020, June 3, 2020, May 14, 2020, May 4, 2020, April 16, 2020, March 31, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. The rating has been reaffirmed by taking into account non-availability of information and no due-diligence conducted due to non-cooperation by Moti Ram Sunil Kumar with CARE'S efforts to undertake a review of the rating outstanding. CARE views information availability risk as a key factor in its assessment of credit risk. Further banker feedback is also not available. The ratings on Moti Ram Sunil Kumar's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Moti Ram Sunil Kumar (MRS) was established as a proprietorship firm in 2006 by Mr. Sunil Kumar. The manufacturing unit is located at Karnal, Haryana. The firm is engaged in processing (milling) of paddy (rice). The firm also works on job work basis for Government departments. MRS procures rice from local grain markets through dealers and agents mainly from the states of Delhi and Haryana. The firm sells its products i.e. basmati and non-basmati rice in the states of Delhi and Haryana through a network of commission agents and traders. NAKODA TECHNOFIBE: CARE Lowers Rating on INR8.48cr Loan to D ------------------------------------------------------------ CARE Ratings revised the ratings on certain bank facilities of Nakoda Technofibe Private Limited (NTPL), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 8.48 CARE D; Revised from CARE B Facilities Stable Detailed Rationale & Key Rating Drivers The revision in the ratings assigned to the bank facilities NTPL is primarily due to ongoing delays in servicing its debt obligations. Rating Sensitivity * Positive Factor: Establishing clear repayment track record for consecutive three months Detailed description of the key rating drivers Key Rating Weaknesses * Ongoing delays in debt servicing: NTPL has been irregular in servicing of its debt obligations for more than 90 days due to weak liquidity position of the company. Liquidity Analysis: Poor Liquidity position of NTPL remained poor. There have been delays of more than 90 days in its debt servicing. The company has utilized 95-100% of its working capital bank borrowings in last twelve month ended August 2019. The current ratio stood moderate at 1.13 times and quick ratio stood below unity level at 0.13 times as on March 31, 2019. Further it has cash and bank balance of INR0.20 crore as on March 31, 2019. Working capital cycle of the company stood at 42 days as on March 31, 2019 improved from 98 days as on March 31, 2018 due to improvement in inventory holding period from 84 days to 46 days as on March 31, 2019. As against Gross Cash Accruals (GCA) level of INR0.59 crore in FY19 (Provisional), principal gross loan repayments remained at INR0.52 crore in FY20. Indore (Madhya Pradesh) based Nakoda Technofibe Private Limited (NTPL) was incorporated in 2014 as Private Limited. NTPL is engaged in the business of cotton ginning, pressing activities and trading of cotton seeds and bales. Company is also engaged in the business of chana processing. The processing plant of the company is located at Indore and has total production capacity of 75 bales per day as on March 31, 2019. It procures raw cotton from local farmers. After getting raw cotton, the company does ginning and pressing activities and after processing it sells cotton seeds to oil mill in Madhya Pradesh, Tamilnadu, Maharashtra and Gujarat states. Further, it sells cotton bales to the textile mill, suit mill and thread mill like Vardhman group and Trident group. NEUEON TOWERS: CARE Keeps D Debt Ratings in Not Cooperating ----------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Neueon Towers Limited (NTL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 1420.24 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 200.02 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 8, 2019, placed the rating(s) of NTL under the 'issuer non-cooperating' category as NTL had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. NTL continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 10, 2020, June 2, 2020, and May 22, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of last rating on May 8, 2019, the following were the rating strengths and weaknesses: Key rating weakness: * Stretched liquidity position with ongoing delays in debt servicing: During FY20, liquidity position of the company continued to remain stretched on account of slower realization from debtors. Given the slow realization of debtors has resulted in stretched liquidity position of the company leading to ongoing delays in meeting debt obligation. Neueon Towers Limited (erstwhile Sujana Towers Limited) was established in April 2006 after demerger of Towers Division of Splendid Metal Products Limited (erstwhile Sujana Metal Products Limited), pursuant to the scheme of arrangement and amalgamation as approved by the High Court Andhra Pradesh. Neueon Towers Limited (NTL) is engaged in manufacturing of galvanized steel towers used in the power transmission and telecom tower sector. NTL was initially a part of the Sujana group, promoted by Y.S. Chowdhary who has more than 23 years of experience in steel products manufacturing and trading. The group has diversified business activity with presence in construction & structural steel, power transmission & telecom towers and allied services, energy (generation, distribution, green energy consulting and manufacture of energy saving LEDs), basic and urban infrastructure development, precision engineering components, domestic appliances and international trade. NOVELTY REDDY: CARE Lowers Rating on INR10cr LT Loan to C --------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Novelty Reddy and Reddy Motors Private Limited (NRRM), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 10.00 CARE C; Issuer not cooperating; Facilities Revised from CARE B+; Stable; ISSUER NOT COOPERATING on the basis of best available information Short-term Bank 1.50 CARE A4; Issuer not Facilities cooperating; Based on best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 15, 2019, placed the rating(s) of NRRM under the 'issuer non-cooperating' category as NRRM had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. NRRM continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 10, 2020, June 2, 2020 and May 22, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings have been revised as CARE was unable to undertake proper due-diligence for the company. The ratings factor in moderate scale of operations with thin profitability margins, weak capital structure, working capital intensive nature of operations with weak liquidity position, authorized dealer of Maruti Suzuki India Limited (MSIL) linking the fortunes of NNRM with MSIL, intense competition from other OEM dealers and cyclical nature of industry. The rating also takes cognizance of experienced and resourceful promoters. Detailed description of the key rating drivers At the time of last rating on May 15, 2019, the following were the rating strengths and weaknesses: (Updated with information from Ministry of Corporate Affairs) Key Rating Weaknesses * Moderate scale of operations with thin profitability margins: The company continues to operate in moderate scale with operating income reduced marginally by 3.56% to INR74.71 crore in FY19 (as against INRRs.77.47 crore in FY18) on account of reduced sales volume during FY19. Being in dealership business, the company earns commission of about 2.5% on the cars, 15% on spare parts and 35% on the accessories. As most of the revenue comes from the sale of cars, the profitability of NRRM is on lower side. PBILDT margin of the company has improved by 33 bps to 3.97% during FY18 (as against 3.64% during FY18). However, PAT margins stood low at 0.28% in FY19. * Weak capital structure: The capital structure of the company represented by overall gearing improved from 4.06x as on March 31, 2018 to 3.04x as on March 31, 2019 on account of infusion of equity of INR2.04 crore during FY19. However, on account of high debt levels, the total debt to GCA remained high at 36.24x in FY19 as against 34.57x in FY18. The interest coverage ratio of the company remained moderate at 1.24x in FY19 (1.32x in FY18). * Working capital intensive nature of operations with weak liquidity position: The operating cycle of the company is on the higher side on account of higher inventory period of about 67 days on account of dealership business, wherein the company is required to showcase all variants of vehicles of MSIL. Liquidity position of the company is weak on account of low cash & bank balance of INR0.20 crore as on March 31, 2019 and high dependence on external borrowings. * Authorized dealer of MSIL linking the fortunes of NRRM with MSIL: NRRM is the authorized dealer of products of MSIL and revenue of NRRM is closely linked to the success of MSIL's models in market. Higher market share of MSIL, launch of new models and vehicles especially in the executive sedan segment by MSIL coupled with overall increase in demand of PVs, is expected to help NRRM to increase its revenue going ahead. The company earns its revenue primarily from sale of cars, apart from some portion from sale of spare parts and accessories and remaining from services. * Intense competition from other OEM dealers: While the company (along with its associate), are the exclusive dealers for MSIL in West Godavari district, there does exist intense competition from dealers of other OEMs, especially due to proximity of the region to Vijayawada, where dealers of most other OEMs such as Tata Motors, Hyundai, Mahindra, etc. are also located. * Cyclical nature of the industry: The auto industry is inherently vulnerable to the economic cycles and is highly sensitive to the interest rates and fuel prices. A hike in interest rate increases the costs associated with the purchase leading to