Risk Analytics System

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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Association of Person, named in Criminal case, with Multiple Companies A Red-flag

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Heckyl’s Risk Analytics System (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.

RAS is also a singular repository to carry out deeper levels of due diligence for compliance and related party risk assessment. Our application allows screening of KMPs, Directors, Companies, and Institutions by performing checks against:

  1. Litigation
  2. Regulatory Complaints
  3. Blacklists/ Defaulter List
  4. Sanctions by Global Authorities
  5. Politically Exposed People
  6. Adverse Media

Recently the Enforcement Directorate (ED) has filed a criminal case under the Prevention of Money Laundering Act (PMLA) against cardiologist Dr Naresh Trehan and others in connection with allotment of land for the Medanta Hospital in Gurgaon.

RAS has captured the adverse media coverage around Dr Trehan, who is director on the board of Global Health Patliputra Pvt Ltd.

Image 1: News Screen

A further deep-dive into RAS’s related parties dataset has revealed that Dr Trehan is/ was director on the boards of 27 companies. Our related parties screen captures both the active and inactive relationship of directors with the companies.

The companies on which Dr Trehan is/ was associated with are Medanta Holdings Pvt Ltd, Escorts Heart and Super Speciality Ltd, Jubilant Life Sciences Ltd, Punj Lloyd Ltd, Varun Beverages Ltd, Fresenius Kabi Oncology Ltd, Shama Estates Pvt Ltd and 20 other companies (highlighted in the below screen).

Image 2: Related Parties Screen

In our view, association of a person, who was named in a criminal case, with multiple companies is a potential red-flag for the lenders.

Contraction in India April Manufacturing PMI Steepest among Top 10 Economies

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The manufacturing sector accounts for just one fifth of the global economy and its share is shrinking further in developed countries. Yet, the investing community spends much time on assessing the health of the sector. The manufacturing sector, being at the forefront of economic activity, provides the direction in which the overall economy will go. This explains why the manufacturing sector grabs the attention of the investor community.

The business surveys on the manufacturing sector have often helped in providing first reliable signals of turning points in the economy. One such key indicator is the manufacturing PMI which shows what the participating purchasing managers think about future capex, job creation and overall demand of goods.

A steep contraction in the latest manufacturing PMI numbers for April wasn’t surprising given the prevalent worldwide lockdown to tackle COVID-19 pandemic. However, a contraction of 20-30% versus a contraction of 50% should be looked upon separately.

While among the major economies, the manufacturing PMI numbers have contracted for all. However, the shrinkage of almost 50% in India’s April manufacturing PMI was steepest among the top 10 economies. This shows the damage caused by the lockdown has far deeper consequences on the Indian economy than its developed counterparts.

PMI
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