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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 200.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 150.00 | ACUITE BBB | Stable | Assigned | - |
| Non Convertible Debentures (NCD) | 250.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 600.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has assigned the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.150.00 Cr. Proposed Non Convertible Debentures facility of KLM Axiva Finvest Limited (KLM). The outlook is 'Stable'. Acuité has reaffirmed the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.250.00 Cr. Non Convertible Debentures of KLM Axiva Finvest Limited (KLM). The outlook is 'Stable'. Acuité has reaffirmed the long-term rating of ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs.200.00 Cr. Bank Loan Facilites of KLM Axiva Finvest Limited (KLM). The outlook is 'Stable'. Rationale for Rating The reaffirmation of the rating factors in the adequate capitalisation levels, moderate earning profile and improvments in the leverage of KLM Axiva Finvest Limited. The Capital Adequacy Ratio (CAR) for the company stood at 23.90% ( Tier 1: 15.79%) in FY25 as against 20.41% ( Tier 1: 13.47%) in FY 24 ( restated). The PAT for the company saw a moderation and stood at Rs 20.19 Cr. for FY 25 as against Rs 23.03 Cr. for FY24. Given the total debt for FY 24 which stood at Rs 1606.05 Cr. and had a corresponding debt to equity ratio of 6.71 times. For FY 25, there was a reduction in total debt to Rs 1575.19 Cr. however the company had an equity infusion in March 25 fo the tune of ~Rs 32 Cr, improving the debt to equity ratio to 5.71 times. These strengths are partially offset by the company's geographical and funding profile concentration. The company's operations are highly concentrated in the states of Kerala (~42 percent) and Karnataka (~24 percent) as on Mar 2025. KLM's resource profile is concentrated towards the NCDs (public issued and privately placed) and sub-debt forming majority proportion of the total borrowings as on FY2025. though the share of bank loans have been increasing it remains modest. Going forward company's ability to continue increasing its scale of operations while maintaining its asset quality within stipulated levels and improving its profitability metrics and mobilizing low cost funds will be key monitorable. |
| About the company |
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Hyderabad based KLM Axiva Finvest Limited was incorporated in 1997 as Needs Finvest Limited and in 2014, the current management took over and renamed it to KLM Axiva Finvest Limited . The company is led and promoted by the whole-time Director Mr Shibu Theckumpurath Varghese. As on March 31, 2025, 39.59% of the shareholding is held by promoters, directors and their relatives and the balance is held by other investors. The company is engaged in lending business and offers gold loan, mortgage loan, vehicle loans, micro finance loans, etc. The company also provides foreign exchange services, money transfer and insurance broking services. The company has its branches in Andhra Pradesh, Tamil Nadu, Kerala, Hyderabad, Karnataka & Maharashtra. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has adopted a standalone approach to analyse the business and financial profile of KLM Axiva Finvest Limited. |
| Key Rating Drivers |
| Strength |
| Promoter support and experienced management team; The company is headed by Mr. Shibu Varghese (whole time director) who has more than 30 years of experience in the Financial Services and is supported by seasoned professionals for the daily operations. The current promoters took over the company in 2014 and have been running the company for a decade now with the support of management having an extensive experience of over a decade in the industry. The company benefits from the rich experience of the promoters in the home state which remained significant for the overall capital raising capability of the company. Acuite believes that company will continue to benefit from the extensive experience of the promoters and management team along with Independent Director. Moderate growth in AUM and Asset Quality; KLM’s AUM has seen a slight moderation to Rs. 1,673.85 Cr. as on March 31, 2025 as against Rs. 1,676 Cr. as on March 31, 2024 (Restated). The moderation in AUM was owing to reduction seen in their MSME and Microfinance portfolio during FY 25. KLM’s Loan against gold contributes 65 percent to the total POS as on March 31, 2025.However, the asset quality for FY 25 saw slight deterioration as compared to FY 24, though there has been an improvement from 9MFY25( GNPA: 2.08% , NNPA: 1.07 %). The company’s asset quality is marked by on time portfolio of 94.30 percent in FY25 a reduction as against 97.94 percent as on March 2024. KLM’s asset quality saw deterioration in FY 25 from 1.60 percent GNPA and 0.67 percent NNPA in FY24 to 1.99 percent GNPA and 1.12 percent in FY25. Acuité believes that going forward the ability of the company to maintain comfortable asset quality and growth momentum in AUM will be key rating sensitivity. Moderate earning profile and