purchase deferral. Fuel prices have a direct impact on the running costs of the vehicle and any hike in the same would lead to reduced disposable income of the consumers, influencing the purchase decision. The company thus faces significant risks associated with the dynamics of the auto industry. Key rating strengths * Experienced and resourceful promoters: NRRM was started by Managing Director Mr. Ramakrishna Reddy who has 15 years of experience in trading activities of prawns feed, automobile dealership and distribution of automobile lubricants. He entered into the field of automobile dealership by starting Reddy & Reddy Automobiles (authorized dealer of Hero Motocorp Limited), Reddy & Reddy Motors (authorized dealer of MSIL). The other companies in Reddy & Reddy Group are Reddy & Reddy Imports & Exports and Nexus Feeds Ltd. Other directors of the company also have around a decade of experience. Novelty Reddy & Reddy Motors Private Ltd (NRRM) was incorporated in 2007, by Mr. G. Rama Krishna Reddy. NRRM is an authorized dealer for Maruti Suzuki India Ltd (MSIL) based in Bhimavaram and Tanuku (both in Andhra Pradesh). The company has dealership for selling entire range of passenger cars, spares and accessories of MSIL. NRRM belongs to Reddy and Reddy Group which has diverse interests including trading of prawns feed, authorized dealership of MSIL and Hero Honda. P.K. INDUSTRIES: CARE Keeps D on INR10cr Loans in Not Cooperating ----------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of P.K. Industries (PKI) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 4.00 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 6.00 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated August 27, 2019 placed the ratings of under the 'issuer non-cooperating' category as PKI had failed to provide information for monitoring of the ratings as agreed to in its Rating Agreement. PKI continues to be non-cooperative despite repeated requests for submission of information through phone calls and emails dated June 18, 2020, June 19, 2020 and June 23, 2020. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating done on August 27, 2019, the following were the rating strengths and weaknesses Detailed description of key rating drivers Key Rating Weakness * Delays in debt servicing: There were delays in debt servicing due to weak liquidity position of the firm. Bhopal (Madhya Pradesh) based P. K. Industries (PKI) was formed in 2000 as a proprietorship firm by Mr. Prashant K Gupta. The firm is ISO 9001: 2008 certified entity and it is engaged into the business of manufacturing of power and distribution transformers. PKI manufactures transformers from capacity of 5 Kilo Volt Ampere (KVA) to 5 Mega Volt Ampere (MVA) and supplies the same to State Electricity Boards (SEB's) in Madhya Pradesh and Rajasthan and other private customers who take contract from government departments. PLATINUM ISPAT: CARE Keeps D on INR18.57cr Debt in Not Cooperating ------------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Platinum Ispat Industries Private Limited (PIIPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 18.57 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE has been seeking information from PIIPL to monitor the rating vide e-mail communications/letters dated July 8, 2020, July 9, 2020 July 10, 2020 and numerous phone calls. However, despite CARE's repeated requests, the company has not provided the requisite information for monitoring the rating. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on entity's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING. Further, the banker could not be contacted. Users of these rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The rating takes into account on-going delays in debt servicing obligations of the company. Detailed Rationale & Key Rating Drivers At the time of last rating in May 10, 2019, the following were the rating weaknesses: Key Rating Weaknesses * Ongoing delays in debt servicing: There are ongoing delays in the term loan repayment obligations of the company. Platinum Ispat Industries Private Limited (PIIPL) was incorporated during August 2012 to initiate a TMT bar manufacturing unit. After incorporation, the company started to set up a manufacturing unit at Didarganj, Patna with an installed capacity of 99,000 MTPA with a project cost of INR22.53 crore. The commercial operation has started from March 2015. The day-to-day affairs of the company are looked after by Mr. Ashok Kumar Agrawal, Director, along with other three directors and a team of experienced personnel. POWER TELEVENTURES: CARE Keeps D Debt Ratings in Not Cooperating ---------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Power Televentures Private Limited (PTPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 15.80 CARE D; Issuer not cooperating; Facilities Based on best available Information Long-Term/Short 8.00 CARE D; Issuer not cooperating; term Bank Based on best available Facilities Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated July 3, 2018, placed the ratings of PTPL under the 'issuer non-cooperating' category as PTPL had failed to provide information for monitoring of the rating. CARE had further reviewed the ratings on the above bank facilities of PTPL under the 'issuer non-cooperating' category vide its press release dated July 22, 2019. PTPL continues to be non-cooperative despite repeated requests for submission of information. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the best available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating on July 22, 2019, the following was the rating weakness. Key Rating Weaknesses * Overdrawing in cash credit limits for more than 30 consecutive days: The company used to act as an authorized distributor cum stocking agent for Proctor & Gamble Home Products Ltd, Products & Gamble Hygiene & Health Care Ltd and Gillette India Ltd (together referred to as P&G). However, the company had lost the distributorship of P&G which led to fall in revenue and in turn led to overdrawn in cash credit limits. Incorporated in June 2005, PTPL is a Bhopal based company incorporated by Mr. Aseem Singh and his family members. The company used to act as an authorized distributor cum stocking agent of P&G for eastern and southern Madhya Pradesh including Bhopal and Gwalior. RAJASTHAN DURGS: CARE Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Rajasthan Durgs and Pharmaceuticals Limited (RDPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 19.30 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 0.50 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated July 17, 2019, placed the rating(s) of RDPL under the 'issuer non-cooperating' category as RDPL had failed to provide information for monitoring of the rating for the rating exercise as agreed to in its Rating Agreement. RDPL continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated June 25, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating on July 17, 2019, the following were the rating strengths and weaknesses Key rating weaknesses * Irregularity in debt servicing: There are instances of delays in debt servicing in the past. Jaipur (Rajasthan) based Rajasthan Drugs & Pharmaceuticals Limited (RDPL), established in November 1978, is a Joint Sector Undertaking between the Government of India (GOI; 51.04% direct shareholding; previously through IDPL: Indian Drugs & Pharmaceuticals Limited) and Government of Rajasthan (GOR) through RIICO (Rajasthan State Industrial Development & Investment Corporation Limited; 48.96% shareholding). RDPL is mainly engaged in the manufacturing and trading of generic pharmaceutical formulations largely for supply to Central/State Government Health Departments and other such entities. RAJIVA EXPORTS: CARE Lowers Rating on INR4cr LT Loan to C --------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Rajiva Exports (REX) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 4.00 CARE C; Issuer not cooperating; Facilities Revised from CARE B+; ISSUER NOT COOPERATING on the basis of best available information Short-term Bank 4.00 CARE A4; ISSUER NOT Facilities COOPERATING; based on best available information Detailed Rationale & Key Rating Drivers CARE has been seeking information from the firm to monitor the rating(s) vide e-mail communications/letters dated July 14, 2020, July 13, 2020, July 9, 2020, July 8, 2020, July 6, 2020, July 3, 2020, June 29, 2020, June 19, 2020, June 16, 2020 and numerous phone calls. However, despite CARE's repeated requests, the firm has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. The rating on the firm's bank facilities will now be denoted as CARE C; ISSUER NOT COOPERATING/CARE A4; ISSUER NOT COOPERATING. