/raid1/www/Hosts/bankrupt/TCRAP_Public/220408.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
Friday, April 8, 2022, Vol. 25, No. 65
Headlines
A U S T R A L I A
AFG TRUST 2022-1: S&P Assigns BB Rating on Class E Notes
BUCHANAN INVESTMENT: Second Creditors' Meeting Set for April 13
L & L MARTIN: First Creditors' Meeting Set for April 14
MEGACRANE HOLDINGS: Second Creditors' Meeting Set for April 14
NEWS CORP: New Unsecured Debt No Impact on Moody's Ba1 CFR
ROTECH SYSTEMS: First Creditors' Meeting Set for April 14
SUPERIOR WINDOWS: Second Creditors' Meeting Set for April 14
C H I N A
CHINA EVERGRANDE: Creditors Allowed to Sue Locally to Recoup Debt
LANDSEA GREEN: Moody's Lowers CFR to B3, Outlook Remains Negative
REMARK HOLDINGS: Swings to $27.5 Million Net Income in 2021
ROAD KING: S&P Lowers LongTerm ICR to 'B+', Outlook Stable
YANGZHOU ECONOMIC: Moody's Assigns Ba1 Rating to New USD Bonds
ZHENGZHOU ZHONGRUI: Moody's Withdraws 'B3' Corporate Family Rating
ZHONGLIANG HOLDINGS: Moody's Cuts CFR to B3, Outlook Remains Neg.
I N D I A
ALFA TRANSFORMERS: CRISIL Lowers Rating on INR6.5cr Loan to C
AMAR FARM: CRISIL Assigns B Rating to INR6cr Cash Loan
ANAND DIVINE: NCLT Initiates Insolvency Proceedings
GODAVARI POLYMERS: ICRA Lowers Rating on INR50.37cr Loan to D
GTN INDUSTRIES: ICRA Raises Rating on INR49.15cr Loan to BB+
HASIMARA INDUSTRIES: ICRA Hikes Rating on INR8.50cr Loan to BB-
ICHALKARANJI POWERLOOM: CRISIL Keeps D Ratings in Not Cooperating
INNOVATIVE TYRES: CRISIL Moves D Debt Ratings to Not Cooperating
INTERNO DOORS: ICRA Assigns B Rating to INR25.20cr Term Loan
JANAK ENTERPRISE: CRISIL Lowers Rating on INR4.95cr Loan to D
JHARKHAND INFRA: ICRA Reaffirms D Rating on INR443.20cr Loan
KKP SPINNING: CRISIL Withdraws B+ Rating on INR31cr LOC
LODHI RAJPOOT: CRISIL Withdraws B+ Rating on INR4.4cr Cash Loan
M K AIRCON: CRISIL Lowers Rating on INR5cr Cash Loan to B+
OMKAR NESTS: CRISIL Moves B+ Debt Ratings to Not Cooperating
PARCOS TILES: ICRA Withdraws B- Rating on INR12.32cr Term Loan
PAREKH ALUMINEX: CRISIL Keeps D Debt Ratings in Not Cooperating
PAWAN KRAFT: CRISIL Assigns B+ Rating to INR60cr Term Loan
RELIANCE CAPITAL: Administrator Gets 55 Bids From Interest Buyers
RELIGARE HOUSING: ICRA Lowers Rating on INR1,200cr Loan to B+
SAI POINT: CRISIL Withdraws B- Rating on INR12cr Overdraft Debt
SAMARTHA HOSPITAL: CRISIL Assigns B Rating to INR15cr New Loan
SEVEN SEAS: CRISIL Moves D Debt Ratings to Not Cooperating
SEW KRISHNAGAR: CRISIL Moves D Debt Ratings to Not Cooperating
SRS LIMITED: CRISIL Keeps FD Debt Rating in Not Cooperating
SURYA ALLOY: CRISIL Withdraws D Rating on INR33cr Cash Loan
UMA GLASS: CRISIL Withdraws D Rating on INR7cr Cash Loan
VISIONINDIA SOFTWARE: CRISIL Moves D Ratings to Not Cooperating
I N D O N E S I A
SAKA ENERGI: Fitch Affirms 'B+' LongTerm IDR, Outlook Negative
M A L A Y S I A
JEPAK HOLDINGS: QEOS Withdraws Judicial Management Application
N E W Z E A L A N D
BELLA VISTA: Former Director Fights Bankruptcy Challenge
DUN EDEN: Creditors' Proofs of Debt Due on May 6
MARKEATON FARMS: Creditors' Proofs of Debt Due on May 12
SMITH & CO: Creditors' Proofs of Debt Due on May 6
TINY INTELLIGENCE: Creditors' Proofs of Debt Due on April 30
WELLINGTON WATERFRONT: Court to Hear Wind-Up Petition on April 12
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A U S T R A L I A
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AFG TRUST 2022-1: S&P Assigns BB Rating on Class E Notes
--------------------------------------------------------
S&P Global Ratings assigned its ratings to seven of the eight
classes of prime residential mortgage-backed securities (RMBS)
issued by Perpetual Corporate Trust Ltd. as trustee for AFG 2022-1
Trust in respect of Series 2022-1.
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including its view that the credit support is sufficient
to withstand the stresses it applies. The credit support for the
rated notes comprises note subordination and lenders' mortgage
insurance on 15.7% of the portfolio.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity facility
equal to 1.0% of the aggregate outstanding amount of the notes,
subject to a floor of A$750,000, and the principal draw function
are sufficient to ensure timely payment of interest.
-- The extraordinary expense reserve of A$150,000 funded by AFG
Securities Pty Ltd. on the closing date to meet extraordinary
expenses. The reserve is to be topped up from excess spread, if
any, to the extent it has been drawn.
-- The counterparty exposure to National Australia Bank Ltd. as
liquidity facility and bank account provider. The transaction
documents for the liquidity facility and bank account include
downgrade language consistent with S&P Global Ratings' counterparty
criteria.
Ratings Assigned
AFG 2022-1 Trust in respect of Series 2022-1
Class A1-S, A$150,000,000: AAA (sf)
Class A1-L, A$525,000,000: AAA (sf)
Class A2, A$33,750,000: AAA (sf)
Class B, A$25,125,000: AA (sf)
Class C, A$7,125,000: A (sf)
Class D, A$3,750,000: BBB (sf)
Class E, A$2,625,000: BB (sf)
Class F, A$2,625,000: Not rated
BUCHANAN INVESTMENT: Second Creditors' Meeting Set for April 13
---------------------------------------------------------------
A second meeting of creditors in the proceedings of Buchanan
Investment Solutions Pty. Ltd. has been set for April 13, 2022, at
11:00 a.m. via Zoom meeting.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 12, 2022, at 4:00 p.m.
Andrew Juzva of G S Andrews Advisory was appointed as administrator
of Buchanan Investment on March 9, 2022.
L & L MARTIN: First Creditors' Meeting Set for April 14
-------------------------------------------------------
A first meeting of the creditors in the proceedings of L & L Martin
Line Marking Pty Ltd will be held on April 14, 2022, at 10:00 a.m.
via Zoom.
Anthony Lane of Beacon Advisory was appointed as administrator of L
& L Martin on April 4, 2022.
MEGACRANE HOLDINGS: Second Creditors' Meeting Set for April 14
--------------------------------------------------------------
A second meeting of creditors in the proceedings of Megacrane
Holdings Pty Ltd (trading as 'Megacrane' and Formerly T/AS 'Soldier
Tower Cranes') and Hyrise Holdings Pty Ltd (ATF The Hyrise Holding
Unit Trust) has been set for April 14, 2022, at 11:00 a.m. at the
offices of O'Brien Palmer, Level 9, 66 Clarence Street, in Sydney,
NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 13, 2022, at 4:00 p.m.
Liam Bailey of O'Brien Palmer was appointed as administrator of
Megacrane Holdings on March 9, 2022.
NEWS CORP: New Unsecured Debt No Impact on Moody's Ba1 CFR
----------------------------------------------------------
Moody's Investors Service says News Corporation's Ba1 Corporate
Family Rating, Ba1-PD Probability of Default Rating, Ba1 senior
unsecured notes ratings, SGL-1 Speculative Grade Liquidity Rating
and positive outlook are unchanged by the proposed issuance of a
new 5-year, $500 million unsecured Term Loan A and new 5-year, $750
million unsecured Revolving Credit Facility which are unrated. The
new obligations will be guaranteed by all subsidiary borrowers
under the existing revolving facilities, and rank pari-passu with
existing secured notes.
The proceeds of the new term loan will be used to partially fund
the $1.45 billion purchase of the OPIS and Base Chemicals
businesses from S&P Global Inc. (A3 Stable) and IHS Markit
(unrated) and pay transaction fees and expenses. The acquisition of
OPIS closed on February 28 and the acquisition of Base Chemicals is
expected to close by May 31st. News Corp's acquisition of S&P's
OPIS and Base Chemicals businesses is credit positive. Moody's
expects the financing mix to include a substantial portion of cash
such that pro forma adjusted leverage remains below 3.0x. Despite
the leveraging event, Moody's believes these are strong assets with
a very high mix of recurring and digital revenue that generate
strong EBITDA margins.
News Corporation (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global,
diversified media and information services company focused on
creating and distributing authoritative and engaging content and
other products and services. The company comprises businesses
across a range of media, including: Dow Jones, digital real estate
services, subscription video services in Australia, news media and
book publishing. Headquartered in New York, News Corp operates
primarily in the United States, Australia, and the United Kingdom,
and its content and other products and services are distributed and
consumed worldwide. Revenues for the last twelve months (LTM) ended
December 31, 2021 was approximately $10 billion (as reported).
ROTECH SYSTEMS: First Creditors' Meeting Set for April 14
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Rotech
Systems Pty. Ltd. will be held on April 14, 2022, at 10:00 a.m. via
virtual meeting.
Stephen Dixon of Hamilton Murphy was appointed as administrator of
Rotech Systems on April 4, 2022.
SUPERIOR WINDOWS: Second Creditors' Meeting Set for April 14
------------------------------------------------------------
A second meeting of creditors in the proceedings of Superior
Windows Pty Limited has been set for April 14, 2022, at 11:00 a.m.
via Zoom.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by April 13, 2022, at 4:00 p.m.
Chad Rapsey of Rapsey Griffiths Turnaround + Advisory was appointed
as administrator of Superior Windows on March 10, 2022.
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C H I N A
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CHINA EVERGRANDE: Creditors Allowed to Sue Locally to Recoup Debt
-----------------------------------------------------------------
Bloomberg News reports that several Chinese lenders have been told
they can file legal cases against China Evergrande Group in local
courts, in an apparent easing of a restriction that required all
such lawsuits to be handled in a single court, according to people
familiar with the matter.
The move may help onshore creditors gain control of assets ahead of
a looming debt restructuring. At least three lenders in Zhejiang
province and Shandong province were told by courts last month that
they can file the cases against the developer in their own
jurisdictions rather than to a court in Guangzhou, where Evergrande
has been based for decades, said the people, asking not to be
identified discussing a private matter, Bloomberg relays.
Some cases have already been accepted, said the people. According
to the report, creditors have filed hundreds of lawsuits to the
Intermediate People's Court of Guangzhou after China's Supreme
Court in early August ordered all cases against Evergrande and its
affiliates to be processed there.
Bloomberg relates that the backlog and protracted process have led
to slow progress for many banks, trusts and suppliers to seize
assets and recover their losses. Evergrande, started 28 years ago
by billionaire chairman Hui Ka Yan, officially became a defaulter
in December and aims to provide creditors with a preliminary
overhaul proposal by the end of July.
Both onshore and offshore investors are closely watching the
development of what could be one of the nation's biggest
restructurings, as they are prepared for a lengthy battle over who
gets paid from what remains, the report says.
Bloomberg relates that the August order to centralise cases had
given Evergrande some breathing room as it helped hold off
creditors' attempts to freeze accounts while allowing the developer
to complete more than one million unfinished homes. Smaller rival
Kaisa Group Holdings in November flagged that it was also resorting
to this approach to prevent assets being frozen by courts under
numerous lawsuits.
However, the Guangzhou court alone cannot deal with hundreds of
filings from the country, the people said. As at Dec. 9, it has
accepted 367 cases with claims totalling CNY84 billion, the
Financial Times reported in December citing official records.
The latest change may allow creditors to gain faster control of
Evergrande's real estate projects, many of which were being pledged
for borrowings, said the people, Bloomberg relays. Signs have
already emerged that Evergrande is speeding up on disposing of
stakes in some property projects. At least three trust companies
have bought stakes in at least seven projects from Evergrande this
year.
About China Evergrande
China Evergrande Group is an integrated residential property
developer. The Company, through its subsidiaries, operates in
property development, investment, management, finance, internet,
health, culture, and tourism markets.
Evergrande had CNY1.97 trillion (US$311 billion) of liabilities at
the end of June 2021. Once China's biggest developer by sales,
Evergrande fell into distress as cash dried up and the group
overstretched itself on borrowings and ventures into car
manufacturing.
Evergrande hired outside financial advisers Houlihan Lokey and
Admiralty Harbour Capital in September 2021 to engage with
creditors soon after it ran into a liquidity squeeze. It has since
worked with more advisers in the past two months by turning to
China International Capital Corp, BOCI Asia and Zhong Lun Law Firm
on its debt workout plan.
As reported in the Troubled Company Reporter-Asia Pacific in
December 2021, S&P Global Ratings lowered the issuer credit ratings
on China Evergrande Group and Tianji Holding Ltd. to 'SD' from
'CC'. S&P also lowered the issuer rating on Tianji's bonds due
2022 and 2023 to 'D' from 'C'. S&P subsequently withdrew all its
ratings on Evergrande, its subsidiary Hengda Real Estate Group Co.
Ltd., and Tianji, at the group's request.
The TCR-AP also reported that Fitch Ratings has downgraded to 'RD'
(Restricted Default), from 'C', the Long-Term Foreign-Currency
Issuer Default Ratings (IDR) of China Evergrande Group and its
subsidiaries, Hengda Real Estate Group Co., Ltd and Tianji Holding
Limited. Fitch has affirmed the senior unsecured ratings of
Evergrande and Tianji at 'C', with a Recovery Rating of 'RR6', as
well as the Tianji-guaranteed senior unsecured notes issued by
Scenery Journey Limited at 'C', with a Recovery Rating of 'RR6'.
The downgrades reflect the non-payment of coupons due Nov. 6, 2021
for Tianji's USD645 million 13% bonds and USD590 million 13.75%
bonds after the grace period lapsed on 6 December. The non-payment
is consistent with an 'RD' rating, signifying the uncured expiry of
any applicable grace period, cure period or default forbearance
period following a payment default on a material financial
obligation.
LANDSEA GREEN: Moody's Lowers CFR to B3, Outlook Remains Negative
-----------------------------------------------------------------
Moody's Investors Service has downgraded Landsea Green Properties
Co., Ltd.'s corporate family rating to B3 from B2 and its senior
unsecured rating to Caa1 from B3.
The outlook remains negative.
"The downgrade reflects Landsea's increasing refinancing risk,
driven by its weakening liquidity and material amount of offshore
bonds maturing in the next 3-6 months," says Daniel Zhou, a Moody's
Analyst.
"The negative outlook reflects the uncertainties over Landsea's
ability to raise new funding, including asset disposals, to manage
the company's refinancing needs in the next 6-12 months," adds
Zhou.
RATINGS RATIONALE
Moody's has changed its assessment of Landsea's liquidity to weak
from adequate, in view of the company's depleting cash at the
holding company level, material amount of offshore bonds maturing
in the next 3-6 months, and constrained funding access.
Moody's estimates Landsea's unrestricted cash at the holding
company level would have declined notably in the first quarter of
2022, as it needed to fund its joint ventures (JVs) in China amid a
tight credit environment and declining contracted sales, which are
a result of the weak market sentiment and ongoing coronavirus
pandemic.
