ICRA: Janatha Fish Meal And Oil Products: Ratings downgraded to [ICRA]BBB- (Stable)/[ICRA]A3

4 June 2020 Rationale: The ratings revision reflects the weakening financial profile of Janatha Fish Meal And Oil Products (JFM) characterised by decline in operating income (OI) in FY2020, coupled with low operating profits and increased debt levels also resulting in weak coverage indicators. The firm’s turnover decline in FY2020 was owing to the low production levels with unavailability of raw fish, coupled with reduction in the realisation rates. ICRA notes that the business continues to remain vulnerable to changes in the climatic conditions that may affect the material availability, impacting the firm’s revenues.

The ratings continue to be constrained by the limited pricing flexibility owing to its presence in a fragmented and competitive industry coupled with commoditized nature of the product. JFM is also exposed to the foreign currency fluctuation risk as it derives about 20% of its revenues from exports. However, the firm benefits from the natural hedge to the extent of its imports. JFM is also exposed to the inherent risks associated with the partnership nature of the business including risk of capital withdrawal and limited ability to raise funds, among others.

The ratings, however, consider the long experience of the promoters in the fish meal and oil products business, the firm’s reputed client base and the proximity of the unit to India’s west coast thereby facilitating easy and timely procurement of raw materials. Going forward, ICRA will continue to evaluate the impact of COVID-19 induced lockdown on the firm’s operations. Although it is currently able to carry out its operations, any adverse developments impacting its supply chain can affects its operations.

Source: ICRA

LM: Moody’s downgrades SBI, HDFC Bank amid bleak outlook for Indian banks

2 June 2020: A day after downgrading the country’s sovereign rating to the lowest level, US-headquartered research and rating agency Moody’s Investor Service, on Tuesday, downgraded both the country’s largest private sector lender HDFC Bank Ltd and the state-owned State Bank of India, citing economic disruption caused by covid-19 outbreak, asset price declines creating severe credit shock across sectors and weakening borrowers’ credit profiles.

Seven other domestic banks saw either their rating or their outlook being negatively revised by Moody’s on Tuesday.

The rating agency announced a rating action on 11 banks. Apart from SBI and HDFC Bank, the nine other banks whose ratings faced an action by Moody’s include Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India (EXIM India), Indian Overseas Bank, IndusInd Bank Ltd., Punjab National Bank and Union Bank of India.

“The rapid and widening spread of the coronavirus outbreak, volatile oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The Indian banking sector has been affected given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles,” said Moody’s.

On Monday, India’s sovereign credit rating was cut by a notch to the lowest investment grade with negative outlook by Moody’s Investors Service, which cited growing risks that Asia’s third-largest economy will face a prolonged period of slower growth amid rising debt and persistent stress in parts of the financial system.

The country’s credit rating was downgraded to Baa3 from Baa2, according to a statement.

On Tuesday, Moody’s said disruptions from the coronavirus outbreak will worsen the economic slowdown in India that has been underway in the past year and will accelerate a deterioration in the banks’ asset quality and profitability.

The rating agency stated that the stimulus measures announced by the Indian government and the RBI will only help mitigate some of the credit pressures.

“The longer and broader the economic slowdown, the more these banks will face asset quality and profitability issues. At the same time, heightened liquidity stress at non-bank financial institutions will pose a risk to the stability of the broad financial system, given banks’ large direct exposures to these entities,” said Moody’s, adding that it expects the standalone credit profiles of most state-run banks to deteriorate.

Also, in the absence of external capital support from the Indian government, Moody’s expects the capitalization of the PSBs to deteriorate.

In Moody’s opinion, the state-run banks’ asset quality and profitability will also deteriorate due to rising loan delinquencies and defaults due to the coronavirus outbreak, which will result in an increase in credit costs.

However, most private sector banks have better loss absorbing capacity than their state-run peers because of stronger capitalization and loan loss reserves.

Moody’s has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI to Baa3 from Baa2. EXIM’s long-term issuer rating has been downgraded to Baa3 from Baa2.

Moody’s maintains the rating outlooks of the three banks as negative.

Moody’s said the downgrades of HDFC Bank and SBI echo the sovereign rating of India since the rating agency assumes that the two banks will receive government support in times of need.

HDFC Bank reported total assets of Rs.15.3 trillion at 31 March 2020, while State Bank of India had total assets of Rs. 37.5 trillion at 31 December 2019.

“HDFC Bank and SBI’s ratings are unlikely to be upgraded in the next 12-18 months. Nevertheless, the rating outlook could be changed to stable if India’s rating outlook is stabilized,” said Moody’s.

Alongside, Moody’s has placed the “Baa3″ long-term local and foreign currency deposit ratings of Bank of Baroda, BOI, Canara Bank and UBI and their baseline credit assessment rating of “Ba3″ under a review for downgrade.