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings have been revised by taking into account non-availability of information and no due-diligence conducted due to non-cooperation by Rajiv Exports (REX) with CARE'S efforts to undertake a review of the rating outstanding. CARE views information availability risk as a key factor in its assessment of credit risk. Further the rating continues to remain constrained on account of its small scale of operations, leveraged capital structure and weak debt coverage indicators. The ratings are further constrained by foreign exchange fluctuation risk, its presence in the highly fragmented & competitive nature of trading industry and its constitution being a proprietorship firm. The ratings, however, continue to take comfort from the experienced management along with long track record of operations and moderate profitability margins. Detailed description of the key rating drivers At the time of last rating on June 2019, following were the rating strengths and weaknesses: Key Rating Weaknesses * Small scale of operation: The scale of operations of the firm continues to remain small marked by total operating income (TOI) and gross cash accruals of INR19.62 crore and INR0.27 crore respectively in FY18. The small scale limits the firm's financial flexibility in times of stress and deprives it from scale benefits. The total operating income registered decline in FY18 over the previous year owing to decrease in quantity sold. * Leveraged capital structure and weak debt coverage indicators: The capital structure continues to remain leveraged owing to higher dependence on external borrowings to meet its working capital borrowings as marked by overall gearing ratio of around at 3.14x as in March 31, 2018. Owing to higher total debt ,the debt coverage indicators of the firm continues to remain weak as characterized by interest coverage ratio and total debt of GCA of 1.23x and 30.52x in FY18. * Foreign exchange fluctuation risk: The firm has been procuring its traded product (iron & steel scrap, pulses and sunflower oil cake) by way of imports. With initial cash out flow occurring in foreign currency and the realization taking place in domestic currency, the firm is exposed to the fluctuation in the exchange rates. Moreover, the firm does not hedge its foreign exchange exposure. Hence, any adverse fluctuations in the currency markets may put pressure on the profitability of the firm. * Presence in highly fragmented and competitive industry: The firm is engaged in trading (iron & steel scrap, pulses and sunflower oil cakes) which is highly fragmented and competitive marked by the presence of numerous players in the country. Given the fact that the entry barriers to the industry are low, the players in the industry do not have pricing power and are exposed to competition induced pressures on profitability. * Proprietorship nature of its constitution: REX's constitution as a proprietorship firm exposes it to the inherent risk of possibility of withdrawal of the proprietor's capital at the time of personal contingency and firm being dissolved upon the death/insolvency of the proprietor. Moreover, proprietorship firms have restricted access to external borrowing which may limit their growth prospects. Further, in FY18 proprietor withdrew a total of INR0.12 crore. Key Rating Strengths * Long track record of operation coupled with experienced proprietor: REX has long track record of operations of over two decades in trading of iron & steel scrap and pulses. Mr. Rajiva Maheshwari has done his bachelors in engineering and has four decades of experience in trading of iron and steel. Before establishing REX, Mr. Maheshwari worked for about two decades as Chief Executive Officer (CEO) in mid-sized steel rolling mill located in Muzaffarnagar, Uttar Pradesh. Mr. Maheshwari looks after the overall affairs of the firm. * Moderate profitability margins: Trading industry is marked by inherently low profitability margins; however during FY18, profitability margins of REX as marked by PBILDT and PAT improved and stood moderate at 6.93% and 1.27% in FY18 as against 4.08% and 0.02% in FY17. Improvement was primarily on account of lower cost of sales. Delhi based Rajiva Exports (REX) was established in 1993 as a proprietorship concern by Mr. Rajiva Maheshwari. The firm is engaged in trading of iron and steel scrap, pulses and cashew nuts. REX imports metal scraps from Singapore, Tanzania and Ghana which are sold to steel manufacturers in Maharashtra. The firm also imports pulses from Tanzania and Myanmar and sells the same to milling units engaged in processing of pulses domestically. RAMAKRISHNA ELECTRONICS: CARE Keeps D Debt Rating in NonCooperating ------------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Ramakrishna Electronics Kurnool (RE) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 30.00 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 30, 2019, placed the ratings of RE under the 'issuer non-cooperating' category as company had failed to provide information for monitoring of the rating. The company continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and email dated January 31, 2020 to July 09, 2020.In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers As confirmed by the banker the account has been classified as NPA. At the time of last rating dated May 30, 2019, the following were the rating strengths and weaknesses Key rating weaknesses * Delays in debt servicing: Ramakrishna Electronics has been facing liquidity issues due to which the firm is unable to service the debt obligation. The banker has confirmed that the account has been classified as NPA. Key Rating Strengths * Experience of the promoters in the similar line of business: Mr. V. Raghavendra (Managing Partner) has experience of around 29 years in the trading activity and looks after marketing and purchase activities of the firm. Ramakrishna Electronics (RE), is a partnership firm established in April, 2000by Mr. V. Raghavenrdra, Mr. V. Ravi Kumar, Mrs. V. Rajeshwari, Mrs. V. Neelima, Mr. V Ananthakrishna, Mr. G. Ramaiah, Mr. G. Seshamma and Mrs. V. Nagarekha. The firm is engaged in distribution and trading (retail and wholesale) of consumer electronic products and home appliances. It operates with a total 9 showrooms. The firm has its registered office and show room located at Municipal Shopping Complex, Park Road, Kurnool with other retail show rooms located at Anathapur, Nadhyala, Madhanapally, Thandapathi, Kadiri and Guntakal in Andhra Pradesh. The firm distributes consumer durables of some major brands which include Sony and LG electronics goods in and around two district of Andhra Pradesh. REDDY AND REDDY MOTORS: CARE Cuts Rating on INR10.10cr Loan to C ---------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Reddy and Reddy Motors (RRM), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 10.10 CARE C; Issuer not cooperating; Facilities Revised from CARE B+; Stable; ISSUER NOT COOPERATING on the basis of best available information Short-term Bank 1.00 CARE A4; Issuer not Facilities cooperating; Based on best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 9, 2019, placed the rating(s) of RRM under the 'issuer non-cooperating' category as RRM had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. RRM continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 10, 2020, June 02, 2020, and May 22, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings have been revised as CARE was unable to undertake proper due-diligence for the entity. The ratings factor in constitution of the entity as a partnership concern, moderate small scale of operations with established track record, intense competition from the other OEM dealer, thin profitability margins, leveraged capital structure with weak debt coverage indicators, cyclical nature of industry and working capital intensive nature of operations. The rating also takes cognizance of experienced and authorized dealer of Maruti Suzuki India Limited (MSIL). Detailed description of the key rating drivers At the time of last rating on May 9, 2019, the following were the rating strengths and weaknesses Key Rating Weaknesses * Constitution of the entity as a partnership concern: Constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency which can affect its capital structure. This was reflected in the balance sheet during FY16 when the capital to the tune of INR 10 lakh was withdrawn to meet personal contingency. Further, partnership concern has restricted access to external borrowing which limits their growth opportunities to some extent. * Moderate scale of operations with established track record: While the firm continues to be relatively small in scale, the total operating income has exhibited a constant growth. The turnover of the firm grew by around 14% from INR63.73 crore in FY15 to INR72.97 crore in FY16. The firm along with its associate firm NRRM are the sole dealers for MSIL in West Godavari District in Andhra Pradesh. * Intense competition from other OEM dealers: While the firms (along with its associate), are the exclusive dealers for MSIL in West Godavari district of Andhra Pradesh there does exist intense competition from dealers of other OEMs, especially due to proximity of the region to Vijayawada, where dealers of most other OEMs such as Tata Motors, Hyundai, Mahindra, Toyota etc. are also located. * Thin profitability, as margin on products is controlled by MSIL: MSIL decides the selling price of the products sold by the dealers and it provides a pre-decided commission to the dealers. RRM earns commission of about 2.5% on the cars, 15% on spare parts and 35% on the accessories. As most of the revenue comes from the sale of cars, the profitability of RRM is on lower side. The PBILDT margin of the firm has declined from 3.82% in FY15 to 3.01% in FY16 on account of increase in discounts & commissions given to push the sales. PAT margin however witnessed a marginal increase from 0.39% in FY15 to 0.44% in FY16, due to decrease in the interest charges. * Leveraged capital structure with weak debt coverage indicators: The capital structure of the company as represented by overall gearing of the firm has deteriorated from 3.39x as on March 31, 2015 to 3.75x as on March 31, 2016 on account of high working capital utilization. Being a trading firm, with low gross cash accruals the debt coverage ratios of the firm are on higher side. The interest coverage ratio of the firm improved from 1.27x in FY15 to 1.38x in FY16 on account of decline in the interest expense. * Cyclical nature of the industry: The auto industry is inherently vulnerable to the economic cycles and is highly sensitive to the interest rates and fuel prices. A hike in interest rate increases the costs associated with the purchase leading to purchase deferral. Fuel prices have a direct impact on the running costs of the vehicle and any hike in the same would lead to reduced disposable income of the consumers, influencing