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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 30.04 | Not Applicable | Withdrawn | - |
| Non Convertible Debentures (NCD) | 69.96 | PP-MLD | ACUITE BBB+ | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 69.96 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 30.04 | - | - |
| Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE PP-MLD BBB+’ (read as ACUITE Principal Protected Market Linked Debentures triple B plus) on the Rs. 69.96 Cr. principal protected market linked debentures of Abans finance Private Limited (AFPL). The outlook is ‘Stable’. |
| About the company |
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AFPL was formerly known as Sofed Comtrade Private Ltd. and incorporated in 1995 in Kolkata and is continuing now, with its registered office in Mumbai. Abans Finance Private Limited is a Non-Deposit NBFC and is engaged in advisory services like Investment Banking, Corporate Finance, Project Finance, Trade Finance and providing Business & Retail Loans against collateral security of immovable property, agri stocks, liquid assets like shares, other financial assets, gold jewelry, etc. AFPL also advances loans to other associate companies within the Abans Group.
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| About the Group |
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The Abans Group was founded by Mr. Abhishek Bansal in 2005. The Group is majorly involved in Commodities Trading activities. Abans Group initially started out as commodities trading house and now has diversified its businesses into Broking Services, Warehousing, Realty & Infrastructure, Merchant Banking, NBFC, Renewable Energy, Gems & Jewelry, Pharmaceuticals, Wealth & Investment Management. The group is promoted by Mr. Abhishek Bansal
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| Analytical Approach |
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Analytical Approach Extent of Consolidation
• Full Consolidation Rationale for Consolidation or Parent / Group / Govt. Support Acuité has adopted a consolidated approach and considered the business and financial risk profile of Abans Holdings Limited (AHL) (formerly known as Abans Holdings Private Limited) and its subsidiaries, (the Company and its subsidiaries together referred to as the Group) for arriving at the rating (for list of subsidiaries as on March 31, 2023 refer Annexure II). The approach is driven by common management, shared brand, and strong operational and financial synergies between the group companies. |
Key Rating Drivers
| Strength |
| Diversified business profile & group synergies
Abans group is globally diversified organization engaged in Financial Services, Gold Refining, Jewellery, Commodities Trading, Agricultural Trading and Warehousing, Software Development and Real Estate. The group is founded by Mr. Abhishek Bansal who leads a global team of qualified people operating businesses from multiple locations including India, United Kingdom, Dubai, Shanghai, Hongkong, Mauritius and Singapore.
Abans Holdings represents the financial services arm of the Abans Group. Headquartered in India, Abans Holdings is engaged in diversified global financial services business providing NBFC services, global institutional trading in equities, commodities and foreign exchange, private client stock broking, depositary services, asset management services, investment advisory services and wealth management services to corporate houses, institutional and high net worth clients. The varied financial services businesses of Abans Group are mainly organized as Finance Business which comprises NBFC operations housed under Abans Finance Private Limited and is primarily focused on lending to private traders and other small and medium businesses involved in the commodities trading market; Agency Business under which the group offers various institutional and non-institutional trading services, wealth management and private client brokerage services, mainly in equity, commodities and foreign exchange; Capital and Other businesses looks after internal treasury operations which manages the Groups capital funds. The companies maintain positions in physical as well as exchange traded commodities and other instruments. The business also includes providing Warehousing Services to commodity market participants. Acuité believes that Abans Holdings consolidated business profile will be supported by expertise of seasoned professional managing the operations and established track record of operations. Comfortable capitalization and gearing levels At group level, Abans group capitalization levels were comfortable marked by networth of Rs. 904.39 crore as on March 31, 2022. Overall gearing levels of Abans group remained low with debt majorly comprising of Secured & Unsecured MLD issued by Abans Finance Private Limited (AFPL) - NBFC. The Group might look forward to leverage its position and raise further debt for expanding its NBFC operations supported by its comfortable capitalization levels. AFPL (standalone) also has adequate capitalization levels marked by overall CAR of 35.66 percent as on June 30, 2023(as on June 30, 2022 CAR stood at 35.35 percent).
