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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 8.00 | ACUITE BB- | Stable | Downgraded | - |
| Bank Loan Ratings | 39.82 | Not Applicable | Withdrawn | - |
| Non Convertible Debentures (NCD) | 15.00 | Not Applicable | Withdrawn | - |
| Total Outstanding | 8.00 | - | - |
| Total Withdrawn | 54.82 | - | - |
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Rating Rationale |
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Acuité has downgraded the long-term rating from "ACUITE BB+" (read as ACUITE double B plus) to ‘ACUITE BB-’ (read as ACUITE double B minus) on the Rs. 8.00 Cr. bank facilities of Auriolus Finvest Private Limited (AFPL). The outlook is ‘Stable’. Acuité has withdrawn the long-term rating on the Rs. 15.00 Cr. Non convertible debentures without assigning any rating as it is a proposed facility of Auriolus Finvest Private Limited (AFPL). The rating is being withdrawn on account of the request received from the company. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. Acuité has withdrawn the long-term rating on the Rs. 7.31 Cr. bank facilities without assigning any rating as the instrument is fully repaid of Auriolus Finvest Private Limited (AFPL). Acuité has withdrawn the long-term rating on the Rs. 25.51 Cr. proposed facilities without assigning any rating as it is a proposed facility of Auriolus Finvest Private Limited (AFPL). The rating is being withdrawn on account of the request received from the company and the No Due Certificate (NDC) received from the bankers as per Acuité’s policy on withdrawal of ratings as applicable to the respective facility/instrument. Acuité has withdrawn the long-term rating on the Rs. 7.00 Cr. bank facilities without assigning any rating of Auriolus Finvest Private Limited (AFPL ). The rating is being withdrawn on account of the request received from the company as per Acuité’s policy on withdrawal of ratings as applicable to the respective facility/instrument. Rationale for the downgrade The downgrade in the rating is on account of weak profitability metrics and decline in operating revenue at a consolidated level. The profitability remained subdued due to high operating expenses. The group reported losses of Rs. 34.87 Cr. in FY24 as compared to losses of Rs. 28.52 Cr. in FY23 (losses for FY22: Rs 31.34 Cr.). There is a decrease in operating revenue to Rs. 677.68 Cr. in FY24 from Rs. 1056.68 Cr. in FY23. The group’s networth stood at Rs. 31.70 Cr. as on Mar-24 with a gearing of 1.61 times as compared to Rs. 61.45 Cr. as on Mar-23 with a gearing of 2.05 times. Acuite also takes into account the decline of AUM in the lending arm of the group Auriolus Finvest Pvt. Ltd. (AFPL) wherein the AUM saw a de growth from Rs. 77.16 Cr. in FY23 to Rs. 26.68 Cr. in FY24. The GNPA deteriorated sharply from 2.24 percent as on March-23 to 10.46 percent as on March-24. The rating continues to factor in the group’s experienced management and support from marquee investors. The capital support from the marquee investors, like Kalaari Capital, Accel, Inventus Capital and Mr. Nandan Nilekani has resulted in healthy capital structure and financial flexibility at the Group level. The rating further factors in expectations of capital support from promoters/ investors in the near to medium term which shall be instrumental for scaling up business operations. |
| About the Company |
| Auriolus Finvest Private Limited (AFPL), known with its Brand, “BizFunds” was incorporated in 2018 to carry on the business of lending to SME sector and working capital loans to Indian businesses to finance their purchase of manufacturing supplies: raw material and industrial equipment. The Company is a subsidiary of Power2SME Private Limited. In April, 2019, the Company has received the Certificate of registration from the Reserve Bank of India to carry on the business of Non-Banking Financial Institution without accepting public deposits. |
| About the Group |
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Power2SME provides its B2B services through its digital ecosystem which delivers raw material procurement at competitive prices, MRO procurement, and access to finance to smaller SME’s with an objective to provide them with higher efficiencies and profitability. Power2SME functions as a 'buying club' and helps SMEs benefit from economies of scale as a result of volume purchase and buying power across a large network of manufacturers. The company has 2 wholly owned subsidiary companies named Jijo India Private Limited & Auriolus Finvest Private Limited. Jijo India Private Limited was incorporated in October 2012 and engaged in the business of trading of various products. Auriolus Finvest Private Limited was incorporated in October 2018 and engaged in lending to SME sector by extending working capital loans to them. Power2SME Private Limited (Power2SME) is a private limited company incorporated in 2012. The company is engaged in the business of trading of Metals (majorly Steel & TMT), Polymers, Yarn, Chemicals etc and sells its product in domestic market. Headquartered in Gurugram, Power2SME has 5 offices spread across Mumbai, Chennai, Kolkata, Ahmedabad and Pune. The company is led and promoted by Mr. R. Narayan (Founder & CEO) with the support of marquee investors. