Press Release

Press Release

April 04, 2025

CREDIT WISE CAPITAL PRIVATE LIMITED
Rating Upgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	15.00	ACUITE BBB+ \| CE \| Stable \| Upgraded	-
Total Outstanding	15.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuite has upgraded the long-term rating to ‘ACUITE BBB+ (CE)’ (read as ACUITE triple B plus (Credit Enhancement)) from 'ACUITE BB+ (CE)’ (read as ACUITE double B plus (Credit Enhancement)) on the Rs.15.00 Cr. partially credit enhanced proposed term loan facilities of Credit Wise Capital Private Limited (CWCPL). The outlook is ‘Stable’.

Rationale for the rating upgarde
The rating upgrade and migration from "Issuer Non-Cooperating' takes into account the experienced management team, comfortable resource raising ability and increased scale of operations. Further, the rating factors the strategic investment in two subsidiary companies namely Analyticsfox Softwares Private Limited and Collect Pro Private Limited during FY24. CWCPL has acquired an 80 percent stake in Analyticsfox Softwares Private Limited in October 2023, establishing it as a key technology subsidiary under CWCPL. In February 2024, CWCPL acquired 72 percent stake in Collect Pro Pvt. Ltd (previously known as 9Syndicate Advisors Private Limited) to provide specialized collection and recovery services to Banks and NBFCs. CWCPL’s AUM grew from Rs. 489.07 Cr. as on March 31, 2024 to Rs. 608.20 Cr. as on Dec 31, 2024 (FY23 Standalone: Rs. 362.19 Cr.) on account of healthy disbursements. The disbursements during 9MFY25 stood at Rs. 373.15 Cr. as compared to Rs. 387.08 Cr. during FY24 (FY23 Standalone: Rs. 330.96 Cr.). The company has healthy resources raising ability and comfortable capitalization levels which is denoted by moderate gearing levels at 2.35 times and comfortable CRAR at 31.19 percent as on December 31, 2024. The consolidated PAT during 9MFY25 stood at Rs. 4.98 Cr. as compared to Rs. 3.68 Cr. during FY24 (FY23 Standalone: Rs. 1.54 Cr.). While Acuite takes cognizance of challenges in the two-wheeler segment, CWCPL has shown consistent improvement in disbursal volumes and profitability metrics. These strengths are partly offset by the geographical concentration in its lending portfolio and limited vintage of the business.

The Rs. 15.00 Cr. transaction has Partial Credit Enhancement (PCE) in the form of unconditional, irrevocable, payable on demand guarantee by Northern Arc (Credit Enhancer/ Guarantor) covering 15% of the initial principal value of the facility amount. The level of guarantee as a percentage of the aggregate outstanding principal of the facility is capped at 22%. Additionally, the facility has security in the form of exclusive first charge on identified book debts and receivables with 120% margin in favour of the lender. CWCPL shall make payments of interest and principal amounts due along with all other obligations (if any) under the Facility Documents by T-5 business days. In case of non-payment by CWCPL, the Guarantors shall be severally and jointly liable to make the payments by the due date.

About the Company

Credit wise Capital Private Limited is tech-supported non-banking finance company (NBFC) having business of two-wheeler finance incorporated in 2018. It was founded and promoted by Aalesh Avlani with multiple renowned business houses, including Greshma Group, Wallfort Group, MJ Shah Group, and the Shanti Group. The company is serving majorly in five states, including Bihar, Maharashtra, Haryana, Odisha, and Karnataka.

About the Group

Credit Wise Capital Private Limited is incorporated in 2018, head quartered in Mumbai, Maharashtra, is a non-deposit taking fintech NBFC. Credit Wise Capital Private Limited primarily provides 2-wheeler vehicle financing though its entirely digital platform. CWCPL has acquired an 80% stake in Analytics Fox Softwares Private Limited (AFX) in October 2023, establishing it as a key technology subsidiary under CWCPL. AFX, specializes in developing cutting-edge SaaS (Software-as-a-Service) solutions and customized lending platforms specifically designed for the Banking, Financial Services, and Insurance (BFSI) sector. This acquisition strategically strengthens CWCPL’s position as a tech-driven NBFC, enabling seamless integration of advanced digital lending capabilities into its core operations. In February 2024, CWCPL acquired 72 percent stake in Collect Pro Pvt. Ltd (previously known as 9Syndicate Advisors Private Limited) to provide specialized collection and recovery services to Banks and NBFCs. This entity is focused on providing specialized collection and recovery services to Banks and NBFCs. By setting up this dedicated collection arm, CWCPL aims to strengthen its in-house recovery capabilities while also tapping into the growing demand for professional collection services from external financial institutions. The Group has presence in 10 states and 215 districts across India as on December 31, 2024.

