/raid1/www/Hosts/bankrupt/TCRAP_Public/230601.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Thursday, June 1, 2023, Vol. 26, No. 110
Headlines
A U S T R A L I A
A1A COMMERCIAL: Second Creditors' Meeting Set for June 6
A1A HOMES: Goes Into Administration
EGG MARKETING: Second Creditors' Meeting Set for June 5
GENESIS CARE: Moody's Lowers CFR to Ca, Outlook Remains Negative
KINZU BRANDS: Second Creditors' Meeting Set for June 6
MARINE PRODUCE: First Creditors' Meeting Set for June 6
MYOB GROUP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
PEPPER RESIDENTIAL NO. 37: S&P Assigns B+(sf) Rating to Cl. F Notes
REVOLUTION ROOFING: Court Allows Receivers to Sell Company
WILLIAMS STEEL: First Creditors' Meeting Set for June 7
[*] AUSTRALIA: Business Restructuring Appointments Surge
B A N G L A D E S H
BANGLADESH: Moody's Cuts LT Issuer & Senior Unsecured Ratings to B1
C H I N A
CHINA: Fading Recovery Reveals Deeper Economic Struggles
DALIAN WANDA: May Sell Malls, Hotels as Share Sale Prospects Dim
FOSUN INTERNATIONAL: S&P Alters Outlook to Stable, Affirms BB- ICR
WEIHAI WENDENG: Moody's Withdraws 'Ba2' Corporate Family Rating
ZHONGRONG INTERNATIONAL: S&P Withdraws 'BB+/B' Issuer Credit Rating
[*] CHINA: Solar Firm Warns Excess Capacity Risks Wave of Failures
I N D I A
ALOKA EXPORTS: CRISIL Assigns B Rating to INR3.47cr Loan
AZURE POWER: Moody's Lowers Rating on Senior Unsecured Notes to B1
BS MINING: CRISIL Keeps B Ratings in Not Cooperating Category
CREAATIVE POWERTECH: CRISIL Cuts Rating on LT/ST Debts to D
DAYAL ENERGY: CRISIL Withdraws D Rating on INR35cr Cash Loan
EDCONS EXPORTS: CRISIL Withdraws B+ Rating on INR14.4cr Loan
ENZAL CHEMICALS: CRISIL Moves B+ Debt Ratings to Not Cooperating
GO FIRST: Now Cancels All Scheduled Flights Till June 4
GRK THEATRES: CRISIL Moves B- Debt Rating from Not Cooperating
IC ELECTRICALS: CRISIL Raises Rating on INR22cr Cash Loan to B-
JAGDISH INT'L: CRISIL Withdraws B Rating on INR13.5cr Loan
JAIBUNDELKHAND ROLLER: CRISIL Rates INR14.54cr Term Loan at B+
JAYPEE INFRATECH: Defers Approval of Fin'l Statements for March Qtr
KSR METAL: CRISIL Assigns B+ Rating to INR10cr Cash Loan
MAYURI ELECTRONICS: CRISIL Reaffirms B+ Rating on INR7.4cr Loan
MEMF ELECTRICAL: Voluntary liquidation Process Case Summary
MERCHANDISERS PRIVATE: Voluntary liquidation Process Case Summary
PALSANA ENVIRO: CRISIL Withdraws B+ Rating on INR15cr Term Loan
PROVET PHARMA: CRISIL Lowers Rating on INR18cr Cash Loan to B+
RAINBOW SPINNERS: CRISIL Lowers Rating on INR13cr Loan to B+
RENEW POWER G4: Fitch Affirms BB- Rating on $585M Sr. Secured Notes
S.S. INFRAZONE: CRISIL Hikes Rating on INR1cr Cash Loan to B+
SAFFRON NONWOVEN: Voluntary liquidation Process Case Summary
SAMSON AND SONS: Liquidation Process Case Summary
SPS EDUCATIONAL: CRISIL Hikes Rating on INR25.0cr Loans to B
TIRUPATI RUSHIVAN: CRISIL Assigns B+ Rating to INR10cr Cash Loan
I N D O N E S I A
ALAM SUTERA: Fitch Affirms IDR at 'B-', Outlook Stable
SAKA ENERGI: Fitch Corrects April 5 Ratings Release
M A L A Y S I A
PROPEL GROUP: Exits from PN17 Status
N E W Z E A L A N D
AMAZING SPACES: Creditors' Proofs of Debt Due on June 27
HISPEC HOMES: Court to Hear Wind-Up Petition on July 6
LANGSVIEW HOLDINGS: Creditors' Proofs of Debt Due on July 24
MARUIA ENTERPRISES: Court to Hear Wind-Up Petition on June 22
SUREPLAN NEW ZEALAND: Creditors' Proofs of Debt Due on June 30
S I N G A P O R E
AVITRA AVIATION: Members' Final Meeting Set for July 4
CAPITAL MATCH: Commences Wind-Up Proceedings
G8 JAPAN: Members' Final Meeting Set for July 8
HIBIKI RESTAURANT: Final Meeting Set for June 30
ORCA DIVE: Court to Hear Wind-Up Petition on June 16
- - - - -
=================
A U S T R A L I A
=================
A1A COMMERCIAL: Second Creditors' Meeting Set for June 6
--------------------------------------------------------
A second meeting of the creditors in the proceedings of A1A
Commercial Builders Pty Ltd and A1 Advanced Constructions Pty Ltd
will be held on June 6, 2023, at 10:00 a.m. and 10:30 a.m.
respectively, via video conference only.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 5, 2023 at 5:00 p.m.
Kathleen Vouris and Richard Albarran of Hall Chadwick were
appointed as administrators of the company on May 2, 2023.
A1A HOMES: Goes Into Administration
-----------------------------------
News.com.au reports that construction company A1A Homes and its
company A1A Commercial Builders have gone into administration.
According to the report, the Melbourne-based company built
residential and commercial builds across Australia and New Zealand
but was recently embroiled in a debacle where a customer was
demanded to pay an extra AUD125,000 to complete a build.
The company immediately began to build a series of one-star reviews
online, with other customers revealed similar experiences.
In March, it was reported by news.com.au that customer Abishek
Mahajan had signed up to build a AUD675,500 home with Melbourne
construction firm A1A Homes in August 2021.
The 27-year-old claimed his build was delayed for a year before the
slab was poured – but once it was completed he was "angry and
shocked" by what happened next.
He claimed the building firm demanded an extra AUD125,000 to
complete the build but it was impossible for the NDIS worker to
come up with the huge sum.
"It was always a dream getting into the property market, to build
our own house and move in there and start a family," Mr Mahajan
told news.com.au. "I recently got married and it's a migrant's
dream. My parents came here 12 years ago and I've been working so
damn hard to have my own house and they have ruined every year of
hard work for us"
News.com.au relates that Mr. Mahajan said he had no idea when
attending a meeting on site in August 2022 that he would receive a
request for an extra AUD125,000 - with the building firm basing the
decision on "rising costs".
The situation left him reeling. "Literally the earth was gone from
my feet and my heart was about to come out. How would you find that
much amount of money and how could ask for that much money?" he
said.
"People take out a loan to get that money, it's not like AUD5000 or
AUD10,000, but AUD125,000 is a down payment for a house . . .."
"Mentally I was so damn sick from the inside, I was having
breathing issues when I spoke to them. I was having a mini heart
attack as you have lost everything in that split second."
At the time, A1A Homes declined to answer detailed questions on the
dispute, the report notes.
News.com.au relates that the company issued this statement: "We
believe some of these accusations are completely not true. As you
know publishing false defamatory statements will have consequences.
We will seek compensation if there will be damages to A1A Homes
reputation."
Mr Mahajan claimed he had no choice but to mutually cancel the
contract with the builder in September last year after the money
request, news.com.au adds.
Kathleen Vouris & Richard Albarran of Hall Chadwick were appointed
as administrators of A1A Homes on May 2, 2023.
A second meeting of creditors has been set for June 6, 2023, at
10:00 a.m. via video conference only.
EGG MARKETING: Second Creditors' Meeting Set for June 5
-------------------------------------------------------
A second meeting of creditors in the proceedings of Egg Marketing
Australia Pty Ltd has been set for June 5, 2023 at 11:00 a.m. via
online video conference.
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 May 2, 2023 at 5:00 p.m.
Daniel Peter Juratowitch and Bruno A Secatore of Cor Cordis were
appointed as administrators of the company on Feb. 8, 2023.
GENESIS CARE: Moody's Lowers CFR to Ca, Outlook Remains Negative
----------------------------------------------------------------
Moody's Investors Service has downgraded Genesis Care Finance Pty
Ltd's (GenesisCare) corporate family rating to Ca from Caa2. At
the same time, Moody's has downgraded to Ca from Caa2 the ratings
of the backed senior secured term loan B facility entered into by
Genesis Specialist Care Finance UK Limited, a 100%-owned and
guaranteed subsidiary of GenesisCare. Moody's has also downgraded
to Ca from Caa2 the backed senior secured ratings of the senior
secured term loan B facility entered into by GenesisCare USA
Holdings, Inc., a 100%-owned and guaranteed subsidiary of
GenesisCare. The outlook remains negative.
RATINGS RATIONALE
The downgrade reflects GenesisCare's unsustainable capital
structure characterized by very high financial leverage and
negative free cash flow due to high debt levels, lower revenues,
higher costs, and continued growth spending. Moody's believes the
company will experience material liquidity issues over the next
6-12 months and that default risk is growing, including the
potential for a distressed exchange transaction such as a
discounted debt repurchase by the company or by an existing private
equity sponsor.
The negative outlook reflects Moody's view that the recovery
prospects on GenesisCare's debt instruments could decrease further
given the company's high level of debt, weakened business
fundamentals and liquidity issues.
Governance considerations are relevant to the rating action. The
downgrade reflects the company's weak governance practices
including aggressive financial policies under private equity
ownership as well as poor liquidity and risk management practices,
which have contributed to high financial leverage and a track
record of operational underperformance.
Moody's does not expect a material improvement in GenesisCare's
earnings and credit metrics over the next 12-18 months due to slow
radiotherapy volume recovery in some jurisdictions, higher costs
and continued capital spending. The company has continued to
increase its capital expenditure and integrate new sites, which
results in higher leverage due to the timing mismatch between
opening the clinic and realizing full earnings capacity.
Moody's expects patients to become more comfortable in attending
appointments, or their need to attend appointments will become
critical given that screenings and treatments have been postponed
during the pandemic. However, the rate of recovery in each
operating jurisdiction will vary in line with differences in the
pandemic's severity. For example, Moody's estimates a faster
recovery in Australia and the UK, compared with a slower and more
gradual recovery in the US and Spain. The company also lost a high
margin contract in Spain, which offsets improving performance in
the UK.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
GenesisCare's credit impact score (CIS-5) indicates that the rating
is lower than it would have been if ESG risk exposures did not
exist and that the negative impact is more pronounced than for
issuers scored CIS-4. This primarily reflects governance risks
(G-5) including a weak track record, aggressive financial policies,
and poor liquidity management under private equity ownership.
Social risk considerations (S-4) are also material to the rating
reflecting the inherent customer relations and responsible
production risks that the health care sector faces.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The outlook could be stabilized and/or ratings could be upgraded if
default risk reduces and recovery expectations on its debt
instruments materially improve. Further positive momentum in the
company's rating level would require a significant improvement in
its capital structure and business fundamentals, evidenced by
higher overall earnings levels, materially reduced gross debt and
stronger liquidity.
The ratings could be downgraded if the probability of a debt
restructuring or event of default increases further, or recovery
prospects decline.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
COMPANY PROFILE
GenesisCare is a healthcare company focusing primarily on cancer
care through the provision of radiotherapy services. The company
currently operates cancer clinics and radiotherapy treatment
centers across the US, Australia, the UK and Spain.
KINZU BRANDS: Second Creditors' Meeting Set for June 6
------------------------------------------------------
A second meeting of creditors in the proceedings of Kinzu Brands
Pty Ltd has been set for June 6, 2023 at 2:30 p.m. via Microsoft
Teams.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by June 5, 2023 at 4:00 p.m.
Joshua Philip Taylor of Taylor Insolvency was appointed as
administrator of the company on May 2, 2023.
MARINE PRODUCE: First Creditors' Meeting Set for June 6
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Marine
Produce Australia Pty Ltd, MPA Fish Farms Pty Ltd, and M P A
Marketing Pty Ltd will be held on June 6, 2023, at 11:00 a.m. via
virtual meeting only.
Robert Michael Kirman and Robert Conry Brauer of McGrathNicol were
appointed as administrators of the company on May 24, 2023.
MYOB GROUP: S&P Alters Outlook to Stable, Affirms 'B-' ICR
----------------------------------------------------------
S&P Global Ratings revised its outlook on Australia-based
accounting software provider MYOB Group Co. Pty Ltd. to stable from
negative. At the same time, S&P affirmed its 'B-' issuer credit
rating and the related issue rating on the company's A$961 million
term loan B and A$50 million revolving credit facility (RCF). The
recovery ratings on these facilities are '3', reflecting meaningful
(50%-70%; rounded estimate: 65%) recovery prospects in a payment
default.
S&P said, "The stable outlook reflects our view that MYOB will
balance its approach between growth and profitability. We expect
the company will refocus on integrating and supporting its existing
systems, product suite, and infrastructure in lieu of further
expansion. This should underpin margin and earnings growth over the
forecast period.
"The revised outlook reflects our view that MYOB's acquisitions and
research and development (R&D) investments should drive a recovery
in financial performance from fiscal 2023.We expect increased
pricing and improved volumes will underpin this recovery,
particularly for MYOB's Enterprise and Financial Services segments.
In recent years, MYOB has undertaken an accelerated R&D capital
expenditure (capex) program to augment and diversify its product
suite. This included capex to integrate bolt-on acquired software
onto MYOB's single software platform. MYOB's elevated R&D
investment has constrained its S&P adjusted EBITDA given we
reclassify capitalized R&D as an operating expense.
"In fiscal 2023 (ending Dec. 31, 2023), we anticipate fewer
acquisitions by MYOB as it shifts its focus from shaping product
suite functionality to improving operating leverage and
efficiencies. This should support margin improvement. Reduced
acquisitions, combined with continued progress for MYOB's migration
of desktop users to cloud-based products, will moderate R&D capex.
Our base case assumes revenue and EBITDA uplift in fiscal 2023 from
product augmentation and higher cloud-based sales.
"We forecast free operating cash flow (FOCF) will turn positive in
fiscal 2024, strengthening the company's balance sheet and capital
structure.This is attributed to an improved earnings base, reduced
acquisition activity, and normalizing R&D capex. We expect FOCF to
improve as MYOB leverages operational efficiencies from its cloud
products. This should support balance sheet deleveraging and a
sustainable capital structure, which we view as currently elevated
and a constraint for the rating."
MYOB's ability to deleverage will depend on earnings improvement,
the company's acquisition pipeline, and R&D capex requirements. In
addition, further increases to borrowing costs will drag on cash
flow, although the payment-in-kind nature of MYOB's shareholder
loan should provide partial offset. S&P forecasts its adjusted
EBITDA cash interest coverage of about 1.0x in fiscal 2023 and 1.5x
in fiscal 2024.
MYOB's small and midsize enterprise (SME) customer base remains
exposed to downside risks associated with a macroeconomic slowdown.
S&P said, "However, we expect the company as a group will
demonstrate resilience through economic cycles. Accounting and
business software is deemed essential especially during periods of
economic stress as businesses look to manage operating costs to
mitigate financial strain. As such, we expect MYOB's SME customers
will continue to utilize the company's software while they explore
other cost efficiencies."
S&P said, "MYOB's customer churn rates have improved through the
COVID-19 pandemic. We believe this reflects the sticky nature of
MYOB's product offering. We expect customer churn rates to remain
reasonably stable over the next few years despite uncertain
macroeconomic conditions. In addition, MYOB should benefit from the
continued migration of existing desktop users to the cloud, which
underpins the company's recurring revenue base.
"We expect MYOB will maintain adequate sources of liquidity.A cash
balance of about A$83 million as of Dec. 31, 2022, supports the
company's liquidity position. MYOB benefits from a capital-light
operating model and a drawn debt profile that mostly matures after
May 2026. MYOB's financial sponsor provided capital to support the
company through its heightened period of R&D investment and
acquisitions. We anticipate this support to continue.
"The stable outlook reflects our expectation of MYOB's 2023
earnings recovery, as the benefits of product augmentation, higher
cloud-focused sales, and incremental earnings from successful
integration of multiple acquisitions start to accrue."
Despite volatile macroeconomic conditions over the next 12 months,
the company's competitive advantage in certain market segments
should position it to maintain market share and increase earnings.
