Svasti Microfinance Pvt. Ltd. Conditional ratings of [ICRA]BBB+(SO) * has been assigned to non-convertible debentures (NCD) programme of Annapurna Microfinance Private Ltd. (AMPL), Asirvad Microfinance Private Ltd. (Asirvad), Arohan Financial Servicess Private Ltd. (Arohan), Disha Microfin Private Ltd. (Disha), Future Financial Services Ltd. (FFSL), Indian School Finance Company Private Ltd. (ISFC), Intrepid Finance and Leasing Private Ltd. (Fino), Pahal Financial Services Private Ltd. (Pahal), Suryoday Micro Finance Private Ltd. (Suryoday), SV Credit Line Private Ltd. (SVCL) and Svasti Microfinance Private Ltd. (Svasti). This is the first pooled NCD programme to be rated in India. Table 1: Rating Summary Description Amount (Rs. Cr ) Payout Maturity Rating Annapurna Microfinance Pvt. Ltd. 10.00 Apr 2016 [ICRA]BBB+(SO)! Asirvad Microfinance Pvt. Ltd. 6.00 Apr 2016 [ICRA]BBB+(SO)! Arohan Financial Services Pvt. Ltd. 10.00 Apr 2016 [ICRA]BBB+(SO)! Disha Microfin Pvt. Ltd. 9.00 Apr 2016 [ICRA]BBB+(SO)! Future Financial Services Ltd. 10.00 Apr 2016 [ICRA]BBB+(SO)! India School Finance Company Pvt. Ltd 7.00 Apr 2016 [ICRA]BBB+(SO)! Intrepid Finance and Leasing Pvt. Ltd 7.00 Apr 2016 [ICRA]BBB+(SO)! Pahal Financial Services Pvt. Ltd 10.00 Apr 2016 [ICRA]BBB+(SO)! Suryoday Microfinance Pvt. Ltd 12.00 Apr 2016 [ICRA]BBB+(SO)! SV Credit Line Pvt. Ltd 9.00 Apr 2016 [ICRA]BBB+(SO)! Svasti Microfinance Pvt. Ltd 8.00 Apr 2015 [ICRA]BBB+(SO)! Total 98.00! indicates that the rating is conditional; The ratings for the NCDs factor in the benefit of the common Corporate Guarantee to the extent of 24% of the initial value of the NCDs, which enhances the credit quality of the NCDs under the pooled NCD programme over the respective Issuer s stand-alone credit quality. The guarantee to the extent of 24% of the initial overall NCD amount is to be provided by Reliance Capital Limited (rated [ICRA]A1+) and IFMR Capital Finance Private Limited (rated [ICRA]A and [ICRA]A1) in the ratio of 72:28. The stand-alone credit quality of the Issuers is weak to moderate, characterised by low to moderate profitability, stable asset quality, comfortable liquidity profile and moderate to good length of operating track record. Most of the Issuers have demonstrated their ability to raise debt from banks and other institutional lenders, however the number of lenders for some of the Issuers has been limited. The capitalisation profile of some of the entities (viz., AMPL, Arohan, CDIPL, FFSL, Suryoday, SVCL and Svasti) is strong while it can be characterised as modest for the others. Mandatory use of credit bureaus and regulatory ceiling on borrower indebtedness has reduced concerns on overleveraging and multiple lending for MFIs. The ratings also draw comfort from the fact that in addition to the Issuer s overall cashflows, the NCDs are supported by security in the form of exclusive specific charge over identified receivables of the Issuer with security cover of 1.10 times. However, the ratings are constrained by the weak to moderate stand-alone credit quality of the Issuers in the long-term. The ratings are also constrained by the vulnerability of the Issuers to any adverse sector-wide development and to any political, communal or environmental issues that could adversely affect their portfolios. The ratings are sensitive to certain features of the transaction structure such as potential acceleration of the NCDs under certain events which could trigger downgrade of the NCDs. Moreover, the credit enhanced ratings have been assigned taking into account the relative share of each Issuer in the For complete rating scale and definitions please refer to ICRA's Website www.icra.in or other ICRA Rating Publications * The conditional ratings assigned are subject to the fulfillment of all conditions under the structure and review by ICRA of the documentation pertaining to the transaction. 100 Lakh = 1 crore = 10 million
