Experienced management and track record of operations
 
AMPL has been extending micro credit since 2007 to women engaged in income generating activities under Joint Liability Group (JLG) and Self Help Group (SHG) model. The company has geographical presence in the states of Rajasthan, Madhya Pradesh and 4 other states with its network of 85 branches and an Asset under Management (AUM) of Rs. 373.11 Cr. as on Sept 30, 2022. AMPL lends mostly to JLG groups, especially women in rural and semi-urban areas for income generating activities. AMPL also organizes women into groups of 8-20 members configuring a SHG, under agreement with IDBI Bank to undertake business correspondent activities. AMPL is promoted by Mr. Pramod Kumar Paliwal and Mr. Kuldeep Kumar Arora. Mr. Pramod Kumar Paliwal is the Chairman at Society for Indian Institute of Rural Development and has been actively involved in promotion of livelihood activities in the rural sector of around three decades. Mr. Pramod Kumar Paliwal was also a National Expert on cluster development with United Nations Industrial Development Organization (UNIDO) consultant with World Bank. Mr. Kuldeep Kumar Arora also has around two decades of experience in microfinancing and livelihood development activities and he is a member of committee on SHG promotion constituted by NABARD. The board is supported Mr. Ashok Bhargava (Independent Director) who has around three decades of experience with SIDBI and was involved in SME development banking and Mr Dinesh Narain Awasthi (Independent Director), Vice Chancellor at Lok Jagrut Kendra University and Advisor at Society for Research and Initiatives for Sustainable Technologies and Initiatives (SRISTI).

Acuité believes that presence of the experienced promoters in the microfinance segment will be central to support the business risk profile of the company.
 

Improvement in Asset Quality metrics
 
The company’s loan portfolio outstanding as on March 31, 2022, grew to Rs. 370.18 Cr as compared to Rs. 309.42 Cr as on March 31, 2021. Further, the AUM stood at Rs. 373.11 Cr as on September 30, 2022. AMPL offers tailor made micro credit products to women through Joint Liability/ Self Help Group within the range of Rs. 20,000 to 60,000, primarily for income generating purpose. The loans have a tenure of 14 to 26 months.  The company has partnered with banks and NBFCs as its business correspondence partner. AMPL has FLDG arrangements with these partners which provide risk cover on the managed book portfolio.  
AMPL has demonstrated sound asset quality, as reflected in the low Gross Non-Performing Assets (GNPA) for owned book at 1.92 percent as on March 31, 2022 improving from 4.47 percent as on March 31, 2021. The company reported nil Net Non-Performing Assets (NNPA) as on June 30, 2022. The company’s overall collection efficiency(including pre-payments)  averages at 98.40 percent for last 6 month ended September 2022, resulting to an on-time portfolio of 97.81 percent as on September 30, 2022 improving from 92.65 percent as on March 31, 2021.

Acuite believes that the ability of the company to grow its loan portfolio while maintaining asset quality will be key monitorable.
 

Geographically concentrated portfolio and Risk Inherent to Microfinance segment
 
The activities of microfinance companies, like AMPL are exposed to geographical concentration risks. AMPL has presence in four states with concentration in Rajasthan (~60 percent of the overall portfolio) and Madhya Pradesh (~20 percent of the overall portfolio) as on June 30, 2022. It has 85 branches located over 42 districts. This exposes the company to high geographical concentration risk. Thus, the company's performance is expected to remain exposed to competitive landscape in these regions and 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 credit profile of AMPL.

Acuité believes that geographic concentration in its portfolio coupled with the inherent risk in microfinance segment will continue to weigh on the company’s credit profile over the near to medium term.

Modest Scale of Operations
 
AMPL is primarily focused on microfinancing through JLG model and SHG under business correspondence agreement. The company reported AUM at Rs. 373.11 Cr. as on September 30, 2022. The AUM comprised of owned portfolio of Rs. 104.61 Cr. and off-book exposure of Rs. 268.49 Cr as on Sept 30, 2022. Over the past three years, the off book portfolio has contributed significantly towards the total AUM, contributing ~72 percent of the AUM as on September 30, 2022. AMPL takes off-book exposure through Business Correspondence model. The company is engaged in Business Correspondence relationship with Yes Bank (since 2014), IDBI Bank (since 2016), MAS Financial Services Limited and Utkarsh Small Finance Bank.  

Acuité expects AMPL to grow its loan portfolio in a sustainable manner through both on book and off book exposure.