This should underpin positive and improved free cash flow over
forecast periods.
S&P said, "We could lower the rating if we believe the company is
unable to maintain adequate liquidity amid material customer churn
and loss related to its SME customer base. We could also lower the
ratings if we view MYOB's capital structure as unsustainable."
This could occur if there is:
-- Weaker revenues than S&P expects, without a commensurate
reduction in software development investment;
-- A material acceleration in customer churn or reduction in new
sales that further impairs free cash flow; or
-- The company returns capital to either common or noncommon
equity holders.
S&P could consider an upgrade if MYOB continues to navigate
macroeconomic challenges such that it maintains adjusted debt to
EBITDA (excluding the shareholder loan) below 7.5x. In addition, an
upgrade would depend on the company's ability to execute its
software development requirements, while maintaining at least
adequate liquidity and sustaining positive free cash flow.
ESG credit indicators: E-2, S-2, G-3
PEPPER RESIDENTIAL NO. 37: S&P Assigns B+(sf) Rating to Cl. F Notes
-------------------------------------------------------------------
S&P Global Ratings assigned its ratings to six classes of
nonconforming and prime residential mortgage-backed securities
(RMBS) issued by Permanent Custodians Ltd. as trustee of Pepper
Residential Securities Trust No. 37. Pepper Residential Securities
Trust No. 37 is a securitization of nonconforming and prime
residential mortgages originated by Pepper Homeloans Pty Ltd.
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including our view that the credit support is sufficient
to withstand the stresses it applies. The credit support for the
rated notes comprises note subordination and excess spread. The
assessment of credit risk takes into account the underwriting
standard and centralized approval process of the seller, Pepper
Homeloans.
-- The availability of a retention amount and amortization amount,
which will all be funded by excess spread, but at various stages of
the transaction's term. They will have separate functions and
timeframes, including reducing the balance of notes outstanding.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity facility
equal to 1.5% of the outstanding balance of the notes, principal
draws, and a yield-enhancement reserve--to the extent it is
funded--are sufficient under its stress assumptions to ensure
timely payment of interest.
-- That S&P also has factored into its ratings the legal structure
of the trust, which has been established as a special-purpose
entity and meets its criteria for insolvency remoteness.
Ratings Assigned
Pepper Residential Securities Trust No. 37
Class A, A$607.50 million: AAA (sf)
Class B, A$24.80 million: AA (sf)
Class C, A$13.75 million: A (sf)
Class D, A$10.80 million: BBB (sf)
Class E, A$6.70 million: BB (sf)
Class F, A$4.95 million: B+ (sf)
Class G, A$6.50 million: Not rated
REVOLUTION ROOFING: Court Allows Receivers to Sell Company
----------------------------------------------------------
The Australian reports that the Federal Court has approved the sale
of Revolution Roofing by receivers following a dispute between
creditors over claims to funds raised from the sale.
As reported in the Troubled Company Reporter-Asia Pacific on Jan.
25, 2023, Revolution Roofing and its sister company Nexteel
collapsed into administration. News.com.au said the manufacturer
owes AUD70 million to 530 creditors, while the sister company,
which produced pre-painted steel, has debts amounting to AUD18
million owed to 130 creditors. The failure of these businesses has
also impacted 200 employees, who are owed AUD3.2 million in unpaid
entitlements, including superannuation. Some notable creditors
include Earlypay, an ASX-listed finance company owed nearly AUD29
million, the Australian Taxation Office with a pending bill of
AUD8.7 million, and the Japanese industrial conglomerate Mitsui &
Co., owed AUD4 million.
Revolution Roofing has manufacturing sites in Adelaide and Perth
that supply processed steel roofing, fencing, cladding and other
products into the residential and commercial markets and has been
operating since 2009.
WILLIAMS STEEL: First Creditors' Meeting Set for June 7
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Williams
Steel Co Pty Ltd will be held on June 7, 2023, at 10:30 a.m. via
virtual meeting at the offices of RRI Advisory Suite 902, 488
Bourke St in Melbourne.
Liam William, Paul Bellamy and Trajan John Kukulovski of RRI
Advisory Pty Ltd were appointed as administrators of the company on
May 26, 2023.
[*] AUSTRALIA: Business Restructuring Appointments Surge
--------------------------------------------------------
SmartCompany reports that restructuring appointments are surging
compared to 2022 levels, data from Australia's corporate regulator
shows; one accountant describes being "overwhelmed" by rising
interest among struggling SMEs.
SmartCompany, citing data from the Australian Securities and
Investment Commission, released last week, says 341 restructuring
practitioner appointments were made in the 2022-23 financial year
to May 7.
Even though the full financial year is not yet through, that figure
is nearly five times the 70 restructuring appointments confirmed
through 2021-22, SmartCompany relates.
Some 138 businesses applied to restructure in the March quarter of
2022-23 alone, with figures remaining high through the month of
April.
According to SmartCompany, the filing of restructuring plans is
also on the rise: 63 have been accepted in the June quarter to
date, compared to 77 in the March quarter.
Those rising figures broadly mirror voluntary administration
statistics, with this financial year's total - 1,059 so far - on
track to double the 676 registered in 2021-22.
SmartCompany says the surge in restructuring interest suggests SMEs
across the map are turning to small business restructuring in the
face of old tax debts and new economic pressures.
Jarvis Archer, head of business restructuring and insolvency at
Revive Financial, outlined two key contributors to the increase in
restructuring appointments.
The Australian Taxation Office is "very actively" issuing statutory
notices and director penalty notices to encourage entrepreneurs to
pay down their debts, Mr. Archer told SmartCompany.
As a result, businesses are increasingly turning to restructuring
schemes that can protect from debt recovery action from the ATO or
other creditors, and provide a way for businesses to deal
collectively with their creditors.
Second, and perhaps more encouraging for small business, is an
increasing awareness of the dedicated small business restructuring
scheme among business advisors.
"Accountants are becoming more aware of the small business
restructuring process and are recommending it to their clients,"
SmartCompany quotes Mr. Archer as saying. "There's still a very low
level of awareness about the process in the business community, but
this is changing as progressive insolvency firms, and ASIC's report
earlier this year, highlight the benefits and success of the small
business restructuring process."
===================
B A N G L A D E S H
===================
BANGLADESH: Moody's Cuts LT Issuer & Senior Unsecured Ratings to B1
-------------------------------------------------------------------
Moody's Investors Service has downgraded the government of
Bangladesh's long term issuer and senior unsecured ratings to B1
from Ba3 and affirmed short term issuer ratings at Not Prime.
This rating action concludes the review for downgrade initiated on
December 9, 2022. The rating outlook is stable.
Moody's assessment is that Bangladesh's heightened external
vulnerability and liquidity risks are persistent, and that,
together with institutional weaknesses uncovered during the ongoing
crisis, the sovereign's credit profile is consistent with a B1
rating. Despite some easing, ongoing dollar scarcity and
deterioration in foreign exchange reserves indicate continued
pressures on Bangladesh's external position, exacerbating imports
constraints and as a result energy shortages. Meanwhile, the
government has not yet fully reversed its import control measures
and unconventional policies including a multiple exchange rate
regime and interest rate caps, which are creating distortions.
Finally, a very low level of fiscal revenues relative to the size
of the economy constrain the government's policy choices and point
to weakening debt affordability as higher interest payments result
from the taka devaluation and short maturities for domestic debt.
Although Moody's expects external financing to help alleviate
pressures on the external and fiscal metrics, external buffers will
remain weaker than before the pandemic and higher debt levels will
weaken fiscal strength, particularly as Moody's expects fiscal
reforms will take years to materialise.
Concurrently, Bangladesh's local-currency (LC) and foreign-currency
(FC) ceilings have been lowered to Ba2 and B1 from Ba1 and Ba3,
respectively. The LC ceiling is placed two notches above the
sovereign rating, reflecting weak predictability and reliability of
government institutions and high external imbalances, which raise
risks for the garment export sector's contributions to government
revenue; balanced by a relatively small government footprint. The
FC ceiling is placed two notches below the LC ceiling, reflecting
low capital account openness, weak policy effectiveness, and some
degree of unpredictability surrounding capital flow management, but
taking also into account a low external indebtedness.
RATINGS RATIONALE
RATIONALE FOR DOWNGRADING TO B1
EXTERNAL VULNERABILITY RISKS WILL STABILIZE, BUT REMAIN ELEVATED
In Moody's assessment, Bangladesh's external position will remain
structurally weaker than before the pandemic. Moody's expects
external financing will halt the deterioration of foreign exchange
reserves, which will stabilize during the next fiscal year 2024
(ending June 2024). However, reserves will not recover to
pre-pandemic levels for the next 2-3 years.
Unfavourable terms of trade followed by a contraction in trade
credit, as well as Bangladesh Bank's initial attempt to defend the
taka, have eroded foreign exchange reserves by over $17 billion (or
40%) since their peak in August 2021. Consequently, the import
coverage ratio and Moody's external vulnerability indicator (EVI,
the ratio of external debt payments and foreign currency deposits
to foreign exchange reserves) have weakened significantly, with
gross foreign exchange reserves (excluding gold and SDRs) declining
to $27 billion or around 3.7 months of goods and services imports
as of April 2023 from $45 billion (around 7 months) in August 2021
– despite import restrictions and energy rationing. While the
devaluation of the taka and import restrictions, along with
resilient exports but tepid remittance flows, have turned the
current account back into surplus, pressures on the current account
remain due to still high energy commodity prices.
Moody's expects gross foreign exchange reserves to remain below $30
billion for the next two to three years, with net reserves likely
lower, following Bangladesh Bank's commitment to the International
Monetary Fund (IMF) to start reporting reserves net of assets such
as the Export Development Fund (EDF). On a gross basis, Moody's
assesses that the import coverage ratio will remain around 3 months
of imports, while Bangladesh's EVI will significantly weaken to 90%
(2024F), vs. about 30-40% pre-pandemic. Net reserves are currently
at approximately $20 billion (or 2.7 months of import cover),
implying an EVI of 115%.
FISCAL STRENGTH WILL WEAKEN AS INTEREST EXPENDITURE GROWTH OUTPACES
REVENUE GROWTH
In Moody's assessment, persistently low revenue generation and
rising interest payments will lead to weakening fiscal metrics,
especially debt affordability. The increase in the deficit, which
added to higher debt levels, was driven by an inflated government
subsidy bill due to higher energy, fertilizer and food costs
despite significant price adjustments lately, while revenues fell
due to the import restrictions. Moody's expects the fiscal deficit
to remain relatively wide, around 5.0-5.5% of GDP over the next few
years, increasing the debt burden to almost 40% of GDP by end
fiscal 2026 from below 30% in fiscal 2022.
Bangladesh's debt burden remains moderate compared to peers, and
external debt payments will remain manageable due to the
concessional nature of its external debt with long maturities.
Nevertheless, interest payments will consume a widening share of
the government's narrow revenue base, rising to a very high level
of above 25% in fiscal 2023-25 from below 20% in fiscal 2019 before
the pandemic.
While the IMF programme will spur some revenue mobilisation
measures, Moody's expects improvements in revenue collection and
tax administration will be slow, considering Bangladesh's poor
track record of implementation as well as administrative and
efficiency barriers. Moody's expects the revenues to GDP ratio to
improve modestly over the next 2-3 years, although remain below 10%
of GDP and still significantly below peers at the B1 rating level.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook is based on Bangladesh's continued access to
concessionary financing and support from international financial
institutions. Moody's expects external financing to help alleviate
pressures on the external and fiscal metrics. Although the
sovereign's financing options remain narrow due to the absence of
international issuance, underdeveloped domestic capital markets,
and limited foreign direct investment (FDI), concessional financing
will support Bangladesh's funding plan over the next 2-3 years,
enabling the stabilisation of foreign exchange reserves. The IMF
programme, approved in January 2023, will provide up to $3.3
billion to manage Bangladesh's immediate economic challenges, as
well as $1.4 billion to mitigate climate change risks. The World
Bank and Asian Development Bank have also pledged an additional $1
billion and $1.6 billion in support, respectively.
The stable outlook is also supported by Bangladesh's economic
resilience. Moody's expects growth to recover to 6% in fiscal 2025,
supported by its globally competitive ready-made garment industry.
At the same time, this resilience is balanced by the country's low
per capita income and constraints in infrastructure and human
capital, low economic competitiveness, and high concentration in
drivers of economic growth compared with peers. Bangladesh's
economy is also exposed to both sudden and gradual climate change
risks that can create adverse economic and social costs.
GDP per capita (PPP basis, US$): 7,044 (2021) (also known as Per
Capita Income)
Real GDP growth (% change): 6.9% (2021) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 5.6% (2021)
Gen. Gov. Financial Balance/GDP: -3.7% (2021) (also known as Fiscal
Balance)
Current Account Balance/GDP: -1.1% (2021) (also known as External
Balance)
External debt/GDP: 19.6% (2021)
Economic resiliency: ba3
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On May 25, 2023, a rating committee was called to discuss the
rating of the Bangladesh, Government of. The main points raised
during the discussion were: The issuer's institutions and
governance strength, have not materially changed. The issuer's
governance and/or management, have not materially changed. The
issuer's fiscal or financial strength, including its debt profile,
has not materially changed. The issuer has become increasingly
susceptible to event risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward pressure on the ratings would result from a rising
likelihood of a combination of factors including (1) significant
progress in the government's fiscal reform implementation that
would increase its revenue generation capacity, leading to an
increase in debt affordability and fiscal space; (2) a more rapid
rebuilding of foreign exchange buffers to higher levels than
Moody's expects; and/or (3) material progress in diversifying the
economy away from its reliance on the RMG sector, and developing
key infrastructure that would raise longer-term economic
competitiveness and FDI to sustain its economic growth.
Downward pressure on the ratings would result from a rising
likelihood of (1) a more severe deterioration of the external and
liquidity position, including depreciation pressures that would
worsen metrics beyond Moody's current expectations; and/or (2) a
severe weakening of the macroeconomic environment, including a
material slowdown in growth and sustained high inflation, that
would weigh on fiscal metrics.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Bangladesh's very highly negative (CIS-5) ESG Credit Impact Score
reflects very high exposure to environmental and social risks,
which weak governance is likely to prevent the sovereign from
addressing.
The exposure to environmental risk is very highly negative (E-5).
As a low-lying country with large coastal areas, Bangladesh is
highly prone to rising sea levels, flooding, which disrupts
economic activity and raises social costs. Low incomes and weak
infrastructure quality compound the impact of weather-related
events on the economy, and in turn, associated fiscal costs. In
addition, the magnitude and dispersion of seasonal monsoon rainfall
also influence agricultural sector growth, generating some
volatility and raising uncertainty about rural incomes and
consumption. Bangladesh is a net energy importer, however it is
exposed to carbon transition risks because 90% of its energy mix
comes from fossil fuels.
Bangladesh's exposure to social risks is very highly negative
(S-5). Low incomes stem in part from physical and social
infrastructure constraints to economic development that will take
time to address. That said, per capita incomes have grown strongly
over the past decade and poverty rates have declined sharply, due
to high and stable economic growth. This has also delivered
improvement in access to basic services, although Bangladesh's
challenges related to improvements in educational opportunities and
outcomes, health and safety, and labor force inclusion remain areas
of social risk.
Bangladesh's weak institutions and governance profile constrain its
rating, as captured by a highly negative governance issuer profile
score (G-4). Challenges in control of corruption and rule of law
weaken existing institutions, while the credibility of legal
structures is also limited. These governance challenges have in
part contributed to asset quality issues in the banking sector.
Besides, a deteriorating monetary policy framework undermines
macroeconomic stability, while challenging fiscal prudence.
The principal methodology used in these ratings was Sovereigns
published in November 2022.
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C H I N A
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CHINA: Fading Recovery Reveals Deeper Economic Struggles
--------------------------------------------------------
The Wall Street Journal reports that China's era of rapid growth is
over. Its recovery from zero-Covid is stalling. And now the country
is facing deep, structural problems in its economy.
The Journal relates that the outlook was better just a few months
ago, after Beijing lifted its draconian Covid-19 controls, setting
off a flurry of spending as people ate out and splurged on travel.
But as the sugar high of the reopening wears off, underlying
problems in China's economy that have been building for years are
reasserting themselves.
The property boom and government overinvestment that fueled growth
for more than a decade have ended. Enormous debts are crippling
households and local governments, notes the report. Some families,
worried about the future, are hoarding cash.
The Journal says Chinese leader Xi Jinping's crackdowns on private
enterprise have discouraged risk-taking, while deteriorating
relations with the West - exemplified by a new campaign against
international due-diligence and consulting firms - are stifling
foreign investment.