At standalone level, AFPL’s capital structure is marked by networth of Rs. 303.36 Cr. as on March 31, 2022 and a gearing of 1.21 times as on March 31, 2023 . The debt mainly comprises of Secured & Unsecured Market Linked Debentures (MLD). Acuité believes that the company’s comfortable capitalization levels will support its growth plans over the medium term. Sound earnings profile Abans Holdings reported total operating income from key business verticals of Rs. 116.70 Cr. for FY2023 as compared to Rs. 101.62 Cr. in FY2022. The businesses at Group level are categorized as Finance Business, Agency Business, Capital Businesses and Others. Finance Business comprises of the Interest Income ,Agency Business comprising Income from Fees, Brokerage and other Financial Services and Capital Business comprising Gross Profit from Internal Treasury Operations and Investment & Dividend Income
The Group reported PAT of Rs. 70.29 Cr. for FY2023 as compared to 61.84 Cr. for FY2022. RoAA stood at 4.58 percent as on March 31, 2023 (at 5.17 percent as on March 31, 2022). Going forward, the Group businesses would be focused towards building itself as an Asset Management Company. At Standalone level, AFPL reported a PAT of Rs. 8.87 Cr. for FY2023 as compared to Rs. 4.90 Cr. for FY2022. Acuité believes that despite in improvement in Abans Holdings earning profile, its business operations would remain susceptible to inherent risks in commodities market and overall economic environment. |
| Weakness |
| Risks involving general economic and market conditions Abans Group was impacted by Covid pandemic which resulted in a decline in physical commodities trading activities as a significant portion trades were dependent on economic activities in the commodities supply chain, all of which have been affected due to the nationwide lockdown that had been imposed from time to time. The Group’s activities were further affected by introduction of Tax Collected at Source (TCS) under GST regulation. General economic and market conditions in India and globally also have a significant impact on the revenue profile of Abans group. Their income sources are highly dependent upon the levels of activity in the securities, currency & commodities markets in the countries in which they operate namely India, United Kingdom, China, Singapore, Mauritius and the UAE. Any adverse change in global economic and political conditions may impact, amongst others, the volume of financial assets traded, the prices and liquidity in the commodity market. Also, revenues generated from businesses like broking, wealth management, private client broking and investment advisory business, are directly related to the volume and value of the transactions. Any adverse market movement (downturn) would result in decline in transaction volumes leading to a decline in the group’s revenues received from commissions earned from such businesses. Abans Group is also involved in trading in the physical bullion and agricultural commodity markets with delivery based local wholesalers/ traders in order to hedge the group’s exchange traded instruments exposures etc. These physical transactions represent the group’s sale and purchase of goods and are dependent on a limited number of counter parties for dealing in these kinds of transactions. The top ten parties represent more than 90% of the total sale and purchase of physical commodities. Although, Abans has only been dealing with known counterparty but, this exposes Abans towards risk of over dependence on a limited number of counterparties. The inability to mitigate such risks could adversely affect the group’s operations and financial conditions going forward. ABSPL is engaged in cash & carry arbitrage. In cash and carry arbitrage, the acquisition cost of the underlying is certain; however, there is no certainty with regards to its carrying costs. However, the cash & carry arbitrage mitigates the trading risks to certain extent. |
| ESG Factors Relevant for Rating |
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Abans Holdings Limited (AHL), has a diversified revenue stream with a majority portion accruing from the financial services sector. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behavior. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry.
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| Rating Sensitivity |
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| All Covenants |
| AFPL is subject to covenants stipulated by its lenders/investors in respect of various parameters like capital structure among others. |
| Liquidity Position |
| Adequate |
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Business growth of Abans has been supported by the group’s internal accruals and issuances of Market Linked Debentures, the company’s dependence on debt is very low as reflected in low gearing of 0.49 times as on March 31, 2023. Hence, the company has no significant term debt obligations over the near term. At a consolidated level the cash and cash equivalents stood at Rs. 350.61 Cr. as on March 31, 2023.
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| Outlook: |
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Acuité believes that Abans Group will maintain ‘Stable’ credit risk profile over the medium term supported by its well-established position in the commodities markets and experienced management. The outlook may be revised to 'Positive' in case of a sizeable improvement in its earnings translating to an improvement in its networth. Conversely, the outlook may be revised to ‘Negative’ in case of significant deterioration in profitability metrics and lower than expected growth of Abans group.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
changes in inventories; Net gains/loss on fair value changes in derivatives; plus, other income |
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| Key Financials - Consolidated | ||||||||||||||||||||||||||||||||||||||||
changes in inventories; Net gains/loss on fair value changes in derivatives; plus, other income |
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| Status of non-cooperation with previous CRA (if applicable): |
| None |
| 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 • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.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 • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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Annexure II List of subsidiaries of Abans Holdings Limited considered for consolidation as on March 2023
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Contacts |
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