Its weakened operations in China and the holding of its US business
through a listed subsidiary will also limit Landsea's ability to
upstream project-level cash to the holding company level.
Landsea will have $147 million and $165 million of offshore bonds
maturing in June and October 2022, respectively, which collectively
accounted for 24% of its reported debt as of the end of 2021.
However, it is unlikely that Landsea can issue new bonds at a
reasonable cost for refinancing, given the company's weakened
access to the offshore bond market.
Moody's also notes that Landsea's auditor, PricewaterhouseCoopers,
has expressed concerns about the company's ability to continue as a
going concern. This would further weaken investors' confidence and
the company's access to funding.
Landsea can use its internal resources and proceeds from assets
disposal to repay its maturing debt. However, this will further
deplete Landsea's balance sheet cash. The timing of its asset sales
will also entail uncertainty, given the weak market sentiment and
tight funding conditions in China.
Landsea's B3 CFR is constrained by its weakening liquidity, lower
flexibility than its peers in accessing project-level cash due to
its asset-light business model, small operating scale and narrow
funding channels. Landsea's B3 CFR also reflects its recognized
brand in green property development and growing US operations,
which support growth and offer geographic diversification.
The Caa1 senior unsecured debt rating is one notch lower than the
corporate family rating due to structural subordination risk. This
subordination risk reflects the fact that the majority of Landsea's
claims are at the operating subsidiaries and have priority over
claims at the holding company in a bankruptcy scenario. In
addition, the holding company lacks significant mitigating factors
for structural subordination.
Consequently, the expected recovery rate for claims at the holding
company will be lower.
In terms of environmental, social and governance (ESG) factors,
Moody's has considered Landsea's concentrated ownership by its key
shareholder, Mr. Tian Ming, who held a stake of approximately
57.94% (direct and indirect) in Landsea as of June 30, 2021.
Moody's has also considered the presence of three independent
nonexecutive directors on the company's seven-member board and
other internal governance structures and standards as required by
the Hong Kong Stock Exchange.
Landsea's heavy reliance on JVs exposes the company to greater
governance risk, as this weakens its corporate and financial
transparency.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely, given the negative outlook.
However, Moody's could return the outlook to stable if Landsea
improves its operating cash flow, liquidity and access to funding.
On the other hand, Moody's could downgrade the ratings if Landsea's
refinancing risks heighten, or its liquidity or access to funding
deteriorates further.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Landsea is a property developer and development and management
services provider in China and the US that specializes in green
property projects.
The company listed its shares in Hong Kong through a reverse IPO in
2013, after acquiring Shenzhen High-Tech Holding Limited. As of
June 2021, it was 57.94% owned by its founder, Tian Ming. Landsea
had total land reserves of 5.0 million square meters on a gross
basis across 36 cities in China and six states in the US as of June
2021.
REMARK HOLDINGS: Swings to $27.5 Million Net Income in 2021
-----------------------------------------------------------
Remark Holdings, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing net income of
$27.47 million on $15.99 million of revenue for the year ended Dec.
31, 2021, compared to a net loss of $13.69 million on $10.15
million of revenue for the year ended Dec. 31, 2020.
"Fourth quarter 2021 revenue of $6.3 million represented a 33%
increase compared to the fourth quarter of 2020, and powered a 58%
year-over-year increase. Adoption of our AI-powered solutions came
from diverse industries including construction, infrastructure,
banking and education," noted Kai-Shing Tao, chairman and chief
executive officer of Remark Holdings. "Our AI-driven security
solutions are currently being evaluated for several U.S.-based
infrastructure projects in the rail and public safety industries as
well as for border control."
As of Dec. 31, 2021, the Company had $75.50 million in total
assets, $44.47 million in total liabilities, and $31.03 million in
total stockholders' equity.
At Dec. 31, 2021, the cash balance totaled $14.2 million, compared
to a cash position of $0.9 million at Dec. 31, 2020. Cash
increased primarily due to $32.2 million in net proceeds from debt
issuances and $5.7 million in proceeds from a stock issuance, which
were partially offset by debt repayments and payments of other
operating liability payments.
"For fiscal year 2022, we anticipate continued growth in both our
US and China AI businesses. Additionally, we have a robust
pipeline of business opportunities in Europe which represents a
previously untapped market. Finally, we will be introducing
several new initiatives in the NFT and metaverse spaces in the
coming months that are powered by our AI technology," concluded Mr.
Tao.
Los Angeles, California-based Weinberg & Company, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 31, 2022, citing that the Company has suffered
recurring losses from operations and negative cash flows from
operating activities and has a negative working capital and a
stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at
https://bit.ly/38t2ELz
About Remark Holdings
Remark Holdings, Inc. (NASDAQ: MARK) --
http://www.remarkholdings.com-- delivers an integrated suite of AI
solutions that enable businesses and organizations to solve
problems, reduce risk and deliver positive outcomes. The company's
easy-to-install AI products are being rolled out in a wide range of
applications within the retail, financial, public safety and
workplace arenas. The company also owns and operates digital media
properties that deliver relevant, dynamic content and ecommerce
solutions. The company is headquartered in Las Vegas, Nevada, with
additional operations in Los Angeles, California and in Beijing,
Shanghai, Chengdu and Hangzhou, China.
ROAD KING: S&P Lowers LongTerm ICR to 'B+', Outlook Stable
----------------------------------------------------------
S&P Global Ratings, on April 6, 2022, lowered its long-term issuer
credit rating on Road King Infrastructure Ltd. (RKI) to 'B+' from
'BB-' and the long-term issue rating on the company's outstanding
senior unsecured notes to 'B+' from 'BB-'.
The stable outlook reflects our view that RKI will maintain steady
operations and adequate liquidity, with little improvements in
leverage from a weaker sales and margin outlook over the next 12
months.
RKI deteriorated leverage is likely to stay at current levels over
the next 12 months, amid normalizing margins and industry
challenges.
The China-based property developer's adequate liquidity, spread-
out maturity profile, and stable cashflow from toll roads support
the revised rating.
S&P said, "We downgraded RKI to reflect its deteriorated leverage,
which in our view is unlikely to significantly improve over the
next 12 months. We believe the company will face challenges in
deleveraging, from normalizing margins and a weakened industry
outlook. Its leverage profile, on both a consolidated and
look-through basis, has deteriorated and is no longer commensurate
with 'BB-' ratings.
"We believe RKI's continued margin normalization in 2022 will
hinder leverage improvements. RKI's margin has been retreating from
a high base in 2018 and 2019, in line with margin contraction in
the industry. The company's EBITDA margin dropped to 22.1% in 2021
from 27.1% in 2020. We forecast it will stay low at 20%-22% in
2022. Nevertheless, RKI's profitability should remain stronger than
the peer average, supported by the company's disciplined land
banking and steady dividends from its toll-road segment.
"The stable outlook reflects our view that RKI has a better
maturity profile than peers to support its liquidity.This is
despite the fact that China's tightened policy on escrow accounts
may affect access to cash. We believe the company's strategy of not
pursuing high asset turnover better positions it in this industry
downturn. The result is a more spread-out maturity profile."
RKI has a Chinese renminbi (RMB) 869 million onshore corporate bond
and a HK$500 million term loan maturing in September 2022. The
company's next offshore senior note maturity is in February 2023.
It has limited exposure to trust financing. Based on S&P's
estimates, RKI held about HK$2 billion of its total cash at the
offshore holding-company level as of end-2021. The company has also
been reasonably compliant with escrow account requirements over the
years, which cushioned the impact from sales proceeds
restrictions.
RKI's toll-road segment will maintain steady cash flow as
operations have recovered to pre-COVID levels. This will offer some
stability and diversification benefits from the uncertain China
property sector. The positive assessment in S&P's comparable
ratings analysis captures this.
Contracted sales could drop by 15%-20% in 2022, amid weak demand
and new pandemic outbreaks across major cities in China. RKI's
sales declined significantly year on year in the first three
months, in tandem with industry peers. Sales had increased by 20%
in the same period in 2021. S&P said, "We expect a 70% sell-through
rate for the company's RMB60 billion of approximate saleable
resources. Its Wong Chuk Hang project in Hong Kong contributed
about RMB13 billion to total sales of RMB48.9 billion in 2021. RKI
will begin handover to buyers by end-2022. We estimate HK$2
billion-HK$3 billion of cash inflow upon delivery. Management
expects to launch the So Kwun Wat project in 2022, with sales of
HK$2 billion-HK$4 billion."
RKI is likely to remain selective and disciplined in acquiring new
projects, even with more opportunities in the land market from
reduced competition. The company will continue to focus on its core
markets in higher-tier cities and spend 30%-35% of its sales
proceeds on land-bank replenishment. This is in line with the
policy cap of 40%. In 2021, RKI spent RMB9 billion on 12 new
projects on an attributable basis. Of this, half were acquired in
the second half when other developers scaled back investments. S&P
also expects the company to maintain a presence in the Hong Kong
property market and redeploy capital from completing projects to
new land.
S&P forecasts gross debt will decline slightly in 2022 and 2023.In
its view, RKI will repay its maturing capital-market borrowings
when they come due over the coming two years. This will partly
offset revenue and margin weakness and limit further deterioration
in its leverage. The ratio of consolidated debt to EBITDA will
likely remain high at 8.4x-8.6x in 2022-2023, compared with 8.4x in
2021 and 7.0x in 2020. On a look-through basis, the ratio has
equally deteriorated and will likely stay in the 6.0x-6.5x range in
2022-2023.
RKI's joint-venture (JV) risks are partly mitigated by the more
robust profile of its partners. The company mainly cooperates with
state-owned enterprises and developers with similar financial
discipline. Therefore, although it does not have the power to
control cash flow from its JVs, counterparty risks on access to
sales proceeds and project viability in the event of the partners'
financial distress are lower, in S&P's view.
S&P said, "The stable outlook reflects our expectation that RKI
will maintain steady operations and adequate liquidity, with small
improvements in leverage from a weaker sales and margin outlook
over the next 12 months. We also expect its toll-road dividends to
be stable.
"We could lower the ratings if RKI's consolidated and look-through
(proportionately consolidating JVs) debt-to-EBITDA ratios stay
above 7x sustainably without signs of improvement. This could
happen if: (1) the company is more aggressive in its debt-funded
expansion than we expect; or (2) revenue booking and profitability
are lower than our expectation.
"We could also lower the ratings if RKI's liquidity and funding
access weakens.
"We could raise the ratings if RKI's consolidated or look-through
debt-to-EBITDA ratios improve to below 5x on a sustained basis.
This may happen if the company limits its debt growth through
strong control over expansion."
YANGZHOU ECONOMIC: Moody's Assigns Ba1 Rating to New USD Bonds
--------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 senior unsecured
rating to the proposed USD bonds to be issued by Yangzhou Economic
and Technological Development Zone Development Corporation (YETDC;
Ba1 stable).
The rating outlook is stable.
The company plans to use the proceeds to refinance existing
indebtedness in accordance with the green finance framework and the
NDRC certificate.
RATINGS RATIONALE
YETDC's Ba1 corporate family rating is based on the Yangzhou
government's capacity to support (GCS) score of baa2, and Moody's
assessment of how YETDC's characteristics affect the Yangzhou
government's propensity to provide support, resulting in a
two-notch downward adjustment from the GCS score.
Moody's assessment of Yangzhou's GCS score reflects Yangzhou's
status as a prefectural-level government and its position at a
relatively lower administrative level in Moody's assessment of the
hierarchy of regional and local governments (RLGs) in China (A1
stable); and Yangzhou's high state-owned enterprise (SOE)
liabilities relative to its fiscal revenue, which present
contingent liability risks.
YETDC's CFR reflects the Yangzhou government's propensity to
provide support to YETDC, which is based on the Yangzhou
government's full ownership of YETDC; the company's status as a
major local government financing vehicle (LGFV) by asset size in
Yangzhou and its position as the sole provider of essential public
services in the Yangzhou Economic and Technological Development
Zone (the Development Zone), including shantytown redevelopment,
social housing construction, and primary land and infrastructure
development.
However, the two-notch downward adjustment from Yangzhou's GCS
score reflects the company's fast debt growth relative to local
economic growth, the lack of a highly predictable government
payment mechanisms, and the high contingent risk associated with
the external guarantees and third-party lending it has provided to
other SOEs.
The Development Zone, a national-level economic and technological
development zone, plays an important role in the upgrading of
Yangzhou's industries and is a key driver of the city's economic
development.
Moody's estimates that YETDC received government cash payments
totaling around RMB21.2 billion in 2017-20, mainly in the form of
compensation for primary land development and infrastructure
projects, capital injections and subsidies. The payments related to
primary land development are inherently subject to public land
sales volatility.
The company has a high level of external guarantees and third-party
lending relative to its total equity. However, it has shown
improvement in the past 18 months – its external guarantee and
third-party lending to total equity ratio declined to 66% at the
end of 2020 and to 59% as of June 2021, from 112% at the end of
2019.
The rating also considers the following environmental, social and
governance (ESG) factors.
YETDC bears high social risk as it implements public-policy
initiatives by developing public infrastructure in the Development
Zone. Demographic changes, public awareness and social priorities
shape its development targets and ultimately affect the Yangzhou
government's propensity to support the company.
Governance considerations are also material to the ratings, as
YETDC is subject to oversight by the Yangzhou government and has to
meet reporting requirements, reflecting the company's public-policy
role and status as a government-owned entity.
Environmental risks are low for YETDC.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
YETDC's stable outlook reflects (1) the stable outlook on China's
sovereign rating; and (2) Moody's expectation that the Yangzhou
government's capacity to provide support will remain stable; and
(3) Moody's view that the company's business profile and
integration with the Yangzhou government, and the Yangzhou
government's control and oversight of the company, will remain
largely unchanged over the next 12-18 months.
Moody's could upgrade the ratings if (1) China's sovereign rating
is upgraded; or the Yangzhou government's capacity to support
strengthens, which could arise from a material improvement in
Yangzhou's economic or financial profile, or the government's
ability to coordinate timely support, or (2) YETDC's
characteristics change in a way that increases the Yangzhou
government's propensity to support, such as
-- YETDC becoming strategically more important to the Yangzhou
government;
-- an increase in government payments and an improvement in the
predictability of government payment mechanisms, whereby dedicated
fiscal budget allocations and transfers from higher-tier
governments can consistently cover a large share of the company's
operational and debt servicing needs;
-- an improvement in access to bank loans and the public bond
market, as reflected by the company having lower funding costs than
its rated peers; and
-- a material reduction in loans, guarantees or other credit
exposures to external parties relative to its equity base.
Moody's could downgrade the ratings if (1) China's sovereign rating
is downgraded; or the Yangzhou government's capacity to support
weakens, which could arise from a material weakening in the
Yangzhou's economic or financial profile, or the government's
ability to coordinate timely support, (2) changes in Chinese
government policies prohibit RLGs from providing financial support
to LGFVs, or (3) YETDC's characteristics change in a way that
weakens the Yangzhou government's propensity to support, such as
-- material changes in its core business, with a substantial
expansion of its commercial activities at the cost of its public
service functionalities, or substantial losses in commercial
activities;
-- its debt and leverage continue to grow rapidly and it receives
fewer corresponding government payments, which increase its
reliance on high-cost financing, including borrowing from
non-standard channels; or
-- a material increase in loans, guarantees or other credit
exposures to external parties from the current level, or a
significant loss resulting from these credit exposures.
The principal methodology used in this rating was Local Government
Financing Vehicles in China Methodology published in July 2020.
Yangzhou Economic and Technological Development Zone Development
Corporation (YETDC) was established in 1992 and is 100% owned by
the Yangzhou government. The company is the sole provider of public
services in the Yangzhou Economic and Technological Development
Zone, including shantytown redevelopment, social housing
construction, and primary land and infrastructure development. As
of September 2021, YETDC reported a revenue of RMB1.2 billion and
total assets of RMB66.5 billion.