According to the Journal, economists said these worsening
structural problems are hobbling China's chances of extending the
growth miracle that transformed it into a rival to the U.S. for
global power and influence. Instead of expanding at 6% to 8% a year
as was common in the past, China might soon be heading toward
growth of 2% or 3%, some economists said.
An aging population and shrinking workforce compound its
difficulties, the Journal adds.
DALIAN WANDA: May Sell Malls, Hotels as Share Sale Prospects Dim
----------------------------------------------------------------
Caixin Global reports that Dalian Wanda Group Co. is considering
offloading some shopping mall and hotel assets to increase
liquidity amid fading prospects of a Hong Kong share sale by one of
its units.
Dalian Wanda Commercial Management Group Co. Ltd. (DWCM), the
property management subsidiary of the troubled
property-to-entertainment conglomerate, is planning to sell several
shopping malls and a hotel in Shanghai, Caixin learned from
multiple sources.
The hotel, Wanda Reign on the Bund, is one of seven luxury hotel
projects owned by DWCM. The company is in talks with private
conglomerate Fosun Group for a potential sale of the Shanghai
hotel, people familiar with the matter said. Fosun denied it was
the potential buyer when contacted by Caixin.
Sources confirmed DWCM's asset sales plan with Caixin after the
company denied a recent Bloomberg report that DWCM was seeking to
sell 20 shopping malls in Zhejiang, Jiangsu and Shanghai. DWCM said
last week the report was "untrue" and it has no plan to sell the
malls.
But Caixin learned that DWCM is indeed considering the sale of some
shopping malls in Shanghai, Nanjing, Wuxi and Changzhou. Because
some of the projects are subject to land transfer lockup-period
requirements under agreements with local governments, DWCM still
needs to negotiate with authorities over the potential sales,
Caixin learned.
The shopping malls are mostly "cash cow" projects with good
performance, said a person close to DWCM.
As of the end of 2022, DWCM had 472 shopping malls under its
management across the country, including 288 that it owned,
according to the company.
Speculation over DWCM's asset sales rose amid uncertainties hanging
over its long-sought share sale plan. After failed attempts to list
shares of the commercial property management business on the
domestic A-share market since 2015, Wanda in 2021 shifted to
seeking a flotation of light-asset unit Zhuhai Wanda Commercial
Management Group in Hong Kong, Caixin recalls.
About Dalian Wanda
Dalian Wanda Commercial Management Group Co., Ltd. operates as a
commercial property developer, owner, and operator. The Company
develops and manages mixed-use property projects including retail,
office, hotel, residential, restaurant, entertainment, and other
projects. Dalian Wanda Commercial Management Group conducts
businesses in China.
As reported in the Troubled Company Reporter-Asia Pacific in early
May 2023, Moody's Investors Service has downgraded Dalian Wanda
Commercial Management Group Co., Ltd.'s (DWCM) corporate family
rating to Ba2 from Ba1.
FOSUN INTERNATIONAL: S&P Alters Outlook to Stable, Affirms BB- ICR
------------------------------------------------------------------
S&P Global Ratings revised its rating outlook to stable from
negative on Fosun International Ltd. At the same time, S&P affirmed
its long-term issuer and issue credit ratings on Fosun at 'BB-'.
The stable rating outlook reflects S&P's expectation of moderating
refinancing risk and further deleveraging via asset recycling over
the next 12-18 months.
Fosun could continue to rely on asset sales and domestic banking
support to reduce its debt burden. S&P anticipates the China-based
investment holding company will continue to deleverage over the
next 18 months amid capital-market headwinds and its own
balance-sheet rationalization. It paid maturing bonds in the past
three quarters with proceeds of over Chinese renminbi (RMB) 30
billion from asset disposals and bank loans. This brought down
holding-company debt by about RMB24 billion to RMB93 billion as of
end-March 2023, from mid-2022 levels.
S&P sees marginally better refinancing conditions since its
downgrade of Fosun in September 2022. Onshore policy support has
become more forthcoming and China's COVID exit has stabilized
operating conditions, although risks of rate hikes in the U.S. and
global and local credit developments still leave confidence low in
offshore markets.
Assuming the operating environment does not change much until the
end of the year, S&P forecasts Fosun's holding-company debt could
further drop to RMB75 billion-RMB85 billion. The company will
likely continue to pay bond maturities with more sales proceeds and
bank credit lines.
A diversified portfolio provides headroom for asset sales, although
capital-market and counterparty risks remain. Fosun had a portfolio
value of RMB230 billion-RMB250 billion in the past six months, with
a loan-to-value (LTV) ratio of 35%-40%. After the recent round of
deleveraging, we expect the company to focus on core assets. Its
portfolio could therefore shrink to RMB170 billion-RMB 190 billion,
with the LTV approaching 30%. This assumes key investees maintain
stable operations and share prices.
While S&P sees the potential for comparable disposal proceeds this
year, success will depend on management's commitment and execution.
The ongoing saga surrounding the sale of Fosun's steel investee,
Nanjing Nangang Iron & Steel United Co. Ltd., underscores the
complexity of large-scale transactions.
Bank loans will be an increasingly important funding and liquidity
channel for Fosun. Stable banking relationships enabled the company
to navigate turbulence in onshore and offshore high-yield markets
in the past year. The share of bank loans in the holding company's
debt rose to 54% as of end-2022 and 60% as of end-March 2023, from
46% in mid-2022. S&P expects the number to rise to 65%-70% by
end-2023.
Higher exposure to bank lending and stable banking relationships
could lower funding volatility for Fosun. The company secured a
RMB12 billion onshore syndicate credit line by pledging shares in
Shanghai Fosun Pharmaceutical (Group) Co. Ltd. in January 2023. In
S&P's view, it can obtain more such secured financing if needed.
S&P estimated secured debt at the holding-company level could
further rise to about a quarter of total debt over the next six to
nine months, from 14% as of end-March. Longer-tenor financing via
such non-direct lending channels has tempered the pressure on
Fosun's debt maturity profile, year to date.
Fosun's liquidity pressure has eased, although material
improvements will require more proactive management. After
navigating past its maturity wall, the company's short-term bond
maturities more than halved to RMB13 billion as of end-March, from
mid-2022 levels. The company should be able to cover the onshore
portion with its committed syndicate credit line, of which RMB6.1
billion was undrawn as of end-May 2023.
That said, Fosun will still face a significant shortfall between
cash on hand of about RMB10 billion and short-term maturities of
RMB47 billion. S&P continues to view the company's liquidity as
less than adequate. The company has demonstrated sound banking
relationships with a good record of rolling over debt in recent
years. Its liquidity management hinges on maintaining this
capability.
Fosun's liquidity may only recover to an adequate level after
building up its holding-company cash balance and regaining its
ability to issue longer-tenor notes in bond markets.
Portfolio quality remains the cornerstone of holding-company
creditworthiness. Fosun's portfolio asset risk has increased
modestly over the past 12-18 months, amid unfavorable macroeconomic
conditions. Most of the company's Greater China assets should
benefit from China's post-pandemic recovery from 2023. Some of its
key portfolio companies are also actively recycling assets to fund
their investment and operational needs. On the other hand,
investees with businesses in financial institutions and global
commercial real estate could continue to face capital-market
volatility and asset depreciation pressure.
Listed assets in Fosun's portfolio dropped to 35%-38% of the total
in the past six months. This followed share sales and price
declines. Given that the company could sell more unlisted investees
this year, its portfolio liquidity may gradually recover.
Recent negative headlines on investee companies (such as Babytree
Group) as well as the legal battle surrounding the sale of Nanjing
Nangang also reflect the need for Fosun to step up stakeholder
management. S&P does not expect a material impact on the holding
company's operations or funding access, although there could be
implications on the company's standing in capital markets if
similar issues surface in the future.
S&P said, "The stable rating outlook reflects our view of easing
refinancing risk, after Fosun navigated its maturity wall. We
expect the company to continue recycling assets to further reduce
holding-company debt and increase financial buffer.
"We may lower the ratings if Fosun's portfolio divestments stall,
reversing its deleveraging trend.
"We could also lower the ratings if Fosun's liquidity position
weakens again.
"We would raise the ratings if Fosun's LTV ratio drops below 30%
for an extended time, and its weighted average maturity extends
well above two years in a sustainable manner. This assumes the
company has comfortable cash sources over uses of over 1.2x."
ESG credit indicators: E2, S2, G2
WEIHAI WENDENG: Moody's Withdraws 'Ba2' Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service has withdrawn Weihai Wendeng District
Bluesea Investment & Development Co., Ltd.'s (Bluesea Investment)
Ba2 corporate family rating.
The outlook prior to the withdrawal was stable.
RATINGS RATIONALE
Moody's has decided to withdraw the rating for its own business
reasons.
COMPANY PROFILE
Established in 2012, Weihai Wendeng District Bluesea Investment &
Development Co., Ltd. (Bluesea Investment) is 100% owned by Weihai
Wendeng District State-owned Assets Service Center. The company is
the main platform designated by the government to develop
infrastructure and affordable housing projects in the Wendeng
district of Weihai city. It is also engaged in project management,
the leasing of sea area use rights, water supply and pipeline
leasing.
As of the end of 2022, the company reported total assets of RMB54.5
billion and a total revenue of RMB3.0 billion.
ZHONGRONG INTERNATIONAL: S&P Withdraws 'BB+/B' Issuer Credit Rating
-------------------------------------------------------------------
S&P Global Ratings withdrew its 'BB+/B' issuer credit rating on
Zhongrong International Trust Co. Ltd. (Zhongrong Trust) and
'BB-/B' issuer credit rating on Zhongrong Trust's subsidiary,
Zhongrong International Holdings Ltd. (ZRH), at the company's
request.
At the time of withdrawal, the outlook on the long-term issuer
credit rating on Zhongrong Trust was stable. This reflected S&P's
expectation that the China-based trust company will maintain its
good market position and low leverage over the next 12-24 months.
The ratings further reflect its contingent liabilities from
implicit support of trust products.
The outlook on the long-term issuer credit rating on ZRH was
negative at the time of withdrawal. This reflected S&P's
expectation of heightened investment risk and persistently weak
liquidity for the company, and the possibility that its strategic
link with its parent could weaken further.
[*] CHINA: Solar Firm Warns Excess Capacity Risks Wave of Failures
------------------------------------------------------------------
Bloomberg News reports that China's world-leading solar industry
could face a wave of bankruptcies if the current aggressive
expansion of manufacturing capacity continues, according to the
sector's biggest player.
More than half of China's solar manufacturers could be forced out
in the next two to three years because of excess capacity, Li
Zhenguo, president of Longi Green Energy Technology Co., said
during an interview May 24 on the sidelines of the SNEC PV Power
Expo in Shanghai, Bloomberg relays.
"Those that will be hurt first will be those that are not prepared
sufficiently," Bloomberg quotes Li as saying. Companies with weaker
finances and less-advanced technology are most at risk, Li told
reporters.
The global solar market is growing rapidly, with installations
expected to rise 36% this year to 344 gigawatts, according to
BloombergNEF. But factories are expanding even faster. One step in
the supply chain alone - producing the polysilicon that goes into
the panels - will see capacity rise enough to produce 600 gigawatts
this year, BloombergNEF analyst Jenny Chase said in a presentation
at SNEC earlier last week.
"There will be a price crash, it will hurt, and there will probably
be bankruptcies across the industry," she said.
Others pushed back against overcapacity concerns. Companies that
are expanding are doing so because their customers need it, said Li
Junfeng, executive council member of the China Energy Research
Society.
"These are the industry leaders, they're on the front lines, they
know the market characteristics the best," Li said on a panel on
May 23.
Longi, the world's biggest solar company by market capitalization,
is fully prepared for the upcoming challenge, with cautious
investment decision-making and sufficient cash flow, Longi Green's
Li said, according to Bloomberg. The company also plans to extend
from solar manufacturing to providing more services to its clients,
in order to rely less on factory margins, he added.
=========
I N D I A
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ALOKA EXPORTS: CRISIL Assigns B Rating to INR3.47cr Loan
--------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B/Stable/CRISIL A4' ratings
to the bank facilities of Aloka Exports (Aloka).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.03 CRISIL A4 (Assigned)
Export Post-
Shipment Credit 3.47 CRISIL B/Stable (Assigned)
The rating reflects Aloka's modest scale of operations in a highly
fragmented & competitive industry and vulnerability of operating
margin to fluctuations in forex rates. These weaknesses are
partially offset by its extensive experience of the promoters, well
established customer base and healthy capital structure.
Analytical Approach
Unsecured loans from Partners of INR1.5 Crores as on March 31, 2022
has been treated as debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations in a highly fragmented & competitive
industry: Aloka's business profile is constrained by its scale of
operations as highlighted in the revenues of INR14 crores as on
March 31, 2022, estimated to be around INR14 to 16 crores as on
March 31, 2023. Aloka's scale of operations will continue limit its
operating flexibility. The industry is highly fragmented and
competitive, with many unorganized players in the market and it
limits the pricing flexibility and bargaining power of the
players.
* Below average financial risk profile: The net worth of the firm
has been impacted due to the capital withdrawals in the past and
due to the operational losses incurred. The net worth of the firm
is expected to be around INR13 to 14 crores. The capital structure
and the debt protection metrics remains poor, expected to improve
with increased scale of operations and steady accretion to the
reserves.
Strength:
* Extensive experience of the promoters: The promoters have an
experience of over four decades in Apparel Retail & Textile - RMG
manufacturing & export business industry. This has given them an
understanding of the market dynamics and enabled them to establish
relationships with suppliers and customers.
Liquidity: Poor
Bank limit utilization is moderate at around 63.04 percent for the
past twelve months ended April 2023. Cash accruals are expected to
be negative due to the expected losses due to the modest scale and
high fixed cost. Current ratio was moderate at 1.27 times on March
31, 2022. Further the unsecured loans from the promoters will
support the liquidity profile of the firm.
Outlook: Stable
CRISIL Ratings believe Aloka will continue to benefit from the
extensive experience of its promoter, and established relationships
with clients
Rating Sensitivity factors
Upward Factors:
* Significant increase in the scale of operations leading to better
operating performance and higher cash accruals of above INR0.5
crores
* Improvement in the working capital cycle.
Downward Factors:
* Any further decline in the revenue.
* Large debt-funded capital expenditure weakening capital structure
with TOL-ANW above 2 times
* Witnesses a substantial increase in its working capital
requirements with GCA above 250 days thus weakening its liquidity &
financial profile.
Established in 1984, Aloka is engaged in manufacturing and exporter
of high fashion accessories like scarves, jacquards, beachware &
sarongs, yarn dyed wovens, capes & kimonos. These products are
exported to high-end buyers across Europe, USA, Australia & Japan.
Aloka is located in Mumbai, Maharashtra.
It is owned & managed by founder Mr. Alok Kumar Agrawal and Mr.
Aditya Agrawal.
AZURE POWER: Moody's Lowers Rating on Senior Unsecured Notes to B1
------------------------------------------------------------------
Moody's Investors Service has downgraded Azure Power Energy Ltd's
(APE) senior unsecured rating to B1 from Ba3 and Azure Power Solar
Energy Private Limited's (APSEP) backed senior unsecured rating to
Ba3 from Ba2.
At the same time, Moody's has placed the ratings on review for
downgrade and has revised the outlook to ratings under review from
negative.
APE is a special-purpose vehicle that used USD note proceeds to
subscribe to senior secured denominated bonds and loans denominated
in Indian rupee, as external commercial borrowings issued by 16
restricted subsidiaries in the restricted group (RG-1). APE is also
part of RG-1.
APSEP is a special-purpose vehicle that used USD note proceeds to
subscribe to senior secured INR-denominated bonds and loans, as
external commercial borrowings issued by 10 restricted subsidiaries
in the restricted group (RG-2). APSEP is also a part of RG-2.
RG-1 and RG-2 represent around 43% of Azure Power Global Limited's
(APGL) operational capacity, and their operational and financial
metrics are significant to APGL's performance. APGL is also a
guarantor for the notes issued by APSEP.
RATINGS RATIONALE
The one-notch downgrade of APE's and APSEP's debt ratings is driven
by governance issues related to APGL's internal controls and
compliance, which have delayed the filing of the audited financials
for the two RGs and for APGL; whistleblower complaints; and high
senior management turnover.
The ratings for both APE and APSEP continue to derive support from
the companies' 53.4% shareholder, Caisse de depot et placement du
Quebec (CDPQ, Aaa stable), which Moody's expects to support APGL,
RG-1 and RG-2 when needed.