the purchase decision. The firm thus faces significant risks associated with the dynamics of the auto industry. * Working capital intensive nature of operations: RRM maintains inventory for about 85-95 days. The firm is required to maintain high level of inventory to be able to showcase all variants of PV of MSIL, as required by MSIL of its dealers. Firm makes payments to MSIL in advance which has led to high working capital requirement and utilization. Most of the working capital requirement of RRM is being funded through bank borrowing. Key rating strengths * Experienced and resourceful Promoters: RRM was started by Managing Partner Mr. Ramakrishna Reddy who has 15 years of experience in trading activities of prawns feed, automobile dealership and distribution of automobile lubricants. He entered into the field of automobile dealership by starting Reddy & Reddy Automobiles (authorized dealer of Hero Honda Motors Limited), Novelty Reddy & Reddy Motors (authorized dealer of MSIL). The other companies in Reddy & Reddy Group are Reddy & Reddy Imports & Exports and Nexus Feeds Ltd. * Authorized dealer of MSIL linking the fortunes of RRM with MSIL: RRM is the authorized dealer of MSIL products and revenue of RRM is closely linked to the success of MSIL's models in market. MSIL is the market leader in the passenger vehicle segment in India with market share of around 48% during FY16 (45% in FY15). Higher market share of MSIL, launch of new models and vehicles especially in the executive sedan segment by MSIL coupled with overall increase in demand of PVs, is expected to help RRM to increase its revenue going ahead. Liquidity Analysis The operating cycle of the firm is on the higher side on account of higher inventory period of about 85-95 days on account of dealership business, wherein the entity is required to showcase all variants of vehicles. Further, current ratio of the firm is above unity level at 1.14x and cash & bank balance of INR0.63 crore as on March 31, 3016. Reddy & Reddy Motors (RRM) is a partnership firm, incorporated in February 2010 by Mr. G. Ramakrishna Reddy, Mr. G. Venkata Reddy and Mr. Srirama Reddy. Mr. G Ramakrishna Reddy is the Managing Partner of the firm. RRM is authorized dealer of Maruti Suzuki India Limited (MSIL) based in Eluru (Andhra Pradesh). It started its operations in June 2010 with a showroom in Eluru. RRM belongs to Reddy and Reddy Group which has diverse interests including trading of prawns feed, authorized dealership of MSIL and Hero Motors and is also engaged in button manufacturing business. REDDY AND REDDY: CARE Lowers Rating on INR10cr LT Loan to C ----------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of Reddy and Reddy Import & Exports (RRIE), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 10.00 CARE C; Issuer not cooperating; Facilities Revised from CARE B+; Stable; ISSUER NOT COOPERATING on the basis of best available information Short-term Bank 4.00 CARE A4; Issuer not Facilities cooperating; Based on best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 09, 2019, placed the rating(s) of RRIE under the 'issuer non-cooperating' category as Reddy and Reddy Import & Exports had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. Reddy and Reddy Import & Exports continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 10, 2020, June 02, 2020, and May 22, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings have been revised as CARE was unable to undertake proper due-diligence for the entity. The ratings factor in constitution of the entity as a partnership concern, small scale of operations despite established track record, trading nature of the firm with thin profitability margins, leveraged capital structure with weak debt coverage indicators and working capital intensive nature of operations. The rating also take cognizance of experienced and resourceful promoters and moderate industry growth prospects. Detailed description of the key rating drivers At the time of last rating on May 9, 2019, the following were the rating strengths and weaknesses: Key Rating Weaknesses * Constitution of the entity as a partnership concern: Constitution as a partnership firm has the inherent risk of possibility of withdrawal of the partners' capital at the time of personal contingency which can affect its capital structure. Further, partnership concern has restricted access to external borrowing which limits their growth opportunities to some extent. Small scale of operations despite established track record While the firm continues to be relatively small in scale, the total operating income has exhibited a steady growth. The turnover of the firm grew at a CAGR of 18% from INR30.68 crore in FY14 to INR42.91 crore in FY16 on account of increase in the income from trading prawn feed. Apart from trading prawn feed, the firm is into manufacturing of shirt buttons, which contributed around 10-12% of the firm's revenue. * Trading nature of the firm with thin profitability margins: The firm is primarily engaged in trading of prawn feed. The firm currently is operating in the domestic market with majority of its suppliers and customers in coastal areas of Andhra Pradesh. Given the trading nature of business and intense market competition, the profitability margins of the firm have been low. The PBILDT margin of the firm has declined by 46 bps from 2.70% in FY15 to 2.24% in FY16 on account of increase in discounts given to the customers to increase the sale. However the PAT margin of the firm has marginally improved from 0.25% in FY15 to 0.31% in FY16. * Leveraged capital structure with weak debt coverage indicators: The capital structure of the company as represented by overall gearing of the firm has deteriorated from 2.42x as on March 31, 2015 to 2.79x as on March 31, 2016 on account of increase in the working capital borrowing to meet the working capital requirement of the firm. The interest coverage ratio of the firm has remained almost stable at 1.18x in FY16 (1.11x in FY15). * Working capital intensive nature of operations: The operating cycle of the firm is moderate with range bound between 75 days to 89 days in FY16. The business operation of RRIE is working capital intensive given high stock of inventory of trading materials required to be kept due to volatile prices of the same, on account of which the inventory holding period is on the higher side. Accordingly, dependence on working capital to finance the business operation is on the higher side. Key rating strengths * Experienced and Resourceful Partners: RRIE was started by Managing Partner Mr. Ramakrishna Reddy who has 15 years of experience in trading activities of prawns feed, automobile dealership and distribution of automobile lubricants. He entered into the field of automobile dealership by starting Reddy & Reddy Automobiles (authorized dealer of Hero Honda Motors Limited), Reddy & Reddy Motors (authorized dealer of MSIL). The other companies in Reddy & Reddy Group are Reddy & Reddy Imports & Exports and Nexus Feeds Ltd. Other partners of the firm also have around a decade of experience. * Moderate industry growth prospects: RRIE is located at West Godavari region which accounts for the largest part of national inland aquaculture production based on fresh water from Krishna and Godavari and supports around 3 lakh acres of inland tanks and ponds. Thus, the production of both fish and prawns and hence the demand for feed required to cultivate them is expected to be high in the aforesaid region. With the commencement of pellet form of feeds and the associated benefits, the demand for the same has increased significantly in the region. Liquidity Analysis The operating cycle of the firm is on the higher side on account of higher inventory period and collection period given the trading nature of business. Further, current ratio of the firm is comfortable at 1.28x, cash and bank balance of INR0.16 crore as on March 31, 2016. Reddy and Reddy Import and Exports (RRIE), is a partnership firm, incorporated in 1997 and is promoted by Mr. Goluguri Rama Krishna Reddy, Mr. Venakata Reddy and Mr. Sri Rama Reddy. Mr. Goluguri Rama Krishna Reddy is the firm's managing partner. The firm primarily trades in prawn feed in and around West Godavari district, Andhra Pradesh. The firm also derives about 10- 12% of its revenue from manufacturing shirt buttons. RRIE belongs to Reddy and Reddy Group which has diverse interests including trading and manufacturing of prawns feed, authorized dealership of Maruthi Suzuki India Limited (MSIL) and Hero Motors. RR FAB CONSTRUCTIONS: CARE Lowers Rating on INR3.8cr LT Loan to C ----------------------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of RR Fab Constructions (RRFC), as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 3.80 CARE C; Issuer not cooperating; Facilities Revised from CARE B+; Stable; ISSUER NOT COOPERATING on the basis of best available information Short-term Bank 1.40 CARE A4; Issuer not Facilities cooperating; Based on best available information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 2, 2019, placed the rating(s) of RRFC under the 'issuer not cooperating' category as RRFC had failed to provide information for monitoring of the ratings. RRFC continues to be noncooperative despite repeated requests for submission of information through phone calls and e-mails dated June, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The ratings have been revised on account of non-availability of last 3 years financials. Detailed description of the key rating drivers At the time of last rating on May 2, 2019, the following were the rating strengths and weaknesses: Key Rating Weakness * Small scale of operations: RRFC was established in 1985 and hence, has a long track record of operations. Despite long track record of operations, the scale of operations remains small marked by total