ZHENGZHOU ZHONGRUI: Moody's Withdraws 'B3' Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service has withdrawn Zhengzhou Zhongrui
Industrial Group Co., Ltd's B3 corporate family rating.
Prior to the withdrawal, the rating outlook on Zhengzhou Zhongrui
was negative.
RATINGS RATIONALE
Moody's has decided to withdraw the rating for its own business
reasons.
COMPANY PROFILE
Zhengzhou Zhongrui Industrial Group Co., Ltd is a privately-owned
enterprise engaged in two major businesses: property development
and coal solutions. The company reported a revenue of RMB49.8
billion in 2020.
As of June 30, 2021, Zhengzhou Zhongrui was 70% owned by Mr. Wan
Wongzing, its founder and chairman, and 30% by Mr. Liu Yi.
ZHONGLIANG HOLDINGS: Moody's Cuts CFR to B3, Outlook Remains Neg.
-----------------------------------------------------------------
Moody's Investors Service has downgraded Zhongliang Holdings Group
Company Limited's corporate family rating to B3 from B2.
The outlook remains negative.
"The rating downgrade reflects Zhongliang's weakened liquidity and
heightened refinancing risks driven by its weak operating cash flow
and sizable debt maturities over the next 12-18 months," says
Cedric Lai, a Moody's Vice President and Senior Analyst.
"The negative outlook reflects the uncertainties over the company's
weakening liquidity to address its refinancing needs," adds Lai.
RATINGS RATIONALE
Moody's expects Zhongliang's contracted sales to decline over the
next 6-12 months because of weak consumer sentiment and challenging
operating conditions. This will reduce the company's operating cash
flow and, in turn, its liquidity. Zhongliang's contracted sales
fell 39% and 62% year-on-year in January and February 2022,
respectively.
The company will likely lower selling prices to push sales,
pressuring its profit margin over the next 12 months.
In addition, Moody's expects Zhongliang's liquidity to weaken over
the next 12 months as it will use internal resources to repay the
maturing debt absent any new fund raising amid the tough funding
environment. In particular, the company still has around USD900
million of offshore bonds maturing before the end 2022. The
company's unrestricted cash to short-term debt declined to 1.04x as
at end 2021 from 1.2x as at end June 2021.
However, Moody's believes the company will scale down land
acquisitions and business operations, as well as control expenses
to preserve liquidity.
Moody's expects Zhongliang's interest coverage, measured by
EBIT/interest coverage, decrease to around 2.3x over the next 12-18
months from 2.5x in 2021, driven by slower revenue recognition and
declining profit margins during the same period.
Zhongliang's B3 CFR reflects the company's solid sales execution
and recognized brand name in second-tier and lower-tier cities in
the Yangtze River Delta region. On the other hand, Zhongliang's
rating is constrained by its weak liquidity, relatively high
exposure to lower-tier cities and reliance on non-bank financing.
In addition, the company has a material exposure to joint venture
(JV) businesses, which hinders the transparency of its credit
metrics.
Moody's notes that Zhongliang's auditor, Ernst & Young, indicated
in its financial result announcement of 2021 the existence of
material uncertainty in the company's ability to continue as a
going concern. Moody's expects such an incident to weaken
investors' confidence and the company's access to funding.
In terms of environmental, social and governance (ESG)
considerations, Moody's has considered the risk associated with the
ownership concentration in Zhongliang's controlling shareholders,
Mr. Yang Jian and his spouse, who together held an 80.5% stake as
of December 31, 2021. Moody's has also considered the presence of
three independent non-executive directors on a board of seven
directors, and two independent non-executive directors who chair
the audit and remuneration committees, respectively, and the
application of the listing rules of the Hong Kong Stock Exchange
and the Securities and Futures Ordinance in Hong Kong.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
An upgrade of Zhongliang's ratings is unlikely over the next 12
months, given the negative outlook.
However, Moody's could change the outlook to stable if Zhongliang
improves its liquidity and access to funding; balances its funding
channels with lower reliance on offshore funding; and strengthens
sales, profitability and credit metrics through the next 12-18
months.
On the other hand, Moody's could downgrade Zhongliang's ratings if
its liquidity deteriorates further.
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Zhongliang Holdings Group Company Limited is a Shanghai-based
residential property developer. The company engages in real estate
development in China. The Yangtze River Delta region contributed
52.2% of the company's contracted sales in 2021.
As of December 31, 2021, Zhongliang was 80.5% owned by its
chairman, Mr. Yang Jian and his spouse, who were acting in
concert.
=========
I N D I A
=========
ALFA TRANSFORMERS: CRISIL Lowers Rating on INR6.5cr Loan to C
-------------------------------------------------------------
CRISIL Ratings has revised the rating on the long term bank
facilities of Alfa Transformers Limited (ATL) to 'CRISIL C Issuer
Not Cooperating' from 'CRISIL B/Stable Issuer Not Cooperating' and
short term rating continues to be 'CRISIL A4 Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 4 CRISIL A4 (Issuer Not
Cooperating)
Bank Guarantee 4.46 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 3.54 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Cash Credit 6.5 CRISIL C (ISSUER NOT
COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Foreign Exchange 0.13 CRISIL A4 (Issuer Not
Forward Cooperating)
Letter of Credit 4.25 CRISIL A4 (Issuer Not
Cooperating)
Letter of Credit 1 CRISIL A4 (Issuer Not
Cooperating)
Proposed Long Term 0.62 CRISIL C (ISSUER NOT
Bank Loan Facility COOPERATING; Revised from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
CRISIL Ratings has been consistently following up with ATL for
obtaining information through letters and emails dated January 22,
2022 and February 28, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of ATL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on ATL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on the long term bank
facilities of ATL revised to 'CRISIL C Issuer Not Cooperating' from
'CRISIL B/Stable Issuer Not Cooperating' and short term rating
continues to be 'CRISIL A4 Issuer Not Cooperating'.
Set up by Mr D K Das in 1982, ATL manufactures small distribution
transformers and offers related technical assistance and services,
including repair work. Units are in Bhubaneswar and Vadodara.
AMAR FARM: CRISIL Assigns B Rating to INR6cr Cash Loan
------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
long-term bank facility of Amar Farm Service (AFS).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B/Stable (Assigned)
The rating reflects the firm's modest scale of operations, large
working capital requirement and weak financial risk profile. These
weaknesses are partially offset by the extensive experience of the
promoter in the tractor dealership business.
Analytical Approach
CRISIL Ratings has considered the standalone business and financial
risk profiles of AFS.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Intense competition constrains
scalability, as reflected in revenue of INR20.26 crore in fiscal
2021, and operating flexibility. Revenue is estimated at around
INR12 crore in the nine months of fiscal 2022 and will remain
modest over the medium term.
* Large working capital requirement: Gross current assets were
sizeable at 128-181 days over the three fiscals through 2021
because of large inventory of 91-104 days. Operations will remain
working capital intensive over the medium term.
* Average financial risk profile: Networth was modest at INR0.50
crore and gearing and total outside liabilities to adjusted
networth (TOLANW) ratio were high at 14.54 and 15.31 times,
respectively, as of March 31, 2021. Debt protection metrics were
subdued owing to high gearing and low cash accrual. Interest
coverage ratio was 1.27 times in fiscal 2021, and is expected at a
similar level over the medium term.
Strength:
* Extensive experience of the promoter: The promoter has experience
of around three decades in the tractor dealership business, which
has given him an understanding of market dynamics and helped to
establish strong relationships with suppliers and customers.
Liquidity: Stretched
Expected net cash accrual of INR0.1-0.4 crore per annum will be
insufficient against yearly term debt obligation of INR0.3-0.4
crore over the medium term. Bank limit utilization was high at 88%
on average during the 12 months through December 2021. The current
ratio was moderate at 1.04 times as of March 31, 2021.
Outlook: Stable
AFS will continue to benefit from the extensive experience of the
promoter.
Rating Sensitivity factors
Upward factors:
* Steady increase in revenue and operating margin
* Improvement in the TOLANW ratio to below 3 times
Downward factors:
* Sustained decline in revenue by 20% and profitability
* Further stretch in the working capital cycle or large,
debt-funded capital expenditure weakening the financial risk
profile
Set up in 1992, AFS is a sole proprietorship of Mr Shankarbhai
Chhaganbhai Patel. The firm is an authorized dealer for Tractors
and Farm Equipment Ltd and Massey Ferguson Ltd. Based in Patan,
Gujarat, it also sells farm implements.
ANAND DIVINE: NCLT Initiates Insolvency Proceedings
---------------------------------------------------
The Economic Times of India reports that the Delhi bench of the
National Company Law Tribunal has initiated bankruptcy proceedings
against Anand Divine Developers pvt ltd, a group company of realty
developer ATS over dues of INR25 crore.
According to the NCLT order, ICICI prudential venture has moved the
tribunal after the developer defaulted on payment, ET relates.
"In the present case, the corporate debtor has not filed any reply
and written submissions till now. However, in view of the debt and
default clearly mentioned in the application u/s 7, this bench is
inclined to admit the present petition," the tribunal said in the
order.
The petitioner has proposed the name of Insolvency Resolution
Professional (IRP) Harish Taneja, ET discloses.
Geetamber Anand, chairman and managing director of Noida based ATS
group told ET that the process to reach a settlement is on.
"We have received a copy of the order and we are in the middle of
studying the same. However, the amount under consideration is a
very small sum and the related project is completed and handed
over. This will have no bearing on our other projects. Meanwhile,
we have mutually closed this dispute/matter with ICICI Pru
(Applicant) and will be filing a settlement soon," ET quotes Anand
as saying.
According to the order, the financial creditor and corporate debtor
executed an investment agreement in July 2014, and the financial
creditor subscribed to 75,00,000 unlisted, secured, cumulative,
redeemable and optionally convertible debentures issued by the
corporate debtor having a face value of INR100 each aggregating to
a total of INR75 crore subject to the terms and conditions set out,
ET relays.
A default under the investment agreement occurred on March 31,
2018, when the corporate debtor failed to pay Interest due for the
period Oct. 1, 2017 to March 31, 2018.
GODAVARI POLYMERS: ICRA Lowers Rating on INR50.37cr Loan to D
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Godavari
Polymers Private Limited (GPPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based/ 34.00 Downgraded to [ICRA]D from
Cash Credit [ICRA]BB(Negative)
Fund-based/ 1.81 Downgraded to [ICRA]D from
Term Loan [ICRA]BB(Negative)
Non-fund- 34.62 Downgraded to [ICRA]D from
based Limits [ICRA]A4
Unallocated Limits 50.37 Downgraded to [ICRA]D from
[ICRA]BB(Negative)
Rationale
The rating downgrade of GPPL factors in the instances of of
overutilization in the Cash Credit limit (continuously overutilized
for more than 30 days) in the recent months owing to the company's
poor liquidity position. The delay in debt servicing has primarily
been on account of delays in receivables from its customers. It may
be noted that the GPPL had been sharing No Default Statements with
ICRA, indicating a regular track record of debt servicing. However,
based on the communication received from the lender, it has come to
notice that there were instances of overutilization of the Cash
Credit limits (continuously for more than 30 days) in recent past.
Further, the rating continues to factor in GPPL's poor liquidity
position, continuous deterioration in financial profile and
exposure of its margins to fluctuations in raw material prices.
ICRA notes the company has established brand presence and extensive
experience in the polymer processing business. ICRA also notes
GPPL's extensive distribution network and diversified mix of
revenues from the RDS network, micro-irrigation systems and
Institutional Government Projects.
Key rating drivers and their description
Credit strengths
* Significant experience in polymer processing business and
established brand name: The company has more than 25 years of
experience in the pipe manufacturing business, resulting in a
reputed customer base. Moreover, GPPL has an established brand name
for HDPE pipes and MIS in the regions it operates.
* Diversified mix of revenues: The company has a diversified mix of
revenues from the RDS network, micro-irrigation systems and IGP
projects, minimizing the risks related to any segment-specific
downturn. However, revenues from IGP have been limited in the past
two years as it did not receive any new orders.
* Widespread distribution network: Over the years, GPPL has built
an extensive distribution network of over 3,560 dealers in the
rural and semi-urban areas across six states in India for selling
its products and is expanding its presence in other states.
Credit challenges
* Poor liquidity position as reflected in overutilization of
working capital limits: The company's liquidity position is poor,
as reflected by the instances of overutilization in the Cash Credit
limit (continuously overutilised for more than 30 days) in the
recent months. The delay in debt servicing has primarily been on
account of delays in receivables from its customers.
* Continuous deterioration in financial profile: A decline in
revenues and stretched receivables resulted in higher debt and
moderation in coverage indicators with an interest coverage of 0.9
times, TD/OPBDITA of 5.0 times and DCSR of 0.7 times in FY2020 and
are expected to remain modest in the near term.
* Profitability indicators exposed to volatility in raw material
prices: The company's revenues and margins are exposed to price
fluctuations of key raw materials such as PVC resin and HDPE/LDPE
granules. Any adverse movement in the price of raw materials could
have an adverse impact on its margins, considering the limited
value addition and stiff competition in the industry.
Liquidity position: Poor
GPPL's liquidity is poor as evident from GPPL's recent instances of
delays in debt servicing. The cash credit account has remained
overdrawn for more than 30 days during recent past. The liquidity
position continues to remain poor due to weak cash accruals and
highly working capital-intensive nature of operations emanating
from its high receivables.
Rating sensitivities
Positive factors – The rating could be upgraded on regularization
of debt servicing for a sustained period as per ICRA policy.
Negative factors – Not Applicable.
GPPL was incorporated in August 1990 as a private limited company
and manufactures high-density polyethylene (HDPE) pipes, sprinkler
irrigation systems, drip irrigation systems and PVC pipes. The
company has two manufacturing units with an aggregate installed
capacity of 24,390 MT per annum with one unit at IDA Cherlapally,
Hyderabad and the other at Shadnagar of Ranga Reddy district.
GTN INDUSTRIES: ICRA Raises Rating on INR49.15cr Loan to BB+
------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of GTN
Industries Limited (GTNIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Non-fund Based 8.30 [ICRA]A4+; upgraded from
Limits [ICRA]A4
Fund-based 49.15 [ICRA]BB+(Positive); upgraded
limits from [ICRA]B+(Stable) and
withdrawn [ICRA]A4+; upgraded
from [ICRA]A4
Rationale
The revision in the ratings of GTNIL primarily considers a
significant improvement in performance in FY2022 owing to improved
market scenario and contributions levels. Consequently, the company
reported revenue of ~INR352.7 crore in 9M FY2022 and an operating
margin (OPM) of 15.6% compared to revenue of INR310.2 crore and an
OPM of 7.8% in FY2021. This also resulted in an improvement in the
debt coverage indicators with an interest coverage of 5.6x in 9M
FY2022. Moreover, as the revival plan has been accepted by all the
lenders, the entire term loans and working capital loans pertaining
to the Medak unit have been paid off, resulting in a significant
reduction in debt levels. As a part of this plan, the company had
to monetise one unit at Medak and GTN House to its Group company,
GTN Engineering (India) Limited. ICRA, however, notes that approval
for transfer of GTN House has not been granted by one of the
bankers, which is expected to happen shortly post which the entire
transaction would be implemented. In FY2023, while the scale of
operation will be lower post transfer of the Medak unit, reduced
debt levels and better realisation in the near term at least will
continue to support the company's debt coverage indicators.