The review for downgrade reflects governance considerations related
to uncertainty regarding the timelines for the filing of audited
financials for APGL and both the rated entities. APGL is currently
listed on the New York Stock Exchange (NYSE), which has given a
second extension to APGL to file fiscal 2022 financials by July 15,
2023 and to be current on all filings including fiscal 2023
financials by August 15, 2023. Failure to meet these deadlines
could result in a possible delisting for APGL and set off a
technical default for the outstanding bonds of both RGs if the RG's
audited financials are not filed within 120 days after the end of
the semi-annual period and 150 days after the end of each fiscal
year.
Governance risks are material to the rating action.
Moody's scores APE's and APSEP's environmental, social and
governance (ESG) credit impact scores at CIS-4, which indicates the
rating is lower than it would have been if ESG risk exposures did
not exist. Both APE and APSEP have exposure to material governance
risks stemming from weak internal controls and compliance and the
management's inability to file audited financials and provide
guidance for their financials.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's review of APE's and APSEP's ratings will focus on the
progress and conclusion of the internal review, the extent of any
revisions to the historical financial performance when the audited
financials are made available, the severity of possible auditor
qualifications, and the consequential impact on Moody's
forward-looking financial projections. Moody's expects to conclude
the review within the next three months.
Moody's could downgrade APE's rating if RG-1's operating
performance weakens because of sustained liquidity stress or if its
funds from operations (FFO)/debt declines below 5% on a sustained
basis; and/or support from APGL's shareholders weakens, as
reflected by a significant decrease in CDPQ's ownership share. The
ratings could be further downgraded by multiple notches if lenders
to the parent company and its subsidiaries do not provide waivers
for a delay in the filing of audited financials and choose to
accelerate debt payments. Insolvency at APGL would also trigger a
default for APE's bonds.
Moody's could downgrade APSEP's rating if RG-2's FFO/debt declines
below 6%-7% on a sustained basis, which is likely if the weakness
in operating performance observed since fiscal 2020 persists; there
is sustained liquidity stress; its off-takers' credit quality
declines to an extent that strains RG-2's standalone credit
quality; and/or support from APGL's shareholders weakens, as
reflected by a significant decrease in CDPQ's ownership share. The
ratings could be further downgraded by multiple notches if lenders
to the parent company and its subsidiaries do not provide waivers
for a delay in the filing of audited financials and choose to
accelerate debt payments. Insolvency at APGL would also trigger a
default for APSEP's bonds.
The delisting of APGL from NYSE could also trigger a technical
default for the outstanding bonds of both APE and APSEP, leading to
a rating downgrade of multiple notches.
Given the review for downgrade, an upgrade of APE's and APSEP's
ratings is unlikely in the near term.
Moody's could change the outlooks to stable if the companies
adequately address auditor findings related to their internal
controls, and if corrective actions to address whistleblower
complaints do not undermine the companies' operational and
financial profiles.
The principal methodology used in these ratings was Power
Generation Projects Methodology published in January 2022.
Azure Power Energy Ltd (APE) is a special-purpose vehicle
incorporated in Mauritius in 2017 as a wholly-owned subsidiary of
Azure Power Global Limited (APGL). The restricted subsidiaries
under the US dollar senior notes issuance are wholly or ultimately
majority owned by APGL. APE is also a part of Azure RG-1. The
restricted subsidiaries operate solar power plants with a total
capacity of 611 megawatts (MW) as of December 2022.
Azure Power Solar Energy Private Limited (APSEP) is a
special-purpose vehicle incorporated in Mauritius in 2018 as a
wholly owned subsidiary of APGL. The restricted subsidiaries under
the USD notes issuance are ultimately majority owned by APGL. They
operate solar power plants with a total capacity of 647.5 MW as of
December 2022.
Listed on the NYSE, APGL is a leading solar power company in India
with a total capacity of 7,425 MW (4,470 MW committed solar plants)
across 23 states as of April 2023.
BS MINING: CRISIL Keeps B Ratings in Not Cooperating Category
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of BS Mining
Corporation Private Limited (BSMCPL) continue to be 'CRISIL
B/Stable/CRISIL A4 Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.5 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 9.3 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Long Term 0.2 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with BSMCPL for
obtaining information through letters and emails dated January 28,
2023 and March 13, 2023 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 BSMCPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
BSMCPL is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the ratings on bank
facilities of BSMCPL continues to be 'CRISIL B/Stable/CRISIL A4
Issuer Not Cooperating'.
BSMCPL was set up as a proprietorship firm in 1994; the firm was
reconstituted as a private limited company in 2008. It is promoted
by Odisha-based Nayek family. The company undertakes contracts for
mining, extraction, and transportation of minerals, such as iron
ore and manganese. It also provides civil construction services.
The operations are managed by Mr. Sarat Nayek along with his sons
Mr. Satya Nayek and Mr. Surti Nayek.
CREAATIVE POWERTECH: CRISIL Cuts Rating on LT/ST Debts to D
-----------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities of
Creaative Powertech Private Limited (CPPL)to 'CRISIL D/CRISIL D
Issuer Not Cooperating' from 'CRISIL B-/Stable/CRISIL A4 Issuer Not
Cooperating'. The rating action is based on recent delay in
servicing debt obligations by CPPL on account of strained
liquidity.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Rating - CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL B-/Stable ISSUER NOT
COOPERATING')
Short Term Rating - CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
CRISIL Ratings has been consistently following up with CPPL for
obtaining information through letters and emails dated April 19,
2023 and November 29, 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 CPPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on CPPL
is consistent with 'Assessing Information Adequacy Risk'.
Incorporated in 2008, CPPL is promoted by Mr Lalit Palwe, Mr Chhabu
Dagadu Nagare and Mr Bhagwat Dhudale. The company manufactures
isolators, fabricated structures and epoxy-cast moulded components
used in the switchgear industry. It has initiated large capex to
venture into new products such as breaker assemblies and radiators,
large structural assemblies for the electrical industry, and to
consolidate operations.
DAYAL ENERGY: CRISIL Withdraws D Rating on INR35cr Cash Loan
------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on INR35 Crore of Cash
Credit facility & INR10 Crore of LC facility on the request of
Dayal Energy And Proteins Private Limited (DEPL) and receipt of a
no objection certificate from its bank. The rating action is in
line with CRISIL Ratings' policy on withdrawal of its ratings on
bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 35 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Letter of Credit 10 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Warehouse Financing 13.3 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with DEPL for
obtaining information through letters and emails dated August 19,
2021, October 6, 2021 and October 21, 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 DEPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on DEPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on the bank facilities
of DEPL continues to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
DEPL, based in Akola, Maharashtra, and promoted by Bachuka family,
is a soya bean oil extractor and refiner. It has a solvent
extraction capacity of 800 tonne per day (tpd) and refining
capacity of 110 tpd. It extracts refined soya oil and crude soya
oil, and produces soya de-oiled cakes. The refined oil is also sold
and marketed under the brand All Day.
EDCONS EXPORTS: CRISIL Withdraws B+ Rating on INR14.4cr Loan
------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Edcons Exports Private Limited (Edcons) on the request of the
company and receipt of a no objection certificate from its bank.
The rating action is in line with CRISIL Ratings' policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Export Packing 14.4 CRISIL B+/Stable/Issuer Not
Credit Cooperating (Withdrawn)
Letter of Credit 1.5 CRISIL A4/Issuer Not
Cooperating (Withdrawn)
Long Term Loan 1.6 CRISIL B+/Stable/Issuer Not
Cooperating (Withdrawn)
Proposed Long Term 0.5 CRISIL B+/Stable/Issuer Not
Bank Loan Facility Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with Edcons for
obtaining information through letters and emails dated December 30,
2022 and February 28, 2023, 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 Edcons. This restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
Edcons is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the rating on bank
facilities of Edcons continues to be 'CRISIL B+/Stable/CRISIL A4
Issuer Not Cooperating'.
Edcons was established in 1995 and promoted by Mr Rajarshi Dey. The
company manufactures and exports leather bags, SLGs, brief cases,
and file folders. Its manufacturing units are in Kolkata. More than
90% of the sales is made to different countries in Europe.
ENZAL CHEMICALS: CRISIL Moves B+ Debt Ratings to Not Cooperating
----------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Enzal
Chemicals India Limited (ECIL) to 'CRISIL B+/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.15 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 5.75 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Credit 2.25 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Letter of Credit 2.60 CRISIL A4 (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1.25 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with ECIL for
obtaining information through letter and emails dated April 26,
2023 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 ECIL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on ECIL
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 ECIL to 'CRISIL B+/Stable/CRISIL A4 Issuer not
cooperating'.
ECIL was incorporated in 1992, promoted by Mr. Arun Gupta and his
family members. The company manufactures piperazine-based bulk drug
intermediaries and salts. Its registered office is in Mumbai and
manufacturing facility in Bharuch, Gujarat. The company has
capacity to produce over 950 tons of intermediaries and salts
annually.
GO FIRST: Now Cancels All Scheduled Flights Till June 4
-------------------------------------------------------
The Hindu reports that Go First Airlines on May 30 informed that
its scheduled flight operations will remain cancelled till June 4,
adding that a full refund will be issued to the passengers.
Earlier flight operations were cancelled till May 30, the report
says.
According to The Hindu, the Directorate General of Civil Aviation
(DGCA) last week advised Go First Airlines to submit a
comprehensive restructuring plan for a sustainable revival of
operations.
The Hindu relates that a senior DGCA official earlier said that Go
First has submitted their response to a show cause notice, issued
on May 8, wherein they have requested that they may be allowed to
use the moratorium period to prepare a comprehensive restructuring
plan for restarting operations and present the same to DGCA for the
requisite regulatory approvals before restarting operations.
Accordingly, DGCA had advised the airline to submit a comprehensive
restructuring/revival plan for a sustainable revival of operations,
within a period of 30 days. The revival plan once submitted by Go
First shall be reviewed by DGCA for further appropriate action in
the matter, the report notes.
About Go First
Go First, formerly known as GoAir, was an Indian ultra-low-cost
airline based in Mumbai, Maharashtra. Go First was incorporated in
April 2004 as GoAir and commenced flight operations in November the
following year. Its inaugural flight was from Mumbai to Ahmedabad.
The airline is owned by the Wadia Group.
As reported the Troubled Company Reporter-Asia Pacific on May 3,
2023, Go First filed an application for voluntary insolvency
resolution proceedings before National Company Law Tribunal (NCLT)
on May 2.
The company said the filing with the NCLT comes after Pratt &
Whitney, the exclusive engine supplier for the airline's Airbus
A320neo aircraft fleet, refused to comply with an order to release
engines to the airline that would have allowed it return to full
operations.
On May 10, the National Company Law Tribunal (NCLT) accepted Go
First's voluntary insolvency petition. The NCLT bench appointed
Abhilash Lal as the interim resolution professional to look after
the affairs of Go First and also suspended its board as part of the
insolvency resolution process.
GRK THEATRES: CRISIL Moves B- Debt Rating from Not Cooperating
--------------------------------------------------------------
Due to inadequate information, CRISIL Ratings, in line with SEBI
guidelines, had migrated the rating of GRK Theatres Private Limited
(GRK) to 'CRISIL B/Stable/CRISIL A4 Issuer Not Cooperating'.
However, the management has subsequently started sharing requisite
information, necessary for carrying out comprehensive review of the
rating. Consequently, CRISIL Ratings is migrating the rating on
bank facilities of GRK to 'CRISIL B-/Stable' from 'CRISIL
B/Stable/CRISIL A4 Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Inventory Funding
Facility 20 CRISIL B-/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Lease Rental
Discounting Loan 10 CRISIL B-/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Overdraft Facility 17 CRISIL B-/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
Term Loan 13 CRISIL B-/Stable (Migrated from
'CRISIL B/Stable ISSUER NOT
COOPERATING')
The rating continues to reflect GRK's extensive industry experience
of the promoters. These strengths are partially offset by its
exposure to intense competition in the automobile dealership
segment and working capital intensive operations
Key Rating Drivers & Detailed Description
Weakness:
* Working capital intensive operations: Gross current assets were
at 186-381 days over the four fiscals ended March 31, 2023. Its
intensive working capital management is reflected in its gross
current assets (GCA) of 381 days as on March 31, 2023. Its's large
working capital requirements arise from its high debtor and
inventory levels. It is required to extend long credit period.
Furthermore, due to its business need, it holds large work in
process & inventory.
Strength:
* Extensive industry experience of the promoters: The promoters
have an experience of over 2 decades years in Media- Movies &
Entertainment industry. This has given them an understanding of the
dynamics of the market and enabled them to establish relationships
with suppliers and customers.
Liquidity: Stretched
Bank limit utilisation is high at around 100 percent for the past
twelve months ended March 2023. Cash accrual are expected to be
over INR2.7 to 4.9 crores which are insufficient against term debt
obligation of INR3 to 6 over the medium term. In addition, it will
be act as cushion to the liquidity of the company. Current ratio is
healthy at 1.92 times on March 31, 2023. Negative net worth limits
its's financial flexibility and restrict the financial cushion
available to the company in case of any adverse conditions or
downturn in the business.
Outlook: Stable
CRISIL Ratings believe GRK will continue to benefit from the
extensive experience of its promoter, and established relationships
with clients.
Rating Sensitivity Factors
Upward factor
* Sustained improvement in scale of operation by 20% and sustenance
of operating margin, leading to higher cash accruals around INR8
crores.
* Improvement in overall financial risk profile especially in
liquidity
Downward factor
* Decline in revenue and lower than expected operating margins
constraining net cash accruals to below INR2 crore
* Any major debt funded capex or stretch in its working capital
cycle leading to weakening of its financial profile
Cuddalore (Tamilnadu) based GRK was incorpored in 1983 and having
diverse business interest including Theatres, Restaurant and
transportation among others.
IC ELECTRICALS: CRISIL Raises Rating on INR22cr Cash Loan to B-
---------------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the bank facilities of
IC Electricals Company Pvt Ltd (ICECPL) to 'CRISIL B-/Stable/CRISIL
A4' from 'CRISIL D/CRISIL D'. The ratings reflect the
regularisation of delays in meeting debt obligation.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 12 CRISIL A4 (Upgraded from
'CRISIL D')
Bank Guarantee 8 CRISIL A4 (Upgraded from
'CRISIL D'))
Cash Credit 22 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The ratings also reflect the large working capital requirement and
average debt protection metrics of the company. These weaknesses
are partially offset by the extensive experience of the promoters
in the electronic products business and their funding support.
Key rating drivers and detailed description
Weaknesses:
* Large working capital requirement: Operations were working
capital intensive, as reflected in estimated gross current assets
of 350-400 days as on March 31, 2023, and 350 days a year earlier,
driven by receivables and inventory of 117 and 229 days,
respectively. Receivables are high because the company is dealing
with the Indian Railways, where multiple quality checks take place
during the billing process. Inventory, on the other hand, is
procured as per requirement.
* Average debt protection metrics: Interest coverage and net cash
accrual to adjusted debt ratios stood at 1.66 times and 0.05 time,
respectively, in fiscal 2022, and are estimated at similar levels
in fiscal 2023. Debt protection metrics were modest because of the
working capital-intensive operations and dependence on external
debt. Improvement in the debt protection metrics remains a key
monitorable.
Strengths:
* Extensive experience of the promoters: The promoters' experience
of two decades in the electronic products business, strong
understanding of market dynamics and healthy relationships with
customers and suppliers will continue to support the business.
ICECPL manufactures transformers, contractors, reactors, motors and
alternator regulators for the Indian Railways. The company
undertakes constant innovation in the product profile to maintain a
competitive advantage. Its manufacturing and research and
development (R&D) facilities are in Haridwar, Uttarakhand. The
promoters' expertise helped the company achieve topline of
INR90-100 crore in the past 3-4 years.
* Funding support from the promoters: The promoters have extended
funding support through unsecured loans to cover working capital
expense and support liquidity. Outstanding loan stood at INR4 crore
as on March 31, 2023. Need-based support from the promoters is
likely to continue and remains a key rating sensitivity factor.
Liquidity: Poor
Bank limit utilisation was high at 100% on average for the six
months through April 2023. Cash accrual, expected at INR3-3.5 crore
per annum, will sufficiently cover yearly term debt obligation of
INR2-2.5 crore over the medium term and cushion liquidity. Also,
the promoters provide funding support by way of unsecured loans.
However, improvement in liquidity will remain a key monitorable.
Outlook: Stable
ICECPL will continue to benefit from the extensive experience of
its promoters.
Rating Sensitivity Factors
Upward factors:
* Efficient working capital management resulting in improvement in
liquidity, with average bank limit utilisation below 95%
* Increase in revenue by 25% and stable operating margin leading to
higher net cash accrual
Downward factors:
* Further stretch in the working capital cycle weakening the
liquidity
* Deterioration in the financial risk profile with interest
coverage ratio below 1.5 times
* Delay in meeting debt obligation
ICECPL was acquired in 2004 by Mr Sanjay Vishwakarma and Mr Sunil
Kumar Verma from India Castings Company. The company manufactures
electronic instruments and power electronic systems for the Indian
Railways (90% of sales) and also caters to original equipment
manufacturers of the Indian Railways (10%).
