Early warning system

Auto, Utilities and Industrials Lead the Volume of Distressed Companies

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The analysis of Altman Z-score for 290 companies from BSE 500 index in Heckyl Risk Analytics System (RAS) revealed that Automobiles, Utilities and Industrials sectors have led the volume of distressed companies in the financial year 2020.

The Altman Z-score is the output of a credit-strength test that gauges the company’s likelihood of bankruptcy. This score measures the performance of the company on profitability, leverage, liquidity, solvency, and activity to predict whether the organization has a high probability of becoming bankrupt.

Based on the value of Altman Z-score, the company cab be classified into three zones. A Z-score above 2.99 suggests that a company is in the safe zone. A Z-score between 1.8 and 2.99 is in the grey zone which suggests there is a good chance of the company going bankrupt. Meanwhile, a Z-score below 1.80 is in the distress zone which indicates a high probability of distress.

Here, we present some of the highlights of Altman Z-score analysis for 290 companies from BSE 500 index which have declared the annual results for the financial year 2020:

#1. Manappuram Finance, Shoppers Stop and Bombay Dyeing fall into Distressed category

#2. Tejas Networks, HEG and AllCargo Logistics slip into Grey zone

#3. Distressed Cholamandalam Investment, Reliance Capital and Can Fin Homes register further Deterioration

Heckyl RAS does all the heavy-lifting to save the time spent by the risk teams at the banks on the collection of various datasets and complex number crunching and thereby helping them to spend quality time on the ready to use output of business rules, financial modules and risk scores.   

Heckyl RAS is the first of its kind innovative application that offers a 360-degree view on the portfolio of companies and individuals through analysis of the traditional and alternative datasets.

To know more about Heckyl RAS, email us at info@heckyl.com.

Heckyl RAS Perfect Partner for UCBs to Adopt System-based Asset Classification

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Heckyl Risk Analytics System (RAS) is the first of its kind innovative application that offers a 360-degree view on the portfolio of companies and individuals through analysis of the traditional and alternative datasets.

On Wednesday, the Reserve Bank of India asked urban cooperative banks (UCBs) to undertake the system-based asset classification from Jun. 30, 2021, to improve efficiency and transparency.

RAS runs hundreds of business rules on the various datasets such as financials, news, provident fund, GST, directors, ownership, credit rating, etc. to derive the overall risk score for each company/ individual from the portfolio. Based on the overall risk score, the portfolio companies are bucketed into a high, moderate, and low-risk profile.

In our view, RAS can act as the perfect system for UCBs to classify their assets into a. Standard Assets; b. Sub-standard Assets and c. Doubtful Assets.

Here, we have presented the Highlights screen of RAS for the portfolio of Nifty50 index companies.

Highlights screen

RAS not only provides the risk overview on the portfolio companies but also offers the option to dig deeper for the company level analysis. There are several other features (such as RBI Alerts screen, daily email newsletters for updates on portfolio companies, etc.) integrated into Heckyl’s application to make RAS a perfect partner for all types of banks.

To know more about Heckyl RAS, email us at info@heckyl.com.

 

Heckyl RAS Can Help Banks to Monitor Critical RBI Red Flag Alerts Seamlessly

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Heckyl has integrated RBI Alert screen in Risk Analytics System (RAS) which helps in the monitoring critical red flags defined by the central banks.

As per the RBI guidelines, the banks should have system which enables them to effectively monitor critical red flags on the portfolio companies. Some of the red flag alerts that the central bank has asked the banks to monitor are:

> Default in payment or bouncing of the high value cheques
> Raid by Income tax officials or other government authorities
> Escalation in project cost
> Resignation of the key personnel and frequent changes in the management
> Reduction in the stake of promoter / director

Our system has flagged news alerts on Eon Electric Ltd for default on payment of interest and repayment of principal amount under RBI Alert screen.

RBI Alerts

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Heckyl Risk Score Negative for 11 Companies from Nifty 50 Index

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Heckyl’s Risk Analytics System (RAS) has shown that the 11 out 50 Nifty companies have earned negative risk scores. The list of companies having negative risk scores was topped by Zee Entertainment, followed by Vedanta and Mahindra & Mahindra.

On the other hand, the Heckyl risk score has been the strongest for HDFC Bank in Nifty 50 companies. HDFC Bank was followed by HCL Technologies and Bajaj Finserv.

Image 1: Heatmap for Nifty 50

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Heckyl RAS Spots Multiple Red-Flags on Alternative Data Ahead of Deterioration in Financials

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The deterioration in financials of the company did not happen overnight. There are one or more events happening internally and/ or externally in a span of time that could hamper the company’s operations. Moreover, the impact of events is known only at the later stage after the announcement of financial results.

Tracking multiple events involving the large number of corporate borrowers in portfolio is a daunting task. In our view, the analysis of Alternative Datasets such as PF, Ownership, Directors, News Sentiment, Credit Rating, GST, Charges etc. can offer an Early Warning Signal to spot deterioration in financials ahead of time.

Heckyl’s Risk Analytics System (RAS) offers 360-Degree view on Risk Assessment of Portfolio Companies by capturing and analyzing 1. Delay in Employees’ Provident Fund (PF) contribution; 2. Adverse Media and News Sentiment; 3. Changes in the Promoter Ownership or Pledging; 4. Director Resignations; 5. Delay in GST filing; 6. Credit Rating; and 7. Creation of New Charge on Assets in addition to Financial Data.

Here, we highlight the top 10 companies which have witnessed multiple red-flags ahead of decline in Financial Score.

Timeline_Concise
RAS is the first of its kind innovative application that provides early warning signals through analysis of traditional and alternative datasets for identifying distress sectors and companies ahead of time.

To know more about Heckyl RAS, email us  at info@heckyl.com.