Press Release July 18, 2024 C S L Finance Limited Rating Assigned and Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	100.00	ACUITE A- | Stable | Assigned	-
Bank Loan Ratings	300.00	ACUITE A- | Stable | Reaffirmed	-
Total Outstanding	400.00	-	-

Rating Rationale

­Acuité has reaffirmed the long-term rating of  'ACUITE A-' (read as ACUITE A minus) on the Rs. 300.00 crore bank facilities of C S L Finance Limited (CSL). The outlook is 'Stable'.  Acuité has assigned the long-term rating of 'ACUITE A-' (read as ACUITE A minus) on the Rs. 100.00 crore bank facilities of C S L Finance Limited (CSL). The outlook is 'Stable'. Rationale for the rating The rating assigned factors in sustained increase in scale of operations, adequate capitalization level, healthy profitability metrics and improving asset quality. The growth in portfolio is owing to the improvement in disbursements in FY24. The AUM grew to Rs. 1030.67 Cr. as on March 31, 2024 from Rs. 735.61 Cr. as on March 31, 2023. The disbursements for FY24 were to the tune of Rs. 1052 Cr.. (P.Y: Rs. 756.83 Cr.)  CSL’s CAR stood at 51.18 percent with Tier 1 capital of 50.75 percent as of Mar 31, 2024. The profitability saw an improvement YoY as marked by increase in Total Income (net of interest expense) from Rs. 90.35 Cr. in FY23 to Rs. 123.65 Cr. in FY24. While Acuite takes cognizance of asset quality challenges in the real estate and SME sector, CSL has been able to maintain comfortable asset quality as marked by its on-time portfolio, which stood at 97.88 percent with a GNPA of 0.45 percent and NNPA of 0.26 percent as of Mar 31, 2024. The rating is however, constrained by geographical concentration and major wholesale book exposure in its loan portfolio but is well managed as the company has expertise and thorough knowledge which it has gained in its long run. The concentration in its wholesale book has been brought down from 81 percent to 54 percent in the last 3 years and the company is expecting to bring this concentration to 40 percent in the coming year. The rating is further constrained by the low seasoning of the small and medium enterprise (SME) portfolio. These constraints weigh on the credit profile of the company. Going forward, movement in asset quality, profitability metrics and any deterioration in capital structure or capitalization levels will be key credit indicators.

About the company

­New Delhi - Based, C S L Finance Limited (formerly known as Consolidated Securities Limited) was incorporated on 28th December 1992. The company is a Non-Banking Finance Company registered with the Reserve Bank of India and listed on both the Stock Exchanges. The Company is a one-stop destination for Small and Medium-Sized Enterprises (SMEs) and Real estate and non-real estate Corporates to avail of a variety of secured loan products. It is led by Mr. Rohit Gupta who is also the promoter. The promoter and promoter group shareholding stands at 47.71 percent as on Dec 31, 2023.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has adopted a standalone approach on CSL’s business and financial risk profile for arriving at the rating.

Key Rating Drivers

Strength

­Comfortable capitalisation with a diversified funding mix CSL’s net worth improved owing to internal accruals and equity infusion received from Kitara Capital of Rs 48 Cr. in FY2024 to Rs. 474.83 crore as of Mar 31, 2024 from Rs 362.52 crore in FY2023. It reported an adequate capital adequacy ratio (CAR) of 51.18 percent, comprising Tier 1 capital at 50.75 percent. The gearing remains comfortable at 1.06 times as on Mar 31, 2024. The company has a diverse lender profile, comprising banks, both private and public and financial institution, CSL has been able to obtain disbursements of Rs 372.41 crore for FY2024 in the form of term loans. CSL’s average cost of funds ranges between 11 to 12 percent. Acuité believes, going forward, that the ability of the company to mobilise low-cost funding through debt and its ability to deploy the funds profitably will be key factors to monitor. Healthy profitability metrics The profitability saw an improvement YoY as marked by increase in Total Income (net of interest expense) from Rs. 90.35 Cr. in FY23 to Rs. 123.65 Cr. in FY24. Despite the company being in an expansion phase, its operating expense to earning assets moderated to 3.62 percent in FY2024 as against 3.76 percent in FY2023. Resulting in an increase in its ROAA to 7.19 percent in FY2024 from 6.97 percent in FY2023. CSL has also shown strong control over its credit costs as the asset quality has shown improvement with lower slippages and increased recoveries. Acuité believes, going forward, the company will be able to maintain healthy profitability metrics given that it’s asset quality and credit costs are contained. Improved asset quality The company’s asset quality is marked by on time portfolio of 97.88 percent as on Mar 31, 2024 as against 98.36 percent as on Mar 31, 2023. CLS’s asset quality improved from 0.61 percent GNPA and 0.35 percent NNPA in FY23 to 0.45 percent GNPA and 0.26 percent in FY24 with comfortable PCR of 42.59 percent. The prudent underwriting policies adopted by the management and improving collection efficiency has enabled the company to improve its asset quality.   Acuité believes that going forward the ability of the company to maintain comfortable asset quality and growth momentum in AUM will be key rating sensitivity.