JAGDISH INT'L: CRISIL Withdraws B Rating on INR13.5cr Loan
----------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Jagdish International Private Limited (JIPL) on the request of the
company and receipt of a no objection certificate from its bank.
The rating action is in line with CRISIL Ratings' policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13.5 CRISIL B/Stable/Issuer Not
Cooperating (Withdrawn)
Proposed Long Term 4.5 CRISIL B/Stable/Issuer Not
Bank Loan Facility Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with JIPL for
obtaining information through letters and emails dated August 24,
2022 and October 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 JIPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on JIPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
JIPL continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
Incorporated in 2004 and promoted by members of the Khandelwal
family, JIPL trades in wheat. Operations are managed by Mr Sanjeev
Khandelwal, Mr Rajeev Khandelwal and Mr Rajat Sharma. The
registered office is in Bareilly, Utter Pradesh.
JAIBUNDELKHAND ROLLER: CRISIL Rates INR14.54cr Term Loan at B+
--------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Jaibundelkhand Roller Flour Mill
Private Limited (JRFMPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 11.25 CRISIL B+/Stable (Assigned)
Term Loan 14.54 CRISIL B+/Stable (Assigned)
The rating reflects risk related to stability in operations,
expected leveraged financial risk profile, and Susceptibility to
climatic conditions and volatility in raw material prices. These
weaknesses are partially offset by the extensive experience of the
promoters.
Analytical Approach
Unsecured loans of INR2.27 crore as on March 31, 2023, from the
promoters and related parties have been treated as quasi equity as
these are subordinate to bank loan. Unsecured loans of INR3.27
crore as on March 31, 2023, from friends and family have been
treated as 75% equity and 25% debt as these loans are to remain in
the business for the long term and are interest-free.
Key Rating Drivers & Detailed Description
Weaknesses:
* Risks related to stability in operations: JRFMPL has set up a new
roller flour mill and commenced its operations in February 2023.
However, the stabilization of operations risk persists, and
achievement of projected turnover and profitability will be key
monitorable. The 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.
* Expected leveraged financial risk profile: The company has
availed a term loan of INR14.53 crore setting up of the plant,
against a small networth of INR6.23 crore as on March 31, 2023.
Hence gearing was weak at 2.3 times and is expected to remain
2.0-3.4 times over the medium term with moderate bank limit
utilization. Interest coverage ratio was weak at (-0.1) time in
fiscal 2023 due to limited operations but is expected to improve to
1.2-2.9 times over the medium term with better operating efficiency
and stability in operations. Net cash accrual to adjusted debt
ratio is also expected to improve upto 23%.
* Susceptibility to climatic conditions and volatility in raw
material prices: Crop yield depends on adequate and timely monsoon,
which exposes the company to limited availability of key raw
material in case of a weak monsoon. Also, production may be
impacted by pests or crop infection, leading to higher
unpredictability in yield and pricing.
Strength:
* Extensive experience of the promoters: Presence of over three
decades in the food processing industry has enabled the promoters
to develop a strong understanding of market dynamics and establish
healthy relationships with suppliers and customers.
Liquidity: Stretched
Expected cash accrual of over INR1.6 crore in fiscal 2024 will
tightly match yearly term debt obligation of INR1.6-2.5 crore, over
the medium term. The promoters are likely to extend equity and
unsecured loans to bridge the gap and help fund working capital
requirement.
Outlook: Stable
The company will benefit from the extensive experience of its
promoters in the food processing and trading industry.
Rating Sensitivity Factors
Upward factors
* Stabilisation of operations with revenue of more than INR250
crore and higher operating profitability, leading to better net
cash accrual
* Negligible dependence on external debt with improvement in
gearing and moderate working capital cycle
Downward factors
* Revenue of less than INR150 crore or operating loss during
initial phase of operations resulting in low cash accrual
* Any unexpected debt-funded capital expenditure or high dependence
on working capital debt further weakening gearing
* Substantial increase in working capital requirement adversely
affecting financial risk profile, including liquidity.
JRFMPL was incorporated in 2020 and is promoted by Mr Sanjeev Jain,
Mr Sangharsh Badkul, Mr Nirmal Kumar Jain and Mr Prince Kumar Jain.
The company recently set up a plant in Tikamgarh, Madhya Pradesh,
to process wheat into refined flour (maida) and unrefined flour
(atta) at an installed capacity of 500 tonne per day (400 tonne for
flour mill [maida, rawa] and 100 tonne for chakki atta).
JAYPEE INFRATECH: Defers Approval of Fin'l Statements for March Qtr
-------------------------------------------------------------------
The Economic Times reports that Jaypee Infratech, which is facing
insolvency proceedings, on May 29 said the company has deferred the
approval of financial statements for the quarter and fiscal ended
March 2023, as it has not been finalised in view of pending cases
in the appellate tribunal. On March 7, the National Company Law
Tribunal (NCLT) approved the resolution plan of Mumbai-based realty
firm Suraksha Group to take over Jaypee Infratech. An
Implementation and Monitoring Committee (IMC) has been set up for
taking all necessary steps for expeditious implementation of the
resolution plan.
In a regulatory filing, Jaypee Infratech informed that the meeting
of the IMC was held on May 29, "wherein the approval of the
financial statements of the company was deferred/postponed for
seeking an extension by way of making necessary application . . ."
"We would like to submit that, for finalisation of accounts and to
capture the effects of the accounting treatment in the books of
accounts of the company, few accounting entries are required to be
made and effects of the plan (resolution plan) to be given in the
financial statements," the company said.
In view of the pending appeals in the National Company Law
Appellate Tribunal (NCLAT), the company said the statutory due date
should be extended to give a proper effect of the accounting
entries in the books for presenting a true and fair view of the
financial performance, ET relays.
Jaypee Infratech is unable to finalise its annual accounts for FY
2022-2023 on account of the pending Appeals, which are factors
beyond its control, it added, according to ET.
About Jaypee Infratech
Jaypee Infratech Limited (JIL) is engaged in the real estate
development. The Company's business segments include Yamuna
Expressway Project and Healthcare. The Company's Yamuna Expressway
Project is an integrated project, which inter alia includes
construction of 165 kilometers long six lane access controlled
expressway from Noida to Agra with provision for expansion to eight
lane with service roads and associated structures on build, own,
operate and transfer basis. The Company provides operation and
maintenance of Yamuna Expressway for over 36 years, collection of
toll and the rights for development of approximately 25 million
square meters of land for residential, commercial, institutional,
amusement and industrial purposes at over five land parcels along
the expressway. The Healthcare business segment includes
hospitals. The Company has commenced development of its Land
Parcel-1 at Noida, Land Parcel-3 at Mirzapur and Land Parcel-5 at
Agra.
JIL features in the Reserve Bank of India's first list of
non-performing assets accounts and had debt exposure of over
INR9,783 crore as of September 2017. The parent company,
Jaiprakash Associates Ltd. (JAL), owes more than INR29,000 crore to
various banks.
On Aug. 8, 2017, the National Company Law Tribunal (NCLT),
Allahabad bench accepted lender IDBI Bank's plea and classified JIL
as an insolvent company. With this, the board of directors of the
company remains suspended.
Anuj Jain was appointed as Interim Resolution Professional (IRP) to
manage the company's business. The IRP had invited bids from
investors interested in acquiring JIL and completing the stuck real
estate projects in Noida and Greater Noida.
KSR METAL: CRISIL Assigns B+ Rating to INR10cr Cash Loan
--------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' to the bank
facilities of Sri KSR Metal and Alloys Private Limited (SKMAPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Assigned)
Proposed Fund-
Based Bank Limits 0.7 CRISIL B+/Stable (Assigned)
Term Loan 2.3 CRISIL B+/Stable (Assigned)
The rating reflects SKMAPL's exposure of nascent stages of
operation susceptibility to fluctuations in raw material prices,
intense competition and leveraged capital structure. These
weaknesses are partially offset by its extensive industry
experience of the promoters.
Key Rating Drivers & Detailed Description
Weaknesses:
* Nascent stages of operation: The company was established in 2020
and has started its operation in June 2022 and has limited track
record of operations. Nascent stages of operation will continue to
impinge the scalability over the medium term.
* Susceptibility to fluctuations in raw material prices, intense
competition: The aluminum ingots industry is highly competitive
due to presence of numerous domestic as well as global players,
which exerts pricing pressure on individual entities. This
necessitates the company to remain cost competitive to maintain
profitability.
* Leveraged capital structure: SKMAPL 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 2.58 times.
Strengths:
* Extensive industry experience of the promoters: The promoters
have an experience of more than 10 years in ferro alloy industry.
This has given them an understanding of the dynamics of the market
and enabled them to establish relationships with suppliers and
customers.
Liquidity: Stretched
Bank limits utilization is moderate at 81.20%.
Cash accruals are expected to be over INR0.25-1.65 crore which are
sufficient against term debt obligation of INR0.40 crore over the
medium term.
The promoters are likely to extend support in the form of unsecured
loans to meet its working capital requirements and repayment
obligations.
Outlook: Stable
CRISIL Ratings believe SKMAPL will continue to benefit from the
extensive experience of its promoter, and established relationships
with clients.
Rating Sensitivity factors
Upward factors
* Stabilizes operations at its plant in time
* Reports significant revenue of more than 65 crore and
profitability leading to higher-than-expected cash accruals
Downward factors
* Delay in ramping up of operating leading to a revenue of less
than INR 40 crore
* Witnesses a substantial increase in its working capital
requirements thus weakening its liquidity & financial profile.
SKMAPL was incorporated in 2020 to set up new unit for
manufacturing of aluminum ingots & alloy.
SKMAPL is promoted by Ms. Preethi Reddy Kandala, Ms. Keerthi Reddy
Sama and Ms. Sushma Reddy Gunda and started its commercial
operation from June 2022.
MAYURI ELECTRONICS: CRISIL Reaffirms B+ Rating on INR7.4cr Loan
---------------------------------------------------------------
CRISIL Ratings has reaffirmed its 'CRISIL B+/Stable' rating on the
long-term bank facilities of Mayuri Electronics Private Limited
(MEPL).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.4 CRISIL B+/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 0.1 CRISIL B+/Stable (Reaffirmed)
Term Loan 0.5 CRISIL B+/Stable (Reaffirmed)
The rating continues to reflect MPEL's small scale of operations
and below-average financial risk profile. These weaknesses are
partially offset by the extensive experience of the promoter in the
electronics retailing business, and the strong brand value of the
principal.
Key Rating Drivers & Detailed Description
Weaknesses:
* Small scale of operations: Subdued scale reflected in revenue of
INR15 crore in fiscal 2022 against INR20 crore in fiscal 2021,
driven by price fluctuation and demand for electronics goods in the
consumer market. Till September 2022 revenue was reported to be
INR7.73 crore and it is estimated to be more than INR20-25 crore in
fiscal 2023. Revenue is likely to improve 5-10% over the medium
term, driven by the strong brand of the principal.
* Below-average financial risk profile: The financial risk profile
is constrained by small net worth of INR2.70 crore and moderate
capital structure with gearing and total outside liabilities to
adjusted net worth (TOLANW) ratio of 2.87 times and 3.04 times,
respectively in fiscal 2022. The capital structure is expected to
be moderate with gearing and total outside liabilities to tangible
net-worth (TOL/TNW) ratio of 2.52 times and 2.60 times respectively
over the medium term in line with marginal growth in net worth of
over INR3 crore.
Strength:
* Extensive experience of the promoter and strong brand value of
the principal: The promoters has experience of two decades in the
consumables industry, leading to strong understanding of market
dynamics and established relationships with suppliers and
customers, which will continue to support the business risk
profile.
Liquidity: Stretched
Average bank limit utilization was 79% in the 14 months through
March 2023. Net cash accrual is expected to be more than INR44 lakh
which is tightly matched against debt obligation of INR39-43 lakh
over the term.
Current ratio was moderate at 1.70 times as on March 31, 2022
Outlook: Stable
CRISIL Ratings believes MEPL will continue to benefit from the
extensive experience of its promoter in the consumables industry
Rating Sensitivity factors
Upward factors:
* Sustainable growth in revenue by more than 20% with profitability
margin of 7% leading to higher cash accrual of INR1 crore
* Improvement in the financial risk profile
* Prudent working capital management
Downward factors:
* Revenue growing less than 20% with lower profit margin of 5%
leading to lesser cash accrual of INR10lakh
* Deterioration in the working capital cycle
Incorporated in 2012, MEPL retails Samsung products through an
exclusive 'Samsung Plaza' in 5 outlet located in Coimbatore,
Namakkal, Karur, Tirchy and Hosur cities. Mr.C. Anand is a
promoter, having over 15yrs of experience in the line of business.
MEMF ELECTRICAL: Voluntary liquidation Process Case Summary
-----------------------------------------------------------
Debtor: MEMF Electrical Industries India Private Limited
127-5, Ratan Park, Row House 3,
Sus Road Pashan, Pune 411021
Liquidation Commencement Date: May 2, 2023
Court: National Company Law Tribunal Pune Bench
Liquidator: Mrs. Dipti Amit Thite
Flat No. 9, B Building, Ramyanagari Housing Society,
Bibwewadi, Pune 411037
Email: dipti@csdiptithite.com
Contact: +91 9890927491
Last date for
submission of claims: June 1, 2023
MERCHANDISERS PRIVATE: Voluntary liquidation Process Case Summary
-----------------------------------------------------------------
Debtor: MS Merchandisers Private Limited
Office No. 305, USMSSL Complex, 120, Mathura Road,
Near Apollo-Jasola Metro Station, NEW DELHI - 110076
Liquidation Commencement Date: April 27, 2023
Court: National Company Law Tribunal New Delhi Bench
Liquidator: Deepak Kumar Goyal
Flat no 101, Shridher Apartment 884/6,
Ward no 6, Mehrauli, New Delhi - 110030
Email id: ca.deepak.mba@gmail.com
Contact Number: 9990045308
c/o 701, Vikrant Tower, Tower No. 4,
Rajendra Place, Delhi 110008
Email id: liq.msmpl@gmail.com
Last date for
submission of claims: May 26, 2023
PALSANA ENVIRO: CRISIL Withdraws B+ Rating on INR15cr Term Loan
---------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Palsana Enviro Protection Limited (PEPL) on the request of the
company and receipt of a no objection certificate from its bank.
The rating action is in line with CRISIL Ratings' policy on
withdrawal of its ratings on bank loans.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 15 CRISIL B+/Stable/Issuer Not
Cooperating (Withdrawn)
Term Loan 15 CRISIL B+/Stable/Issuer Not
Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with PEPL for
obtaining information through letters and emails dated January 28,
2023 and March 13, 2023, 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 PEPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on PEPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
PEPL continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
PEPL was set by members of the Palsana Industrial Association in
1999. The company operates a common effluent-treatment plant in
Kadodara, Gujarat.
PROVET PHARMA: CRISIL Lowers Rating on INR18cr Cash Loan to B+
--------------------------------------------------------------
CRISIL Ratings has downgraded its rating on the long term bank
facilities of Provet Pharma Private Limited (PPPL) to 'CRISIL
B+/Stable' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 18 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The rating downgrade reflects the decline in revenue and operating
margins which has led to lower than expected net cash accrual to
meet term debt obligation. This has also impacted the financial
risk profile as reflected in the estimated gearing and TOL/TNW more
than 5 times in FY23. While the net cash accrual is expected to
increase gradually as the operating margin and turnover improve, it
remains key rating monitorable.
The rating continues to reflect the large working capital
requirement and below average financial risk profile of PPPL. These
weaknesses are partially offset by the extensive experience of
promoters.
Key Rating Drivers & Detailed Description
Weaknesses:
* Below average financial risk profile: Estimated gearing and
networth has significantly declined to 5.5 times and INR4.38 crore,
respectively, as on March 31, 2023, from 3.51 times and INR8.18
crore a year earlier. Total outside liabilities / Tangible networth
(TOL/TNW) has gone high to 10.9 times in FY23 led by the decline in
operating, margins. Debt protection metrics also got impacted, as
reflected in the estimated interest coverage and net cash accrual
to adjusted debt ratios of 0.15 times and -0.14 time, respectively,
in fiscal 2023. (against 2.21 times and 0.15 time in fiscal 2022).
* Large working capital requirement: Gross current assets were
estimated at around 271 days as on March 31, 2023, driven by
stretched debtors of over 210 days and moderate inventory of around
53 days. However, the working capital is partially supported by
creditors of 100-130 days.