pooled NCD programme. Thus, while the NCDs are freely transferable, a sale / transfer of the NCDs by the NCD holders in a ratio other than the initial one may lead to a rating action on the NCDs. Key Features of the NCD programme The scheduled interest servicing as well as principal amortisation on each of the NCDs is on a monthly basis. The collateral pool of each Issuer consists of weekly, fortnightly and monthly-paying loan contracts with no overdue. The pool has geographical diversity given the different areas of operations of the different Issuers. In case, the Issuer is unable to meet the scheduled interest / principal payout, the Guarantee will be invoked. The payment mechanism is designed to ensure timely servicing of the amounts due to the investor even in the event Guarantee has to be invoked. About the Issuers Asirvad Microfinance Private Limited (Asirvad) Asirvad (rated [ICRA]BB+(stable) for its long term bank facilities and assigned Microfinance grading of M2 by ICRA) is a Tamil Nadu based MFI that was set up as an NBFC in December 2007 and started operations in January 2008. It was promoted by Mr. S.V. Raja Vaidyanathan with the aim of replicating a similar model as that of the Grameen Bank of Bangladesh in the villages of Tamil Nadu. Asirvad received two rounds of private equity from Lok Capital in FY2010 and FY2011, overall totalling to Rs. 14.95 crore (including share premium). As on December 2013, Asirvad was concentrated in 25 districts in the states of Tamil Nadu and Kerala, with a portfolio size of Rs. 169 crore. As on December 2013, 0+ delinquency for overall the portfolio of Asirvad was negligible at 0.04%. Arohan Financial Services Private Limited (Arohan) Arohan was set up in January 2006 as an NBFC and started its operations in April 2006 in Kolkata. Arohan s focus was to provide financial services to the urban and semi-urban poor, however, since the beginning of CY2010, Arohan has been lending to borrowers in rural areas as well. Arohan offers credit to economically backward women and men by offering varied products to suit their requirements, by using the Grameen Bank model of lending. The company has operations in West Bengal, Bihar and Assam. As on December 2013, Arohan had operations in 63 branches across 18 districts of West Bengal, Bihar and Assam, with a portfolio size of Rs. 155 crore. The overall 0+ delinquency for Arohan is at 1.00% as of December 2013. Annapurna Microfinance Private Limited (AMPL) Annapurna Microfinance Private Limited (AMPL) was started as Mission Annapurna by People s Forum (the parent organisation) to carry out the microfinance activities of People s Forum. People s Forum has been in operations since 1994 and is engaged in wide array of developmental activities for the poor including microfinance, healthcare, women empowerment, agricultural and allied services training etc. Mission Annapurna was subsequently converted to an NBFC (AMPL) in Financial Year (FY) 2008-09 after acquisition of a Gwalior based Microfinance Company. AMPL operates mainly in rural areas and semi-urban areas with a small presence in urban areas. The company is present primarily in the state of Orissa with a reasonable presence in Chhattisgarh with a portfolio size of Rs. 130 crore as on December 2013. As on December 2013, 0+ delinquency for overall the portfolio of AMPL was low at 0.15%.The company has a rating of [ICRA]BB+(stable) outstanding from ICRA for its long term debt instruments. Disha Microfin Private Limited (Disha) Disha (rated [ICRA]BBB-(stable) for its long term bank facilities and assigned Microfinance grading of M2 by ICRA) is a Gujarat-based MFI which started in 1996 and ventured into microfinance in June 2009. Disha is currently operational in 51 branches spread over 19 districts in the states of Gujarat, Madhya Pradesh and Rajasthan with a portfolio size of Rs. 141 crore as on December 2013. The portfolio of Disha comprises of Joint Liability Group (JLG) loans only. As on December 2013, 0+ delinquency for overall the portfolio of Disha was negligible at 0.04%. Future Financial Services Limited (FFSL) FFSL is an NBFC involved in microfinance activities, with presence in the states of Karnataka, Tamil Nadu and Andhra Pradesh. The company s overall performance was adversely impacted post the Andhra Pradesh (AP) Ordinance in October 2012, due to its exposures on AP (about 23% of its overall portfolio as on Sep-10). Consequently, FFSL restructured all its term liabilities as on Mar-11, through
