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ICICI Prudential Asset Management Company is exposed to 548.5 crores of debt issued by Nayara Energy. Nayara Energy counts Rosneft Singapore Pte Limited, a subsidiary of Russia’s Rosneft Oil Company as a 49.13% shareholder. Kesani Enterprises Company Limited, a consortium comprising Trafigura and United Capital Partners (UCP) investment group is the other major shareholder with a similar 49.13% stake. Nayara was placed on ‘credit watch with negative implications’ on 5th March 2022 by CARE Ratings. This was done ‘on account of the Russian invasion of Ukraine and the resultant economic sanctions being placed on Russia and certain Russian entities and persons’, the ratings note said. The current rating of this debt is AA. 

Six funds of ICICI Prudential AMC are exposed with varying degrees of exposure as a percentage of scheme assets, data from Rupeevest showed.  The highest exposure is in ICICI Prudential Credit Risk Fund at 2.95% of scheme assets followed by ICICI Prudential Regular Savings Fund with exposure at 2.21% of scheme assets. ICICI Prudential Child Care Fund - Gift Plan has a 1.15% exposure and ICICI Prudential Equity Savings Fund has a 0.84% exposure. ICICI Prudential Equity and Debt Fund has 0.52% of its assets in Nayara debt while ICICI Prudential Balanced Advantage Fund has 0.19% of its assets in Nayara Debt. According to Rupeevest, this debt across all schemes is set to mature in August 2024.

 “CARE Ratings has placed the long-term ratings of Nayara on ‘credit watch with negative implications’ on account of the Russian invasion of Ukraine and the resultant economic sanctions being placed on Russia and certain Russian entities and persons. CARE Ratings will continue to monitor the situation and take a rating action in case of any adverse impact of the war on Nayara’s shareholders and consequent impact of the same on Nayara, although CARE Ratings notes that at present, the company does not have any major operational dependence on Russia or any of the Russian entities," the ratings note said.

"Nayara Energy is an entity incorporated in India. It has not been subjected to any sanctions. It just happens to have a Russian shareholder, which too is holding less than 50% of Nayara's shareholding. Nayara has low dependence on Russian entities, less than 1% of its purchase and sales are with Russian entities. Recently Nayara's shareholders infused capital aggregating USD 500 million into the company which was primarily used for deleveraging. Currently Nayara's net debt is less than its projected full year EBITDA, with significant expansion of its gross refining margins. CARE has recently confirmed Nayara's AA credit rating. All these factors give comfort and make the likelihood of default, rather unlikely in this paper," said a person with knowledge of the matter who declined to be named.

ABOUT THE AUTHOR

Neil Borate

Neil heads the personal finance team at Mint. A former colleague called them 'money nerds' and that's what they are. They cover topics like mutual funds, taxation and retirement, all to improve your chances of building wealth. Neil graduated with a degree in law and economics. He passed the CFA Level I exam and began his writing career at Value Research, a mutual fund research firm in 2016. He joined the personal finance team Mint in 2019. Everyday, the Mint Money Team tackles personal finance questions such as where to invest and where to borrow, through articles, charts and reader queries. They also have a daily podcast - 'Why Not Mint Money' and an annual ranking of mutual funds - the Mint 20.
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