Strength:
* Extensive experience of promoters: The promoters are veterinary
professionals with extensive experience in animal healthcare, while
the investors are experts in poultry products and broiler farming
and own the Kavi group of companies, based in Bengaluru. The
company has thus been able to develop strong relationships with key
stakeholders, leading to steady orders and healthy revenue growth
in the past few years.
Liquidity: Stretched
Bank limit utilization is high at around 90 percent for the past 12
months ended 31st March 2023. Cash accruals are expected to be
over INR2 - 3 crore which are sufficient against term debt
obligation of INR 0.90 crore over the medium term. In addition, it
will be act as cushion to the liquidity of the company.
Estimated current ratios stands at 1.32 times on March31, 2023. 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 Rating believes PPPL will continue to benefit from the
extensive experience of its promoters.
Rating Sensitivity Factors
Upward factors:
* Sustained increase in revenue and/or profitability more than
8.5%, leading to higher-than-expected cash accrual
* Improvement in financial risk profile especially TOL/TNW
Downward factors:
* Decline in revenue or drop in profitability, resulting in cash
accrual less than INR2 crore
* Large, debt-funded capital expenditure
PPPL, incorporated in 2009, manufactures and trades in animal feed
supplements and pharmaceutical formulations for animals. Two
veterinary professionals – Dr Senthil Suthanthirakumar and Dr V
Muthuselvan – and two investors – Mr Puvikumar and Mr
Radhakrishnan – are the promoters. Dr Suthanthirakumar (sales
director) and Dr Muthuselvan (marketing director) manage the
business.
RAINBOW SPINNERS: CRISIL Lowers Rating on INR13cr Loan to B+
------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities of
Rainbow Spinners Private Limited (RSPL) to 'CRISIL B+/Stable/CRISIL
A4' from 'CRISIL BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 13 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Letter of Credit 8 CRISIL A4 (Downgraded from
'CRISIL A4+')
Long Term Loan 5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Proposed Long Term
Bank Loan Facility 3.43 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The downgrade reflects weakening of RSPL's financial risk profile
with stretched liquidity profile marked by tightly matched net cash
accrual against repayment obligation and high bank limit
utilization of over 97% for past 12 months ended March 2023.
Improvement in net cash accruals and moderation in bank limit
utilization will remain key rating sensitivity factor.
The ratings continue to reflect the extensive experience of RSPL's
promoters in the yarn spinning industry. These strengths are
partially offset by the company's modest scale of operation and
average financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations: Revenue is expected to be modest at
~Rs75 crores in fiscal 2023. The company's spinning mills are
situated in Southern Tamil Nadu region, which is a cotton textile
belt. There are a large number of cotton yarn manufacturers
situated in this region, exposing the entity to risks related to
intense competition. Further, the spinning industry is highly
fragmented with commodity nature of product.
* Average financial risk profile: The financial risk profile is
average. The networth is expected to be modest at INR12 crore and
the total outside liabilities to tangible networth (TOLTNW) ratio
at 1.92 times as on March 31, 2023. Debt protection metrics were
modest, as reflected in interest coverage and net cash accrual to
total debt ratios, of 1.92 times and 0.08 time, respectively, for
fiscal 2023.
Strength:
* Extensive experience of the promoters: The promoters have been
engaged in the cotton yarn industry for more than three decades.
Over the year, the promoters have established longstanding
relationship with suppliers and customers.
Liquidity: Stretched
Bank limit utilization is average at ~ 97 percent for the past
twelve months ended Nov 2022. Cash accruals are expected to be over
INR1.52 crores which are sufficient against term debt obligation of
INR1.48 crore over the medium term. However, NCA is expected to
deteriorate which can lead to insufficient cash accrual against
repayment obligation in FY24. Current ratio is moderate at 1.38
times on March 31, 2023. The promoters are likely to extend support
in the form of unsecured loans to meet its working capital
requirements and repayment obligations
Outlook: Stable
CRISIL Ratings on the bank facilities believes RSPL will continue
to benefit from the extensive industry experience of the
promoters.
Rating Sensitivity Factors
Upward Factors
* Increase in revenue by 20% and sustaining of margins over and
above 7%
* Improvement in the financial risk profile and liquidity
Downward Factors
* Decline in margins below 4% leading to lower cash accrual.
* Stretched working capital cycle weakening of liquidity
Incorporated in 2006 and promoted by Mr. M Venkatachalam and his
relatives, Mr. M Subramani and Mr. P Chinnusamy, RSPL manufactures
cotton yarn and is based in Pallipalaym, Tamil Nadu.
RENEW POWER G4: Fitch Affirms BB- Rating on $585M Sr. Secured Notes
-------------------------------------------------------------------
Fitch Ratings has affirmed India-based ReNew Power Restricted Group
4's (ReNew RG4) USD585 million senior secured notes due 2028 at
'BB-'. The Outlook is Stable.
RATING RATIONALE
The rating on the notes reflects the credit strengths and
weaknesses of a restricted group of operating entities. The
restricted group will benefit from parent ReNew Power Private
Limited's (ReNew Power, BB-/Stable) access to funding to refinance
its US dollar bonds, supported by a full-tenor unconditional
guarantee from the parent. ReNew Power is one of the largest
renewable-energy independent power producers in India with a total
renewable asset base of over 13GW, including projects under
operation, in the pipeline and under development.
The restricted group includes 10 renewable projects of ReNew Power
with a total capacity of 803.1MW spread across seven states in
India. The portfolio has nine wind assets (753.1MW) and one solar
project (50MW). All of the assets have been operating for more than
five years, other than one 300MW wind project, which started
operations in early 2021. The 300MW project is contracted with
sovereign-owned Solar Energy Corporation of India (SECI), while the
rest are contracted with weaker state-owned distribution
companies.
KEY RATING DRIVERS
Proven Technology, Lack of Maintenance Reserve - Operation Risk:
Midrange
The technologies deployed in ReNew RG4's wind and solar projects
are considered proven. Most of the wind turbines are procured from
some of the world's largest manufacturers, while the solar modules
are sourced from an internationally well-known supplier. Operation
and maintenance (O&M) for most of the wind projects is carried out
by the original equipment manufacturers under 10-year contracts.
The O&M for three wind projects - 28MW, 60MW and 92MW - was taken
over by an affiliate company, ReNew Services Private Limited, at a
fixed price, with 4%-5% annual price escalation, for shorter but
extendable tenors. The O&M for the solar project is also carried
out by the affiliate under a five-year fixed-price contract, with
5% annual price escalation. The operation risk assessment is
constrained at 'Midrange' as the operating cost forecast is not
validated by an independent technical advisor and the bond
indenture does not have a maintenance reserve account.
Wide Forecast Spread, Adequate Operating Performance - Revenue Risk
(Volume): Weaker
The energy yield forecast produced by third-party experts indicates
an overall P50/one-year P90 spread of 18%, leading to a 'Weaker'
assessment for volume risk. The portfolio has a capacity-weighted
average record of five years as all assets have been operating for
more than five years, except the recently commissioned 300MW wind
project. Actual load factors recorded by the portfolio in the last
few years were moderately volatile. Hence, Fitch applies a lower
haircut of 7% on the volume forecast in its base and rating cases.
The curtailment risk is limited in India due to the "must-run"
status of renewable projects.
Fixed Long-Term Prices, Minimal Renewal Risk - Revenue Risk
(Price): Midrange
ReNew RG4 contracts 63% of its total capacity with state-owned
distribution companies and the balance with SECI under long-term
fixed-price power-purchase agreements (PPAs), which protect the
portfolio from merchant-price volatility. These PPAs have a
capacity-weighted residual life of about 20 years.
The only contract with a shorter fixed-price tenor of 13 years,
with a remaining life of three years, is a 28MW wind project signed
with Maharashtra's state-owned distribution company. However, Fitch
expects management to recontract the asset, as it will have a
residual asset life of about 12 years at the end of the PPA. Fitch
constrains the price risk assessment at 'Midrange' in light of the
low but certain merchant-price exposure due to this asset.
Foreign-Currency Exposure, Manageable Refinancing Risk - Debt
Structure: Weaker
Management has hedged the principal payment of the US dollar bonds
using options, lowering the all-in cost to about 6.5% but leaving
exposure to rupee depreciation until the contracted strike price,
resulting in its 'Weaker' debt structure assessment. Its rating
case conservatively assumes a flat rupee for the next few years
with gradual depreciation thereafter. A weaker rupee would damage
the underlying credit profile, although the bond's credit rating
will continue to benefit from the parent's guarantee. The hedging
is done till mid-2024 with a mid-term rollover planned for bonds
that may still be outstanding.
Noteholders are protected by ReNew RG4's ring-fenced structure and
covenants. It has a standard cash distribution waterfall and a
lock-up test at a backward-looking 1.3x interest-service coverage
ratio for cash outflow. The notes are fixed-rate. The restricted
group will not maintain a debt-service reserve or a major
maintenance reserve account, but this will be partly offset by the
excess cash it must retain in the last year of the notes' tenor.
Refinancing risk is mitigated by the guarantee and ReNew RG4's
access to banks and capital markets, with support from the PPAs,
which extend beyond the notes' maturity.
Financial Profile
Fitch's forecast assumes that the outstanding US dollar bond at
maturity will be refinanced by another debt that will amortise
across the remaining PPA terms or the projects' useful life,
whichever is longer.
Fitch does not rate the state-owned distribution companies that
purchase power from some projects of the restricted group. These
counterparties have weak credit profiles and histories of payment
delays, but exposure to multiple counterparties mitigates risk. All
assets in the restricted group also recorded better collections in
FY23, supported by various reform measures from the central
government.
Fitch still believes it is prudent for such projects to meet a
higher threshold to achieve the same rating as other projects with
strong counterparties, all else being equal. Hence, Fitch bases the
credit assessment of the notes on the indicative debt-service
coverage ratio (DSCR) thresholds applicable to merchant projects
for the share of exposure to state-owned distribution companies,
instead of the ones for fully contracted projects, while cash flow
is evaluated based on the contracted prices. SECI's credit quality
does not constrain the rating, as Fitch views revenue exposure to
SECI as a systematic sector risk.
Fitch's base case assumes P50 generation, a 7% production haircut
and an 11% refinancing interest rate, which results in an average
annual DSCR of 2.78x, 1.53x and 1.16x over the bond life, portfolio
life and refinancing period, respectively. Fitch's rating case
assumes one-year P90 generation and a 7% production haircut. Fitch
also applies a 15% stress on management's operating expense
forecast and an 11% refinancing interest rate. Its rating case
results in an average annual DSCR of 2.26x, 1.15x and 0.85x over
the bond life, portfolio life and refinancing period,
respectively.
The restricted group will benefit from the parent's access to
funding for refinancing its US dollar bond, supported by a
full-tenor unconditional guarantee from ReNew Power.
PEER GROUP
ReNew RG4's closest peer is India Green Energy Holdings (IGEH, US
dollar notes: BB-/Stable). The credit assessment of both restricted
groups is driven by that of their parent, ReNew Power.
IGEH has higher contribution from solar capacity at around 33%.
However, its counterparty mix is slightly weaker with 77% of its
capacity exposed to weak state-owned distribution companies and the
balance signed with commercial and industrial customers, against
37% of ReNew RG4's capacity that is contracted with SECI. IGEH is
also an orphan SPV issuance. ReNew RG4's financial profile benefits
from the benign interest-rate environment, while IGEH's financial
profile gets a significant uplift from committed interest income
from the parent on inter-company loans extended by the restricted
group.
IGEH's rating on the notes is capped by ReNew Power's credit
assessment. ReNew Power will repay the initial parent guarantor
loan before the US dollar bond matures, which IGEH will use to
partially redeem the US dollar bond while refinancing the
outstanding amount. IGEH will not be able to fully amortise its
refinanced debt over the refinancing period if ReNew Power does not
repay the initial parent guarantor loan under Fitch's rating case.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of the parent guarantor
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade of the parent guarantor
TRANSACTION SUMMARY
The US dollar bonds are co-issued by 10 operating entities that are
owned by ReNew Power. The due and punctual payment of all amounts
payable by each co-issuer under the US dollar notes is fully and
unconditionally guaranteed on a senior basis by each of the other
co-issuers, and fully guaranteed on a senior basis by ReNew Power.
The co-issuers used the proceeds mostly to repay their
then-existing indebtedness.
The notes are issued under External Commercial Borrowings
guidelines by the central bank of India. This is a cleaner,
single-tier route that was also implemented by Adani Green's two
rated restricted groups earlier.
CREDIT UPDATE
ReNew RG4's electricity generation improved marginally yoy in the
financial year ended March 2023 (FY23). The significant uptick in
FY22 versus FY21 was supported by a combination of a full year of
operations of the 300MW SECI 3 asset and a general increase in wind
resources.
The 60MW Sattegiri project faced O&M issues in FY21 and FY22, as
two wind turbine generators were affected by lightning damage to
the blades. However, the wind turbines were rectified and power
generation improved significantly in FY23. The 100MW Nimbagallu
project's generation also improved as it faced less curtailment
from Andhra Pradesh's state utility. Fitch expects the asset's
off-take and cash collections to recover further in light of a
judiciary order against the state utility's attempt to renegotiate
power tariffs and the utility's participation in the central
government's reform measures.
The portfolio's receivable position improved by end-FY23 from
end-FY22. The receivable position improved across all of the assets
following the late payment surcharge scheme implemented by India's
central government, along with various other reform measures.
SECURITY
The US dollar bonds issued by each co-issuer benefit from a
standard security package, including a charge over certain immobile
and movable assets of the co-issuer, and a share pledge over a 51%
stake in the operating entity.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The rating on ReNew RG4's bonds is directly linked to the credit
quality of its parent, ReNew Power. A change in Fitch's assessment
of the credit quality of the parent would automatically result in a
change in the rating on the bond.
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.
Entity/Debt Rating Prior
----------- ------ -----
ReNew Power
Restricted
Group 4
ReNew Power
Restricted
Group 4/
secured/1 LT LT BB- Affirmed BB-
S.S. INFRAZONE: CRISIL Hikes Rating on INR1cr Cash Loan to B+
-------------------------------------------------------------
CRISIL Ratings has upgraded its ratings on the bank facilities of
S.S. Infrazone Private Limited to 'CRISIL B+/Stable' from 'CRISIL
B/Stable'. The short-term rating has been reaffirmed at 'CRISIL
A4'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 25 CRISIL A4 (Reaffirmed)
Cash Credit 1 CRISIL B+/Stable (Upgraded
from 'CRISIL B/Stable')
The upgrade in the long-term rating reflects the improvement in the
debtor position of SSIPL. Debtors over 6 months has reduced to 34%
of total debtors as on March 31, 2023 as compared to 64% as on
March 31, 2022. The realisation of debtors has led to improvement
in its liquidity position with bank limits of INR 4 crore utilised
at 40.7% in the 6 months ending March 2023.
The business risk profile of the company has also seen an
improvement with operating income estimated to have grown to INR
56.0 crore in fiscal 2023 as compared to INR 46.8 crore in fiscal
2022. Though operating margins are estimated to have moderated to
15.2% in fiscal 2023 as compared to 19.7% in fiscal 2022, cash
accruals are estimated to have increased to ~Rs. 7.2 crore in
fiscal 2023 as compared to INR 5.7 crore in fiscal 2022.
The rating reflects SIPL's vulnerability to tender based operations
and its working capital intensive operations. These weaknesses,
however, are partially offset by the extensive experience of its
promoters, and its above average financial risk profile.
Key Rating Drivers & Detailed Description
Weaknesses:
* Susceptibility to tender-based operations: Revenue and
profitability entirely depend on the ability to win tenders. Also,
entities in this segment face intense competition, thus requiring
bidding aggressively to get contracts, which may restrict the
operating margin to a moderate level. Also, given the cyclicality
inherent in the construction industry, the ability to maintain
profitability margin through operating efficiency becomes critical.
This has resulted in fluctuating operating income in the past,
which was INR 56 crore in fiscal 2023 compared to INR 153.4 crore
in fiscal 2019. The company's orderbook also has customer
concentration with its top 3 orders constituting 97% of total
orderbook as on March 31, 2023. Diversification in its orderbook
will be a key monitorable.
* Working capital intensive operations: Gross current assets were
at 221-303 days over the three fiscals ended March 31, 2022. Its
intensive working capital management is reflected in its gross
current assets (GCA) of 303 days as on March 31, 2022 driven by
debtors of 106 days. However, CRISIL Ratings notes that its
receivables position has improved as on March 31, 2023 with debtors
over 6 months reducing to 34% of total debtors as compared to 64%
of debtors as on March 31, 2022 resulting in debtors of 86 days as
on March 31, 2023. Sustenance of the same will be a key
monitorable.