operating income of INR12.40 crore in FY16 and net worth of INR9.17 crore as on March 31, 2016, compared with other peers in the industry. * Improvement in working capital cycle, however, remained elongated: RRFC's business, being execution of civil construction works, is working capital intensive. The operating cycle of the firm improved from 313 days in FY15 to 202 days in FY16. The collection period days improved from 117 days in FY15 to 70 days in FY16 due to faster realization of debtors from existing customers on account of completion of the project which also resulted in improvement in the inventory days. The creditor days stood in line at 23 days in FY16. The average utilization of cash credit facility was around 99% for the last 12 month ended February 28, 2017. * Short-term revenue visibility from order book position and with high geographical concentration risk: The firm has revenue visibility for one year with an outstanding order book of INR15 crore as on March 23, 2017. Along with the existing order book the firm is expecting order from Samprasiddhi Infratech for construction of commercial apartments worth INR20 crore during FY18. RRFC's project portfolio is primarily concentrated in the state of Karnataka, leading to geographical concentration risk. Key Rating Strengths * Experienced Partners: The partners of RFC - Mr. R. Somesh & Mr. S. Ramachandra - are highly experienced with 15 years and 35 years of experience, respectively, in the similar industry. * Growth in total operating income and increase in profitability margins: The total operating income of RRFC grew by 8.23% from INR11.16 crore in FY15 to INR12.40 crore in FY16 on account of execution of the orders. The PBILDT margin of the entity increased from 10.57% in FY15 to 13.10% in FY16 on account of decrease in labour cost and other overheads. Due to increase in PBILDT and decline in interest expenses, the PAT margin also increased from 2.77% in FY15 to 4.50% in FY16. * Comfortable capital structure and improvement in debt coverage indicators: The debt equity ratio of the RRFC remained comfortable at below unity level as on March 31, 2016. Furthermore, the overall gearing ratio, though marginally deteriorated, ie, from 0.42x as on March 31, 2015, to 0.43x as on March 31, 2016, due to withdrawal of capital of INR3.17 crore, stood comfortable. The capital structure of the firm remained comfortable at below unity, on account of nominal amount of debt facility (i.e. vehicle loan). The debt coverage indicators of the company improved in FY16 compared to FY15. The total debt/GCA improved from 9.82x in FY15 to 5.74x in FY16 due to increase in cash accruals. The PBILDT interest coverage ratio also improved to 2.36x in FY16 from 1.93x in FY15 due to increase in PBILDT along with decrease in interest expenses at the back of repayment of vehicle loan. RR FAB Constructions (RRFC), formerly known as R&R Fabricators, was established in 1985 by Mr. S. Ramachandra as a proprietorship concern, for executing civil construction works. Subsequently, it was converted into partnership firm on May 5, 2010 with Mr. R. Somesh joining as partner. RRFC is engaged in execution of civil construction works like construction of buildings, commercial apartments in the state of Karnataka under direct tender basis. The firm is currently executing civil construction works for private entities. SANKHESWARAA GOLD: CARE Keeps D on INR12cr Debt in Not Cooperating ------------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Sankheswaraa Gold Exports Private Limited (SGEPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 12.50 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 14, 2019, placed the rating(s) of SGEPL under the 'issuer non-cooperating' category as SGEPL had failed to provide information for monitoring of the rating. SGEPL continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated June 8, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The rating takes into account the delays in debt servicing. Detailed description of the key rating drivers At the time of last rating on May 14, 2019, the following were the rating strengths and weaknesses (updated for the information available from Registrar of Companies): Key rating weaknesses * Delays in debt servicing: As per the interaction with the banker, the account has been classified as NPA. Sankheswaraa Gold Exports Private Limited (SGEPL) was incorporated on June, 25, 2012 by Mr. Ketan Nirmal Jain & family. In March, 2016, the company was taken over by Mr. Rakesh Champalal Parekh and Mr. Nikunj Pravin Parekh. SGEPL has recently commenced its operations from May 19, 2016 by setting up a plant & machinery for manufacturing of gold chains and bracelets with high quality art and finishing. This machinery was imported from Turkey and the total expenditure was INR1.10 crore which was funded through funds from the promoters. The company sells its products to various wholesalers spread across India. SHIVALIK INFRA: CARE Keeps D on INR5.0cr Debt in Not Cooperating ---------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Shivalik Infrastructure (SIF) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 5.00 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated September 17, 2019 placed the ratings of SIF under the 'issuer non-cooperating' category as SIF had failed to provide information for monitoring of the ratings as agreed to in its Rating Agreement. SIF continues to be non-cooperative despite repeated requests for submission of information through phone calls and emails dated June 18, 2020, June 19, 2020 and June 23, 2020. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above ratings. Detailed description of the key rating drivers At the time of last rating done on September 17, 2019, the following were the rating strengths and weaknesses Detailed description of key rating drivers Key Rating Weakness * Ongoing delays in debt servicing: There are ongoing delays in servicing debt obligation due to weak liquidity position of SIF. There have been overdrawing in cash credit facility for more than a year. Rajkot-based (Gujarat) Shivalik Infrastructure (SIF) was established in April, 2016 as a partnership firm by Mr. Amish Ramani and Mr. Madhav Dave. Key promoters of SIF are having an experience of around two decades in various industries. SIF mainly executes projects for various civil construction projects like different types of buildings, roads, pipeline, earthwork etc. on a sub-contracting basis, largely for the Government of Gujarat. SICO INDIA: CARE Lowers Ratings on INR5cr Loans to D ---------------------------------------------------- CARE Ratings revised the ratings on certain bank facilities of SICO INDIA, as: Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long-term Bank 2.50 CARE D; ISSUER NOT COOPERATING Facilities Revised from CARE B-; Stable; ISSUER NOT COOPERATING on the basis of best available information Short Term Bank 2.50 CARE D; ISSUER NOT COOPERATING Facilities Revised from CARE A4; ISSUER NOT COOPERATING on the basis of best available information Detailed Rationale & Key Rating Drivers CARE has been seeking information from SICO INDIA to monitor the ratings vide e-mail communications/letters dated July 14, 2020, July 6, 2020, June 3, 2020, May 14, 2020, May 4, 2020, April 16, 20020, March 31, 2020 and numerous phone calls. However, despite CARE's repeated requests, the entity has not provided the requisite information for monitoring the ratings. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the publicly available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. The rating takes into account the ongoing delays in the servicing of interest obligations due to stressed liquidity position. Furthermore, as per the banker's confirmation, the account is classified as NPA. The ratings on SICO India's bank facilities will now be denoted as CARE D; ISSUER NOT COOPERATING/CARE D; ISSUER NOT COOPERATING. Delhi based, SICO India (SI) was established in 1982 as a proprietorship firm and is currently being managed by Mr. Savir Madan. The firm is engaged in trading of ball-bearings from its office located in Rajouri Garden, Delhi. Firm imports a specific brand of ball-bearings named HHB (Hebei Hailan Bearing) and claims to be the sole supplier for the brand in India. The firm is selling its product through a well-established network of dealers across India. SPLENDID METAL: CARE Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Splendid Metal Products Limited (SMPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 1701.84 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 269.13 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated May 8, 2019, placed the rating(s) of SMPL under the 'issuer non-cooperating' category as SMPL had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. SMPL continues to be non-cooperative despite repeated requests for submission of information through emails, phone calls and a letter/email dated June 29, 2020, June 10, 2020, and May 22, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed description of the key rating drivers At the time of last rating on May 08, 2019, the following were the rating strengths and weaknesses: Key rating weakness: *Stretched liquidity position with ongoing delays in debt servicing: During FY19, liquidity position of the company continued to remain stretched on account of slower realization from debtors. Given the slow realization of debtors has resulted in stretched liquidity position of the company leading to ongoing delays in meeting debt obligation. Splendid Metal Products Limited (Erstwhile Sujana Metal Products Limited), belongs to Hyderabad based Sujana Group. SMPL was incorporated in May 1988 under the name of Sujana Steel Re-Rolling Industries (P) Limited. The name of the company was later changed to Sujana Steels Private Limited