The ratings also derive comfort from GTNIL's established presence
in the domestic cotton yarn market, its long relationship with
reputed customers in the domestic and export markets, along with
the promoters' extensive experience of more than five decades in
the cotton spinning industry. Further, the ratings note the
favourable track record of funding support from the Group company,
GTN Engineering India Limited (GEIL, rated [ICRA]BBB+ (Stable)/A2)
to meet the debt obligations of GTNIL. The long-term ratings
assigned to the bank facilities of GTNIL have been withdrawn at the
request of the company, upon receipt of no objection certificate
(NOC) from the bankers, in accordance with ICRA's policy on
withdrawal and suspension of credit rating.
The ratings are constrained on account of working capital intensive
nature of operation with high inventory requirement, which is
likely to keep the liquidity position under check. Post reduction
of working capital limits, the cushion remains very low and the
track record of utilisation of reduced limits needs to be seen. The
utilisation remains high at ~86% of fund-based limits as of
February 2022. Also, GTNIL operates in an intensely competitive and
commoditised spinning industry. Low product differentiation and a
fragmented industry structure translate into limited pricing power
and profitability. Thus, its earnings remain exposed to the
volatility in cotton prices, which have constrained its
contribution levels in the past. The Positive outlook reflects
ICRA's belief that the company would benefit from the revival plan
and its financial position should improve over the near-to-medium
term.
Key rating drivers and their description
Credit strengths
* Significant improvement in performance in FY2022: The company is
expected to report a healthy improvement in its operating income
(including the Medak Unit) in FY2022, resulting in a significant
improvement in the operating margin and cash accruals.This also
resulted in an improvement in debt coverage indicators with an
interest coverage of 5.6x in 9M FY2022. In FY2023, while the scale
would be down, favorable realization at least in the near term,
will support the operating margins and debt coverage indicators.
* Successful implementation of revival plan has resulted in
improved ratios: The revival plan along with healthy market
conditions has resulted in improved financial ratios of the
company. The entire term loans have been paid off and the working
capital limits have also been reduced to the extent of the Nagpur
unit only.
* Established presence in domestic market and extensive promoter
experience: The company enjoys established presence in the domestic
cotton yarn market and shares long relationship with reputed
customers in the domestic and exports markets. Its promoters have
extensive experience spanning more than five decades in the cotton
spinning industry. Further, the ratings consider the track record
of funding support from the Group company, GEIL, to meet debt
obligations of GTNIL.
Credit challenges
* Working capital intensive nature of operations: The operations of
the company are working capital intensive, reflected by NWC/OI of
41% as of December 2021 mainly due to high inventory levels.
Moreover, the cushion in limits remains low post reduction of the
overall limits. The fund-based limits have been utilised to the
extent of 86% as of February 2022. The company's track record of
maintaining cushion in limits is yet to be established.
* Intense competition limits pricing power: GTNIL operates in an
intensely competitive and commoditized spinning industry,
characterized by low product differentiation and a fragmented
industry structure, which results in limited pricing power and
profitability. Thus, its earnings remain exposed to the volatility
in cotton prices, which have constrained its contribution levels in
the past.
Liquidity position: Adequate
The liquidity profile of GTNIL takes comfort from healthy cash
accruals in the current fiscal and significant debt reduction,
resulting in nil repayment obligations, going forward. However, the
working capital utilisation is on the higher side at present with
limited cushion available and low cash balance of around INR2-3
crore as of December 2021.
Rating sensitivities
Positive factors – ICRA could upgrade GTN's rating if the company
demonstrates an improvement in its liquidity position by
effectively managing working capital requirements while maintaining
healthy profitability and debt coverage indicators. An interest
coverage above 3 times on a sustained basis could lead to an
upgrade.
Negative factors – Pressure on the rating may arise if there is a
deterioration in the operational performance of the company and/or
any weakening of linkages with the promoter group. An interest
coverage below 2 times on a sustained basis could also be a
negative trigger.
GTN Industries Limited (GTNIL) manufactures and trades in cotton
yarn and is a part of the established GTN Group, which has
diversified business interests ranging from textiles to
engineering. GTN was founded by Late M. L. Patodia and at present,
it is managed by Mr. M. K. Patodia. The company's shares are listed
on the Indian bourses. GTNIL has an installed capacity of 92,400
spindles across its two spinning units at Medak, Telangana and
Nagpur, Maharashtra. However, post monetisation of the Medak unit,
the capacity would be close to 42,000 spindles.
HASIMARA INDUSTRIES: ICRA Hikes Rating on INR8.50cr Loan to BB-
---------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Hasimara
Industries Limited (HIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 8.50 [ICRA]BB- (Stable); upgraded
Cash Credit from [ICRA]B (Stable)
Fund-based 4.10 [ICRA]BB- (Stable); upgraded
Term Loans from [ICRA]B (Stable)
Non-fund-based
Bank Guarantee 1.50 [ICRA]A4; reaffirmed
Rationale
The upward revision in the long-term rating considers the
improvement in the financial performance of HIL in FY2021, driven
by a significant increase in tea prices, translating into a sharp
rise in profitability, cash accruals and debt coverage metrics.
Although ICRA expects some moderation in HIL's profitability in
FY2022 due to a decline in tea prices, the debt coverage indicators
are likely to remain at a comfortable level. The ratings continue
to consider the experience of the promoters in the tea business and
the good quality of its produce as evident from the premium
commanded over the average market prices. The ratings also factor
in the favourable age profile of HIL's tea bushes, which supports
its productivity.
The ratings, however, remain constrained by the modest scale of
HIL's current operations, notwithstanding the growth witnessed in
FY2021 and 9M FY2022. The ratings are also impacted by the risks
associated with tea for being an agricultural commodity as
production and quality of tea depend on agro-climatic conditions.
Such risks are accentuated by the geographical concentration of
HIL's operations as the company has a single garden in West Bengal.
HIL also remains vulnerable to adverse regulatory changes, wage
rate hike etc., which can impact its cost structure and
profitability. Further, domestic tea prices are impacted by the
demand-supply situation and prices in the international market,
which would continue to have a bearing on the profitability of
Indian tea players, including HIL.
The Stable outlook on the [ICRA]BB- rating reflects ICRA's opinion
that HIL is expected to maintain its business position while
maintaining its profitability.
Key rating drivers and their description
Credit strengths
* Experience of the management in the tea industry: HIL,
incorporated in 1904, is a relatively small but an established
player in the tea business, producing the crush, tear, curl (CTC)
variety of tea. It has a total area of 1,061.5 hectares, of which,
around 894 hectares is under tea cultivation. The long experience
of the management in the tea industry has aided the production and
sales of the company over the years. HIL's tea production remained
in the range of 1.71 million kg to 1.96 million kg between FY2017
and FY2021. The company is not involved in the bought-leaf
operation.
* Good quality of tea produced; favorable age profile of bushes
supports productivity: The high quality of HIL's produce is
reflected by the premium it fetches over the industry average. The
weighted average realization of tea produced by the company stood
at INR210.4/kg in 9M FY2022 compared to the North Indian auction
average of INR195.6/kg. The company's tea bushes have a favorable
age profile with around 69% of the bushes falling in the age group
of 5-50 years. This supports the productivity of the company,
mitigating the risks associated with the fixed-cost-intensive
nature of the industry to an extent. HIL's yield per area of
cultivation and the outturn ratio in FY2021 stood at 2,038
kg/hectare (2,245 kg/hectare in FY2020) and 22.1% (22.3% in
FY2020), respectively.
* Financial risk profile improved in FY2021 with significant
increase in tea realizations; although some moderation is likely in
FY2022 with decline in tea realizations, the gearing and coverage
indictors are likely to remain comfortable: After incurring
operating losses in FY2019 and FY2020, HIL posted an operating
profit of INR5.99 crore in FY2021, aided by a significant increase
in tea prices (34% increase in FY2021 over FY2020). Consequently,
the debt coverage metrics also improved significantly in FY2021.
The total debt of HIL declined to INR11.53 crore in FY2021 from
INR15.78 crore in FY2020 due to a sizeable reduction in working
capital and unsecured loans. Improved profitability and reduced
debt levels had a favourable impact on the company's overall
financial risk profile. The company's operating profit reduced to
INR9.48 crore in 9M FY2022 from INR12.34 crore in 9M FY2021 as tea
prices declined to an extent in the current fiscal. Although this
is expected to impact HIL's gearing and coverage indicators to an
extent, the same is likely to remain at comfortable levels in the
near term at least.
Credit challenges
* Small scale of current operations: The company's operating income
increased by around 19% to INR38.53 crore in FY2021 despite a ~11%
contraction in volumes sold (1.65 million kg in FY2021 vis-à-vis
1.86 million kg in FY2020), due to a 34% increase in tea prices.
The total production stood at 1.71 million kg (1.89 million kg in
FY2020) and 1.94 million kg (1.55 million kg in 9MFY2021) in FY2021
and 9M FY2022, respectively. HIL's current scale of operation
remains small compared to the established players in the tea
manufacturing industry, constraining the company's operational
profile to some extent.
* High geographical concentration risk: The company has a single
tea garden in Alipurduar, West Bengal. This keeps HIL vulnerable to
high geographical concentration risks. Exposed to agro-climatic
risks, regulatory changes, wage rate hike etc as tea is an
agricultural commodity – The quality and production volume of tea
depend on agro-climatic conditions, pest attacks etc. The sector
also remains vulnerable to other factors like regulatory changes,
wage rate hike by the Government etc. The Government of West
Bengal, in January 2021, declared an interim wage hike of 15%,
which led to an increase in HIL's production cost in 9M FY2022.
* Prices of Indian tea, despite its better quality, remain
vulnerable to price fluctuation in the international market:
Exports play a vital role in maintaining the overall demand-supply
balance in the domestic tea market, despite the large domestic
consumption base. Healthy export realization is also crucial for
maintaining domestic realizations as unremunerative prices in the
export market may lead to exporters dumping the produce in the
domestic market, which in turn would exert pressure on domestic
prices, despite the better quality of Indian tea. Hence, the
demand-supply situation in the global tea market, in ICRA's
opinion, would continue to have a bearing on the realisations and
profitability of Indian players, including HIL.
Liquidity position: Adequate
The liquidity profile of the company is adequate. HIL generated
cash flow from operations of INR3.37 crore in FY2021, aided by a
significant increase in realisations. The average utlisation of
fund-based working capital limits remained at around 51% during
January 2021 to February 2022, leaving the company with a sizeable
cushion. The company's repayment obligations (excluding unsecured
loans) stand at INR0.98 crore, INR1.65 crore and INR1.55 crore in
FY2022, FY2023 and FY2024 respectively. HIL is expected to spend
around INR2.19 crore for upgradation and modernisation of machinery
in FY2023 and FY2024. The same will be funded through a mix of term
loans (INR1.63 crore) and internal accruals (INR0.57 crore).
However, the liquidity of the company is expected to remain
adequate in the near term at least, in view of adequate cash flow
from operations and undrawn line of credits.
Rating sensitivities
Positive factors – ICRA may upgrade HIL's ratings if its revenues
and profitability improve on a sustained basis.
Negative factors – ICRA may downgrade HIL's ratings if there is
any further increase in wages or any unfavorable regulatory
development, negatively impacting the company's credit profile and
liquidity position.
Hasimara Industries Limited (HIL), incorporated in 1904, owns a tea
garden in the Alipurduar district of West Bengal. The tea estate is
spread over an area of around 1,061 hectares, of which around 894
hectares is under tea cultivation. The company produces CTC variety
of black tea, which it sells in the domestic market through auction
and private sales. It is not involved in bought leaf operations.
ICHALKARANJI POWERLOOM: CRISIL Keeps D Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of
Ichalkaranji Powerloom Mega Cluster Limited (IPMCL) to 'CRISIL D
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 4.93 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
Term Loan 25.07 CRISIL D (Issuer Not
Cooperating)
In accordance with the terms of the rating agreement with IPMCL,
CRISIL Ratings has sent repeated reminders for payment of fees
towards the surveillance exercise through letters and emails dated
February 18, 2022 and March 8, 2022 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/ reviewed with
the suffix 'ISSUER NOT COOPERATING'.
On account of lack of management cooperation towards non-payment of
fees, CRISIL Ratings has migrated the rating on bank facilities of
IPMCL to 'CRISIL D Issuer not cooperating'.
IPMCL, incorporated in 2012, is currently setting up a unit for
sizing, warping, processing of fabric and yarn dyeing in
Ichalkaranji, Maharashtra. The plant is expected to be commissioned
in April 2020. The company is promoted by Mr. Prakash K. Awade and
managed by Mr. Sunil S. Patil, Mr. Satish S. Koshti, Mr.
Satyanarayan Dalya, Mr. Laximikant Purohit and Mr. Jadhavji Patel.
INNOVATIVE TYRES: CRISIL Moves D Debt Ratings to Not Cooperating
----------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of
Innovative Tyres and Tubes Limited (ITTL) to 'CRISIL D/CRISIL D
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 15 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Foreign Exchange 1 CRISIL D (ISSUER NOT
Forward COOPERATING; Rating Migrated)
Letter of Credit 14 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Standby Line 1 CRISIL D (ISSUER NOT
of Credit COOPERATING; Rating Migrated)
Term Loan 6.3 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Working Capital 3.45 CRISIL D (ISSUER NOT
Facility COOPERATING; Rating Migrated)
Working Capital 2.32 CRISIL D (ISSUER NOT
Facility COOPERATING; Rating Migrated)
In accordance with the terms of the rating agreement with ITTL,
CRISIL Ratings has sent repeated reminders for payment of fees
towards the surveillance exercise through letters and emails dated
June 24, 2021 and March 3, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/ reviewed with
the suffix 'ISSUER NOT COOPERATING'.
On account of lack of management cooperation towards non-payment of
fees, CRISIL Ratings has migrated the rating on bank facilities of
ITTL to 'CRISIL D/CRISIL D Issuer not cooperating'.
ITTL manufactures and exports bias tyres. It offers a wide range of
products in the truck/bus, agricultural and OTR, and
motorcycle/three-wheeler segments. In addition to presence in
Gujarat, Maharashtra, Delhi, and Punjab, ITTL exports to more than
40 countries across 5 continents. Its manufacturing plants are at
Halol in Gujarat.
INTERNO DOORS: ICRA Assigns B Rating to INR25.20cr Term Loan
------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Interno Doors
India Private Limited (IDIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Proposed Term
Loan 25.20 [ICRA]B(Stable); assigned
Proposed Non-fund
Based Facility 8.30 [ICRA]B(Stable); assigned
Proposed Fund-
based Facility 7.50 [ICRA]B(Stable); assigned
Rationale
The assigned rating is constrained by the high execution and
funding risks associated with setting up a manufacturing facility
of 31,200 doors capacity by IDIPL in Ranga Reddy district,
Telangana. The project is in the nascent stage of execution, where
around 10.3% (INR5.0 crore) of the total cost (INR48.68 crore) has
been incurred as of March 17, 2022. The project is yet to achieve
financial closure and the promoters are yet to infuse funds of
around INR10.2 crore (out of the total of INR15.18 crore). Also,
ICRA notes that demand for premium doors depends on the performance
of the real estate sector and industrial capital expenditure.
Timely commissioning of the facility within budgeted costs, along
with stabilization of operational metrics, will be the key rating
monitorable going forward.
The rating, however, is supported by the long track record of
IDIPL's promoters in producing aluminium doors and retail of
premium and sanitaryware products through its Group companies to
reputed corporates, real estate players. The Group's track record
in the industry is likely to support IDIPL to ramp-up operations
post commencement of its plant.
The Stable outlook on the rating reflects ICRA's opinion that IDIPL
will continue to benefit from the experience of the promoters in
the industry.