Strengths:
* Extensive industry experience of the promoters: SIPL's moderate
scale provides it an operating flexibility in an intensely
competitive industry. Further, it also benefits from the promoters'
experience of over a decade, their strong understanding of market
dynamics, and healthy relations with customers and suppliers and
will continue to support the business.
* Above average financial risk profile: SIPL has an above average
financial risk profile with comfortable gearing and TOL/TNW of 0.06
time and 0.98 time respectively as on March 31, 2022. Gearing and
TOL/TNW are expected to have improved further as on March 31, 2023.
As a result of healthy operating margins, its debt protection
metrics have been at a comfortable level. The interest coverage and
net cash accrual to total debt (NCATD) ratio were 5.1 times and 2.8
times respectively in fiscal 2022 and are estimated at comfortable
levels in fiscal 2023.
Liquidity: Stretched
Bank limits of INR 4 crore had 69.5% utilisation in past 12 months
ending March 31, 2023. Bank limits have seen full utilisation in
some months, however, CRISIL Ratings notes that it has seen
improvements over the past 6 months ending March 31, 2023. Cash
accruals are expected to be over INR7 crore against debt repayments
of INR 0.2 crore in the medium term. Current ratio is healthy at
1.33 times on March 31, 2022 and expected over 1 time as on March
31, 2023.
Outlook: Stable
CRISIL Ratings believe SIPL will continue to benefit from the
extensive experience of its management, and established
relationships with clients.
Rating Sensitivity factors
Upward factors:
* Further reduction in debtors over 6 months leading to sustained
improvement in working capital cycle and liquidity profile
* Sustenance of operating margins and scale over INR 55 crore
leading to higher cash accruals
Downward factors:
Decline in scale of operations or operating margins leading to
accruals of below INR 3 crore.
Significant debt funded capex or stretch in receivables impacting
the liquidity profile.
Incorporated in 2012 and based in Lucknow, SSIPL is engaged in
civil construction work, mainly for roads and irrigation projects.
Ms Sangeeta Singh and Mr SP Singh are the promoters of the company.
Operations are managed by Mr SP Singh.
SAFFRON NONWOVEN: Voluntary liquidation Process Case Summary
------------------------------------------------------------
Debtor: Saffron Nonwoven Private Limited
Plot No. 17, Sopan Kesar, IndustrialHub, NH-8A,
Nr. Railway Crossing, Vill. Moraiya,
Tal. Sanand Moraiya GJ 382110 India
Liquidation Commencement Date: May 1, 2023
Court: National Company Law Tribunal Ahmedabad Bench
Liquidator: Mr. Pinakin Surendra Shah
A/201 Siddhi Vinayak Towers,
B/H BMW Showroom, Next to Kataria House,
Off S.G Highway, Makaraba, Ahmedabad-380051, Gujarat
Email: pinakincs@gmail.com
Last date for
submission of claims: May 31, 2023
SAMSON AND SONS: Liquidation Process Case Summary
-------------------------------------------------
Debtor: Samson and Son Builders and Developers Private Limited
TC 3/678, Muttada Trivandrum KL 695025 India
Liquidation Commencement Date: April 26, 2023
Court: National Company Law Tribunal Kochi Bench
Liquidator: K Parameswaran Nair
37/17 36E, Kripasagaram, K Murali Road,
Kadavanthra, Kochi-682020
Email: cakpnair@gmail.com
Mobile No: +91 9567875348
Last date for
submission of claims: May 26, 2023
SPS EDUCATIONAL: CRISIL Hikes Rating on INR25.0cr Loans to B
------------------------------------------------------------
CRISIL Ratings has upgraded its rating on the bank facilities of
SPS Educational Trust (Regd.) (SPS) to 'CRISIL B/Stable' from
'CRISIL D'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 0.3 CRISIL B/Stable (Upgraded
from 'CRISIL D')
Term Loan 24.7 CRISIL B/Stable (Upgraded
from 'CRISIL D')
The upgrade is driven by timely servicing of debt, leading to
improvement in the financial risk profile.
The rating reflects vulnerability to regulatory risks in the
education sector, modest scale of operations and leveraged capital
structure. These weaknesses are partially offset by the extensive
experience of the trustees in the education sector and sound
operating efficiencies.
Key Rating Drivers & Detailed Description
Weaknesses:
* Vulnerability to regulatory risks: Establishment and operations
of educational institutions are regulated by various government and
quasi-government agencies, such as All India Council for Technical
Education, Central Board of Secondary Education (CBSE),
universities and state governments. Each agency has detailed
procedures for granting permission to set up institutions, and
approvals need to be renewed every 3-5 years. Non-compliance may
result in cancellation of affiliation and license, leading to loss
of reputation and revenue.
* Modest scale of operations: Intense competition constrains
scalability and operating flexibility, as indicated by estimated
revenue of INR16 crore in fiscal 2023 and INR 12.5 crore in fiscal
2022.
Below average financial profile: The financial risk profile is
constrained by high gearing and weak debt protection metrics.
Networth and total outside liabilities to tangible networth ratio
are estimated at INR13.73 crore and 2.68 times, respectively, as on
March 31, 2023. Debt protection metrics were modest with interest
coverage and net cash accrual to adjusted debt ratio of 1.47 times
and 0.06 time respectively in fiscal 2023. Going forward, debt
protection metrics are expected at a similar level.
Strengths:
* Extensive industry experience of the trustees: The trustees have
experience of over 30 years in the education sector. This has given
them an understanding of market dynamics and helped to establish
strong market position in Palwal, Haryana. This has enabled the
trust to improve operating income which increased to INR 16 crore
in fiscal 2023 as compared to INR 12.5 crore in fiscal 2022.
* Sound operating efficiencies: SPS has healthy operating
efficiencies, marked by healthy operating margins which have ranged
between 42.4% to 46.5% in the 3 years ending fiscal 2023. Operating
margins stood at 46.5% in fiscal 2023 and are expected to continue
at healthy levels going forward.
Liquidity: Stretched
Cash accrual, expected above INR3 crore per annum going forward,
will just about cover yearly debt obligations over the medium term.
The trust does not have fund-based limits. Unsecured loan of INR2.4
crore as on March 31, 2023, from the trustees supports liquidity.
Current ratio stood at 2.01 times as on March 31, 2023.
Outlook: Stable
CRISIL Ratings believes that SPS will continue to benefit from the
expensive experience of the trustees.
Rating Sensitivity Factors
Upward Factors:
* Improvement in scale of operations with sustained operating
margins leading to higher cash accruals
* Improvement in interest coverage to over 1.8 times
Downward Factors:
* Large debt funded capex resulting in deterioration of financial
risk profile and/or liquidity profile
* Deterioration in scale of operations or profitability leading to
lower cash accruals below INR 1.5 crore
Set up in 2010 by Mr Suresh Chand Bhardwaj and his family members,
SPS manages a senior secondary school, SPS International, in
Palwal. The school is affiliated to CBSE and offers education from
nursery to standard 12.
TIRUPATI RUSHIVAN: CRISIL Assigns B+ Rating to INR10cr Cash Loan
----------------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
bank facilities of Tirupati Rushivan (TR).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Assigned)
Proposed Fund-
Based Bank Limits 1.05 CRISIL B+/Stable (Assigned)
Term Loan 6.95 CRISIL B+/Stable (Assigned)
The rating reflects TR's geographical concentration, weak financial
profile and extensive exposure to group companies. These weaknesses
are partially offset by its strong track record of operations and
extensive industry experience of the promoters.
Analytical Approach
CRISIL Ratings has considered standalone financials of TR to derive
the bank loan ratings. Unsecured loans have been considered as
debt.
Key Rating Drivers & Detailed Description
Weaknesses:
* Geographical concentration: Its operations are based in Gujarat
in around Derol, exposing the firm to geographical concentration
risk. Any location specific demand constraint or change in the
competitive landscape will affect its business risk profile.
* Extensive exposure to group companies: TR has invested INR 3.21
crore in its group companies in the form of equity , loans and
advances as on March 31, 2023, which is near to 50% of its current
net worth. CRISIL Ratings believes that any further exposure in the
group companies, impinging its own cash accrual may impact
liquidity and will remain a rating sensitivity factor.
* Moderate financial profile: TR has average financial profile
marked by gearing of 2.85 and total outside liabilities to adj
tangible net worth (TOL/ANW) of 2.92 for year ending on 31st March
2023. TR's debt protection measures have also been at weak level in
past due to high gearing and low accruals from the operations. The
interest coverage and net cash accrual to total debt (NCATD) ratio
are at 3.48 times and 0.20 times for fiscal 2023 .TR debt
protection measures are expected to remain at similar level with
moderate debt levels
Strengths:
* Strong track record of operations: The promoters Mr. Patel
Jitendrakumar Ishvarlal, Patel Rushikesh Ganeshbhai, Patel
Gopalbhai Madavlal, Patel Babulal Ishvarlal and Patel Jaswantbhai
have an experience of over a decade in operating waterpark and
adventure park. The park has healthy footfall, with 400-500
visitors each day. The company is expecting the turnover to
increase further in the coming fiscal years.
Liquidity: Stretched
Bank limit utilization is moderate at around 76 percent for the
past twelve months ended March-23.
mjCash accrual are expected to be over INR4-5 crores which are
sufficient against term debt obligation of INR96 lakhs over the
medium term. In addition, USL will be act as cushion to the
liquidity of the company. Current ratio is estimated at 1.07 times
on March31, 2023.
TR have invested INR3.2 crore in its group companies in the form
of equity , loans and advances as on March 31, 2023 , which is
around 50 percent of its current net worth. CRISIL Ratings believes
that any further exposure in the group companies, impinging its own
cash accrual may impact liquidity and will remain a rating
sensitivity factor
Outlook: Stable
CRISIL Ratings believe TR will continue to benefit from the
extensive experience of its promoter, and established relationships
with clients.
Rating Sensitivity factors
Upward factors:
* Sustained improvement in margins to 30% and scale, leading to
higher cash accruals.
* Improvement in the financial risk profile
Downward factors:
* Decline in scale of operations leading to fall in revenue by 20
percent and profitability margin below 40 %, hence leading to net
cash accrual lower than INR3 crore.
* Large debt-funded capital expenditure weakens capital structure
TR was established in 2009 . TR operates amusement and water parks
in Derol, Gujarat with the capacity of 17,000 people per day. It
also operates a hotel named Meera with a capacity of 24 rooms. It
consists of other facilities like lockers, food stalls, etc. TR is
a part of Tirupati Group which is engaged in various industries
like civil construction, real estate etc.
TR is owned & managed by Patel Jitendrakumar Ishvarlal, Patel
Rushikesh Ganeshbhai, Patel Gopalbhai Madavlal, Patel Babulal
Ishvarlal and Patel Jaswantbhai.
=================
I N D O N E S I A
=================
ALAM SUTERA: Fitch Affirms IDR at 'B-', Outlook Stable
------------------------------------------------------
Fitch Ratings has affirmed Indonesia-based homebuilder PT Alam
Sutera Realty Tbk's (ASRI) Issuer Default Rating (IDR) at 'B-'. The
Outlook is Stable.
The affirmation reflects Fitch's expectation that ASRI's annual
presales, excluding bulk land sales to developers, will recover to
about IDR2.3 trillion. Fitch expects the company to launch more
projects in 2H23 amid limited visibility on bulk land sales to
developers compared with last year. However, the rating is
constrained by ASRI's reliance on successful asset sales or
external financing to repay its November 2025 bond upon maturity.
The Stable Outlook reflects Fitch's expectation that ASRI will have
sufficient liquidity to repay its debt obligations and fund its
forecast of negative free cash flow (FCF) in the next 12-18 months
given its cash balance of IDR1.4 trillion at 31 March 2023.
Fitch has also affirmed the senior unsecured debt class rating at
'B-' with a Recovery Rating of 'RR4' and withdrawn the rating as it
is no longer considered by Fitch to be relevant to the agency's
coverage because the company has repaid its unsecured bonds.
KEY RATING DRIVERS
Presales to Improve: Fitch forecasts presales, excluding bulk land
sales to developers, to improve to IDR2.3 trillion in 2023 from
IDR1.7 trillion in 2022. ASRI sold IDR1.5 trillion of land to
developers in 2022, but Fitch does not factor in similar sales this
year due to their limited visibility. The bulk land sales were
driven by investor demand for residential developments in Suvarna
Sutera, and, to a lesser extent, retail space in Alam Sutera, and
underlines the long-term appeal of ASRI's key townships, in its
view.
ASRI plans to launch most of its new projects in 2H23, following
what Fitch believes to be a muted 1H23, when most of the presales
will stem from existing projects. The new launches include
residential clusters in both Alam Sutera and Suvarna Sutera. Fitch
expects large domestic banks to remain supportive of consumer home
loans, with interest rates largely steady since January 2022
despite significant hikes in benchmark interest rates. More than
50% of ASRI's presales were funded by bank mortgages, with 25% by
in-house instalment products and the balance from cash.
Normalising Product Mix: Fitch expects ASRI's presales mix in 2023
to normalise, with 70% from mainly landed homes with some land
lots, 19% from commercial land plots and shophouses, and high-rise
apartments making up the balance. This is in contrast to the
temporary shift in 2022 with 48% of presales from bulk land sales,
38% from landed homes, 5% from commercial sales and the remainder
from apartments.
Alleviated Refinancing Risk: ASRI's tender offer in November 2022
to repurchase the USD171 million secured notes due May 2024 has
alleviated near-term refinancing risk. The buyback was financed
mostly through a non-revolving eight-year syndicated credit
facility from local banks with the rest by internal cash, which
improved ASRI's debt maturity profile. ASRI's next significant debt
maturity is a USD251 million secured bond due in November 2025.
Fitch expects the company to have to rely on external financing to
repay the bond as its internal cashflows will not be sufficient.
FCF to Weaken: Fitch expects ASRI's FCF to weaken to negative
IDR241 billion in 2023 and negative IDR179 billion in 2024 in the
absence of bulk land sales, which have high profit margins, as well
as due to rising construction costs. Its FCF estimates include
IDR350 billion and IDR250 billion of land banking, respectively, in
2023 and 2024. ASRI reported strong FCF of IDR1.4 trillion in 2022
following large land-sales, and FCF of IDR871 billion in 2021 as
cashflows recovered from the pandemic.
Exposure to Unhedged USD Debt: ASRI is exposed to foreign-currency
risks, which could affect its FFO interest coverage, which Fitch
forecasts at 1.2x in 2023 and 2024. The developer has not hedged
around USD131 million (or around IDR2 trillion) of its USD251
million secured bond due in November 2025. ASRI uses call
spread-options to hedge the remaining USD120 million, with spreads
in the range of IDR14,250-IDR16,500 per US dollar. A significant
deterioration in the domestic exchange rate could see ASRI's
interest coverage fall below 1.0x.
Execution Risk on Asset Sales: Fitch has not factored in sales of
ASRI's pledged assets in its rating case. The sale of its office
tower in Jakarta, The Tower, remains challenging, with only 15% of
the strata units sold since its launch in 2013. ASRI secured
long-term leases for about 60% of the remaining space with a local
bank in 2022. Fitch believes disposal of the remaining space will
remain difficult due to the oversupply of office space in and
around the asset's catchment area, as well as existing strata sales
to external parties, as potential investors may be more keen to buy
the entire asset.
DERIVATION SUMMARY
ASRI's 'B-' IDR compares well with the company's two closest peers,
PT Lippo Karawaci TBK (LPKR, B-/Stable) and PT Kawasan Industri
Jababeka Tbk (KIJA, CCC+).
LPKR's presales of IDR3.4 trillion are slightly higher than ASRI's
IDR3.2 trillion, but the companies are rated the same level due to
ASRI's stronger cash flows, stemming mainly from its higher EBITDA
margins and lower debt. ASRI has a track record of neutral to
positive FCF, particularly in periods where it successfully
executes bulk land sales. LPKR's FCF, while improving, remain weak
and Fitch estimates FCF to remain negative in the next 12-18
months.
Fitch expects LPKR's liquidity to improve with improving FCF, such
that its cash balance of IDR1.3 trillion will be sufficient to
cover ongoing obligations, and its next material debt maturity is
in February 2025. ASRI has adequate cash on hand of IDR1.4
trillion, which is more than sufficient to cover its forecast of
negative to neutral FCF and repay amortising bank loans, while the
next significant debt maturity is its secured bond due in November
2025.
KIJA has a business profile similar to that of ASRI. KIJA's smaller
presales, which are mostly from cyclical industrial land sales, are
offset by more stable cashflows from its non-development sources,
including its power plant. Meanwhile, ASRI's residential products
exhibit more stable demand, given its established townships and
price-point and product diversity, and this supports its larger
consolidated presales of IDR3.2 trillion.