Adequate Capitalisation levels; The growth in scale of operation in FY2025 is reflected in the interest income which grew to Rs 332.47 Cr. in FY2025 from Rs 305.62 Cr. in FY2024. However, as the company is in an expansion phase its operating expense to earning assets increased to 8.14 percent in FY2025 as against 7.57 percent in FY2024. The operational costs are expected to rationalise in the coming years once the operational efficiency from the new branches is attained. The company has reported a PAT of Rs 23.03 Cr. with ROAA of 1.27 percent during FY2024 which saw a moderation to a PAT of Rs 20.19 Cr. and ROAA of 1.05 percent during FY2025. The company has restated its financial statements for the year ended March 31, 2024 as per the Ind-AS and to follow RBI's directive of providing further provisioning on certain restructured gold loans outstanding as on 31 March 2024, under the Resolution Framework 2.0. Additionally, these loans were written off in FY 25, impacting profit after tax for the same period. The Capital Adequacy Ratio for the company stood at 23.90 %, comprising primarily of Tier 1 Capital of 15.79% for FY25 as against 20.41 % for FY24 (restated) comprising of Tier 1 of 13.47%. Acuité believes that KLM will be able to sustain its financial performance and any impact on profitability metrics due to higher provisioning requirements would remain key monitorable. |
| Weakness |
| Leveraged capital structure; KLM is engaged in loans against gold and MSME loans secured and unsecured for a period of 12 - 24 months. The company’s networth stood at Rs. 274.70 Cr.(Including revaluation reserves) and total debt stood at Rs. 1575.19 Cr. as on March 2025. The company’s AUM stood at Rs. 1,673.85 Cr. as on March 25 as compared to Rs. 1,676 Cr. as on March 31,2024(restated) .The company has seen an improvement in the gearing, KLM’s gearing stood at 5.71 times as on March 25 (6.71 times as on March 31, 2024 (restated)). The total debt of Rs 1575.19 Cr. includes subordinated liabilities, NCDs and short term bank facilities. as on March 2025. To support the growth momentum KLM would require further debt and considering the already leveraged capital structure the promoters may be required to infuse additional equity to support any future business growth. Going forward, Acuité believes that the company’s ability to manage its gearing levels will be a key monitorable and infusion of capital would be required for containing gearing levels and to support business growth. Geographical and Funding profile concentration; KLM started its operations in the state of Kerala and gradually expanded to the states of Karnataka and Tamil Nadu and has expanded to other states like Hyderabad, Andhra Pradesh and Maharashtra thereby reducing the concentration in the state of Kerala. However, major concentration is in the state of Kerala with exposure of ~42% as on March 2025. KLM's resource profile is concentrated towards the NCDs (public issued and privately placed) and sub-debt forming majorly proportion of the total borrowings as on Mar'25; though the share of bank loans have been increasing it remains modest. Acuite believes that geographical concentration coupled with improved earning profile will continue to weigh on the company’s credit profile. |
| Rating Sensitivity |
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| All Covenants |
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Subject to the terms of the Debenture Trust Deed, the Debenture Trustee at its discretion may give notice to the company specifying that the NCDs and or/any particular Options of NCDs, in whole but not in part are and have become due and repayable on such date as may be specified in such notice inter alia if any of the events of default including cross defaults, if any and consequences will be specified in the Debenture Trust Deed. Upon Occurrence of an Event of Default, the Debenture Trustee of the NCD Holders as the case maybe, shall enforce the hypothecation and exercise the power of sale as set out under Clause 4 of Part B or any other right over the Movable properties conferred on the Debenture Trustee under the Deed. All expenses incurred by the Debenture Trustee after an Event of Default has occurred in connection with: i) preservation of the company's assets(whether then or thereafter existing); and ii)collection of amounts due in respect of the NCDs: shall be payable by the company. |
| Liquidity Position |
| Adequate |
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The company had cash and cash equivalents of about Rs 36.46 Cr. as on March 31, 2025 and as on March 31, 2024, the company had cash and cash equivalents of about Rs 37.22 Cr. The company has an average monthly collections of Rs 276 Cr. majorly from the gold loan portfolio, with the overall collection efficiency at 95.75% for FY25. There are no negative cumulative mismatches in the ALM as of March 31, 2025. The unutilised bank limits stand at Rs 27.16 Cr. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
**FY 24 Financial Statement are restated |
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
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