Shanker Group’s 13 Companies Removed from ‘Negative Watch’ Within 10 Days as Rating Agency Reviews Business Continuity

KATHMANDU: Thirteen companies affiliated with Nepal’s Shanker Group have been removed from the “Watch with Negative Implications” (Negative Watch) category by rating agency Infomerics Credit Rating Nepal, less than two weeks after they were placed under heightened monitoring following criminal cases filed against key promoters and directors.

The latest development indicates that the rating agency, after conducting a preliminary reassessment of the companies’ operations and management continuity, concluded that an immediate negative revision to their credit ratings was not warranted despite ongoing legal proceedings involving the group’s promoters.

13 Companies Removed from Negative Watch

According to the updated rating action released by Infomerics, 13 out of the 18 companies initially placed under Negative Watch have now been removed from the monitoring category. These companies include:

Jagdamba Steels, Jagdamba Motors, Jagdamba Auto Group, Jagdamba Mobiles, Jagdamba Hire, Purchase, Jagdamba Hospitality, TeleTalk, Tele Direct, Litmus Industries, Riddhi Cement Industries, Ganapati Vanaspati, Ram Janaki Hydropower, Hulas Finserv Hire Purchase

The agency emphasized that the decision reflects its latest assessment of the companies’ current operating conditions rather than the outcome of the legal proceedings.

Why Were the Companies Placed Under Negative Watch?

The companies were placed under Negative Watch in June after Nepal’s Government Attorney’s Office filed cases involving alleged violations related to securities, banking, insurance, and anti-money laundering laws.

The prosecutions include allegations against several business leaders connected with major corporate houses, including:

• Shanker Lal Agrawal, Chairman of Shanker Group
• Sulabh Agrawal, Chairman of Jagdamba Holdings
• Sahil Agrawal, Chairman of Jagdamba Group

Following these prosecutions, Infomerics initiated a review of companies associated with the promoters, citing uncertainty regarding governance, management continuity, financial stability, operational performance, and debt servicing capacity.

The rating agency noted that placing a company on Negative Watch does not constitute a downgrade. Instead, it serves as a surveillance mechanism indicating that future rating actions may be required depending on developments.

Court Proceedings Continue

The criminal cases were filed on June 11, 2026 (Jestha 28, 2083 BS) before the Kathmandu District Court, Patan High Court, and the Special Court.

In total, 167 individuals have been named as defendants across multiple cases:

• 81 in securities-related offences;
• 42 in insurance-related offences;
• 39 in money laundering cases; and
• Five in banking offences.

Following detention hearings, Sulabh Agrawal and Deepak Bhatt were remanded to judicial custody pending trial, while cases involving other defendants remain under judicial consideration.

Why the Rating Agency Reversed Its Earlier Decision

Infomerics said its latest review incorporated additional information received from the companies, including:

• continuity of management;
• current business operations;
• financial performance;
• operational stability; and
• preliminary reassessment of associated risks.

Based on these factors, the agency concluded that there was insufficient justification at this stage for maintaining Negative Watch status for the 13 companies.

The agency’s decision suggests that, despite the legal proceedings involving individual promoters, the businesses themselves continue to operate without evidence of immediate deterioration significant enough to justify adverse rating action.

Over Rs 105 Billion in Credit Facilities Had Been Under Review

Before the latest revision, 15 of the 18 companies placed on Negative Watch had obtained credit ratings covering banking facilities worth approximately Rs 105 billion, while the remaining three companies had issuer ratings placed under surveillance.

Among the largest exposures were:

These facilities were subjected to enhanced monitoring following the legal actions against the companies’ key promoters.

Legal Cases Remain Pending

Infomerics clarified that removing the companies from Negative Watch should not be interpreted as an indication that the legal disputes have been resolved or that the charges against the promoters have been dismissed.

The agency said it will continue monitoring the progress of court proceedings, potential management changes, business performance, and financial conditions. It added that credit ratings may be reviewed again if future developments materially affect the companies’ credit profiles.

The latest action underscores the distinction between legal proceedings involving individual promoters and the independent assessment of corporate creditworthiness, with the agency concluding that the current operational and financial position of the 13 companies does not presently justify a negative rating outlook.