Stocks

HDFC MF’s investment in Simplex halves to Rs 62

Our Bureau Mumbai | Updated on December 13, 2019 Published on December 13, 2019

The crisis in the debt schemes of mutual funds seem to be far from over. HDFC Mutual Fund’s investment in cash-strapped Simplex Infrastructure has halved to Rs 62 crore in less than two weeks.

HDFC Credit Risk Debt Fund had a debt exposure of Rs 124.11 crore in Secured Non-Convertible Debentures of Simplex Infra, which it wrote down to Rs 106.25 crore on November 26 after the NCD rating was downgraded by CARE Ratings, with a negative outlook.

On Thursday, the rating agency further downgraded the debentures of the company to default, due to a recent delay in repayment of certain debt obligations by the company, whose liquidity position has come under strain on account of an elongation of its working capital cycle.

Consequent to this downgrade, HDFC Credit Risk Debt Fund valued the exposure to Simplex at Rs 62.5 crore on Friday, it said.

The write-down on învestment is in accordance with the applicable SEBI Regulations and Circulars on valuation of such securities. The impact on the NAV of the HDFC Credit Risk Fund is -0.3 per cent, it added.

Established in 1924, Simplex is a Kolkata-based construction company primarily engaged in Engineering Procurement Construction contracts and turnkey projects related to civil construction across sectors.

For the six months ended September 2019, the company reported revenues of Rs 2,485 crore, operating profit of Rs 330 crore and net profit of Rs 28 crore.

In order to improve its liquidity position, Simplex plans to induct a strategic partner, who is likely to infuse funds into the company. Additionally, Simplex is looking to monetise its shareholding in a road special purpose vehicle in the near term.

"We continue to monitor the developments closely and are also engaging with the company for repayment of the outstanding exposure," HDFC MF said in a statement on Friday.

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Published on December 13, 2019
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