| Experienced management in micro-finance segment:
GUFS commenced its operations in 2008 extending micro-credit to women engaged in income generating activities under the Joint Liability Group (JLG) model. The company also extends Micro Housing loans, Integrated Fish Farming loans and Water, Sanitation and Hygiene loans. GUFS cater to rural and semi-urban areas of Odisha and Chhattisgarh with its network of 53 branches across 16 districts with an AUM of Rs. 80.20 Cr. as on March 31, 2025. GUFS is promoted by Mr. Govind Chandra Dash (Managing Director) who has been engaged in microfinance and rural development in Odisha through his NGO Gram Utthan. In 1990, Mr. Govind Chandra Dash established an NGO Gram Utthan which worked towards the development and financial inclusion of the rural population of Odisha. In 2008, he acquired an existing NBFC Visudha Investment Private Limited and re-named it as G U Financial Services Private Limited to provide an exclusive platform for financial inclusion efforts of his NGO Gram Utthan. Mr. Govind Chandra Dash is adequately supported by other members on the Board of Directors comprising Mr. Santosh Mishra (Director), who has over a decades of experience in Micro Finance, Micro Enterprise promotion, Entrepreneurship Development, Sustainable Livelihood Promotion, Skill Development Initiative with three decades of experience in the banking functions in various capacities in multiple areas of Administration and Management of Human Resources Management including Account Management, Customer Service, Staff Coordination, Training and Development. He also has experience in the functioning of Exchange Control Regulation, Management of Currency in the Issue Department and Maintenance of Estate in the Estate Department of Reserve Bank of India. He also has experience in the functioning of Exchange Control Regulation, Management of Currency in the Issue Department and Maintenance of Estate in the Estate Department of Reserve Bank of India. The company takes off-book exposure through Business Correspondence. It is a business correspondence partner for Arohan Financial Services Pvt Ltd, CSB Bank and Jana Small Finance Bank.The Capital Adequacy Ratio of the company stood at 50.74 percent for FY 25,( PY: 65.38 percent).
Acuité believes that experience of the management and promoters will be central to support the business risk profile of the company.
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| Modest Financial performance and Reduction in AUM :
The company’s on-book portfolio witnessed a marginal increase to Rs 37.02 crore as on March 31, 2025, compared to Rs 28.55 crore as on March 31, 2024. As of Q1 FY2026, the on-book AUM stood at Rs 34.25 crore. However, the overall AUM of GUFS declined significantly from Rs 188.10 crore in FY2024 to Rs 80.20 crore in FY2025. The off-book AUM dropped from Rs 159.55 crore as on March 31, 2024 to Rs 43.18 crore as on March 31, 2025, and further to Rs 39.39 crore as on June 30, 2025. This contraction is primarily attributed to the discontinuation of Business Correspondent (BC) partnerships with two financial institutions and regulatory changes introduced by the RBI concerning PBC criteria.
The company’s profitability also weakened, with PAT declining to Rs 0.19 crore in FY2025 from Rs 1.87 crore in FY2024, largely due to the reduced scale of AUM and disbursements. Asset quality deteriorated, with Gross Non-Performing Assets (GNPA) rising from 0.73% in FY2024 to 2.23% in FY2025, and slightly to 2.22% as of Q1 FY2026. In absolute terms, GNPA increased from Rs 1.38 crore in FY2024 to Rs 1.79 crore in FY2025, and stood at Rs 1.64 crore as on June 30, 2025.
Acuité believes, going forward, the ability of the company to mobilise additional lower cost funding through debt/ sub debt and its ability to deploy the funds profitably to improve its financial performance will be a key rating monitorable.
Risk inherent to microfinance segment
The activities of microfinance companies like GUFS are exposed to concentration risks. GUFS has a presence in 2 states with a concentration in Odisha (99 percent of total AUM) and Chhattisgarh (1 percent of total AUM) for FY25. This exposes the company to high geographical concentration risk. Thus, the company's performance is expected to remain exposed to the competitive landscape in these regions and the occurrence of events such as natural calamities, which may adversely impact the credit profile of the borrowers. Besides geography, the company will be exposed to competition and any changes in the regulatory framework, thereby impacting the credit profile of GUFS.
Acuité believes that the company’s modest scale of operations, coupled with geographic concentration, will continue to weigh on the company’s credit profile over the near to medium term.
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