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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE A | Stable | Assigned | - |
| Bank Loan Ratings | 800.00 | ACUITE A | Stable | Upgraded | - |
| Non Convertible Debentures (NCD) | 180.00 | ACUITE A | Stable | Assigned | - |
| Non Convertible Debentures (NCD) | 130.00 | ACUITE A | Stable | Upgraded | - |
| Total Outstanding | 1210.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has upgraded the long-term rating to ‘ACUITE A’ (read as ACUITE A) from ‘ACUITE A-’ (read as ACUITE A minus) on the Rs. 800.00 Cr. Bank Loan facilities (including proposed facilities) of Shri Ram Finance Corporation Private Limited (SRFCPL). The outlook is ‘Stable’. Acuité has upgraded the long-term rating to ‘ACUITE A’ (read as ACUITE A) from ‘ACUITE A-’ (read as ACUITE A minus) on the Rs. 130.00 Cr. Non- Convertible Debentures (including proposed facilities) of Shri Ram Finance Corporation Private Limited (SRFCPL). The outlook is ‘Stable’. Acuité has assigned the long-term rating of ‘ACUITE A’ (read as ACUITE A) to the Rs. 180.00 Cr. proposed Non- Convertible Debentures of Shri Ram Finance Corporation Private Limited (SRFCPL). The outlook is ‘Stable’. Acuité has assigned the long-term rating of ‘ACUITE A’ (read as ACUITE A) to the Rs. 100.00 Cr. proposed Bank Loan facilities of Shri Ram Finance Corporation Private Limited (SRFCPL). The outlook is ‘Stable’. Rationale for Rating The rating upgrade factors in consistent growth in AUM and disbursements, adequate capital structure and profitability, and healthy resources raising ability. The rating also continues to factor in the company’s demonstrated track record of operations in vehicle financing segment, experienced management and healthy profitability metrics. Further, the company's AUM has shown a healthy growth of ~19 percent YoY to Rs. 1277.28 Cr. as on FY25 (Prov.) and a consistent growth since FY 22 (AUM at Rs 544.12 Cr). That said, the rating considers the moderate asset quality as marked by GNPA of 2.78 percent as on March 31, 2025 (Prov.) (P.Y: 2.55 percent) and gearing levels which stood at 3.81 times as on FY25( Prov.) as against 3.88 times as on FY24. Further, the ratings remain constrained by geographical concentration risk with ~31 percent and ~47 percent of the lending portfolio concentrated in Chhattisgarh and Madhya Pradesh, respectively. Going forward, the timeliness of raising equity, growth in AUM while maintaining asset quality, and operating metrics will be key monitorables. |
| About the company |
| Raipur (Chhattisgarh) based, SRFCPL was incorporated in 2004 as a Non-Deposit-taking NonBanking Financial Company (ND-NBFC). Subsequently, it started lending business in 2008 upon receiving NBFC license. SRFCPL is engaged in extending two wheeler financing, secured and unsecured loans towards SME borrowers and personal loans to government employees. The company is promoted by Mr. Ganesh Bhattar and his son Mr. Gaurav Bhattar, who have over a decade of experience in two-wheeler financing and in MSME financing as well. The company primarily operates in eight states namely Chhattisgarh, Madhya Pradesh, Odisha, Jharkhand, Maharashtra, Rajasthan, Andhra Pradesh and Uttar Pradesh through a network of 240 branches as on March 31, 2025. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of SRFCPL to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Established track record of lending in vehicle financing through a wide branch network and collection points SRFCPL commenced lending activities in 2008 upon receiving its NBFC license. The company started the lending business with two-wheeler financing only and gradually since 2010 has diversified its product mix to four wheeler financing, financing LAP towards SME borrowers and microfinance lending. The company is promoted by Mr. Ganesh Bhattar and his son Mr. Gaurav Bhattar (MD & CEO) who have been engaged in two-wheeler financing since 2004 through a proprietorship concern. The promoters are supported by professionals with significant experience in various functional areas. With the support of able management, SRFCPL is associated with ~600 dealers and intermediaries for supporting their forays in two-wheeler segment. The extensive experience of the promoters has helped the