Key rating drivers and their description
Credit strengths
* Long track record of promoters through Group companies in
production and retailing of related products: The company's
promoters have vast experience in producing aluminum doors through
its Group company, Alumil Buildmate Private Limited and retail of
premium international kitchen and sanitaryware products through
Value Line Homestyle Private Limited. As the Group companies are
involved in a similar industry for more than a decade, IDIPL is
planning to target the Group's existing clientele such as Phoenix
Group, GMR Group, Larsen and Tourbo Limited, Bluestar Ltd, Sobha
Ltd, Dr. Reddy's Lab, Aurobindo Pharma, ITC Hotels, Taj Group of
Hotels, etc. This is likely to support the company to ramp-up
operations post commencement of its plant.
Credit challenges
* High execution and funding risks: The project is exposed to high
implementation risk as it is in the nascent stage of execution,
where around 10.3% (INR5.0 crore) of the total cost (INR48.68
crore) has been incurred as on March 17, 2022, towards land
purchase and preliminary works. The total project cost is expected
to be funded by a debt to equity ratio of 69:31. The project is
exposed to funding risk as it is yet to achieve financial closure
and the promoters are yet to infuse funds worth around INR10.2
crore (out of total INR15.18 crore). However, the company has
received all the major approvals required for the execution of the
project. Timely commissioning of the facility within budgeted costs
along with stabilisation of operational metrics will be a key
rating monitorable going forward.
* High dependence on real estate sector and industrial capex;
margins susceptible to raw material price fluctuations and
competition: Demand for premium doors depends on the performance of
the real estate sector and industrial capital expenditures, which
exposes the company to any slowdown in the end-user segment.
IDIPL's margins are susceptible to adverse fluctuations in the
costs of the key raw materials. Given the stiff competition in the
industry, the company's ability to pass on any raw material price
hikes to its customers will remain a key determinant of its
profitability, going forward.
Liquidity position: Stretched
The company has free cash balance of INR0.02 crore as on March 17,
2022. The liquidity position is stretched with majority of the
project cost yet to be incurred with high dependence on timely
financial closure and infusion of promoters' funds.
Rating sensitivities
Positive factors – ICRA could upgrade IDIPL's rating if there is
timely commencement of the manufacturing facility within the
estimated cost and ramp-up of operations resulting in healthy cash
accruals and credit metrics.
Negative factors – Pressure on IDIPL's rating could arise if
there is a delay in the project completion or equity infusion by
the promoters and/or cost overruns resulting in weakening of the
company's credit and return metrics.
Promoted by Mrs. Seema Anand along with her son, Mr. Anamol Anand,
Interno Doors India Private Limited was incorporated in May 2018.
The company is planning to set up a new manufacturing facility of
31,200 doors per annum for producing premium wooden doors to cater
to the needs of premium segment builders, corporates, hotels, IT
parks and high net-worth individuals at Rangasamudram, Farooqnagar,
Ranga Reddy district, Telangana.
JANAK ENTERPRISE: CRISIL Lowers Rating on INR4.95cr Loan to D
-------------------------------------------------------------
Due to inadequate information and in line with the guidelines of
the Securities and Exchange Board of India, CRISIL Ratings had
migrated the ratings on the bank facilities of Janak Enterprise
(JE) to 'CRISIL B+/Stable/CRISIL A4 Issuer Not Cooperating'.
However, the management has subsequently started sharing the
requisite information necessary for carrying out a comprehensive
review of the ratings. Consequently, CRISIL Ratings is downgraded
the ratings to 'CRISIL D/CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.95 CRISIL D (Downgraded from
'CRISIL B+/Stable ISSUER NOT
COOPERATING*')
Packing Credit 1.30 CRISIL D (Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
The ratings reflect delays in servicing of term loan because of
weak liquidity.
The ratings also reflect the firm's working capital-intensive
operations. These weaknesses are partially offset by the extensive
experience of its promoters in the speciality chemicals industry.
Key Rating Drivers & Detailed Description
Weaknesses
* Large working capital requirement: Gross current assets (GCAs)
were 738 days as on March 31, 2021, because of stretched
receivables and sizeable inventory of 384 days and 331 days,
respectively. Creditors were 351 days in fiscal 2021.
* Delays in debt servicing: JE has delayed servicing of its term
loan interest and principal repayment in February 2022 and March
2022 and interest payment of cash credit limit for February 2022
due to poor liquidity.
Strength
* Extensive industry experience of the promoters: Presence of over
25 years in the speciality chemicals segment has enabled the
promoters to understand market dynamics and establish healthy
relationships with suppliers and customers.
Liquidity: Poor
Bank limit utilization was high at 96.7% on average for the 12
months through February 2022. Average net worth limits and
stretched working capital cycle impacts its's financial flexibility
and restrict the financial cushion available to the company in case
of any adverse conditions or downturn in the business. Current
ratio was at 1.2 times on March 31, 2021.
Rating Sensitivity Factors
Upward factors
* Track record of timely debt servicing for at least 90 days
* Improvement in the financial risk and liquidity profiles
JE was established in 2004 as a partnership firm by Mr Dhaval
Hasmuklal Shah and Ms Kuntiben Dhaval Shah. The firm manufactures
and exports specialty dyes such as inkjet dyes, digital textile
printing ink dyes and stationery dyes. Its facility is in Narol in
Ahmedabad, Gujarat.
JHARKHAND INFRA: ICRA Reaffirms D Rating on INR443.20cr Loan
------------------------------------------------------------
ICRA has reaffirmed the ratings on certain bank facilities of
Jharkhand Infrastructure Implementation Company Limited (JIICL),
as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based
term loan 443.20 [ICRA]D; Reaffirmed
Rationale
The rating reaffirmation factors in the continued irregularities in
the debt servicing by JIICL due to stretched liquidity position of
the company arising from delays in receipt of annuities. The
company's cash flows have been constrained on account of
significant delays in annuity payments from Government of Jharkhand
(GoJ). The first, second and third semi-annuities were received
with a delay of 63 days, 36 days and ~8 month respectively, whereas
the third, fourth and sixth semi annuities, due in May 2020,
November 2020 and November 2021 respectively, are yet to be
received. Given the delay in annuity payments from the authority,
the lenders had dipped into the DSRA to meet debt servicing
obligations for the month of September 2020 and October 2020 and
had also approved the nonmaintenance of major maintenance reserve
(MMR). Timely receipt of annuities on a sustained basis remains
critical and would remain key from a debt servicing perspective.
Owing to prevailing delays in receipt of the annuities, the company
was unable to maintain debt service reserve account (DSRA) and MMR
as per the sanctioned terms. Consequently, JIICL's ability to
ensure satisfactory maintenance of the road is also constrained.
The first major maintenance cycle, falling due in FY2024-25, at an
estimated cost of INR34.3 crore is also exposed to funding risk.
Timely build-up of the MMR would remain important from a credit
perspective. The profitability and cash flows of the project
remains exposed to interest rate risk owing to the floating nature
of interest rate.
Key rating drivers and their description
Credit strengths- Not Applicable
Credit challenges
* Delay in debt servicing: The company has not been able to service
its debt obligations on time since February 2021 onwards due to its
stretched liquidity position on account of delays in annuity
receipts.
* High counter-party credit risk: JIICL has witnessed significant
delays in the receipt of its annuities from GoJ. The first, second
and third semi-annuities were received with a delay of 63 days, 36
days and ~8 month respectively, whereas the third, fourth and sixth
semi annuities, due in May 2020, November 2020 and November 2021
respectively, are yet to be received. Given the delay in annuity
payments from the authority, the lenders had dipped into the DSRA
to meet debt servicing obligations for the period Sept 2020–Oct
2020 and have also approved the non-maintenance of MMR. Timely
receipt of annuities on a sustained basis remains critical and
would remain a key rating monitorable.
* Non-maintenance of debt service reserve account and major
maintenance reserve account: As per the sanctioned terms, JIICL is
required to maintain DSRA equivalent to ensuing six months debt
servicing obligations. The rating remains constrained on account of
non-maintenance of DSRA and MMR as per the sanctioned terms owing
to prevailing delays in receipt of the annuities.
* Ensuring regular and periodic maintenance expenditure within
budgeted levels: Poor maintenance of the road could result in lane
closures leading to potential deductions from annuity by NHAI.
Ability of the company to undertake routine and periodic
maintenance expenditures within budgeted costs remains important.
* Exposed to interest rate risk: The project's cash flows and
profitability remains exposed to interest rate risk given the
floating nature of the interest rate.
Liquidity position: Poor
JIICL's liquidity profile is poor as reflected by delays in debt
servicing. The company has an unencumbered cash balance of
Rs.1.1 crore as of March 31, 2021. The company's debt repayment
obligation remains significantly high against a backdrop of
weak cash accruals.
Rating sensitivities
Positive factors – ICRA could upgrade the rating on successful
demonstration of timely debt repayment on a sustained basis,
following improvement in the liquidity profile of the company.
Negative factors – Not Applicable
Jharkhand Infrastructure Implementation Company Limited (JIICL), a
wholly-owned subsidiary of IL&FS Transportation Networks Limited
(ITNL), was incorporated in 2015 to implement the project for
improvement of balance works of Ranchi Ring Road (section VII) on
Build, Operate and Transfer (BOT) annuity basis. The project
stretch starts from design chainage Km 0.000 near Kathitar Junction
with NH-75 via Sukurhuttu Pithora to design chainage Km. 23.575 at
Vikas with NH-33 in the State of Jharkhand having a length of
23.575 kms, to be developed into a 6-lane divided carriageway with
paved shoulders. The total project cost of INR636 crore was funded
by way of equity infusion of INR80 crore, promoter sub-debt of
INR80 crore and INR476 crore of bank debt. The project achieved
provisional completion certificate on November 21, 2018 and final
completion certificate on May 16, 2019.
KKP SPINNING: CRISIL Withdraws B+ Rating on INR31cr LOC
-------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of K
K P Spinning Mills Private Limited (KKP Spinning; a part of the KKP
group) on the request of the company and after receiving no
objection certificate from the bank. The rating action is in-line
with CRISIL Rating's policy on withdrawal of its rating on bank
loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Line of Credit 31 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Withdrawn)
CRISIL Ratings has been consistently following up with KKP Spinning
for obtaining information through letters and emails dated February
28, 2022, March 8, 2022 and March 15, 2022 among others, apart from
telephonic communication. However, the issuer has remained
non-cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of KKP SPINNING. This restricts
CRISIL Ratings' ability to take a forward-looking view on the
credit quality of the entity. CRISIL Ratings believes that rating
action on KKP SPINNING is consistent with 'Assessing Information
Adequacy Risk'. CRISIL Ratings has Continues the ratings on the
bank facilities of KKP SPINNING to 'CRISIL B+/Stable Issuer not
cooperating'.
For arriving at its ratings, CRISIL Ratings has combined the
business and financial risk profiles of KKP Spinning, KKP Fine Line
Private Limited (KKP Fine), KKP Hi Tech Weaving India Pvt Ltd (KKP
Hi Tech), KKP Textiles Pvt Ltd (KKP Textiles) and KKP Weaving and
Processing Mills Pvt Ltd (KKP Weaving). This is because all the
companies, collectively referred to as the KKP group, are in the
same line of business and have the same management. Also, the
companies have inter-company commercial transactions and a
centralised system for procurement of raw material and marketing
arrangements.
Based in Namakkal (Tamil Nadu), the KKP group was set up by Mr. K
Periyasamy, father of Mr. P Nallathambi, who is the present
chairman. KKP Hi Tech and KKP Weaving are into the manufacture of
grey fabric, KKP fine manufactures Madeups and Fabric. KKP textiles
manufactures cotton yarn. KKP Spinning manufactures cotton yarn and
grey fabric.
LODHI RAJPOOT: CRISIL Withdraws B+ Rating on INR4.4cr Cash Loan
---------------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Lodhi Rajpoot Ice And Cold Storage Private Limited (LRICS) on the
request of the company and after receiving no objection certificate
from the bank. The rating action is in-line with CRISIL Rating's
policy on withdrawal of its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.4 CRISIL B+/Stable/Issuer Not
Cooperating (Withdrawn)
Term Loan 1.65 CRISIL B+/Stable/Issuer Not
Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with LRICS for
obtaining information through letters and emails dated March 21,
2022 and March 25, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of LRICS. This restricts CRISIL
Ratings' ability to take a forward-looking view of the credit
quality of the entity. CRISIL Ratings believes that rating action
on LRICS is consistent with 'Assessing Information Adequacy Risk'.
CRISIL Ratings has migrated the ratings on the bank facilities of
LRICS to 'CRISIL B+/Stable Issuer not cooperating'.
LRICS, which was set up in 1996, operates a cold storage facility
for potatoes, for local farmers in Shikohabad (Uttar Pradesh), with
capacity of 2 lakh tonnes. Daily operations are managed by
promoters, Mr Mohan Datt and Mr Ram Gopal.
M K AIRCON: CRISIL Lowers Rating on INR5cr Cash Loan to B+
----------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities of
M K Aircon Systems Private Limited (MKASPL) to 'CRISIL
B+/Stable/CRISIL A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit/ 5 CRISIL B+/Stable (Downgraded
Overdraft facility from 'CRISIL BB-/Stable')
Letter of Credit 4 CRISIL A4 (Downgraded from
'CRISIL A4+')
The rating downgrade reflects weakening of the business risk
profile of MKASPL on account of significant decline in revenue and
accruals over the three fiscals ended 2021 due to subdued demand.
Pressure on revenue and profitability is likely to lead to
lower-than-expected accruals and further deterioration in the
credit risk profile in fiscal 2022.
The ratings continue to be constrained by the modest scale of
operations of the company, its average financial risk profile and
stretched liquidity. These weaknesses are partially offset by the
extensive experience of the promoters in the heating, ventilating,
and air conditioning (HVAC) industry.
Analytical Approach
Unsecured loan of INR0.61 crore (as on March 31, 2021) provided by
the promoters, has been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Intense competition due to the
presence of a large number of small players in the industry keeps
the scale of operations modest with estimated revenue of INR9.41
crore in the 11 months of fiscal 2022 (Rs 12.44 crore in fiscal
2021). Further, slowdown in capex plans of government and private
players also contributes to modest scale of operations.
* Average financial risk profile: The financial risk profile is
constrained by high gearing and total outside liabilities to
tangible networth ratios of 2.70 and 4.87 times, respectively, and
modest networth of INR2.65 crore as on March 31, 2021.
Strength:
* Extensive experience of the promoters in the HVAC industry:
The promoters' experience of over two decades in the HVAC industry
will continue to support the business.
Liquidity: Stretched
Cash accrual in fiscal 2022 is expected to remain insufficient
against debt repayment obligations. Bank limit remained fully
utilized for the 12 months through November 2021. Current ratio was
moderate at 1.32 times as on March 31, 2021.
Outlook: Stable
MKASPL will continue to benefit from the extensive experience of
its promoters.
Rating Sensitivity factors
Upward factors:
* Increase in revenue (by more than 50%) and operating margin
leading to higher cash accrual
* Improvement in the capital structure
Downward factors:
* Steep decline in revenue and operating margin, resulting in cash
accrual dipping by 20%
* Stretch in the working capital cycle or large, debt-funded
capital expenditure, weakening the financial risk profile
* Weakening of debt protection metrics
MKASPL was established in 1999 as a partnership firm and was
reconstituted as a private limited company in 2003. The company
undertakes turnkey projects for HVAC systems and annual maintenance
works for companies in the private and government sectors. It is
promoted by Mr Dhirendra Shukla and his family members.
OMKAR NESTS: CRISIL Moves B+ Debt Ratings to Not Cooperating
------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Omkar
Nests Private Limited (ONPL) to 'CRISIL B+/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 23.5 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Secured Overdraft
Facility 1 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with ONPL for
obtaining information through letters and emails dated March 22,
2022 and March 25, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of ONPL, which restricts CRISIL
Ratings' ability to take a forward-looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on ONPL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of ONPL to 'CRISIL B+/Stable Issuer not
cooperating'.
