Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Bank Loan Ratings 100.00 Not Applicable | Withdrawn -
Non Convertible Debentures (NCD) 40.00 ACUITE A+ | Stable | Downgraded | Negative to Stable -
Non Convertible Debentures (NCD) 10.00 Not Applicable | Withdrawn -
Total Outstanding Quantum (Rs. Cr) 40.00 - -
Total Withdrawn Quantum (Rs. Cr) 110.00 - -
 
Rating Rationale

Acuité has withdrawn rating on the Rs. 100.00 Cr. bank facilities of Clix Housing Finance Limited (CHFL). The rating is being withdrawn on account of request received from the company and NOC received from the banker as per Acuite's withdrawal policy.

Acuité has downgraded the long-term rating to ‘ACUITE A+’ (read as ACUITE A plus) from ‘ACUITE AA-’ (read as ACUITE double A minus) to the Rs. 40.00 Cr. non-convertible debentures of Clix Housing Finance Limited (CHFL).The outlook is revised from 'Negative' to ‘Stable’.

Acuité has withdrawn rating on the Rs. 10.00 Cr. proposed non-convertible debentures of Clix Housing Finance Limited (CHFL). The rating is being withdrawn on account of request received from the company and as per Acuite's withdrawal policy.

Reason for downgrade
The downgrade is on account of modest earning profile, continued elevated credit costs and modest growth in AUM levels over the last three years through FY 2023. Clix Capital Services Private Limited reported a Profit After Tax (PAT) of Rs. 24.41 Cr. in FY2023 vis-a-vis Rs. (93.31) Cr. in FY2022 and Rs.9.4Cr in FY 2021 on account of higher operating costs, write-offs and provisions. Acuite however also takes note of the one-time MAT (Minimum Alternate Tax) credit impact of Rs. 20.54 Cr during FY2023. Clix Capital’s operating expense to earning assets remain in the range of 5.18%-5.65% during the last three years through FY 2023. Acuite also observes significant deterioration in the asset quality indicators, the GNPA and write-offs as a percentage of AUM remained high over the last three years and currently stands at 7.83% (consolidated basis) as on March 31, 2023 post peaking at 12.73% as on March 31, 2022. On a consolidated basis, the GNPA stood at 2.48% in FY 2023 as compared to 4.99% in the previous year. While the GNPA levels improved in FY 2023 compared to FY 2022, it remains modest compared to its peer group. Furthermore, the downgrade also factors the continued elevated costs for the Clix group. At a consolidated level, write offs for the year stood at ~Rs. 227.79 Cr as against ~Rs.283.02 Cr in FY2022. Acuite takes note of that the write-offs in FY 2023 also includes the write-offs on partnership products amounting to Rs.103 Cr. The on-time portfolio stood at 89 percent as on March 31, 2023 as against 83 percent as on March 31, 2022.
The growth in AUM levels of the company has remained muted over the last three years, and has witnessed a compounded annual growth rate (CAGR) of around 2.0% over the same period. The company reported an AUM of Rs. 4,374 Cr. as on March 31, 2023 as compared to Rs. 4,188 Cr as on March 31, 2021. During FY2022, the AUM of CSPL declined on account of a distinct shift in strategy from wholesale to granular retail book. (The AUM stood at Rs. 3650.29 Cr. as on March 31, 2022). Acuite observes that while the core retail book in FY 2023 has grown at around 30% compared to the last year, the run-down of the existing wholesale book has restricted any meaningful growth in the overall AUM. The limited growth in AUM has led to lower net interest income which remains restricted at around Rs.300 Cr in FY 2023 as compared to Rs.270 Cr in FY 2022.
The rating continues to factor the strong management team, the presence of experienced promoters, Mr. Pramod Bhasin and Mr. Anil Chawla as well as a competent board backed by the global private equity fund, Apollo Global Management LLC and addition of three new independent directors on the board. The rating derives comfort from the association of Apollo Global Management LLC, besides capital support and board representation, since the Group benefits from its oversight and expertise across various sectors and products. With a consolidated net worth of Rs 2025.46 Cr. and moderate gearing of 1.66 times as on March 31, 2023, the group is well positioned to support the future growth of its retail lending businesses.