in March 1992 and got converted into public limited company in April 1992. SMPL is engaged in trading of steel products and manufacturing of TMT bars & structural steel products at its facilities located at Hyderabad, Chennai and Vizag. Sujana group, belonging to Y. S. Chowdhary, is a South India based industrial house having about two decades of experience in the steel industry. The group is involved in manufacturing of Thermo Mechanical Treated (TMT) bars, Structural Steels, Galvanised Steel towers (used in power transmission & telecom sector) and steel trading through its companies; Sujana Universal Industries Ltd, Sujana Towers Ltd. etc. SUZUKI TEXTILES: CARE Keeps D Debt Ratings in Not Cooperating ------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Suzuki Textiles Limited (STL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 143.87 CARE D; Issuer not cooperating; Facilities Based on best available Information Short term Bank 20.23 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated August 28, 2018, placed the ratings of STL under the 'issuer non-cooperating' category as STL had failed to provide information for monitoring of the rating. CARE had further reviewed the ratings on the above bank facilities of STL under the 'issuer non-cooperating' category vide its press release dated July 22, 2019. STL continues to be non-cooperative despite repeated requests for submission of information. In line with the extant SEBI guidelines, CARE has reviewed the ratings on the basis of the best available information which, however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating. Detailed description of the key rating drivers At the time of last rating on July 22, 2019, the following were the rating weaknesses (updated based on the best available information; FY19 result from ROC and banker feedback). Key Rating Weaknesses * On-going delays in debt servicing: Debt servicing of STL is irregular as reflected by delays in servicing obligation. With disrupted operations (post fire incident) has resulted into acute liquidity stress which led to delays in debt servicing. Further, STL has received notice from State Bank of India u/s 13(2) Of SARFESI Act to initiate the proceedings under said act. * Suspension of manufacturing operation due to fire leading to stressed financial profile: STL is undergoing acute liquidity stress as an aftermath of fire incident that had taken place at its manufacturing facility during March 2016. The fire incident had destroyed both raw material and finished goods inventory at its premises along with substantial damage to its factory building. STL is a Bhilwara based closely held public limited company incorporated in 1986 and has an operational track record of more than two decades. STL operates in three basic segments - suiting & shirting, yarn (polyester cotton & cotton) and readymade garments. VANTAGE SPINNERS: CARE Keeps D on INR68cr Debt in Not Cooperating ----------------------------------------------------------------- CARE Ratings said the rating for the bank facilities of Vantage Spinners Private Limited (VSPL) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 68.75 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated March 15, 2018, placed the rating(s) of VSPL under the 'issuer non-cooperating' category as VSPL had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. VSPL continues to be non-cooperative despite repeated requests for submission of information through emails, phone calls and a letter/email dated May 20, 2019 and July 13, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). Detailed Rationale & Key Rating Drivers The ratings of Vantage Spinners Private Limited (VSPL) factors in delays in servicing of debt obligations by the company. Detailed description of the key rating drivers At the time of last rating on May 30, 2019, the following were the rating strengths and weaknesses: Key Rating Weaknesses * Stretched liquidity with delays in debt servicing: The company has been facing stretched liquidity with inadequate cash accrual generation for servicing the debt obligation. Consequently there has been delays in debt servicing. Key rating Strengths * Experienced promoter group: VSPL's promoter Mr. Potluru Mohana Krishna has around three years of experience in the textile industry mainly by virtue of his association with M/s Priyadarshini Spinning Mills Ltd. Vantage Spinners Private Limited (VSPL) was incorporated on July 28, 2006, by Mr. Potluru Mohana Murali Krishna, Mr. Potluru Soma Sekhar and Ms Nandamuri Meenalatha. VSPL is engaged in manufacturing of cotton yarn (40s and 60s count) with an installed capacity of 31,500 spindles. The company's manufacturing plant is located at Nuzividu Mandalam in Krishna district, Andhra Pradesh. The company started commercial operation in February 2010. VIJAYA DURGA: CARE Keeps D on INR8cr Debt in Not Cooperating ------------------------------------------------------------ CARE Ratings said the rating for the bank facilities of Vijaya Durga Green Fields Private Limited (VDGF) continues to remain in the 'Issuer Not Cooperating' category. Amount Facilities (INR crore) Ratings ---------- ----------- ------- Long term Bank 8.00 CARE D; Issuer not cooperating; Facilities Based on best available Information Detailed Rationale & Key Rating Drivers CARE had, vide its press release dated March 19, 2018, placed the rating(s) of VDGF under the 'issuer non-cooperating' category as VDGF had failed to provide information for monitoring of the rating as agreed to in its Rating Agreement. VDGF continues to be non-cooperative despite repeated requests for submission of information through e-mails, phone calls and a letter/email dated May 20, 2019 and July 13, 2020. In line with the extant SEBI guidelines, CARE has reviewed the rating on the basis of the best available information which however, in CARE's opinion is not sufficient to arrive at a fair rating. Users of this rating (including investors, lenders and the public at large) are hence requested to exercise caution while using the above rating(s). The ratings of Vijaya Durga Green Fields Private Limited (VDGF) factors in delays in servicing of debt obligations by the company. Detailed description of the key rating drivers At the time of last rating on May 30, 2019, the following were the rating strengths and weaknesses: Key Rating Weaknesses * Delays in debt servicing: The company has been facing stretched liquidity profile and consequently there are delays in debt servicing. * Volatility in raw material prices: Prices of raw cotton are highly volatile in nature and depend upon factors like area under cultivation, crop yield, international demand-supply scenario, export quota decided by the Government and inventory carry forward of the previous year. Hence, the profit margins of the company are susceptible to fluctuations in price of raw cotton. * Decline in revenue and low profitability: The company registered a significant decline in revenue by about 23% on y-o-y basis in FY17 from FY16 at the back of decrease in sales volume due to reduced demand in market. The profitability level continued to remain low due to trading nature of business. Key rating Strengths * Experienced promoters & management team: The promoters of the company, Ms N. Meena Latha and Ms P. Sitaratnam have experience of about 10 years in the cotton and textile industry. Vijaya Durga Green Fields Private Limited was promoted by Smt. Nandamuri Meenalatha and Smt. Potluru Sita Ratnam in December 2013. The company is engaged in trading of cotton lint and cotton yarn and is the supplier of cotton lint to various spinning units in the major cotton growing region in Krishna District, Andhra Pradesh. The company started commercial operations from January 2014 onwards. VTP CORP: CARE Reaffirms and Then Withdraws D Debt Ratings ---------------------------------------------------------- CARE has reaffirmed and withdrawn the outstanding rating of 'CARE D' assigned to the bank facilities of VTP Corporation LLP with immediate effect. The above action has been taken at the request of VTP Corporation LLP and 'No Objection Certificate' received from the bank that has extended the facilities rated by CARE. VTP Corporation LLP (VTPLLP) was established in March 2011 as a special purpose vehicle constituted by the promoters of the VTP Group namely, Mr. Vilas Kumar Palresha (24%), Mr. Bhushan Vilas Palresha (20%), Mr. Nilesh Vilas Palresha (20%), Mr. Dheeraj Maleneni (18%), Mr. Manoj Maleneni. The firm is currently executing two projects in Pune, namely 'VTP Purvanchal' at Wagholi location admeasuring 7.21 lsf and 'KP Square' at Chinchwad, Pune admeasuring 0.73 lsf. [*] INDIA: HC Seeks Centre Stand on Insolvency Code Ordinance Bid ----------------------------------------------------------------- The Hindu reports that the Delhi High Court on July 28 sought the Centre's reply on a plea challenging the Insolvency and Bankruptcy Code (IBC) Ordinance which suspended proceedings against defaults arising on or after March 25 for six months in view of the COVID-19 pandemic. According to the report, a Bench of Chief Justice D.N. Patel and Justice Prateek Jalan issued notice to the Ministry of Law and the Insolvency and Bankruptcy Board of India (IBBI) seeking their stand by August 31 on the plea, which seeks setting aside of the amendment made in the IBC by the ordinance. Central government standing counsel Amit Mahajan, appearing for the ministry, opposed the plea saying it was not maintainable, The Hindu says. The Hindu relates that Mahajan said the petitioner - Rajeev Suri - has been unable to show his locus for filing the instant PIL. According to the IBC Ordinance issued on June 5, default on repayments from March 25, the day when the nationwide lockdown began to curb the spread of coronavirus infections, would not be considered for initiating