Incorporated in 2000, ONPL is a Delhi-based developer of real
estate. The promoters, Mr Omkar Nath, Mr Kamal Krishan and Mr Vimal
Kumar, have experience of more than a decade in constructing
high-rise buildings in the National Capital Region and Jammu. The
company has taken up two residential township projects, both named
Royal Nest, in Greater Noida and Jammu.
PARCOS TILES: ICRA Withdraws B- Rating on INR12.32cr Term Loan
--------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Parcos
Tiles LLP (PTL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based
Term Loan 12.32 [ICRA]B- (Stable); Withdrawn
Fund-based
Cash Credit 8.00 [ICRA]B- (Stable); Withdrawn
Non-fund Based
Bank Guarantee 4.00 [ICRA]A4; Withdrawn
Unallocated Limits 0.68 [ICRA]B- (Stable); Withdrawn
ICRA has withdrawn the ratings assigned to the bank facilities of
PTL based on the No Objection Certificate received from the banker,
and in accordance with ICRA's policy on withdrawal and suspension.
However, ICRA does not have information to suggest that the credit
risk has changed since the time the rating was last reviewed. The
Key Rating Drivers, Liquidity Position, Rating Sensitivities, have
not been captured as the related instruments are being withdrawn.
Established in July 2016 as a limited liability partnership firm,
Parcos Tiles LLP (PTL) manufactures vitrified tiles. It commenced
operations in April 2017. The firm's manufacturing unit is at Morbi
in Gujarat and has an installed capacity of 9,000 boxes of tiles
per day. On November 2020, the firm was taken over by Mr. Ramji
Chhatrola, Mr. Pintu Baraiya, Mr. Dhaval Kadivar from the erstwhile
promoter group. The partners have experience of more than a decade
in the ceramic industry by virtue of being associated with other
ceramic companies.
PAREKH ALUMINEX: CRISIL Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Parekh
Aluminex Limited (PAL) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 172.5 CRISIL D (Issuer Not
Cooperating)
Cash Credit 93 CRISIL D (Issuer Not
Cooperating)
Cash Credit 32 CRISIL D (Issuer Not
Cooperating)
Cash Credit 13 CRISIL D (Issuer Not
Cooperating)
Cash Credit 34.5 CRISIL D (Issuer Not
Cooperating)
Letter of Credit 55 CRISIL D (Issuer Not
Cooperating)
Letter of credit 64 CRISIL D (Issuer Not
& Bank Guarantee Cooperating)
Letter of credit 26 CRISIL D (Issuer Not
& Bank Guarantee Cooperating)
Proposed Long Term 855 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with PAL for
obtaining information through letters and emails dated January 31,
2022 and February 28, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of PAL, which restricts CRISIL
Ratings' ability to take a forward-looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on PAL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
PAL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
Incorporated in 1994, PAL manufactures aluminium foil containers
(AFC), lids, covers, and allied products used in packaging food
items. Manufacturing units are in Dadra and Nagar Haveli. In 2005,
PAL acquired a Singapore-based company to enter the Southeast Asian
markets. In 2008, its units acquired export oriented-unit status.
The company entered the retail space with two brands, PAL and ME
Foil, in fiscal 2011. It has annual production capacities of 688
crore pieces of AFC, 3.96 crore pieces of foil roll, and 179 crore
pieces of foil lids.
PAWAN KRAFT: CRISIL Assigns B+ Rating to INR60cr Term Loan
----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' ratings to the
bank facilities of Shree Pawan Kraft Paper Mills LLP (SPKPM).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 60 CRISIL B+/Stable (Assigned)
The rating reflects SPKPM's susceptibility to intense competition
and cyclicality in the industrial paper industry, exposure to risks
related to ongoing project and expected leveraged capital
structure.
These weaknesses are partially offset by its extensive industry
experience of the promoters and adoption of latest machinery in
steady industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to risks related to ongoing project: SPKPM is scheduled
to commence its project in April 2023. Demand risk is also
expected to be moderate as the industry is highly fragmented marked
by low entry barriers with small capital and technological
requirements. Also, will be exposed to intense competition from
other players in the segment. Timely completion and successful
stabilization of its operations at the new unit will remain a key
rating sensitivity factor.
* Expected leveraged capital structure: SPKPM is expected to have
an average financial risk profile with high gearing and moderate
debt protection metrics. The project is aggressively funded through
a debt-equity ratio 1.27 times.
* Susceptibility to intense competition and cyclicality in the
industrial paper industry: The Indian industrial paper industry is
highly fragmented with several organized and unorganized players.
The level of fragmentation is even higher in the industrial paper
segment (which accounts for a major portion of the total paper
industry) where unorganized players hold majority of the market
share. Rapid growth in the number of small mills has been because
of the low entry barriers (the cost of setting up an industrial
paper plant is relatively low as most smaller capacities are
waste-paper-based and involve low investment in technology) and
government policies (several excise concessions and other benefits
to small paper mills granted from time to time).
Competition, especially in the kraft paper segment, is intense.
Consequently, players have limited pricing flexibility. Moreover,
end-users of packaging paper are also price sensitive. This
situation is expected to continue over the medium-to-long term, as
consolidation is unlikely because of unviable capacities. The
industry is also cyclical in nature, with small players shutting
down capacities during downturns and recommencing operations when
the economy revives. This prevents established players from
generating large profits even during periods of good economic
growth. The business risk profile may remain constrained over the
medium term by susceptibility to risks related to the
above-mentioned factors.
Strengths:
* Extensive industry experience of the promoters: The promoters
have an experience of over 25 years in the industry. This has given
them an understanding of the dynamics of the market and enabled
them to establish relationships with suppliers and customers.
* Adoption of latest machinery in steady industry: SPKPM is
currently in process of setting a new unit, the unit installed is
equipped with latest equipment & technology. Therefore, the
adoption of latest machinery in steady industrial paper industry
would support its business profile.
Liquidity: Stretched
Total cost of the project is Rs.107.1 cr funded with debt-to-equity
ratio of 1.3 times. Repayment of term loan will commence from
Apr-2024 with annual repayment of Rs.6 cr in FY2025 & FY2026 with
ballooning installment ending on Sept 2031. The promoters are
likely to extend support in the form of equity and unsecured loans
to meet its working capital requirements and repayment
obligations.
Outlook: Stable
CRISIL Ratings believes that SPKPM will benefit over the medium
term from its promoter extensive industry experience.
Rating Sensitivity factors
Upward factors:
* Stabilises operations at its proposed plant in time
* Reports significant revenue and profitability.
Downward factors:
* Faces a considerable delay in the commencement of its operations,
* Witnesses a substantial increase in its working capital
requirements thus weakening its liquidity & financial profile
resulting in a debt-to-equity ratio of greater than 2.8 times
SPKMP was incorporated on December 12, 2019. SPKPM is currently
setting up a plant to manufacture kraft paper in Kamrup (Rural)
district in Assam with installed capacity of 300 ton per day. The
plant is expected to be commissioned in April 2023.
SPKPM is promoted by Mr. Rishabh Kr Jindal, Mr. Surendra Kr Mittal,
Mr. Lovnish Aggarwal, Mr. Rajesh Kr Mittal, Ms. Shanti Devi Mittal,
Mr. Harish Jindal and Mr. Ved Prakash Agarwala.
RELIANCE CAPITAL: Administrator Gets 55 Bids From Interest Buyers
-----------------------------------------------------------------
The Hindu BusinessLine reports that as many as 55 bids have been
received for debt ridden Reliance Capital as part of the ongoing
insolvency proceedings.
A consortium led by Piramal Group, Yes Bank, Zurich Insurance
Company, IndusInd International Holdings, Jindal Power, Ajay
Harinath Singh, Chairman, Darwin Platform Group of Companies are
some of the prospective resolution applications, BusinessLine
discloses citing a list released by Nageswara Rao Y, the RBI
appointed Administrator of Reliance Capital.
According to BusinessLine, the Piramal Consortium, with PEL Finhold
is the lead partner and India Resurgence Fund, has bid for both the
options -- for Reliance Capital as a whole as well as the business
clusters. Piramal Group had previously also bid for and also taken
over Dewan Housing Finance Corporation Ltd.
In all, 22 companies have put in bids for both the options while
the others have bid for only selected business clusters, the report
notes. The insurance subsidiaries, which are parts of cluster I and
II have also seen a lot of investor interest.
Other prospective resolution applicants include Adani Finserv,
Authum Investment Infrastructure, Bandhan Financial Holdings,
Brookfield, HDFC Ergo General Insurance, ICICI Lombard General
Insurance, Torrent Investment, TPG Asia and Truenorth Fund,
BusinessLine says.
Bids by five companies -- Cosmea Financial Holdings, Howen
International Fund, Libord Finance, Shree Krishna Group and Yash
Shares and Stocks have not been included in the list of prospective
resolution applicants due to issues arising after verification of
documents. The Administrator can choose to evaluate these bids as
well based on further documents and clarifications.
The list of applicants was disclosed by Reliance Capital in a late
night stock exchange filing on April 4.
BusinessLine says the Administrator had on February 18 issued the
expression of interest seeking bids for the company. The last day
to submit EoIs was March 25. Previously, the deadline had been
fixed as March 11 but it was extended by two weeks as some
prospective bidders had sought more time to submit EoIs.
The Administrator has sought any objection to inclusion or
exclusion of prospective candidates within five days, the report
notes.
About Reliance Capital
Headquartered in Mumbai, India, Reliance Capital Limited --
https://www.reliancecapital.co.in/ -- a non-banking financial
company, primarily engages in lending and investing activities in
India, Singapore, and Mauritius. The company operates through
Finance & Investment, General Insurance, Life Insurance, Commercial
Finance, Home Finance, and Others segments. It offers life, health,
and general insurance products; brokerage and distribution
services, including stock broking, wealth management, and third
party distribution; and commercial and home finance services, such
SME, retail, microfinance, renewable, affordable housing, and home
loans, as well as loans against property and construction finance.
The company also provides asset reconstruction, institutional
broking, and proprietary investments services, as well as other
financial and allied services. The company was formerly known as
Reliance Capital & Finance Trust Limited and changed its name to
Reliance Capital Limited in January 1995.
In an order dated Dec. 6, 2021 of the National Company Law
Tribunal, Mumbai (NCLT), corporate insolvency resolution process
has been initiated against Reliance Capital as per the provisions
of the Insolvency and Bankruptcy Code (IBC), 2016.
Reliance Capital owes its creditors over INR19,805 crore, majority
of the amount through bonds under the trustee Vistra ITCL India,
The Economic Times of India said.
RELIGARE HOUSING: ICRA Lowers Rating on INR1,200cr Loan to B+
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Religare
Housing Development Finance Corporation Limited (RHDFCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term/ 1,200 [ICRA]B+ (Negative)/[ICRA]A4;
Short-term long-term rating downgraded
Bank Lines from [ICRA]BB and short-term
rating reaffirmed; removed
from rating Watch with
Negative Implications
Short-term 100 [ICRA]A4; reaffirmed and
Debt Programme removed from rating Watch
with Negative Implications
Rationale
The downgrade in the long-term rating of RHDFCL factors in its
reduced financial flexibility due to the longer-than-expected delay
in the implementation of the Debt Resolution Plan (DRP) of Religare
Finvest Limited (RFL). RHDFCL is an 87.5% subsidiary of RFL (rated
[ICRA]D), which, in turn, is a wholly-owned subsidiary of Religare
Enterprises Limited (REL). The delay in the implementation of the
DRP at the RFL level has significantly impacted RHDFCL's fund flow
and has consequently inhibited new business growth for the company.
RHDFCL's loan book RHDFCL has declined continuously and stood at
INR368 crore as on December 31, 2021 (INR452 crore as on March 31,
2021).
Consequently, the asset quality indicators have deteriorated with
gross non-performing advances (GNPAs) of 16.7% as on December 31,
2021 (10.6% as on March 31, 2021). Increase in absolute number of
GNPA is on account of the clarification by the Reserve Bank of
India (RBI) on IRAC norms vide its circular dated 12th November
20211. RBI has provided NBFCs time till September 2022 to augment
the required systems and controls for implementing its instruction
on NPA upgradation vide its circular dated February 15, 2022. Gross
NPAs would have been at INR41.3 crore as on December 31, 2021 as
against INR61.3 core (INR48.5 crore as on March 31, 2021) adjusting
for the impact of the November 2021 circular.
The ratings also factor in the moderate profitability indicators
with a return on average assets (RoA) of 0.1% for 9M FY2022 and
1.6% for FY2021 due to the high credit cost of 1.4% in 9M FY2022
and 0.4% in FY2021. While collections have been good in the past
few months, supported by prepayments and foreclosures, the asset
quality profile is expected to remain under pressure over the
medium term given the increasing challenges in the operating
environment and the reducing denominator. In the past, the company
has repaid all the debt obligations on/before time using the inflow
from the loan book and liquidity raised through loan sell downs.
An improvement in RHDFCL's credit profile remains contingent on the
timely implementation of RFL's DRP and RHDFCL's subsequent ability
to resume business operations while maintaining its asset quality.
At the same time, a longer-than-expected 1 RBI vide its circular
dated November 12, 2021 has stipulated guidelines on NPA
classification basis the day end position basis and upgrade from an
NPA to standard category only after the clearance of all
outstanding overdues delay in the implementation of the DRP and
hence the subsequent resumption of funding lines for RHDFCL can put
further pressure on its already stretched liquidity profile.
Key rating drivers and their description
Credit strengths
* Favourable growth potential, given the focus on affordable
housing: Home loans accounted for the majority (~71%) of RHDFCL's
portfolio mix as on December 31, 2021, with loan against property
(LAP) and builder loans accounting for the balance 29%. ICRA notes
that RHDFCL has resumed disbursements in November 2021, though any
meaningful scale-up in the business remains to be seen. While the
affordable housing segment has good growth opportunity, the
inherent risks associated with this segment are also relatively
high, given the target borrower profile (self-employed and low
income) with credit underwriting largely based on assessed income,
and the competitive operating environment. However, ICRA notes that
RHDFCL's loan book is granular in nature and secure; thus, the
expected loss in case of default is expected to be low.
Credit challenges
* Stretched liquidity profile and curtailed business operations due
to reduced financial flexibility: Given the ongoing challenges at
the Group level, RHDFCL's financial flexibility has been impacted,
which, in turn, has led to curtailed business operations.
Negligible disbursements since FY2019 led to a further run-down of
the on-balance sheet gross loan book to INR368 crore as on December
31, 2021 from INR452 crore as of March 31, 2021. The company has
not been able to raise any fresh funding lines post FY2018 and its
liquidity profile also remains stretched owing to mismatches in its
asset-liability management (ALM) statement as on September 30,
2021. However, the company had previously repaid all its debt
obligations on/before time using inflows from the loan book and
liquidity raised through loan sell-downs. It had assigned loans
worth INR42 crore and INR18 crore in Q2 FY2021 and Q4 FY2021,
respectively, and the funds arranged through assignment were mainly
utilised towards servicing the debt obligations. It had also
prepaid the term loan instalments. It would be imperative for
RHDFCL to raise funds (either through sell-downs or support from
ultimate parent – REL) to maintain its credit profile in the
event of significant reduction in the expected inflows from the
loan book. At the same time, RHDFCL's ability to raise fresh funds
and subsequently restart its lending operations would remain
contingent on the timely DRP implementation at the parent level.