About CHFL
­Clix Housing Finance Limited, a wholly owned subsidiary of Clix Capital, is a housing finance company, registered with the National Housing Bank (NHB). The company was incorporated in 2016 and commenced its operations in 2018. Clix Housing Finance Limited added as a new entity to focus on mortgage and housing finance products. It benefits from capital infusion by, and synergies with, Clix Capital Services Private Limited.
 
About the Clix Group
­Delhi based, Clix Capital Services Private Limited (formerly known as GE Money Financial Services Private Ltd), and Clix Finance India Private Limited, was originally set up by GE Group in 1994. In 2016, Mr Pramod Bhasin and Mr Anil Chawla (promoter holding 15 percent), former top executives at GE India along with the backing from private equity firm AION Capital Partners Limited (85 percent stake)acquired these businesses from GE Group via management buy in arrangement. AION is a joint venture between ICICI Venture Funds and US Headquartered Global private Equity Fund Apollo Global Management LLC, which ended in 2020, and currently, Apollo Global Management LLC is directly managing the Group. In 2022, for simplifying its corporate structure, the company merged its subsidiary Clix Finance India Pvt. Ltd. with main entity Clix Capital.
 

Analytical Approach

Extent of Consolidation
•Full Consolidation
Rationale for Consolidation or Parent / Group / Govt. Support
­Acuité has consolidated the business and financial risk profiles of Clix Capital Services Private Limited, and its subsidiariy Clix Housing Finance Limited. (Hereinafter referred to as ‘Clix Group’) for arriving at the rating. The consolidation is in view of common promoters and management, integrated businesses, shared brand name, and significant operational and financial linkages between these entities.

Key Rating Drivers

Strength

Experienced Management backed by Global Private Equity Fund
Clix Capital Services Private Limited (formerly known as GE Money Financial Services Private Ltd), and Clix Finance India Private Limited, was originally set up by GE Group in 1994. In 2016, Mr Pramod Bhasin and Mr Anil Chawla, former top executives at GE India along with backing from private equity firm AION Capital Partners Limited acquired these businesses from GE Group via management buy-in arrangement. AION is a joint venture between ICICI Venture Funds and US Headquartered Global private Equity Fund Apollo Global Management LLC which ended in 2020 and currently, Apollo Global Management LLC is directly managing the Group.
The Board and top management of Clix Group include key management personnel with a long track record, managing both corporate and retail finance, with relevant experience. The promoter Mr Pramod Bhasin, who has around 3 decades of experience in corporate management, served as the President of GE Capital India till 2009. Mr Anil Chawla has extensive experience of three decades in corporate lending, private equity and financial services. He had been associated with GE India for 10 years as CEO of GE Commercial Finance and Managing Director of GE India. Mr Utsav Bajjal ( Senior Partner and MD at Apollo Global Management Inc) having 20 years of experience in financial services, is on the Board of Clix Capital and Clix Finance. The Clix group’s CEO, Mr. Rakesh Kaul has over 2 decades of experience in Financial Services. The Board is ably supported by experienced senior management team heading different verticals of the Group with adequate and relevant experience in their respective fields.
Further, the company has appointed three new Independent Directors having deep domain expertise. Mr. Chander Mohan Vasudev as Secretary in Department of Banking (Ministry of Finance), Expenditure and economic affairs. Ms. Anuradha Bajpai has an experience of over 3 decades in the field of Audit and Assurance having worked as a consultant with Deloitte, Haskins and Sells. Mr Ajay Candade is the Managing Partner and co-founder of Fractal Growth Partners, a scale-up focused investor in technologyenabled businesses, he was previously co-lead of KKR's Private Equity team in India.
Acuité believes that Clix Group’s business profile will benefit from expertise of its top management and the promoters.
 
Adequate Capitalization and Gearing levels and resource raising ability.
With a consolidated net worth of Rs 2025.46 Cr. as on March 31, 2023, the group is well positioned to support the growth of its businesses over the medium term. CCSPL’s capital position is adequate as reflected in the capital adequacy which stood at 37.08 percent as on March 31, 2023. Also, the consolidated outstanding debt stood at Rs. 3368.59 Cr. as on March 31,2023 translating to gearing ratio of 1.66 times (1.39 times as on March 31,2022). The group has well diversified resource profile and demonstrated ability to raise funds from Banks and Financial Institutions in the form of Term Loans, NCD/MLD and securitization.
Acuité believes that the company’s comfortable capitalization levels and the ability to raise funds will support its growth plans over the medium term.