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has considered the consolidated view on the business and financial risk profile of Power2SME Private Limited and its subsidiaries Auriolus Finvest Private Limited and others to arrive at the rating. The approach is driven by common management, shared brand, and strong operational and financial synergies between the group companies. |
| Key Rating Drivers |
| Strength |
| Experienced management team Power2SME Private Limited (P2S) is led by Mr. R. Narayan (Founder & CEO). Mr. Narayan is a seasoned entrepreneur with around two decades of corporate experience. He was previously associated with working in sales and marketing profiles for Microsoft, Oracle and TATA Group. Having worked with SME segment closely and understanding their nuances he co-founded Denave India Private Limited a technology powered sales enabling services company. Later in 2012, with the support of marquee investors, Mr. Narayan founded Power2SME to further his cause to empower the SME segment. Mr. Narayan is supported by an experienced professional team with diverse expertise in areas of finance, treasury, investments, customer-ready technology solutions, networking alliances amongst others. Accel and Inventus Capital have board representation and P2S benefits from their expertise. Mr. Mahendran Balachandran (Partner – Accel) and Mr. Parag Dhol (Inventus Capital) are on the board of P2S. The management team has been able to on-board various suppliers on their platform and blue-chip companies as customers to fulfil their MRO requirements like Vendata, Hindustan Zinc, Orient, L&T and others. The management has taken steps to improve its credit policies. The subsequent decline in traded volumes has resulted in the company not being able to achieve optimal levels of volumes required for break-even. Acuité believes that, the adoption of robust credit policies, on-boarding blue-chip clients to drive volumes and overall experience of the management will help the company to grow in a sustainable manner. |
| Weakness |
| Weak financial risk profile P2S commenced its operations in 2012. The group reported loss of Rs. 34.87 Cr. for FY2024 over an operating income of Rs.677.68 Cr. as compared to loss of Rs. 28.52 Cr. over an operating income of Rs. 1056.68 Cr. during FY2023. The group’s networth stood at Rs. 31.70 Cr. as on Mar-24 with a gearing of 1.61 times as compared to Rs. 61.45 Cr. as on Mar-23 with a gearing of 2.05 times. The company will be able to achieve break-even only once its achieves optimal levels of volumes in its trading segment and rationalize its high operating costs. Since the company is currently less dependent on funding lines from Banks & NBFC/FI for its business operations, the finance cost and debt repayment obligations remain low. As the NBFC arm grows, the company would be in requirement of funding lines which could further add to the existing stress on profitability metrics unless, the company is able to optimize its overall operating costs and scale up business volumes. Additional capital infusions from investors, could help the business to maintain lower levels of finance costs in medium term, thus enabling the company to focus its resources in driving business growth. Competitive nature of industry and susceptibility to cyclicality nature of industry P2S competes with various players in the organized and unorganized segments in trading industry, thus limiting the pricing power. Metals (especially steel) constitutes around 60 percent of the total NMV for P2S. The steel consumption is majorly dependent on the economic activities taking place in and around the country, any significant slowdown in this industry will impact the revenue of the P2S’s customers thus impacting P2S’s credit profile. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| The Group’s liquidity is adequate and has maintained cash and bank balance of Rs. 11.59 crore as on March 31, 2024. A major portion of P2S portfolio is against Bank Guarantee and Letter of Credit which is correspondingly discounted against the bank lines with matched tenure. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Key Financials (Consolidated) | ||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable) |
| Not applicablle |
| Any Other Information |
| None |
| Applicable Criteria |
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• Service Sector: https://www.acuite.in/view-rating-criteria-50.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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