* Weak asset quality: RHDFCL's asset quality indicators have
weakened further due to high delinquencies with the GNPA% at 16.7%
as on December 31, 2021 (10.7% as on March 31, 2021). ICRA notes
that a part of the increase was also on account of the denominator
effect, given the reducing loan book. Nevertheless, following the
Reserve Bank of India's (RBI) clarification on Income Recognition
and Asset Classification (IRAC) norms there has been an uptick in
the absolute numbers as well. RBI vide its circular dated February
15, 2022, has provided NBFCs time till September 2022 to augment
the required systems and controls for implementing its instruction
on NPA upgradation. Adjusting for the impact of November 2021
circular, the absolute gross NPAs were lower at INR41.3 crore
supported by the sale of NPAs to an asset reconstruction company
(ARC). RHDFCL sold GNPAs of ~INR23.86 crore (INR14.36 crore net of
provision) to an ARC in 9M FY2022 at a net loss (after
provisioning) of ~INR2 crore. ICRA notes that RHDFCL has not
restructured any loans and its average collection efficiency
(including prepayments and foreclosures) was 182% during July 2021
to December 2021. However, the asset quality profile is expected to
remain under pressure over the medium term, given the limited
disbursements and higher prepayments from better credit quality
borrowers and hence a reducing base.
* Modest profitability indicators: RHDFCL's operating profitability
indicators have remained range-bound owing to the stable yield on
advances of 14.4% in 9M FY2022 (15.1% in FY2021) on account of the
relatively stable monthly collections from its existing loan book.
The net interest margins improved due to some moderation in
interest expenses with a sequential decline in borrowings and also
the softening of systemic interest rates. However, due to the
curtailment of business operations and the high absolute GNPAs of
~INR61 crore as on December 31, 2021 (INR48.5 crore as on March 31,
2021) and loss on sale of loans to an ARC, the credit costs
increased to 1.6% in 9M FY2022 from 0.4% in FY2021, resulting in a
decline in the overall profitability indicators. Operating expense,
in relation to average assets for 9M FY2022, also increased to 6.8%
of total assets from 5.4% in FY2021 due to lower operating
efficiency. The RoA and the return on equity (RoE) declined to 0.1%
and 0.3%, respectively, in 9M FY2022 from 1.6% and 4.4%,
respectively, in FY2021. Given the challenging operating
environment and the pressure on the asset quality, the overall
profitability indicators are expected to remain modest in FY2023 as
well. RHDFCL's legal actions have resulted into reversal of
provisioning and resolution of long pending high value cases and
retail cases which has led to increase in the profitability. PAT
for 11M FY2022 is INR5.4 crore against INR0.4 crore for 9M FY2022
and INR9.1 crore for FY2021.
Liquidity position: Stretched
RHDFCL's liquidity position is stretched. As on March 15, 2022, the
company had cash & liquid investments of ~INR8.46 crore and expects
debt repayments of INR34.9 crore during April 2022 to September 30,
2022. It expects inflows of INR30.3 crore comprising of principal
repayments of INR8.9 crore and interest collection of INR21.4 crore
from advances during the same period. ICRA also notes that RHDFCL
is in breach of covenants on certain borrowings and any
acceleration of repayment by lender will stretch the liquidity
further. RHDFCL is dependent on support from its ultimate holding
company, REL, to make timely payments for its debt obligations and
has a commitment of INR150 crore for equity infusion from REL.
Prepayments from advances and sell-down of portfolio can also
support liquidity.
Rating sensitivities
Positive factors – An improvement in the credit profile of the
Religare Group, and hence improved fund flow to RHDFCL to support
its business operations, could lead to a rating upgrade.
Negative factors – Further weakening of the liquidity profile or
a delay in liquidity support from REL would significantly impact
RHDFCL's credit profile and could lead to a rating downgrade.
RHDFCL was incorporated in June 1993 as Maharishi Housing
Development Finance Corporation Limited. REL acquired an 87.5%
stake in RHDFCL in May 2009, which was later transferred to RFL.
The remaining 12.5% stake is held by Maharishi Housing Development
Trust and others. The company operates from RFL's branches and has
a service-level agreement with the parent for the cost sharing of
infrastructure and employees. RHDFCL is a housing finance company
registered with National Housing Bank (NHB) and it primarily
provides housing loans. In FY2021, RHDFCL reported a net profit of
INR9.1 crore on a total asset base of INR521.3 crore and a net
worth of INR211.0 crore compared to a net profit of INR5.3 crore on
a total asset base of INR649.1 crore and a net worth of INR201.8
crore in FY2020. As per the provisional financials for 9M FY2022,
the company reported a net profit of INR0.4 crore on a total asset
base of INR411.9 crore and a net worth of INR211.3 crore. As on
December 31, 2021, RHDFCL's gross loan book stood at INR367.8
crore. Housing loans accounted for 71% of the portfolio while
non-housing loans comprised the remaining 29%. The gross and net
NPAs, as on December 31, 2021, were 16.7% and 11.8%, respectively
(10.7% and 6.0%, respectively, as of March 31, 2021).
SAI POINT: CRISIL Withdraws B- Rating on INR12cr Overdraft Debt
---------------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Sai Point Bikes And Cars (SPBC) on the request of the company and
after receiving no objection certificate from the bank. The rating
action is in-line with CRISIL Rating's policy on withdrawal of its
rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Drop Line 12 CRISIL B-/Stable (ISSUER NOT
Overdraft Facility COOPERATING; Migrated from
'CRISIL B-/Stable'; Rating
Withdrawn)
CRISIL Ratings has been consistently following up with SPBC for
obtaining information through letters and emails dated March 21,
2022 and March 25, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SPBC. This restricts CRISIL
Ratings' ability to take a forward-looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on SPBC is consistent with 'Assessing Information Adequacy Risk'.
CRISIL Ratings has migrated the ratings on the bank facilities of
SPBC to 'CRISIL B-/Stable Issuer not cooperating'.
SPBC was formed as a proprietorship of Mr Dilip Patil in 2015. The
firm buys pre-owned luxury car models such as Audi, Mercedes Benz,
Jaguar, Range Rover and BMW, and sells them after an overhaul. It
has showrooms in Mumbai and Pune.
SAMARTHA HOSPITAL: CRISIL Assigns B Rating to INR15cr New Loan
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable' rating to the
proposed long-term bank facility of Samartha Hospital And Research
Center Private Limited (SHRCPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Term Loan 15 CRISIL B/Stable (Assigned)
The rating reflects the company's modest scale of operations,
exposure to project risks and expected leveraged capital structure,
exposure to intense competition and geographic concentration in
revenue. These weaknesses are partially offset by the extensive
experience of the promoters in the healthcare industry.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Revenue remained subdued at INR59
lakh to Rs. 1 crore over the past few fiscals through 2021 due to
high number of competitors in the industry. The revenues of the
company had declined significantly in fiscal 2021 due to Dr. Arjun
Bhangale being 70+ years had discontinued visiting the hospital
during covid period. Though the hospital was operational, the
inflow of patients was less due to Dr. Arjun not being available
and hence led to lesser sale of medicine. Though the revenues are
expected to improve in the fiscal 2022 to around Rs. 98 lakhs, it
would continue to remain modest.
* Exposure to project risks: SHRCPL is planning to set up a 100
bedded multi-specialty hospital in Jalgaon, which is scheduled to
commence operations from April 2024 and has a project cost of Rs.
23 crore. The project has a high implementation as well as funding
risk, as the construction has recently begun and is still in
nascent stage of operations. The project is expected to be funded
through term loans of Rs. 15.5 crore while the rest through
promoters in the form of equity as well as unsecured loans. The
term loan is yet to be sanctioned and hence has a high funding
risk.
* Expected leveraged capital structure: The project is aggressively
funded by debt of Rs. 16.5 crores, leading to debt-equity ratio of
2.5:1. This would lead to higher interest and finance charges which
would lead to reduction in profitability of the company.
* Exposure to intense competition and geographic concentration in
revenue: Competition from other multi-specialty hospitals limits
growth prospects for the company. Furthermore, unlike other
healthcare players operating on a pan-India scale, SHRCPL is
present only in Jalgaon, Maharashtra, and hence, is prone to
dynamics of a single market. Demand risk is likely to be moderate
as the industry is highly fragmented. Also, the hospital will face
intense competition from other players in the segment. Timely
completion of hospital construction and successful stabilization of
operations will be key monitorable.
Strength:
* Extensive experience of the promoters: The promoters Dr. Arjun
Bhangale has experience of over 40 years in the healthcare
industry. He has also been running another hospital named Dr.
Bhangale surgical hospital and nursing home. Also, Dr. Rashmi badhe
and Dr. Rakesh Badhe have experience of around a decade working in
another hospitals. This has given them an understanding of market
dynamics.
Liquidity: Poor
Cash accruals are expected to be low in fiscal 2023 and fiscal
2024. Although there is no debt obligations for those years, the
capex will need to be funded through promoter infusion and debt.
Cash and bank balance was INR26 lakh as on March 31, 2021. Timely
stabilization of operations will be critical to meet repayment for
the planned loan.
Outlook: Stable
CRISIL Ratings believes SHRCPL will continue to benefit from the
extensive experience of the promoters.
Rating Sensitivity Factors
Upward factors
* Timely stabilisation of hospital operations, and significant
revenue and profitability
* Increase in revenues while maintaining operating margins leading
to cash accrual of more than Rs. 1 crore
Downward factors
* Considerable delay in commencement of operations of the hospital
* Significant low revenue generation of less than during initial
phase of operations
Incorporated in 2001, SHRCPL wholesales medicines and medical
products. The company is setting up a 100-bed multispecialty
hospital in Jalgaon, Maharashtra. It is promoted by Mr Arjun Ganpat
Bhangale and Ms Jyoti Arjun Bhangale. The hospital is expected to
commence operations in fiscal 2024.
SEVEN SEAS: CRISIL Moves D Debt Ratings to Not Cooperating
----------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Seven
Seas Hospitality Private Limited (SSHPL) to 'CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft Facility 4 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft Facility 11 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft Facility 6.25 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft Facility 4.75 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Working 13.74 CRISIL D (ISSUER NOT
Capital Facility COOPERATING; Rating Migrated)
Term Loan 83.18 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 36.81 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 62.27 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with SSHPL for
obtaining information through letters and emails dated March 8,
2022 and March 12, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SSHPL, which restricts CRISIL
Ratings' ability to take a forward-looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SSHPL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of SSHPL to 'CRISIL D Issuer not cooperating'.
Incorporated in 2006 and promoted by the Dang group, SSHPL offers
banqueting and catering services at three banquet halls at Lawrence
Road, Delhi, with combined seating capacity of 1500 people. The
company has set up a five-star
hotel-cum-restaurant-cum-banquet-hall at Rohini, Delhi.
SEW KRISHNAGAR: CRISIL Moves D Debt Ratings to Not Cooperating
--------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Sew
Krishnagar Baharampore Highways Limited (SKBHL) to CRISIL D Issuer
not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 50 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 100 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 100 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 50 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 25 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 25 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 150.32 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 25 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 75 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
In accordance with the terms of the rating agreement with SKBHL,
CRISIL Ratings has sent repeated reminders for payment of fees
towards the surveillance exercise through letters and emails dated
July 28, 2021 and March 1, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution while using the rating assigned/ reviewed with
the suffix 'ISSUER NOT COOPERATING'.
On account of lack of management cooperation towards non-payment of
fees, CRISIL Ratings has migrated the rating on bank facilities of
SKBHL to CRISIL D Issuer not cooperating'.
SKBHL is a wholly owned SPV of SEW Transportation Networks Ltd,
which is a 100% subsidiary of Sew Infrastructure Ltd (SIL). SIL was
awarded a build-operate-transfer contract by NHAI for converting
the 78-km stretch between Krishnagar and Baharampore in West Bengal
to four lanes from two lanes (from 115 km to 193 km on National
Highway-34, which connects Kolkata to Dalkhola in northern West
Bengal). The project is being implemented by SKBHL at a project
cost is INR1,155 crore.
The scheduled COD for the project was in July 2014. However, owing
to delays in project implementation, land acquisition, lag in
equity infusion by the promoters, and delay in disbursement of the
term loan, the project has been delayed by almost six years. The
company completed 65.02 km (85%) out of total stretch of 76.358 km
by December 2018, and applied for PCOD. Post recommendation from
IE, NHAI approved PCOD on February 10, 2020 for the 65.02 km of
stretch. De-scoping of 3.9 km of land has been done, 2.1 km land
has been made available and work on the same is progressing and
balance 5 km land is yet to be made available by NHAI.
The company has received 4 annuities till date, one each in July
and January, starting July 2020.
SRS LIMITED: CRISIL Keeps FD Debt Rating in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings the rating on bank facilities of SRS Limited (SRS)
continues to be 'FD Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Fixed Deposits-LT 125.0 FD (Issuer Not Cooperating)
CRISIL Ratings has been consistently following up with SRS for
obtaining information through letters and emails dated January 31,
2022 and February 28, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SRS, which restricts CRISIL
Ratings' ability to take a forward-looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SRS
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SRS continue to be 'FD Issuer Not Cooperating'.
Incorporated as SRS Commercial Company Ltd in 2000, SRS got its
current name in 2009. It operates in four business verticals: gems
and jewellery (SRS Jewells brand), cinema exhibition (multiplexes
under SRS Cinema), retail value chains (under SRS Value Bazaar and
SRS Fashion Wear), and food and beverages (under SRS 7 Dayz, Asian
Amigo, Punjabi Haandi, and Desi Cafe). The company has been listed
on the Bombay Stock Exchange and National Stock Exchange since
September 2011. It is managed by Dr Anil Jindal, a first-generation
entrepreneur.
SURYA ALLOY: CRISIL Withdraws D Rating on INR33cr Cash Loan
-----------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Surya Alloy Industries Limited (Surya Alloy) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL Rating's policy on
withdrawal of its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 33 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Cash Credit 18.75 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Cash Credit 36 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Cash Credit 3.74 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Letter of credit 23.36 CRISIL D/Issuer Not
& Bank Guarantee Cooperating (Withdrawn)
Letter of credit 19.77 CRISIL D/Issuer Not
& Bank Guarantee Cooperating (Withdrawn)
Letter of credit 4.94 CRISIL D/Issuer Not
& Bank Guarantee Cooperating (Withdrawn)
Letter of credit 2.70 CRISIL D/Issuer Not
& Bank Guarantee Cooperating (Withdrawn)
Term Loan 53.36 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 7.99 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 42.62 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 40.22 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 7.07 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 12.57 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 9.55 CRISIL D/Issuer Not
Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with Surya Alloy
for obtaining information through letters and emails dated February
28, 2022, March 8, 2022 and March 15, 2022 among others, apart from
telephonic communication. However, the issuer has remained non
cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of Surya Alloy. This restricts
CRISIL Ratings' ability to take a forward-looking view on the
credit quality of the entity. CRISIL Ratings believes that rating
action on Surya Alloy is consistent with 'Assessing Information
Adequacy Risk'. CRISIL Ratings has Continues the ratings on the
bank facilities of Surya Alloy to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Surya Alloy was promoted by Mr Ashish Rungta and the late Mr
Motilal Rungta in 1990. The Rungta group has been mainly
manufacturing railway track material for the Indian Railways since
20 years. Surya Alloy mainly manufactures and supplies railway
track material, including spheroidal graphite cast iron inserts,
elastic railway clips, grooved rubber pads, metal liners, and fish
plates. The company is approved by the Research Design & Standards
Organisation of the Indian Railways. Over the years, Surya Alloy
has expanded its product profile to include ingots and billets
(alloy/non-alloy steel), special spring steel rounds, and rolled
products such as angles, channels, joists, Z-section bars, and
flats. The company has also set up a ferroalloys division.
UMA GLASS: CRISIL Withdraws D Rating on INR7cr Cash Loan
--------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Uma Glass Works (UGW) on the request of the company and after
receiving no objection certificate from the bank. The rating action
is in-line with CRISIL Rating's policy on withdrawal of its rating
on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Letter of Credit 1.3 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Long Term Loan 1.4 CRISIL D (ISSUER NOT
COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
Proposed Fund- 0.3 CRISIL D (ISSUER NOT
Based Bank Limits COOPERATING; Migrated from
'CRISIL D'; Rating Withdrawn)
CRISIL Ratings has been consistently following up with UGW for
obtaining information through letters and emails dated March 8,
2022 and March 12, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of UGW. This restricts CRISIL
Ratings' ability to take a forward-looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on UGW is consistent with 'Assessing Information Adequacy Risk'.