The review for downgrade reflects Moody’s expectation that the forward-looking improvements to these three bank’s credit profiles will be more difficult in the current environment, said the rating agency.

Bank of Baroda, headquartered in Mumbai, reported total assets of Rs.10.9 trillion at 31 December 2019. Bank of India had total assets of Rs.6.3 trillion, Canara Bank had assets of Rs.7.2 trillion and Central Bank of India reported total assets of Rs.3.5 trillion at 31 December 2019. Mumbai-headquartered Union Bank of India had assets of Rs.5.3 trillion at 31 December 2019.

Private lender IndusInd Bank’s long-term local and foreign currency deposit ratings too have been downgraded to “Ba1″ from Baa3 and its baseline credit assessment rating to ba2 from ba1.

Moody’s has also put its rating outlook as negative for IndusInd Bank.

The bank’s downgrade incorporates the risks to bank’s asset quality and profitability, said Moody’s.

The rating outlook of Punjab National Bank too has been downwardly revised to stable from positive by Moody’s, while the state-run lender’s long-term local and foreign currency deposit ratings at Ba1 has been affirmed.

Only in the case of Central Bank of India and Indian Overseas Bank, the rating agency has affirmed their long-term local and foreign currency deposit ratings at Ba2, while maintaining their rating outlook as stable.

In the case of CBI and IOB, Moody’s expects the asset quality and profitability pressures due to the coronavirus outbreak will be largely mitigated by the improvements in the banks’ credit profile over the past year.

The rating agency has downgraded the counterparty risk rating and counterparty risk assessment of HDFC Bank, PNB, CBI and IOB.

Source: LiveMint

TOI: Moody’s downgrades India’s rating to ‘Baa3

1 June 2020: Moody’s Investors Service on Monday downgraded India’s sovereign rating to ‘Baa3’ from ‘Baa2’, saying there will be challenges in implementation of policies to mitigate risks of a sustained period of low growth and deteriorating fiscal position.

“Moody’s has today downgraded the government of India’s foreign currency and local-currency long-term issuer ratings to Baa3 from Baa2. It has also downgraded India’s local-currency senior unsecured rating to Baa3 from Baa2, and its short-term local-currency rating to P-3 from P-2. The outlook remains negative,” the agency said in a statement.

The negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy and financial system that could lead to a more severe and prolonged erosion in fiscal strength than Moody’s currently projects, it added.

“The decision to downgrade India’s ratings reflects Moody’s view that the country’s policy-making institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period of relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector,” the statement said.

 ‘Baa3’ is the lowest investment grade – just a notch above junk status.

Moody’s had in November 2017, after a gap of 13 years, upgraded India’s sovereign credit rating by a notch to Baa2 from Baa3.

Source: The Times of India

ICRA: Mantra Buildcrafts LLP: Moved to Non Cooperating category, Rating downgraded based on best available information

1 June 2020: The rating assigned to the Mantra Group entities remained constrained in the past due to high external debt, moderate cash flow cover and sizeable reliance on new sales. The rating downgrade factors in ICRA’s expectation of moderation in the credit risk profile of the Mantra Group due to Covid-19.

The impact of the outbreak of Covid-19 pandemic, with the ongoing pan India lockdown, contagion fears, and economic uncertainties, are likely to affect the operations, bookings and cash flows of real estate developers.

Demand is expected to witness moderation and committed receivables from
already booked sales are also expected to get impacted, given that mile-stone based payments may get deferred and some buyers may delay payments on account of economic/income uncertainties. Consequently, cash flows for Mantra Group are expected to witness a sharp reduction in FY2021.

Further, based on the best available information, considering the modest liquidity position, the group may remain more susceptible to the possible cashflow mismatches that might arise during the year due to disruption in operations, leading to increased dependence on refinancing.

As per the last available information and ICRA estimates, the Group has around Rs. 20 crore of interest expenses and Rs. 35 crore principal repayment obligations during FY2021, to be serviced post the RBI forbearance period, from September 2020 onwards.

The rating is based on limited information on the Group’s performance since the time it was last rated in July 2019. The lenders, investors and other market participants are thus advised to exercise appropriate caution while using this rating as the rating may not adequately reflect the credit risk profile of the entity, despite the downgrade.

As part of its process and in accordance with its rating agreement with Mantra Buildcrafts LLP, ICRA has been trying to seek information from the entity so as to monitor its performance, but despite repeated requests by ICRA, the entity’s management has remained non-cooperative.

In the absence of requisite information and in line with SEBI’s Circular No.
SEBI/HO/MIRSD4/CIR/2016/119, dated November 01 2016, ICRA’s Rating Committee has taken a rating view based on
the best available information.