Corporate Debt Restructuring (CDR) Cell with Small Industries Development Bank of India (SIDBI) as the Monitoring Institution. FFSL was the first MFI to admit to the CDR process post the Andhra Crisis. As on Dec-13, FFSL was present in 85 branches spread over 16 districts in the states of Tamil Nadu, Karnataka, and Andhra Pradesh with a portfolio size of Rs. 204 crore. The company has portfolio of Rs. 22.8 crore over 2 districts of the state of AP, where it has discontinued the operations. As on Dec 2013, the 0+ dpd for the company is 12.08%, while the same for company s non-ap portfolio stands at about 1.18%. Indian School Finance Company Private Limited (ISFC) ISFC is an NBFC in the business of providing credit facilities to the Affordable private school (APS) segment, i.e. providing loans to private schools for improvement, capacity expansion and growth. The company commenced operations from October 2008. As in September, 2013 ISFC had a client base of about 670 schools and had a portfolio Rs. 45.50 crore. As of December 2013, the 30+ delinquency levels stood at moderately high levels of 3.68% while the 90+ delinquency levels were at 1.85% as on Dec-13. As of Q3FY2014, the company reported a net profit of Rs. 0.5 crore and its regulatory capital adequacy of the company was comfortable at 39.80% as on Dec-13. Intrepid Finance & Leasing Private Limited (FINO) Intrepid Leasing and Finance Private Limited is a Microfinance institution and a Non-deposit accepting NBFC registered with Reserve Bank of India. ILFPL was acquired by FINO PayTech (FINO) in 2010 to originate microfinance loans on the books of the NBFC. Intrepid is currently operational in the states of Maharashtra, UP, MP, Bihar and Karnataka, with a portfolio size of Rs. 25 crore as on December 2013.As on December 2013, Intrepid reported nil 0+ delinquency levels for overall the portfolio. ILFPL reported a PAT of Rs. 0.13 crore in 9M FY14. The capital adequacy ratio is comfortable at 43.68% as on Dec2013. Pahal Financial Services Pvt. Ltd (Pahal) Pahal started its operations in February 2011 by acquiring about Rs. 2.6 crore of micro loan portfolio of LokVikasNidhi -a trust operating in Gujarat for over 25 years. The promoters also brought in the initial equity to venture into microfinance activities in Gujarat. At present, Pahal is operational in 23 branches spread over 12 districts in the state of Gujarat with a portfolio size of Rs. 42 crore as on December 2013. As on December 2013, the 30+ delinquency level for overall the portfolio of Pahal was 0.36%. Suryoday Micro Finance Private Limited (Suryoday) Suryoday (rated [ICRA]BBB-(stable) and [ICRA]A3 for its long-term and short term debt instruments respectively, by ICRA) was set up in October 2008 as an NBFC, but commenced its full-fledged operations from May 2009. As on December 2013, Suryoday had operations in 58 branches across six states viz. Maharashtra, Tamil Nadu, Andhra Pradesh (AP), Orissa, Gujarat and Rajasthan. Of the total portfolio of Rs. 262 crore as on December 2013, about 56% resides in the state of Maharashtra. Suryoday reported a net profit of Rs. 1.95 crore as on FY2013. Further, the company reported net profit of Rs. 6.13 crore for 9M FY2014. The regulatory capital adequacy based on managed assets was 33.5% as of December 2013. As of December 2013, 0+ delinquency for overall the portfolio of Suryoday was 0.10%. SV Credit Line Private Limited (SVCL) SVCL came into existence in September 2008 by the acquisition of an existing NBFC named MantranaFinlease Limited. The company is engaged in microfinance operations in the states of Madhya Pradesh, Uttar Pradesh and Rajasthan, having presence in 29 districts through a network of 58 branches as on December 2013, with a total portfolio outstanding of around Rs. 153 crore. As of December 2013, the 0+ delinquency level for overall the portfolio of SVCL was 0.45%. Svasti Microfinance Pvt Ltd (Svasti) Svasti Microfinance Pvt Ltd (Svasti) is a Mumbai based MFI that aims to provide comprehensive financial services to the low income segments of society in Mumbai. The company is headquartered in Mumbai and as on Dec-13, Svasti operates has 9 branches and a portfolio of Rs. 31.53 crore. The company has exhibited strong asset quality since inception with the 0+ dpd levels for Svasti being negligible at 0.03% as on Dec-13. March 2014
For further details please contact: Analyst Contacts: Mr. Kalpesh Gada (Tel. No. +91 22 61796369) Head- Structured Finance kalpesh@icraindia.com Relationship Contacts: (Tel. No. +91-80-43326401) jayantac@icraindia.com Copyright, 2014, ICRA Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. The ICRA ratings are subject to a process of surveillance which may lead to a revision in ratings. Please visit our website (www.icra.in) or contact any ICRA office for the latest information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents
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