CRISIL Ratings has migrated the ratings on the bank facilities of
UGW to 'CRISIL D/CRISIL D Issuer not cooperating'.
UGW was set up in 1996 and acquired by the current partners, Mr
Gaurav Singhal, Mr Suresh Chandra Agarwal and Ms Gunjan Singhal, in
2011. The firm manufactures glass products such as kitchenware,
tableware, headlights, and decorative glassware.
VISIONINDIA SOFTWARE: CRISIL Moves D Ratings to Not Cooperating
---------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of
Visionindia Software Exports Limited (VISEL) to 'CRISIL D/CRISIL D
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3.23 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Bank Guarantee 7 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 4 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 2 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Long Term Loan 3.4 CRISIL D (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 10.37 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with VISEL for
obtaining information through letters and emails dated March 23,
2022 and March 28, 2022 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VISEL, which restricts CRISIL
Ratings' ability to take a forward-looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on VISEL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of VISEL to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Incorporated in 2000, VSEL is engaged in providing software
solutions. It undertakes e-governance projects and provides banking
solutions for financial inclusion. The company is promoted by Mr.
Sunil Umrani and is based in Pune.
=================
I N D O N E S I A
=================
SAKA ENERGI: Fitch Affirms 'B+' LongTerm IDR, Outlook Negative
--------------------------------------------------------------
Fitch Ratings has affirmed PT Saka Energi Indonesia's Long-Term
Issuer Default Rating (IDR) at 'B+'. The Outlook is Negative. The
agency has also affirmed Saka's senior unsecured US-dollar bonds at
'B+' with a Recovery Rating of 'RR4'.
Saka's ratings benefit from a two-notch uplift from its Standalone
Credit Profile (SCP) of 'b-', based on Fitch's assessment of its
parent's - PT Perusahaan Gas Negara Tbk (PGN, BBB-/Stable) -
'Medium' incentive to provide support, in line with Fitch's Parent
and Subsidiary Linkage Rating Criteria.
The Negative Outlook stems from uncertainty around Saka's position
within PGN's structure and the risk of a continued decline in its
business profile in the absence of large reserve replenishments.
Fitch expects that PGN will be required to help Saka repay or
refinance its US-dollar notes due in 2024.
Fitch continues to assess Saka's SCP at 'b-', reflecting the weak
operating and financial profile. Saka maintained its proved reserve
life at 4.8 years at end-2021 (2020: 4.9 years) despite marginally
higher production during the year. Fitch believes that risks of a
decline in Saka's operating profile remain high in the absence of
inorganic growth plans.
KEY RATING DRIVERS
Parent's 'Medium' Incentive to Provide Support: Fitch assesseses
PGN's incentive to support Saka as 'Medium' in light of significant
reputational risk. This is driven by legal linkages from the
presence of cross-default provision between PGN and its significant
subsidiaries. Fitch expects Saka, which is fully owned by PGN, to
account for around 30% of PGN's consolidated EBITDA until 2023.
Saka's branding is also integrated with PGN's in its marketing and
financial materials.
Legal Linkages Remain Moderate: Fitch believes Saka qualifies as a
material subsidiary, as defined in the bond documentation of PGN's
USD1.35 billion notes. Consequently, a default by Saka would
trigger a cross-default provision in PGN's bonds, which mature
after Saka's USD405 million notes due in 2024. However, Fitch
believes PGN's legal incentives to support Saka are only 'Medium',
as its bond documents are vague about the definition of a material
subsidiary, giving PGN some discretion. Continued deterioration in
Saka's asset profile and earnings could further weaken its
materiality to PGN.
Saka Misaligned in Group Structure: Saka's position in PGN's
structure is uncertain. PGN has explicitly expressed its intention
to provide liquidity support to Saka, but Fitch believes Saka's
strategic importance to PGN is 'Weak'. Overall, Fitch assesses the
operational incentive to provide support as 'Medium', given PGN's
control over Saka's board and management. Saka's strategic and
operational importance to PGN has decreased since mid-2018 amid a
restructuring of state-owned oil and gas companies that transferred
the state's 57% ownership of PGN to PT Pertamina (Persero)
(BBB/Stable).
Weakening Operating Profile: Saka's operating profile remains weak,
with proved reserves of 50.6 million barrels of oil equivalent
(mmboe) (2020: 46 mmboe) and proven and probable reserves of
87.2mmboe as of December 2021. Saka added 15.2 mmboe to its proved
reserves against production of 10.6 mmboe during 2021 (2020
production: 9.4 mmboe). However, reserves and production are still
at the lower end of 'B' rated peers. Fitch believes there are risks
to Saka's operating profile in the absence of inorganic growth.
Financial Profile Improvement Transient: Fitch estimates Saka's
leverage, defined by net debt/EBITDA, to improve to 1.6x in 2022,
from 2.7x in 2021, due to higher oil prices and lower debt.
However, Fitch expects leverage to exceed 2.0x by 2023 and 4.0x by
2024, as Fitch forecasts lower oil prices and a drop in production
volumes.
Parental Support Required for Bond Repayment: Fitch expects Saka to
require PGN's support to repay or refinance its US-dollar notes due
in 2024. Fitch estimates that Saka's EBITDA will improve to USD330
million in 2022, but then drop by USD100 million-200 million a year
until 2025. Saka's earnings derive some stability from its large
share of earnings from long-term fixed-price gas contracts. Fitch
includes USD361 million in shareholder loans in Saka's debt.
Inorganic Investments Unlikely: Saka is unlikely to make inorganic
investments until its ownership structure is finalised. Fitch
estimates capex for organic exploration and the developments of
existing fields at around USD100 million during 2022 and 2023
(2021: USD106 million), rising to USD190 million in 2024.
DERIVATION SUMMARY
Saka's ratings benefit from a two-notch uplift due to the 'Medium'
incentive of support from its parent. Saka's 'b-' SCP is comparable
with that of other small independent oil and gas companies rated
globally. The ratings of Gran Tierra Energy International Holdings
Ltd. (GTE, B-/Stable) and Frontera Energy Corporation (B/Stable)
are constrained to the 'B' category given the inherent operational
risks associated with the small scale and low diversification of
their oil and gas production profiles.
Saka's small production size of 29 million of barrels of oil
equivalent per day (mboepd) is similar to that of 'B' rated peers.
Fitch expects Saka's production to average at around 28mboepd,
which is slightly lower than GTE's forecast production of 34mboepd.
GTE and Frontera have 1P reserve lives of 6.8 years and 6.5 years,
respectively, which is higher than Saka's 4.8 years. The Negative
Outlook on Saka's rating reflects risks to further weakening in its
operating profile.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Oil price of USD100/barrel in 2022, USD80/barrel in 2023,
USD60/barrel in 2024 and USD53/barrel thereafter.;
-- Oil and gas production at 28mboepd in 2022 and 2023, 24mboepd
in 2024 and 22mboepd in 2025 (2021: 29mboepd);
-- Capex of around USD100 million in 2022 and 2023, USD190million
in 2024 and USD100million in 2025 (2021: USD106 million).
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Outlook maybe revised to Stable upon clear evidence of
adequate support from PGN that can strengthen Saka's operating
profile and upon clarity on Saka's position with the group
structure, in which case Fitch may assume that linkages
between PGN and Saka and Saka's SCP remain unchanged.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weakening of linkages with PGN in the absence of significant
additional support and a deterioration in Saka's position
within the group structure.
-- Weakening of Saka's SCP, including, but not limited to,
declining reserves or production in the absence of reserve
acquisitions, or a weakening of its liquidity position.
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
Liquidity Support from Parent Required: Saka will require
additional funding to repay its bond on maturity in 2024 based on
Fitch's forecasts. Fitch expects that Saka would require PGN to
rollover shareholder loans of USD77.6 million due in January 2023
and need additional funding support to repay its 2024 bonds. Apart
from the shareholder loans, Saka does not face any near-term debt
maturities, with its bonds of USD405 million falling due in 2024.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Saka's ratings benefit from a two-notch uplift from its SCP based
on Fitch's assessment of moderate linkages between Saka and its
parent.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
===============
M A L A Y S I A
===============
JEPAK HOLDINGS: QEOS Withdraws Judicial Management Application
--------------------------------------------------------------
theedgemarkets.com reports that the High Court (Commercial
division) on April 6 recorded the withdrawal of QEOS Energy Sdn
Bhd's application to have Jepak Holdings Sdn Bhd, the company
involved in the controversial solar hybrid project for 369 rural
schools in Sarawak, not continue to be under judicial management
(JM).
The application for withdrawal was recorded on April 6 before
Judicial Commissioner Nadzarin Wok Nordin, the report says.
This followed QEOS Energy's counsel Simrenjeet Singh informing the
court that the objectives of JM had been met.
"The Education Ministry's refusal to have negotiations with Jepak
has been remedied with the ministry opening their doors resulting
in an audit done by the JM, and a copy of which has been submitted
to the Prime Minister's Office and the Ministry of Finance (MoF).
"The government has agreed for the value of work done in the audit
of the JM. The government has instructed the MoF to expedite
settlement payment based on the audit. Based on the report that was
filed by the JM, the issues resulting in non-payment by the
Education Ministry, in respect of the work done and the termination
have been identified with clarity," the counsel said.
JM is part of a mechanism that came into force in 2018 in Malaysia,
where a court-appointed insolvency practitioner is empowered to
manage a problematic or distressed company's affairs, business and
properties, as part of a corporate rescue exercise, the report
says.
theedgemarkets.com relates that Simrenjeet added that although
there has been no payment yet, QEOS is hopeful and confident that
payment will be forthcoming.
"Nonetheless, whilst the Malaysian government has agreed to make
payment, we cannot say for sure when payment will be forthcoming.
"Therefore, in the context of a JM, we have also advised our client
that it would be difficult and unnecessary to ask this court for a
six month moratorium as there is no concrete timeline to premise
this application and furthermore there is no immediate threat of
liquidation against Jepak Holdings.
"Our client (QEOS) therefore will pursue other options in
expediting payment from the MoF," he told the court.
Also present in court on April 6 were counsel Mohd Faizal Khalid
for the JM and Datuk Mohd Afrizan Husain and Shim De Zhen for
Jepak.
QEOS Energy is one of Jepak's creditors in the project who
undertook the JM exercise after Jepak's JM exercise since January
26 last year and on extension for another five months until last
December had elapsed, according to theedgemarkets.com.
As according to Section 406 (1) of the Companies Act 2016 - a JM
order shall be in force for six months and may be extended for
another six months by the permission of the court.
As Jepak's JM period almost ended, QEOS Energy, as one of the
creditors applied under Section 405 of the Companies Act - for a
court order where a prospective creditor or any other parties can
apply for a JM and as a result of the resolution as mentioned by
Simrenjeet the company has withdrawn the application, the report
relates.
Last February, it was reported that three Jepak contractors which
were owed by the company would be directly paid by the Education
Ministry and the MoF.
QEOS Energy group chief executive officer, Dr Gabriel Walter, when
contacted by theedgemarkets.com confirmed the withdrawal of the
application for JM as the threats from creditors were no more.
He even noted the court through JC Nadzarin commended the JM
exercise, the report notes.
=====================
N E W Z E A L A N D
=====================
BELLA VISTA: Former Director Fights Bankruptcy Challenge
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The New Zealand Herald reports that the man behind Tauranga's
failed Bella Vista development is fighting a New Zealand High Court
challenge to declare him bankrupt, promising the court he has a
plan to pay back a NZD1 million debt to a building materials
supplier.
NZ Herald relates that Danny Cancian, former director of the
now-liquidated Bella Vista Homes company, shed tears as he appeared
via audio-visual link in the High Court at Tauranga on March 31.
The 21-home Bella Vista development in The Lakes was evacuated by
Tauranga City Council in 2018 over claims of construction
deficiencies. The saga has since sparked multiple court cases, the
report says.
In one, Mr. Cancian was taken to court by Carter Holt Harvey, the
owner of retail timber giant Carters. Mr. Cancian owes the company
NZD1.078 million racked up during the construction of the
development.
When his company Bella Vista Homes was liquidated, a number of
creditors stepped forward, including Carters, which was owed one of
the largest sums, the report relates.
Carters took Mr. Cancian to court in 2017, suing him for the unpaid
debt. The company argued Mr. Cancian was personally liable for his
former business' bill because he signed a personal guarantee for a
line of trade credit.
Mr. Cancian, however, argued Carters led him to believe his
liability would be limited to NZD50,000 and that the credit limit
was raised without his knowledge.
According to the report, the case dragged on for years, with the
High Court ruling in 2020 that the money should be paid - plus
interest - and Justice Edwin Wylie saying he found aspects of
evidence Mr. Cancian had given in court to be "self-serving" and
"uncorroborated".
That ruling came after a two-day hearing in which Mr. Cancian
represented himself.
Mr. Cancian appealed the decision of the court in 2021, again
losing.
However, the former developer has still not settled the debt.
That led Carters to seek an order for bankruptcy adjudication - in
essence, a court order declaring Mr. Cancian bankrupt, according to
NZ Herald.
That would allow Mr. Cancian's assets - including properties,
vehicles, or other valuables - to be sold to pay his creditors
back.
The case was heard on March 31 in the High Court at Tauranga in
front of Associate Justice Rachel Sussock, the report notes.
Bella Vista Homes went into voluntary liquidation on November 30,
2018, leaving behind unfinished houses and millions of dollars in
outstanding debts to creditors.
DUN EDEN: Creditors' Proofs of Debt Due on May 6
------------------------------------------------
Creditors of Dun Eden Green Limited are required to file their
proofs of debt by May 6, 2022, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on April 1, 2022.
The company's liquidators are:
Trevor Edwin Laing
Emma Margaret Laing
Trevor Laing & Associates Limited
PO Box 2468
Dunedin 9044
MARKEATON FARMS: Creditors' Proofs of Debt Due on May 12
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Creditors of Markeaton Farms Limited are required to file their
proofs of debt by May 12, 2022, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on April 4, 2022.
The company's liquidators are:
Wendy Somerville
Malcolm Hollis
PwC, PO Box 191
Hamilton 3240
SMITH & CO: Creditors' Proofs of Debt Due on May 6
--------------------------------------------------
Creditors of Smith & Co Building Limited are required to file their
proofs of debt by May 6, 2022, to be included in the company's
dividend distribution.
The High Court at Dunedin on March 31, 2022, appointed Trevor Edwin
Laing and Emma Margaret Laing of Trevor Laing & Associates Limited
as joint and several liquidators of the company. The petitioning
creditor was Top Notch Roofing Otago Limited.
The company's liquidators can reached at:
Trevor Laing & Associates Limited
PO Box 2468, Dunedin 9044
TINY INTELLIGENCE: Creditors' Proofs of Debt Due on April 30
------------------------------------------------------------
Creditors of Tiny Intelligence Limited and Rock Tops Limited are
required to file their proofs of debt by April 30, 2022, to be
included in the company's dividend distribution.
The company commenced wind-up proceedings on March 30, 2022.
The company's liquidator is:
Brenton Hunt
PO Box 13400
City East, Christchurch 8141
WELLINGTON WATERFRONT: Court to Hear Wind-Up Petition on April 12
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A petition to wind up the operations of Wellington Waterfront
Luxury Apartment Limited will be heard before the High Court at
Wellington on April 12, 2022, at 10:00 a.m.
Tanya Maria Lieven filed the petition against the company on Dec.
10, 2021.
The Petitioner's solicitor is:
Hunwick Law Limited
1103 Anzac Memorial Drive
Taupo 3378 New Zealand
*********
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,
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2022. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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