About Northern Arc Capital Limited (“Northern Arc”)

Northern Arc, previously known as IFMR Capital Finance Ltd., is a Non-Deposit taking NonBanking Financial Company (ND-NBFC) incorporated in 1989. It is involved in the placement (arranging funding for its clients via loan syndication, securitisation and assignment among others) and lending business. The company acts as a link between mainstream capital markets investors and highquality last mile lending institutions and businesses. The company’s business is categorized as finance sector exposure, i.e., microfinance, affordable housing finance, commercial vehicle finance, consumer finance, agri-finance and small business loans, and non-finance sector exposure, i.e., mid-market finance and corporates.
Northern Arc reported Assets Under Management (AUM) of Rs. 12,250 Cr. as on Dec 31, 2024, as against Rs. 11,710 Cr. as on March 31, 2024. Northern Arc’s asset quality improved with GNPA (90+dpd) at 0.90% as on December 31, 2024 as against 0.47% as on March 31, 2024. The company’s Profit After Tax (PAT) stood at Rs. 267 Cr during 9MFY2025 (Rs. 308 Cr during FY2024). The company’s debt/equity ratio was 2.5 times as on December 31, 2024 as compared to 3.9 times as on March 31, 2024.

Unsupported Rating

ACUITE BBB-/Stable

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 CWCPL and its subsidiaries as on December 31, 2024, Analyticsfox Softwares Pvt. Ltd. and Collect Pro Pvt. Ltd. wherein CWCPL holds 80 percent and 72 percent respectively.
Further, the rating factors in the credit enhancement arising from the structure. The suffix (CE) indicates credit enhancement arising from the PCE in the form of unconditional, irrevocable, payable on demand guarantee covering 15 percent of the initial principal value of the facility amount. The strength of the underlying structure and continued adherence to the same is central to the rating. Accounting for the Partial Credit Enhancement, the agency has enhanced the rating of the facility to ACUITE BBB+ (CE)/ Stable. The Credit Enhancement (CE) in the rating is solely for the rated issue and its terms and structure. The notched up rating of the loan facility incorporates the PCE in the form of guarantee by Northern Arc Capital Limited (“Northern Arc”), acting as the Credit Enhancer/ Guarantor.

Key Rating Drivers

Strength

Strength of underlying structure

The Credit Enhancer shall provide PCE, favouring CWCPL in the form of an unconditional, irrevocable guarantee that covers 15% to the extent of Guarantee Cap guaranteeing the repayment of principal and payment of interest amounts in relation to the facility. If due to the amortisation of the facility, the credit enhancement % becomes greater than 22% of the aggregate outstanding principal of the facility, the Guarantee Cap shall be reduced to 22% of the aggregate outstanding principal of the facility (Revised Guarantee Cap).
Borrower shall make payments of interest and principal amounts due and payable under the Facility Agreement into the Collection and Payment Account, opened and maintained by the Collection and Payment Agent by 5 (five) Business Days prior to due date (i.e., T-5 Business Days). In case of non-payment by Borrower as stipulated above, Collection and Payment Agent shall on the same day, i.e., on the T-5 Business Day invoke the guarantees extended by the Guarantors and require the Guarantors to pay such amounts, 4 (four) Business Days prior to due date (i.e., T-4 Business Days) and Guarantors shall be jointly and severally liable to make such payment within the said timeline.
In case of non-payment by the Borrower and the Guarantors as stipulated above, the Collection and Payment Agent shall on T-3 Business Days invoke the PCE and send a notice of 2 (Two) Business Day to the Credit Enhancer to make payments. Credit Enhancer shall make payment on T-1 Business Day (i.e. one day prior to the interest or principal due date) into the Collection and Payment Account.
The facility has security in the form of exclusive first charge on identified book debts and receivables with 120% margin in favour of the lender. The security cover will be met from the date of disbursal of the facility. In case of CWCPL senior secured long-term rating (as per Acuité view) downgrade to below BB+ the Borrower shall transfer the collections from the Hypothecated Property to the Collection and Payment Account on a weekly basis and such collections would be applied by the Collection and Payment Agent towards repayment of principal and interest due and payable in relation to the Facility and then towards accelerated payment of principal on the Facility

Acuité believes that the structure provides for adequate covenants to safeguard the interest of the lender. The lender has enough buffers available to initiate corrective action and mitigate the risks arising out of non-adherence to the terms and conditions.

Significant AUM growth

The company’s loan portfolio outstanding as on December 31, 2024 grew significantly to Rs. 608.20 Cr as compared to Rs. 489.07 Cr as on March 31, 2024 and Rs. 362.19 Cr as on March 31, 2023. The portfolio majorly constitutes of two-wheeler loans as on December 31, 2024. The loans have a tenure of 12 to 36 months. The disbursements during 9MFY25 stood at Rs. 373.15 Cr. as compared to Rs. 387.08 Cr. during FY24 (FY23 Standalone: Rs. 330.96 Cr.).The company has structured inherent checks for effective risk management that include lending policy, underwriting process and dedicated due diligence team, which helps to maintain asset quality.
Acuite believes that the ability of the company to grow its loan portfolio while maintaining asset quality will be key monitorable.