Shift towards granular retail portfolio & technology driven processes.
Clix, as a part of its conscious strategy, has been reducing its corporate loan book while simultaneously focusing on growth of its retail loan book. The corporate lending segment has now reduced to ~2.28 percent as on March 31, 2023 from 17.5% in FY 2021. Consequently, the company has increased the exposure towards School and Business loans which collectively constitute ~48.75 percent of the loan portfolio. The Group has invested in analytics and digital technologies over the years to achieve faster scalability in building retail-oriented portfolio. It has employed statistically driven scorecard model for its credit underwriting processes i.e. origination, risk assessment and disbursements with minimum manual intervention.
Acuité believes that the company’s focus towards retail book is likely to augur well over the near to medium term.

Weakness

Moderately seasoned retail loan portfolio
Clix Group has consolidated AUM of Rs 4257 Cr. as on March 31, 2023. Since FY2019, the Group has gradually pivoted to retail book from wholesale book with retail portfolio now accounting majority of the portfolio. CCSPL has restructured 2,190 accounts having an outstanding balance of Rs 248.7 Cr. as on March 31, 2023 and created provisions of Rs 30 Cr against these restructured accounts. Given the limited seasoning of the retail book, the ability of the company to manage asset quality while maintaining healthy collections will be a key monitorable.
Acuité believes that limited seasoning of the  portfolio, will continue to weigh on the company’s credit profile over the near to medium term.

Profitability under pressure due to higher credit costs
On a consolidated level, Profit after Tax (PAT) stood at Rs 28.33 Cr. as on March 31, 2023 as against a loss of 98.47 Cr as on March 31, 2022. For FY2022, PAT declined on account of decline in the outstanding portfolio coupled with higher credit costs. During FY2023, the company reported profits which was aided by overall reduction in the provisions and write offs during that year. The write offs for the year stood at ~Rs. 227.79 Cr as against ~Rs.283.02 Cr in FY2022. The profitability indicators stood moderated marked by a RoAA of 0.54 percent as on March 31, 2023 remaining significantly lower than its peer group average. The ROAA however has improved however from -1.93% in the previous year. On standalone basis, CHFL reported PAT of Rs 2.96 Cr. as on March 31, 2023 as against Rs 2.50 Cr. as on March 31, 2022. The profitability has grown marginally in the housing arm on account of decrease in the overall loan portfolio. The Net Interest Margin (NIM) as on March 31, 2023 stood at 7.81 percent.

Acuité believes that Group’s ability to sustain improvement in earning’s profile in the current operating environment will be key rating monitor able.
 

ESG Factors Relevant for Rating

Clix Capital Services Private Limited (CCSPL) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Some of the material governance issues for the sector are policies and practices with regards to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, sustainable financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. CCSPL has been focusing on SME loans which supports financial inclusion by financing of smaller businesses. The Clix group board comprises of a total of seven directors . The executive chairman of the board is Mr. Chander Mohan Vasudev who has worked in Ministry of Finance, Government of India as Secretary in Department of Banking, Expenditure and economic affairs. The group companies maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. The group companies also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances, litigations, and regulatory penalties for the group, if relevant. In terms of its social impact, CCSPL is actively engaged in community development programmes through its CSR activities.
 
Rating Sensitivity
  • ? Movement in profitability metrics and sustenance of the same
  • Scalability of operation reflected in growth in AUM and disbursement levels.
  • Movement in the asset quality and collection efficiency
  • Performance of the restructured portfolio
  • Financial performance of the company vis-à-vis its peers Continued support from the major shareholders
 
Material Covenants
­The Group is subject to covenants stipulated by its lenders/investors in respect of various  parameters like capital adequacy
 
Liquidity Position
Adequate
­The company’s consolidated  cash and bank balance stood at Rs. 675 Cr. as of March 2023. As per ALM Statement dated March 31, 2023, company’s near-term liquidity position is well managed with positive mismatches in individual buckets.  The Group has adopted a conservative liquidity policy which adequately covers for near term debt obligations.
 
Outlook - Stable
­Acuité believes that Clix Group’s credit profile will remain supported by the extensive experience of its management and adequate capitalisation levels and resource raising ability. The outlook may be revised to ‘Positive’ in case the Group is able to demonstrate a significant improvement in asset quality and profitability. Conversely, The outlook may be revised to ‘Negative’ if the group reports higher than expected deterioration in asset quality and profitability. Any decline in AUM or capitalization will also impart a negative bias to the rating.
 