KIJA restructured its US dollar notes in 2022, which Fitch
considered to be a distressed debt exchange. The company's 'CCC+'
rating reflects KIJA's improved liquidity following the exchange,
but also the company's still untested ability to access material
external financing after the restructuring.
KEY ASSUMPTIONS
Key Assumptions Within Its Rating Case for the Issuer:
- Presales of IDR2.3 trillion and IDR2.4 trillion in 2023 and 2024,
respectively;
- No bulk land sales to developers in its rating horizon;
- EBITDA margin of around 40% for 2023-2025;
- Land banking cash outflow of IDR350 billion in 2023 and IDR250
billion a year from 2024-2025;
- FCF to remain negative but on an improving trend over 2023-2025
Key Recovery Rating Assumptions:
- Fitch assumes ASRI will be liquidated in a bankruptcy than
continue as a going concern as it is an asset-trading company.;
- 75% advance rate against the value of accounts receivable and a
50% advance rate against inventory, investment properties and other
property plant and equipment, in line with peers;
- The reported land bank value, which is based on historical land
costs, is at a significant discount to current market value and
thus the book value is already a conservative estimate. Based on
1Q23 financials, the average book value of land was around
IDR564,644/sqm, significantly lower than the residential land lot
price at Serpong of around ID17.4 million/sqm and around IDR5.9
million/sqm at Pasar Kemis;
- Deducted 10% of the resulting liquidation value for
administrative claims.
The resulting recovery corresponds to a Recovery Rating of 'RR1'
for ASRI. However, the Recovery Rating is capped at 'RR4' because,
under Fitch's Country-Specific Treatment of Recovery Ratings
Criteria, Indonesia falls into Group D of creditor friendliness.
Instrument ratings of issuers with assets in this group are subject
to a soft cap at the issuer's IDR and a Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch does not foresee positive rating action until ASRI is able
to demonstrate its ability to repay or refinance the 2025 bonds.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Presales (excluding bulk land sales to developers) sustained
below IDR2 trillion
- A significant weakening in liquidity.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: ASRI had IDR1.4 trillion of cash as of
end-March 2023, which Fitch believes is sufficient to cover
repayments of the company's amortising term loans in 2023 and 2024
amounting to IDR367 billion and IDR651 billion, respectively, and
fund negative FCF. Fitch expects ASRI to need to rely on external
financing to repay its secured cross-border notes maturing in
November 2025 as Fitch does not expect the company's internal
cashflows to be sufficient.
ISSUER PROFILE
ASRI is a medium-sized Indonesian homebuilder that develops and
manages two townships, Alam Sutera and Suvarna Sutera. Presales are
fairly evenly split between the two townships, while products are
skewed towards the residential segment, which accounts for around
75% of presales (excluding bulk land sales to developers), with
commercial (shophouses and office tower units) making up the
balance.
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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
PT Alam Sutera
Realty Tbk LT IDR B- Affirmed B-
senior
unsecured LT B- Affirmed RR4 B-
senior
unsecured LT WD Withdrawn RR4 B-
SAKA ENERGI: Fitch Corrects April 5 Ratings Release
---------------------------------------------------
This is a correction of a release published on 5 April 2023. It
includes the recovery rating assumptions, which were omitted from
the original release.
Fitch Ratings has revised PT Saka Energi Indonesia's Outlook to
Stable from Negative and affirmed the Long-Term Issuer Default
Rating at 'B+'. The agency has also affirmed Saka's senior
unsecured US dollar bonds at 'B+' with a Recovery Rating of 'RR4'.
The Outlook revision reflects Saka's improved business profile as
its reserves increased in 2022 beyond its previous expectations.
Saka's proved reserve life rose to 6.2 years by end-2022 from 4.8
years in 2021. Fitch believes the risks of a decline in Saka's
operating profile in the near-to-medium term has been reduced with
the adequate reserves. Fitch expects parent PT Perusahaan Gas
Negara Tbk (PGN, BBB-/Stable) to help Saka repay or refinance its
US dollar notes due 2024.
Saka's ratings benefit from a two-notch uplift from its Standalone
Credit Profile (SCP) of 'b-', based on its assessment of PGN's
'Medium' incentive to provide support, in line with its Parent and
Subsidiary Linkage Rating Criteria. The 'b-' SCP reflects the
constraints of the small size of its operations.
KEY RATING DRIVERS
Small Scale Despite Improvement: Saka's operating profile has
improved with higher proved reserves of 75.6 million barrels of oil
equivalent (mmboe) as of December 2022 (2021: 50.6mmboe) and proven
and probable reserves of 114mmboe (2021: 87.2mmboe). Saka added
37.2mmboe to its proved reserves against production of 12.2mmboe
during 2022 (2021 production: 10.6mmboe).
However, reserves and production are still at the lower end of 'B'
rated peers. Fitch estimates proved reserve life remained at 6.2
years at end-2022, based on production volume of 12.2mmboe in 2022.
Fitch expects production to range between 11mmboe and 13mmboe per
year over the next three years. In the absence of inorganic growth,
Saka is likely to face challenges in maintaining its reserve
profile on a sustained basis over the medium term.
Low Leverage: Fitch expects Saka's leverage, defined by net
debt/EBITDA, will improve to 0.5x in 2023, from an estimated 0.7x
in 2022 (2021: 2.7x), due to high oil prices and lower debt. Fitch
expects net leverage to remain low at 0.6x by 2024 even as Fitch
forecasts lower oil prices, as Saka's strong cash flows during 2022
and 2023 will help reduce debt materially. Fitch forecasts Saka's
net debt to decline to USD172 million by 2024 (2022: USD328
million; 2021: USD698 million).
Parental Support for Bond Repayment: Fitch expects Saka to require
PGN's support to repay its US dollar notes when they mature in
2024. Fitch estimates Saka's EBITDA will fall to USD330 million in
2023 (2022: USD456 million) based on its oil price assumptions.
Fitch forecasts Saka will need around USD100 million to repay its
US dollar notes in 2024, considering its capex plans. Fitch expects
PGN to support Saka's funding requirements although the exact
nature of the support is currently uncertain.
PGN has included Saka as a co-borrower in a debt facility for up to
USD50 million in 2023, reflecting its support commitment. Saka's
earnings derive some stability from its large share of earnings
from long-term fixed-price gas contracts. Fitch includes USD283
million in shareholder loans in Saka's debt.
'Medium' Legal, Operational Incentive: Fitch believes Saka is a
material subsidiary, as defined in the bond documentation of PGN's
USD950 million notes. A default by Saka would trigger a
cross-default provision in PGN's bonds, which mature after Saka's
USD376 million notes due 2024. However, Fitch believes PGN has only
'Medium' legal incentive to support Saka, as its bond documents are
vague in the definition of a material subsidiary, giving PGN some
discretion. PGN's control over Saka's board and management drive
its 'Medium' operational incentive assessment.
Saka Misalinged in Group Structure: PGN has explicitly expressed
its intention to provide liquidity support to Saka, but the
subsidiary's position in PGN's structure remains uncertain after a
restructuring of state-owned oil and gas companies that transferred
the state's 57% ownership of PGN to PT Pertamina (Persero)
(BBB/Stable). There has been no clarity from PGN or Pertamina on
Saka's position to date, resulting in its 'Weak' assessment of the
strategic support incentive.
DERIVATION SUMMARY
Saka's 'b-' SCP is comparable with that of other small independent
rated oil and gas companies 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
due to the inherent operational risks from their small scale and
the low diversification of their oil and gas production profiles.
Saka's low production of 33 million of barrels of oil equivalent
per day (mboepd) is similar to that of 'B' rated peers. Fitch
expects Saka's production to average around 33mboepd, which is on a
par with GTE's forecast production of 32mboepd and lower than
Frontera's production of 42mboepd. GTE and Frontera have proved
reserve lives of 6.8 years and 8.6 years, respectively, higher than
Saka's 6.2 years. Saka is likely to face greater challenges in
maintaining its reserve profile on a sustained basis, which
explains the difference in their standalone assessments.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Oil (Brent) price of USD85/barrel (bbl) in 2023, USD75/bbl in
2024, USD65/bbl in 2025 and USD53/bbl thereafter in line with
Fitch's oil and gas price assumptions.
- Natural gas sales prices based on contracted Indonesian
production prices for the next three years; Henry hub price of
USD3.5/thousand cubic feet (mcf) in 2023 and 2024, USD3.0/mcf in
2025 and USD2.75/mcf thereafter.
- Oil and gas production of 31mboepd in 2023, 33mboepd in 2024,
37mboepd in 2025 and 40mboepd in 2026 (2021: 29mboepd, 2022
estimate: 33mboepd)
- Capex of around USD150 million in 2023, USD250 million in 2024,
USD165 million in 2025 and USD220 million in 2026 (2021: USD106
million, 2022 estimate: USD67 million)
Recovery Rating Assumptions:
- Saka would be reorganised as a going-concern in bankruptcy rather
than liquidated;
- A 10% administrative claim.
Going-Concern Approach
The going-concern EBITDA estimate is based on the average EBITDA
Fitch expects over 2023 to 2025, stressed by 30% to reflect risks
associated with oil price volatility, and possible challenges in
maintaining production from operating fields, or other factors.
An enterprise value multiple of 3x is used to calculate
post-reorganisation valuation, where is at the lower end of the
band compared to an average 4.5x mid-cycle multiple for oil and gas
and metals and mining companies globally. The multiple used is less
than the lowest observable multiple of 4.5x, reflecting its small
production scale.
Fitch has assumed that the shareholder loans and the US dollar
notes rank pari passu, resulting in a recovery rate corresponding
to a 'RR4' Recovery Rating for the unsecured notes. Even if the
recovery rate is commensurate with a higher Recovery Rating, the
senior unsecured bonds would be rated at 'B+'/'RR4' because
Indonesia falls into Group D of creditor friendliness under its
Country-Specific Treatment of Recovery Ratings Criteria, and the
instrument ratings of issuers with assets in this group are subject
to a soft cap at the issuer's IDR and Recovery Rating of 'RR4'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Strengthening of linkages with PGN upon clarity of Saka's
position within the group structure;
- Sustained improvement in reserve life while maintaining
production levels.
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.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Support from Parent Required: Saka will require support
from PGN to repay its USD376 million in bonds due May 2024 and also
roll over shareholder loans of USD142 million due December 2024.
Saka has another shareholder loan of USD142 million due December
2025, which Fitch expects to be rolled over.
ISSUER PROFILE
Saka, a wholly owned subsidiary of PGN, engages in oil and gas
exploration and production and acts as PGN's upstream arm.
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.
Entity/Debt Rating Recovery
----------- ------ --------
PT Saka Energi
Indonesia LT IDR B+ Affirmed
senior
unsecured LT B+ Affirmed RR4
===============
M A L A Y S I A
===============
PROPEL GROUP: Exits from PN17 Status
------------------------------------
New Straits Times reports that Propel Group Bhd was uplifted from
the PN17 classification of the listing requirements effective from
May 31.
According to the report, Propel Global received a letter dated May
30 from Bursa Malaysia granting it a modification of compliance
based on the net profit for the three-month financial period ended
Dec. 32 2022 and three-month ended March 31 2023, following the
completion of its regularisation plan on Oct. 7 last year.
"Bursa also noted that Propel Global no longer triggers any of the
criteria under Paragraph 2.1 of PN17 of the listing requirements as
the group has regularised its financial condition and level of
operations," NST quotes Angeline Lee, the group chief executive
officer, as saying.
"This is indeed good news. We have worked really hard to be
uplifted from the PN17 status. Our financial performance speaks for
itself as we have seen three straight quarters of profitability,"
she added.
Propel Global applied for the uplifting of the PN17 status on Feb.
23, the report notes.
Propel Group Bhd (formerly known as Daya Materials Berhad) engages
in investment holding and providing management services to its
subsidiaries. The Company's segments include polymer, oil and gas,
technical services and others. The polymer segment manufactures
materials for the power cables and wires industry, and trades other
related polymer compounds and specialty chemical products.
Propel Group Bhd fell into Practice Note 17 (PN17) status in
February 2018 after its shareholder equity retreated to under 25%
of its issued capital as at Dec. 31, 2017.
=====================
N E W Z E A L A N D
=====================
AMAZING SPACES: Creditors' Proofs of Debt Due on June 27
--------------------------------------------------------
Creditors of Amazing Spaces NZ Limited and LKN Group Limited are
required to file their proofs of debt by June 27, 2023, to be
included in the company's dividend distribution.
The company commenced wind-up proceedings on May 29, 2023.
The company's liquidators are:
Steven Khov
Kieran Jones
Khov Jones Limited
PO Box 302261
North Harbour
Auckland 0751
HISPEC HOMES: Court to Hear Wind-Up Petition on July 6
------------------------------------------------------
A petition to wind up the operations of Hispec Homes NZ Limited
will be heard before the High Court at Christchurch on July 6,
2023, at 10:00 a.m.
D Stringer Interior Limited filed the petition against the company
on May 10, 2023.
The Petitioner's solicitor is:
Holly Maree Cassin
Cavell Leitch Limited
BNZ Centre
Level 3, 111 Cashel Mall
Christchurch 8011
LANGSVIEW HOLDINGS: Creditors' Proofs of Debt Due on July 24
------------------------------------------------------------
Creditors of Langsview Holdings Limited are required to file their
proofs of debt by July 24, 2023, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on May 22, 2023.
The company's liquidators are:
Christopher Carey McCullagh
Stephen Mark Lawrence
C/- PKF Corporate Recovery & Insolvency (Auckland)
PO Box 3678
Auckland 1140
MARUIA ENTERPRISES: Court to Hear Wind-Up Petition on June 22
-------------------------------------------------------------
A petition to wind up the operations of Maruia Enterprises Limited
will be heard before the High Court at Christchurch on June 22,
2023, at 10:00 a.m.
The Commissioner of Inland Revenue filed the petition against the
company on April 5, 2023.
The Petitioner's solicitor is:
Nanette Cunningham
Inland Revenue, Legal Services
PO Box 1782
Christchurch 8140
SUREPLAN NEW ZEALAND: Creditors' Proofs of Debt Due on June 30
--------------------------------------------------------------
Creditors of Sureplan New Zealand Limited are required to file
their proofs of debt by June 30, 2023, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on May 29, 2023.
The company's liquidator is:
R. Mason-Thomas
Meltzer Mason, Chartered Accountants
PO Box 6302
Victoria Street West
Auckland 1141
=================
S I N G A P O R E
=================
AVITRA AVIATION: Members' Final Meeting Set for July 4
------------------------------------------------------
Members of Avitra Aviation Services Pte Ltd will hold their final
general meeting on July 4, 2023, at 10:00 a.m., at 190 Middle Road,
#16-01 Fortune Centre, in Singapore.
At the meeting, Robert Yam Mow Lam, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
CAPITAL MATCH: Commences Wind-Up Proceedings
--------------------------------------------
Members of Capital Match Platform Pte Ltd, on May 26, 2023, passed
a resolution to voluntarily wind up the company's operations.
The company's liquidators are:
Saw Meng Tee
Ong Shyue Wen
1 North Bridge Road
#23-05, High Street Centre
Singapore 179094
G8 JAPAN: Members' Final Meeting Set for July 8
-----------------------------------------------
Members of G8 Japan GK Manager Pte. Limited will hold their final
general meeting on July 8, 2023, at 10:00 a.m., at 6 Shenton Way,
#33-00 OUE Downtown 2, in Singapore.
At the meeting, Lim Loo Khoon and Tan Wei Cheong, the company's
liquidators, will give a report on the company's wind-up
proceedings and property disposal.
HIBIKI RESTAURANT: Final Meeting Set for June 30
------------------------------------------------
Members and creditors of Hibiki Restaurant Group Pte Ltd will hold
their final meeting on June 30, 2023, at 11:00 a.m., via video
conference (via Zoom).
At the meeting, Seah Chee Wei, the company's liquidator, will give
a report on the company's wind-up proceedings and property
disposal.
ORCA DIVE: Court to Hear Wind-Up Petition on June 16
----------------------------------------------------
A petition to wind up the operations of Orca Dive Services Pte Ltd
will be heard before the High Court of Singapore on June 16, 2023,
at 10:00 a.m.
Nautical Marine & Engineering Pte Ltd filed the petition against
the company on May 10, 2023.
The Petitioner's solicitors are:
I.R.B. LAW LLP
229 Mountbatten Road
#01-08/09, Mountbatten Square
Singapore 398007
*********
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-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
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Copyright 2023. All rights reserved. ISSN: 1520-9482.
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