Improving profitability, albeit modest

In FY2024, CWCPL’s portfolio has grown owing healthy disbursement levels. The company’s disbursements stood at Rs. 373.15 Cr during 9MFY2025 as compared to Rs. 387.08 Cr as on March 31, 2024 and Rs. 330.96 Cr as on March 31, 2023. The company’s overall financial risk profile remains modest as marked by a consolidated PAT of Rs. 3.68 Cr during FY2024 which further improved to Rs. 4.98 Cr during 9MFY2025. The operating expense to earning assets is expected to remain high as the company is penetrating into newer geographies and increasing their overall staff count.
Acuite believes that going forward ability of the company to grow its loan portfolio while improving its profitability will be key monitorable.

Weakness

Geographical Concentration

CWCPL started its expansion recently which makes its portfolio highly concentrated in the areas of its initial operation. CWCPL’s portfolio is highly concentrated in Maharashtra and Bihar with ~52 percent of the portfolio originating from there, each state contributing in similar proportion. Further, more than ~23 percent of the portfolio is concentrated in Haryana, Odisha and Karnataka. It makes CWCPL vulnerable to policy changes and/or any other changes in the region affecting the business.

Acuité believes that improving the capitalization levels and expanding the business while maintaining the growth in earning profile will be crucial.

Detereorating asset quality

CWCPL has demonstrated declining asset quality, as reflected by Gross Non-Performing Assets (GNPA) of 2.31 percent and NNPA of 2.08 percent as on December 31, 2024 as compared to GNPA of 1.46 percent and NNPA of 1.31 percent as on March 31, 2024 (FY23 Standalone: GNPA - 0.95 percent and NNPA - 0.71 percent). The GNPA recognition policy for FY23, FY24 and FY25 is 180 days, 150 days and 120 days respectively. The 90+ dpd as as December 31, 2024 stands at 2.66 percent as compared to 1.87 percent as on March 31, 2024 (as on March 31, 2023 Standalone: 1.89 percent).

Acuite believes that the ability of the company to profitably scale-up its operations while maintaining healthy asset quality will be key monitorable.

Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix)

CWCPL has significant experience in the Two-wheeler financing segment and has healthy disbursement growth. Thus, Acuité believes that the CE will stand adequate in all scenarios and in the event of any requirement, Northern Arc will provide the necessary support.

Rating Sensitivity

Timely infusion of capital
Movement in asset quality
Movement in profitability metrics
Changes in regulatory environment

Liquidity Position

Adequate

CWCPL’s overall liquidity profile remains adequate with no negative cumulative mismatches in near to medium term as per ALM dated September 30, 2024. The company has cash and bank balances to the tune of Rs. 18.61 Cr. as of March 31, 2024 and is in talks with new and existing lenders to further aid its disbursements and liquidity.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials - Standalone / Originator

Particulars	Unit	FY24 (Actual)	FY23(Actual)
Total Assets	Rs. Cr.	340.97	345.98
Total Income*	Rs. Cr.	64.91	43.50
PAT	Rs. Cr.	2.02	1.54
Net Worth	Rs. Cr.	108.56	82.36
Return on Average Assets (RoAA)	(%)	0.59	0.55
Return on Average Net Worth (RoNW)	(%)	2.11	1.89
Debt/Equity	Times	2.04	3.09
Gross NPA	(%)	1.46	0.95
Net NPA	(%)	1.31	0.71

*Total income equals to Net Interest Income plus other income

Key Financials (Consolidated)

Particulars	Unit	FY24 (Actual)	FY23(Actual)
Total Assets	Rs. Cr.	344.23	-
Total Income*	Rs. Cr.	78.47	-
PAT	Rs. Cr.	3.69	-
Net Worth	Rs. Cr.	109.97	-
Return on Average Assets (RoAA)	(%)	1.07	-
Return on Average Net Worth (RoNW)	(%)	3.35	-
Debt/Equity	Times	2.01	-
Gross NPA	(%)	1.46	-
Net NPA	(%)	1.31	-

*Total income equals to Net Interest Income plus other income

Status of non-cooperation with previous CRA (if applicable)

Not applicable

Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)

Not applicable

Any Other Information

None

Applicable Criteria

• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.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
• Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.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.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
09 Oct 2024	Term Loan	Long Term	15.00	ACUITE BB+ (CE) (Downgraded & Issuer not co-operating* from ACUITE BBB+ (CE) \| Stable)
12 Jul 2023	Term Loan	Long Term	15.00	ACUITE BBB+ (CE) \| Stable (Assigned)
13 Apr 2023	Proposed Term Loan	Long Term	15.00	ACUITE Provisional BBB+ (CE) \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Hinduja Leyland Finance Ltd.	Not avl. / Not appl.	Term Loan	30 Mar 2023	Not avl. / Not appl.	30 Sep 2025	15.00	Simple	ACUITE BBB+ \| CE \| Stable \| Upgraded ( from ACUITE BB+ CE )

*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

Sr. no.	Names of Entities
1.	Credit Wise Capital Private Limited
2.	Analyticsfox Softwares Private Limited
3.	Collect Pro Private Limited

Contacts

Mohit Jain
Senior Vice President - Rating Operations

Nivedita Gokul
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.