Other Factors affecting Rating
­None
 
Key Financials - Standalone / Originator
­
Particulars Unit FY23 (Actual) FY22 (Actual)
Total Assets Rs. Cr. 137.82 274.82
Total Income* Rs. Cr. 14.04 19.11
PAT Rs. Cr. 2.96 2.50
Net Worth Rs. Cr. 57.29 54.24
Return on Average Assets (RoAA) (%) 1.43 0.92
Return on Average Net Worth (RoNW) (%) 5.30 4.73
Debt/Equity Times 1.25 3.79
Gross NPA (%) 0.06 0.03
Net NPA (%) 0.04 0.02
*Total income equals to Net Interest Income plus other income.
 
Key Financials (Consolidated)
Particulars Unit FY23 (Actual) FY22 (Actual)
Total Assets Rs. Cr. 5657.17 4908.93
Total Income* Rs. Cr. 414.58 386.74
PAT Rs. Cr. 28.33 (98.47)
Net Worth Rs. Cr. 2025.46 1988.30
Return on Average Assets (RoAA) (%) 0.54 (1.93)
Return on Average Net Worth (RoNW) (%) 0.53 (2.07)
Debt/Equity Times 1.66 1.39
Gross NPA (%) 2.48 4.99
Net NPA (%) 1.58 1.51
­*Total income equals to Net Interest Income plus other income
 
Status of non-cooperation with previous CRA (if applicable)
­None
 
Any Other Information
­None
 
Applicable Criteria
­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
 Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm
 Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-60.htm
 
Note on Complexity Levels of the Rated Instrument

­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.
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
06 Jul 2022 Proposed Non Convertible Debentures Long Term 10.00 ACUITE AA- | Negative (Reaffirmed)
Proposed Term Loan Long Term 50.00 ACUITE AA- (Withdrawn)
Term Loan Long Term 3.64 ACUITE AA- | Negative (Reaffirmed)
Term Loan Long Term 29.75 ACUITE AA- | Negative (Reaffirmed)
Non Convertible Debentures Long Term 10.00 ACUITE AA- | Negative (Reaffirmed)
Proposed Term Loan Long Term 46.10 ACUITE AA- | Negative (Reaffirmed)
Term Loan Long Term 2.00 ACUITE AA- | Negative (Reaffirmed)
Term Loan Long Term 3.51 ACUITE AA- | Negative (Reaffirmed)
Term Loan Long Term 15.00 ACUITE AA- | Negative (Reaffirmed)
Non Convertible Debentures Long Term 30.00 ACUITE AA- | Negative (Reaffirmed)
06 Jul 2021 Proposed Non Convertible Debentures Long Term 50.00 ACUITE AA- | Stable (Assigned)
Proposed Term Loan Long Term 150.00 ACUITE AA- | Stable (Assigned)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating
Not Applicable INE0DLP07024 Non-Convertible Debentures (NCD) 30 Sep 2021 9.20 30 Sep 2023 30.00 Simple ACUITE A+ | Stable | Downgraded | Negative to Stable
Not Applicable INE0DLP07016 Non-Convertible Debentures (NCD) 23 Jul 2020 10.75 23 Jul 2023 10.00 Simple ACUITE A+ | Stable | Downgraded | Negative to Stable
Not Applicable Not Applicable Proposed Non Convertible Debentures Not Applicable Not Applicable Not Applicable 10.00 Simple Not Applicable|Withdrawn
Not Applicable Not Applicable Proposed Term Loan Not Applicable Not Applicable Not Applicable 46.10 Simple Not Applicable|Withdrawn
Federal Bank Not Applicable Term Loan Not available Not available Not available 2.00 Simple Not Applicable|Withdrawn
Indusind Bank Ltd Not Applicable Term Loan Not available Not available Not available 3.64 Simple Not Applicable|Withdrawn
Sundaram Home Finance Ltd. Not Applicable Term Loan Not available Not available Not available 15.00 Simple Not Applicable|Withdrawn
Hinduja Housing Finance Limited Not Applicable Term Loan Not available Not available Not available 29.75 Simple Not Applicable|Withdrawn
Hero Housing Finance Limited Not Applicable Term Loan Not available Not available Not available 3.51 Simple Not Applicable|Withdrawn
­

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