company to sustain the business growth during economic downturn. The company’s operations are currently spread across eight states namely Chhattisgarh, Odisha, Madhya Pradesh, Jharkhand and have recently expanded to Maharashtra, Rajasthan, Andhra Pradesh and Uttar Pradesh and operate through a network of 240 branches as on March 31, 2025. SRFCPL has a major presence in Chhattisgarh and Madhya Pradesh with ~78 percent of the AUM as on March 31, 2025 spread across various districts in these two states. Acuité believes that SRFCPL’s business profile will continue to benefit from the established presence in the area of operations backed by a wide network of branches. Consistent growth in AUM and disbursement The rating draws strength from persistent improvements in disbursements, SRFCPL has disbursed Rs. 826.02 Cr. for FY25 (Prov.) from Rs. 381.49 Cr. for FY 22 and registered an AUM of Rs.1277.28 Cr. as on March 31, 2025 (Prov.) which has increased from Rs 544.12 Cr. in FY 22. Further, SRFCPL’s profitability indicators are healthy marked by growth in Net Interest Income (Total Income net of Interest expense) from Rs. 78.72 Cr. in FY 2022 to Rs. 187.88 Cr. in FY2025. (Prov.) The PAT for FY2025 (Prov.) stood at Rs. 53.92 Cr.(FY24: Rs. 48.71 Cr.). As the company has adopted Ind-AS in FY 24-25, the Ind- AS adjusted PAT for FY 25 (P) stood at Rs 45.49 Cr. The experience of the top management and their active focus on maintaining robust collections has supported the company’s financial and operating performance. Acuite believes that the company will be able to sustain its profitability and asset quality metrics on the back of its ability to raise and deploy funds at competitive spreads across various asset classes. |
| Weakness |
| Modest capital position SRFCPL’s net worth stood at Rs.297.74 Cr. as on March 31, 2025 (Prov.) as against Rs 251.68 Cr as on March 31, 2024. The increase in networth is attributable to regular capital infusions from the promoter group as well as internal accruals. The company’s leverage indicators stood at 3.81 times as on March 31, 2025 as against 3.88 times as on March 31, 2024. SRFCPL reported a capital adequacy ratio (CAR) of 24.80 percent, comprising Tier 1 capital at 21.02 percent and Tier II capital at 3.81 percent as on March 31, 2025(Prov.). Further, the company has demonstrated resource-raising ability from both banks and large NBFC/FIs, with total debt of Rs. 1135.47 Cr. outstanding as on March 31, 2025(Prov.). Further, SRFCPL is engaged in a co-lending arrangements with SBI which will fuel portfolio growth. Acuité believes that the infusion of debt and equity capital will together stimulate the business growth and in turn improve the financial risk profile of the company. Moderate asset quality and geographic concentration SRFCPL’s product mix comprises two-wheelers financing, secured and unsecured loans towards MSME borrowers and personal loans towards government employees. Based on AUM of Rs. 1277.28 Cr. (as on March 31, 2025(Prov.)), two-wheeler loans comprised ~38 percent of AUM, followed by secured and unsecured loans towards MSME borrowers of ~46 percent , personal loans towards government employees comprising ~16 percent and remaining being loans to four-wheelers. SRFCPL’s overall borrower profile typically has dual income profile in terms of salary and agriculture income; these borrowers belong to mid to low-income segment in rural areas. SRFCPL’s overall GNPA and NNPA levels saw a slight deterioration; these stood at 2.78 percent and 1.83 percent as on March 31, 2025(Prov.) respectively (2.55 percent and 1.97 percent as on March 31, 2024). The provision coverage as on March 31, 2025 (Prov.) stood at ~34 percent. SRFCPL operates in 8 states namely Chhattisgarh, Madhya Pradesh, Odisha, Jharkhand, Maharashtra, Rajasthan, Andhra Pradesh and Uttar Pradesh. Of the total AUM, Chhattisgarh accounts around 31 percent, followed by Madhya Pradesh around 47 percent. However, the company has started expanding into newer regions with a view to mitigate the concentration risk. Acuité believes that containing additional slippages, while maintaining the growth in the loan portfolio and ability to expand operations in other states will be key rating monitorables. |
| ESG Factors Relevant for Rating |