insolvency proceedings for a certain period of time, the report relays. Insolvency proceedings would not be initiated for "any default arising on or after March 25, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf", the ordinance has said, according to The Hindu. Under the IBC, an entity can seek insolvency proceedings against a company even if the default is only for one day. This is subject to the minimum threshold of INR1 crore. Earlier, the threshold was INR1 lakh, the report notes. ========= J A P A N ========= LAOX CO: To Close 12 Stores in Japan as Number of Tourists Drop --------------------------------------------------------------- The Japan Times reports that Laox Co. has announced plans to shut down 12 domestic outlets, or half of its stores in the nation, and withdraw from Okinawa Prefecture and Kyushu. The steps are part of the company's efforts to improve profitability after the number of foreign tourists to Japan, its main customers, plunged due to the novel coronavirus pandemic, the report says. According to The Japan Times, Laox will close three stores in Hokkaido, six in Kyushu and one each in Tokyo, the Kinki western region and Okinawa. The closure dates will be announced after details are finalized. Regarding its reasons for the closures, Laox said in a statement on July 28 that travelers from China, the company's main customers, were unable to enter Japan amid the pandemic and that no recovery was in sight for the number of visitors from the rest of the world, according to The Japan Times. In 2009, Laox came under the wing of a major Chinese electronics retailer due to a business slump, the report recalls. The Japanese company logged a net loss for the second consecutive year in the year ended in December 2019, after a temporary improvement in earnings thanks to a rise in the number of foreign tourists to Japan, The Japan Times discloses. Since February this year, Laox has sought applications for two voluntary redundancy programs to accelerate restructuring efforts, the report adds. NISSAN MOTOR: Warns of Record Loss as Pandemic Hits Turnaround -------------------------------------------------------------- Reuters reports that Nissan Motor Co warned of a record $4.5 billion operating loss this year and its lowest sales in a decade as the COVID-19 pandemic hampers its turnaround efforts. According to Reuters, Japan's No. 2 carmaker is battling to recover from a rapid expansion that has left it with dismal margins and an ageing portfolio, as well as revive its alliance with Renault that was rocked by the arrest of long-time boss Carlos Ghosn. But the virus pandemic and associated plunge in demand has taken a heavy toll on the car industry, with Nissan reporting a second straight quarter of operating losses on July 28, Reuters relays. The company forecast an operating loss of JPY470 billion for the year to March 2021, much larger than analysts' consensus estimate for a JPY262.8 billion loss, Reuters discloses citing Refinitiv data. That would be the second annual loss in a row. Reuters relates that the maker of Rogue SUVs and Leaf electric cars also warned revenue would likely plunge by a fifth to JPY7.8 trillion this year, with vehicle sales falling to an 11-year low of JPY4.13 million from JPY4.93 million the year before. Adding to expected losses is a likely deterioration in Nissan's sales financing business as cash-strapped customers struggle to make lease payments, while underutilised factories are also burning through cash, the report states. "The market outlook remains uncertain and we may see a further deterioration in demand due to a possible second wave of the pandemic," Chief Executive Makoto Uchida told a livestreamed briefing. "Fiscal year 2020 will be a challenging year in terms of profitability and free cash flow," Uchida said, adding Nissan would not issue a dividend this year, Reuters relays. Reuters says Peugeot maker PSA Group sounded more upbeat on July 28, saying pent-up demand from coronavirus lockdowns was driving a rebound in sales, while a survey showed a surge in export expectations among German automakers. Still, Nissan said it expected to cut more than JPY150 billion this year from costs related to marketing, selling and depreciation - roughly half its target to cut JPY300 billion from its fixed costs by March 2024, Reuters discloses. About Nissan Motor Nissan Motor Company Ltd, usually shortened to Nissan, is a Japanese multinational automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. As reported in the Troubled Company Reporter-Asia Pacific on July 16, 2020, Egan-Jones Ratings Company, on July 6, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Nissan Motor Co., Ltd. to BB- from BB. EJR also downgraded the rating on commercial paper issued by the Company to B from A3. =============== M A L A Y S I A =============== PRESS METAL: S&P Affirms 'B+' LT ICR on Proposed Tender Offer ------------------------------------------------------------- S&P Global Ratings, on July28, 2020, affirmed its 'B+' long-term issuer credit and issue ratings on Press Metal Aluminium Holdings Bhd. (PMB) and the Malaysia-based company's outstanding guaranteed senior unsecured notes. S&P said, "We affirmed the ratings because we view PMB's proposed cash tender offer as opportunistic and not distressed. The proposed transaction gives investors an option to tender and we do not envisage an imminent risk of a conventional default over the next 12 months even if the offer is rejected." PMB is offering to repurchase up to US$200 million of its US$400 million guaranteed senior unsecured notes due 2022 at a premium to current market prices. The offer is in the form of a modified Dutch auction, with the price range between 95% and 100% of the principal amount. S&P currently view the discount to par as minimal. S&P said, "In our opinion, PMB's proactive liability management could reduce financing costs and add flexibility to its capital structure. We expect the proposed transaction to generate interest cost savings of Malaysian ringgit (MYR) 20 million-MYR30 million annually. In addition, PMB intends to modestly term out its debt maturity of close to MYR1.9 billion in 2022, which largely comprises the outstanding US$400 million senior unsecured notes. This reduces refinancing risk for a lumpy maturity, in our view." Despite the weak aluminum market, favorable raw material prices and PMB's hedging arrangements should support the company's cash flow generation over the next 12-18 months. S&P anticipates soft market conditions in the aluminum sector to continue due to weak demand, with a recovery only in 2022. However, PMB's favorable aluminum hedge contracts will provide some buffer against near-term price weakness. Sharp declines in the prices of key raw materials also support the company's profitability. Prices for alumina and carbon anodes fell by almost 25% and 20%, respectively, in the six months to June 30, 2020. This compares with an 11% decline in London Metal Exchange aluminum prices over the same period. S&P said, "We believe PMB's business prospects will improve from 2021.The company's efficient smelting operations, slated increase in smelting capacity, and expected backward integration into alumina should support future cash flow generation. Although we forecast subpar credit metrics in 2020, PMB's ratio of funds from operations (FFO) to debt will likely rise to above 20% in 2021. We expect the improvement to be supported by a timely ramp-up of the company's Bintulu phase three capacity expansion and continued favorable raw materials pricing." PMB may face liquidity pressure because of its reliance on access to short-term bank financing amid higher capital intensity and soft aluminum prices. The company's liquidity assessment remains constrained by its dependence on short-term debt financing. S&P said, "Nevertheless, we believe PMB will manage and roll over its short-term debt maturities accordingly. The company's ability to tap banks' working capital facilities and bank financing for the proposed tender offer supports our view." The negative outlook reflects the risk that over the next 12-18 months, weaker macroeconomic and market conditions could delay PMB's deleveraging to levels commensurate with the rating. The negative outlook also reflects the company's demonstrated growth aspirations. S&P could lower the ratings if PMB's liquidity buffer deteriorates or if we expect the company's FFO-to-debt ratio to remain below 20%. Such a scenario could materialize if: -- Averaged realized aluminum prices remain at below US$1,700/ton (after hedging) for a prolonged period at current production levels; -- Production from phase three does not ramp up in 2021 and aluminum prices remain weak; or -- EBITDA margin is materially eroded as raw material prices increase more rapidly than aluminum prices. S&P could revise the outlook to stable if aluminum prices increase such that it believes PMB's FFO-to-debt ratio can recover comfortably above 20%. This could happen if production from phase three ramps up smoothly in 2021, and a broader recovery in the aluminum market stabilizes the company's liquidity position and supports a clear deleveraging path. A stable outlook would also be contingent on PMB lengthening its debt maturity profile and refinancing lumpy maturities due in 2022, as well as greater visibility on working capital movements. ===================== P H I L I P P I N E S ===================== BDO UNIBANK: Posts Rare Loss, Braces for Defaults ------------------------------------------------- Ditas B Lopez at Bloomberg News reports that BDO Unibank Inc., the Philippines' largest lender by assets, posted its first loss in more than a decade after bolstering provisions for bad loans due to the pandemic. Bloomberg relates that the bank said its net loss totaled PHP4.48 billion (US$91 million) in the three months ended