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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 200.00 | ACUITE BBB- | Negative | Downgraded | - |
| Total Outstanding | 200.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has downgraded its long-term rating to ‘ACUITE BBB-’ (read as ACUITE triple B minus) from ‘ACUITE BBB’ (read as ACUITE triple B) on the Rs. 200.00 crore bank facilities of Adi Chitragupta Finance Limited (ACFL). The outlook has been revised from 'Stable' to 'Negative'. Rationale for the rating The downgrade reflects the deterioration in Adi Chitragupta Finance Limited’s credit profile during FY2025 as compared to FY2024. This deterioration is in consonance with the overall deterioration in the micro finance sector due to over leveraging in the sector during last few years and consequent deterioration in asset quality. Acuite understands that as a part of deliberate strategy ACFL slowed down disbursement during the last financial year and total disbursement during the FY 2025 was restricted to ~Rs. 87.00 Cr owing to low disbursement the portfolio came down to Rs. 167.08 Cr as on FY2025 from Rs 286.23 Cr as on FY2024. Profitability also weakened because of reduction in portfolio and consequent decrease in operating income with PAT reducing to Rs. 0.41 Cr as on FY25 from Rs.14.63 Cr as on FY24, alongside a decline in return indicators such as RoAA (0.16% vs. 4.70%) and RoTA (0.20% vs. 4.54%). Asset quality also deteriorated due to over indebtedness impaired the ability of borrowers to repay consequent increase in GNPA across the industry. Besides in the state of Bihar due to increase in indebtedness number the customers migrated to other state, resulting in hike in GNPA. ACFL's GNPA rising to 17.33% as on FY25 from 1.41% as on FY24 and NNPA stood at 12.19% as on FY25, leading to higher provisioning costs. |
| About the company |
| Bihar based Adi Chitragupta Finance Limited (ACFL) is a non-deposit taking Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI). Incorporated in 2015, the company was founded by Mr. R.K Sinha and Mr. Gyan Mohan and commenced its operation in 2017. Mr. R.K Sinha is the founder of Security & Intelligence Services (India) Limited known as SIS Group and Mr. Gyan Mohan is an ex-banker with exposure in Banking and finance, including investment and international banking. ACFL extends micro-credit primarily to women borrowers through the Joint Liability Group (JLG) model. The company operates in the states of Bihar, Jharkhand and Uttar Pradesh through a network of 86 branches across 45 districts as on Mar 31, 2025. |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of ACFL to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Experienced management AFCL was founded by Mr. R.K Sinha and Mr. Gyan Mohan. Mr. R.K Sinha (Director) is an entrepreneur and founder of Security & Intelligence Services (India) Limited (SIS). SIS Group is one of the leaders in the manpower security business in the Asia-Pacific. SIS Group also has operation in Australia, New Zealand etc. SIS India is a company listed at BSE & NSE, with annual turnover in excess of Rs. 13,000 Cr. and more than 3 lakhs employees . SIS Group offers Security, Cash Logistics, and Facility Management Services in India, Australia, and Asia-Pacific regions. Mr. Gyan Mohan (Director and CEO) is an ex-banker and has around three decades of experience in the banking and finance sector, including investment and international banking. He has worked with SBI Capital Market as SVP & GH (Mergers & Acquisitions & Advisory) and has advised on many privatizations, mergers and advisory assignments. Mr. Mohan is governing board member of Microfinance Institutions Network (MFIN) and is the chairman of Task Force on Small & Medium MFIs and also an active member of Task Force on Credit Bureau at MFIN. The promoters are also supported by other board members like Mr. A. P. Verma (ex-Managing Director and CEO at SBI Capital Markets Limited), DMD and chief credit officer of SBI, who has over three decades of experience and has held varied senior positions at State Bank of India. Mr. Neelmani, a former IPS officer of batch 1975 who has served as DGP, Bihar. Mr. D.K. Saxena who has over four decades of experience in the field of Audit, Taxation, Textiles, Power and Banking/NBFC sectors and has served as a Director and Chairman of the Audit Committee of Syndicate Bank. The extensive experience of the board has helped ACFL put in place robust systems and procedures. The company has in place an automated loan processing system which operates on CBS & CRM provided by BR.Net from Craft Silicon on Software as a Service (SaaS) platform. Healthy Capital Structure ACFL’s networth stood at Rs. 78.95 crore as on March 31, 2025 over the years net worth has been grown through promoters contribution and plough back of profits. Promoters have also supported the company by way of Non-convertible debentures of Rs. 49.95 crore and unsecured loans of Rs. 2.00 crore during FY2025. During FY2024 also the promoters infused capital of Rs. 10.00 crore in the form of compulsorily convertible preference share (CCPS) and in FY2025 existing CCPS worth of Rs. 11.00 crore has been converted into equity share. As per conditions stipulated with some of the lenders, the promoters are committed to maintain their NCD holding in the same form or by way of conversion into equity. The company has also demonstrated moderation in leverage, with debt-to-equity improving to 1.45 times in FY2025 from 2.87 times in FY2024, reflecting reduced reliance on external borrowings. Networth remained stable at around Rs. 78.95 Cr as on March 31, 2025, providing a cushion against operational stress. AFCL's Capital Adequacy ratio (CAR) stood at ~51.19 percent as on March 31, 2025 (~33.90 percent as on March 31, 2024). These factors, along with a track record of operations and a diversified funding base, lend support to the overall credit profile despite the deterioration in asset quality and profitability. |
| Weakness |
| Weak Asset Quality
After two years of rapid growth, the sector is facing challenges caused by borrower overleveraging and resulted increase in delinquency. Industry’s Gross NPAs in FY2025 surged to around 15% vis-à-vis opening Gross NPAs of ~8.8 % as of March 2024. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| ACFL liquidity profile remained comfortable as on Mar 31, 2025 with no negative cumulative mismatches in any of the buckets as per the reported liquidity statement |
| Outlook - Negative |
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| Other Factors affecting Rating |
| None. |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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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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