About the company:

The Mantra Group is promoted by the family of Late Mr. Puranchand Kishorilal Gupta. The Group entered into the realestate business in 2006 and over the last decade has completed development of around 1.9 mn sqft of area. It has around 4.7 mn sqft of area under development at present. The Group is now developing 11 residential real-estate projects in Pune, with each project being developed through a separate SPV.

Mantra Buildcrafts LLP (MBL), incorporated in 2013, is the SPV executing the ‘Mantra 7 Hills’ project at Kirkatwadi, Pune. Phase-I of the project has a total saleable area of 0.26 mn sqft, out of which 81% share belongs to MBL as a developer. The project was launched in July 2016.

Source: ICRA

Moody’s downgrades India Infoline Finance Limited to B1 from Ba3; ratings remain under review for downgrade

29 May 2020: Moody’s Investors Service has downgraded the corporate family rating and senior secured debt rating of India Infoline Finance Limited to B1 from Ba3. Moody’s has also downgraded the senior secured program rating of India Infoline Finance to (P)B1 from (P)Ba3.

At the same time, Moody’s has placed the ratings under review for further downgrade.


The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. Moody’s expects Indian non-bank finance companies (NBFCs) to be affected by the shock as disruptions to India’s economic activity from the coronavirus outbreak will weaken the credit fundamentals of these companies. Moody’s regards the coronavirus outbreak as a social risk under its environmental, social and governance (ESG) framework, given the substantial implications for public health and safety.

Today’s action follows the review for downgrade initiated on 13 April 2020, and reflects the impact on India Infoline Finance of the breadth and severity of the shock and the deterioration in credit quality it has triggered.

Like other NBFCs, Moody’s expects India Infoline Finance’s funding and liquidity to remain under strain over the next few quarters as the domestic debt markets remain largely closed to many NBFCs. And while the Indian government’s (Baa2 negative) planned support measure to subscribe to INR300 billion of NBFC debt will provide some near-term relief, this will not sufficiently address NBFCs’ funding issues.

Moody’s also expects Indian banks to extend support to the NBFCs via loan moratoriums or by providing new term loans to the companies.

Despite these measures, Moody’s expects India Infoline Finance’s funding and liquidity to remain strained as inflows from assets will materially decline, while the company will continue to need to service interest and principle on liabilities, such as capital markets liabilities, that cannot be rescheduled without default.

India Infoline Finance’s modest liquidity offers limited support if funding conditions do not improve over the next few quarters.

Also, the moratorium on debt repayments can hinder its ability to conduct loan assignments — the outright sale of loans to banks — and securitization, which have been a source of immediate liquidity since mid-2018.

Moody’s expects India Infoline Finance’s asset quality will weaken as loan delinquencies and defaults increase because customers and businesses face a drop in earnings and cash flows due to the economic disruption caused by the coronavirus outbreak.

While the Reserve Bank of India’s forbearance for banks and NBFCs — whereby they can extend 6-month loan repayment moratoriums to customers without affecting the asset classification — will soften some of the near-term strain on asset quality, but the sharp slowdown in India’s economic growth will exacerbate asset quality issues for the company.

Capital remains a credit strength of India Infoline Finance. Moody’s expects capital to remain modestly decline as the company looks to conserve liquidity, with no plans to expand its balance sheets materially unless funding conditions normalize.

This rating action considers the consolidated financials of IIFL Finance Limited, the legal entity that has acquired all of India Infoline Finance Limited’s assets and liabilities as of 01 April 2020.

India Infoline Finance’s ratings remain under a review for downgrade as Moody’s expects near-term stress on its funding and liquidity that could further weaken its credit profile.


Given the review for downgrade, India Infoline’s ratings are unlikely to be upgraded in the next 12-18 months. Nevertheless, Moody’s will confirm the ratings if the company strengthens its balance by (1) refinancing or raising new funding over the next few quarters, or (2) improving collection rates on its assets such that the company is able to meet its maturing obligations without straining its liquidity.

India Infoline Finance’s rating could be downgraded if the company’s liquidity deteriorates. The rating could also be downgraded if there is a significant deterioration in its asset quality leading to a worsening of its solvency metrics.

Headquartered in Mumbai, India Infoline Finance Limited reported total assets of INR312 billion at 31 December 2019.

List of Affected Ratings:

..Issuer: India Infoline Finance Limited

…. Long-term Corporate Family Rating, Downgraded to B1 from Ba3; Under Review for further Downgrade

….Long-term Senior Secured Medium-Term Note Program (Foreign and Local Currency), Downgraded to (P)B1 from (P)Ba3; Under Review for further Downgrade

….Long-term Senior Secured Debt (Foreign Currency), Downgraded to B1 from Ba3; Under Review for further Downgrade

…Outlook remains ratings under review

Source: Moody’s