June, compared with profit of PHP10.4 billion a year earlier. It booked provisions of PHP22.4 billion in the first half, in anticipation of potential delinquencies stemming from the coronavirus pandemic. According to Bloomberg, BDO joins Bank of the Philippine Islands in bracing for a wave of soured debts as the country faces its worst economic slump in decades following a lockdown to stem the outbreak. "The provisions are anticipatory in nature, and meant to safeguard the balance sheet," BDO said in a statement July 27, Bloomberg relays. The gross non-performing loan ratio increased to 1.95%. The loss shouldn't be surprising after BDO disclosed the pre-emptive provisions last month, said Nicky Franco, head of research at Abacus Securities Corp. Trading gains totaling 6 billion pesos helped to curtail the red ink, Mr. Franco added. It was the bank's first loss since the third quarter of 2008, according to data compiled by Bloomberg. BPI earlier this month set a provision of 15 billion pesos in the first half, driving its second-quarter profit down 25% from a year earlier, Bloomberg adds. NATIONAL AGRIBUSINESS: PHP4.8MM in Irregular Disbursement Returned ------------------------------------------------------------------ Ben Rosario at Manila Bulletin reports that seven years after the abolition of graft-ridden National Agribusiness Corporations (NABCOR), only one former official was able to return to the government a total PHP4.850 million in expenditures found highly anomalous by the Commission on Audit (COA). But by COA's reckoning, the amount is just a drop in the bucket compared to the over PHP1.6 billion in pork barrel funds that were disallowed due to irregularities allegedly committed by Congress members with the connivance of NABCOR officials and personnel, Manila Bulletin relates. In a management letter released by COA, the audit agency disclosed that as of December 31, 2019, the total unsettled audit disallowances had reached PHP406.255 million, Manila Bulletin discloses. Manila Bulletin relates that the amount was outside the PHP1.274 billion lost by the government through non-existent and highly anomalous livelihood projects that 65 legislators initiated with the use of their respective shares of the Priority Development Assistance Program or pork barrel and other private individuals. In the management letter sent to Agriculture Secretary William Dar, state auditors led by Supervising Auditor Amyryllis Barbara Almazan reiterated their previous recommendation to the NABCOR Technical Working Group for Financial Assessment to record the disallowances in the books of the abolished state-owned firm. According to Manila Bulletin, the Audit Team said this is vital in establishing the accountability to be transferred to the DA and "facilitate the collection of the receivables from the concerned persons liable." State auditors noted that the audit disallowances of PHP406.255 million that have become final and executory have not been recorded in the books of Nabcor which had been ordered dissolved in 2014, Manila Bulletin relays. Manila Bulletin notes that the winding down affairs of NABCOR is being managed by the Transition Management Committee for the Liquidation of the Affairs of Abolished Government Owned and/or Controlled Corporations under the DA. It is being headed by lawyer Francisco Villano Jr., DA assistant secretary for finance. COA lamented that despite the lapse of six years, there remained a failure on the part of TMC and the TWGs to complete mandated activities to resolve all matters for the full liquidation of NABCOR's corporate affairs, Manila Bulletin adds. "Moreover, the activities towards the closure of the NABCOR's books of accounts, the transfer and de-recognition of its remaining assets, and the recognition thereof in the DA's books of accounts were not yet undertaken. Thus, the accountability for the assets was not ensured," the audit body noted. About NABCOR NABCOR was a government corporation primarily engaged in the production of livestock and agricultural products. From 2007 to 2010, NABCOR became a conduit for the commission of massive fund irregularities in the use of PDAF allocated for congressional offices. Its abolition was ordered in 2013 by the Governance Commission for GOCCs. ================= S I N G A P O R E ================= HIAP SENG: Applies for Judicial Management ------------------------------------------ Lee Meixian at The Business Times reports that Hiap Seng Engineering on July 28 said that it has, with its subsidiary, HS Compression & Process (HSCP), filed separate applications in the High Court for orders that they be placed under judicial management (JM). The JM applications will be heard on a date to be fixed by the Court, the report says. BT relates that the board of HSCP has, in the JM applications, proposed the appointment of Oon Su Sun -- oonsusun@RSMSingapore.sg -- and Lin Yueh Hung -- yhlin@RSMSingapore.sg -- from RSM Corporate Advisory as judicial managers to manage the affairs, business and property of the company and HSCP during the JM period. Hiap Seng has also notified the Singapore Exchange of the JM applications. The suspension of trading of the company's shares, which began last November, continues. In February this year, Hiap Seng, which was going through restructuring, reported that it had widened its third-quarter losses as turnover took a tumble from lower recognition of revenue, BT recalls. Net loss was SGD5.43 million for the three months to Dec 31, 2019, worsening from SGD834,000 in the year before; its revenue fell by 31.7 per cent year on year, to SGD31.8 million, BT discloses. Hiap Seng Engineering Ltd provides building construction, engineering, procurement, construction, and plant maintenance services for the oil and gas, and energy sectors in Singapore, Malaysia, Thailand, Vietnam, the United Arab Emirates, and internationally. =============== T H A I L A N D =============== THAI AIRWAYS: Has Defaulted on Nearly $3 Billion Worth Of Debt -------------------------------------------------------------- Haneesa Begum at Simple Flying reports that Thai Airways released a disclosure on July 22, stating its inability to pay off a cumulative debt of $2.7 billion (THB85 billion). The airline, which successfully filed for a rehabilitation request at the end of May, has defaulted on debts to banks and official government stakeholders, the report says. On May 18, CIMB Thai Bank appealed for payment of principal and interest in promissory notes due on May 26. The amount owed but defaulted is nearly $32 million. Similarly, the Islamic Bank of Thailand issued a letter the same day requesting for payment worth $15.8 million. The sum was to be paid on May 22. Additionally, the Public Debt Management Office under the Ministry of Finance requested for principal payment, interest, and on-lend fees by June 15. As of May 22, the amount is $378 million, the report discloses. Simple Flying relates that he unredeemed debentures make up the remaining amount of $2.2 billion (THB71.6 billion). As a result, the accumulated debt is $2.7 billion, equivalent to 33.14% of Thai Airways' total assets. In the official disclosure sent to Simple Flying, Thai Airways revealed that the submitted rehabilitation petition was done due to the carrier's current financial standing. As such, the Central Bankruptcy Court accepted the airline's rehabilitation petition on May 27. The rehabilitation plan puts THAI on automatic stay, which prevents creditors from collecting debts until the case is closed. This is similar to the bankruptcy procedure in the US, referred to as Chapter 11, the report states. Chansin Treenuchagron, THAI's new Acting President, adds, "The company has received notices of repayment of debts under all series of debentures issued by the company and have not yet been redeemed. The company has also notified the SET of such events. However given that the company is in the rehabilitation process, which puts the company in an automatic stay, the company is currently unable to repay such debts," Simple Flying relays. Simple Flying, citing Bangkok Post, discloses that nearly half of the airline's debts, precisely 49%, are owed to foreign creditors located in Germany, England, and the US. Hence, Thai Airways must also file for protection under Chapter 11, or risk having its offices and planes abroad impounded. Furthermore, the airline is now privatized, after the Finance Ministry reduced its stake by 3% in the airline, hitting 48%, adds Simply Flying. Simply Flying says the next step for Thai Airways is to prepare a business plan in hopes of saving the company. The project will be revealed to the Central Bankruptcy Court in three weeks, on August 17. About Thai Airways Thai Airways International PCL (BAK:THAI) -- http://www.thaiairways.co.th/-- is the national carrier of Thailand. The company provides air transportation, freight and mail services on domestic and international routes including Asia, Europe, North America, Africa and South West Pacific. The Company is a state enterprise which is controlled by the government and partly owned by the public. As reported in Troubled Company Reporter-Asia Pacific on May 21, 2020, Reuters said Thailand's cabinet approved a plan to restructure troubled Thai Airways International Pcl's finances through a bankruptcy court, the Southeast Asian country's prime minister said on May 19. The plan for a court-led restructuring of the national carrier replaces a previous proposal of a government-backed rescue package that was heavily criticised in the country. Thai Airways on May 27 said it appointed board members as rehabilitation planners in a bankruptcy court submission. Thai Airways posted losses every year after 2012, except in 2016. In 2019, it reported losses of THB12.04 billion. ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. *** End of Transmission ***