| SRFCPL belongs to the NBFC sector which continues to complement the efforts of banks in enhancing small ticket retail lending in India. Some of the material governance issues for the financial services sector are policies and practices with regard to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, responsible financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. The entity has made adequate disclosures regarding its policies on related party transactions, vigil mechanism and whistle blowing. The board of directors consist of 6 directors. The company also maintains adequate level of transparency with regards to business ethics issues like related party transactions. In terms of its social impact, SRFCPL is actively engaged in community development programmes through its CSR activities. |
| Rating Sensitivity |
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| All Covenants |
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The Issuer shall maintain the below mentioned covenants during the entire tenor of the Debentures and till all the amounts outstanding is being duly repaid: a) Total Debt/Tangible Net Worth ratio to be within 5x. b) Capital Adequacy Ratio (CAR) of atleast 20% or as per applicable RBI regulation, whichever is higher. Of the above CAR, Tier-I to remain at minimum of 17%. c) Gross NPA not to exceed 5% of Gross Loan Portfolio d) Net NPA not to exceed 4 % e) Net NPA to Tangible Net Worth shall not exceed 15 %. f) Issuer to maintain a minimum Tangible Net-worth of Rs. 275 crores g) Earnings: After-tax Net Income (excluding extraordinary income) to remain positive. h) Issuer to maintain minimum liquidity amount equivalent to next 2- month liabilities after including Put Options/interest reset on liabilities (assuming 50% haircut in collection) in the form of unencumbered Cash and Cash equivalents, Fixed Deposits and/or Mutual Fund Investments. Unutilised CC from Banks shall be taken in account while testing. i) Average monthly Collection efficiency for the quarter, i.e., current month collections against current month’s demand (excluding arrears demand) to be maintained at minimum 85%. j) No Loans exceeding 1% of Tangible Net-worth to any single party and/or guarantees on behalf of third parties. k) The share of off balance sheet portfolio shall not exceed 25% of the Total Loan Portfolio. l) There shall not be any negative mismatches on cumulative basis in any of the buckets till the next one year of ALM statement after incorporating all the liabilities of the Issuer incorporating Put Options/ Reset Options etc. (in any form). The asset will include all the unencumbered Cash and Cash equivalent maturing across all the buckets of the ALM. Unutilized bank lines, undisbursed committed sanctions of the company and cash credit limits shall not be taken into account while testing the same. m) Issuer shall not prepay any loans or redeem NCDs; voluntarily or mandatorily before its stated maturity such that it leads to a negative mismatch on cumulative basis in any of the buckets of ALM statement up to one year of the Debentures after incorporating all the liabilities of the Issuer including Put Options/interest reset on liabilities. Unutilized bank lines, undisbursed committed sanctions of the company and cash credit limits shall not be taken into account while testing the same. n) Any other additional covenant as may be mutually agreed and shall form a part of the Transaction Documents. All covenants would be tested on quarterly basis i.e. as on 31 March, 30 June, 30 Sept and 31 Dec every year, starting from June 30, 2025 on consolidated and standalone balance sheet till the redemption of the NCDs. |
| Liquidity Position |
| Adequate |
| SRFCPL’s liquidity profile is adequate with no cumulative mismatches in individual buckets in the near to medium term based on the ALM statement as on March 31, 2025 (Prov.). The cash and cash equivalents of the company stood at Rs 41.48 Cr. as per March 31, 2025 (Prov.) |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Income plus other income ** Ind- AS adjusted PAT for FY 25 ( Prov.) stands at Rs 45.49 Cr. |
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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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