Weakness

­Low seasoning of SME portfolio and concentration risk. CSL forayed into the lending segment in 2011, but has commenced extending loans to SME since 2017, with an average tenure from 5 to 7 years. The company’s retail loan book has grown significantly to Rs. 440.93 crore as of Mar 31, 2024, from Rs. 291.57 crore as of Mar 31, 2023 constituting 46 percent of the total book. As the tenure is high the seasoning of this segment is yet to be established. CSL’s portfolio is majorly exposed towards its real estate segment, with 54% as on Mar 31, 2024, though, it has come down gradually from 81% as on March 31, 2021. Further, company is expecting to achieve the product mix of 60:40 between retail and wholesale segment in the next 12 to 18 months. CSL’s book is concentrated to its top 20 borrowers account which form ~29% of total AUM and slippages from these large accounts can put pressure on the asset quality, leading to higher delinquencies. Further, the company’s operations are concentrated in Delhi-NCR region.

Rating Sensitivity

­ Movement in gearing levels Timely infusion of capital Movement in profitability metrics Changes in regulatory environment

Liquidity Position

Adequate

­­CSL’s overall liquidity profile remains adequate. The company’s assets and liabilities are well matched with no deficit in any of the time buckets upto 5 years as on Sept 30, 2023. CSL has maintained cash and cash equivalents of Rs. 63.39 Cr. as on Mar 31, 2024.

Outlook: Stable

­Acuité believes that CSL will maintain a ‘Stable’ outlook over the near to medium owing to established track record of promoters in lending and their resource raising ability while maintaining asset quality and profitability metrics. The outlook may be revised to ‘Positive’ in case of higher than envisaged growth in loan portfolio while maintaining profitability and asset quality metrics. Conversely, the outlook may be revised to ‘Negative’ in case of any deterioration in asset quality or profitability metrics or elevation in gearing levels or in case of headwinds faced by promoters in raising resources in a timely and profitable manner or in case of any deterioration in capital structure or capitalization levels.

Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

Particulars Unit FY24 (Actual) FY23 (Actual) Total Assets Rs. Cr. 984.28 777.57 Total Income* Rs. Cr. 123.65 90.35 PAT Rs. Cr. 63.36 45.63 Net Worth Rs. Cr. 474.83 362.52 Return on Average Assets (RoAA) (%) 7.19 6.97 Return on Average Net Worth (RoNW) (%) 15.13 13.34 Debt/Equity Times 1.06 1.13 Gross NPA  (%) 0.45 0.61 Net NPA (%) 0.26 0.35 *Total income equals to Net interest income plus other income

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

­Not Applicable

Any other information

­None

Applicable Criteria

• 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

­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 22 Mar 2024 Proposed Term Loan Long Term 12.57 ACUITE A- | Stable (Assigned) Term Loan Long Term 19.44 ACUITE A- | Stable (Assigned) Term Loan Long Term 2.50 ACUITE A- | Stable (Assigned) Term Loan Long Term 14.00 ACUITE A- | Stable (Assigned) Term Loan Long Term 8.33 ACUITE A- | Stable (Assigned) Term Loan Long Term 10.54 ACUITE A- | Stable (Assigned) Term Loan Long Term 20.00 ACUITE A- | Stable (Assigned) Term Loan Long Term 4.44 ACUITE A- | Stable (Assigned) Term Loan Long Term 5.00 ACUITE A- | Stable (Assigned) Term Loan Long Term 1.90 ACUITE A- | Stable (Assigned) Term Loan Long Term 5.48 ACUITE A- | Stable (Assigned) Term Loan Long Term 2.86 ACUITE A- | Stable (Assigned) Term Loan Long Term 33.16 ACUITE A- | Stable (Assigned) Term Loan Long Term 50.00 ACUITE A- | Stable (Assigned) Term Loan Long Term 4.65 ACUITE A- | Stable (Assigned) Term Loan Long Term 14.14 ACUITE A- | Stable (Assigned) Term Loan Long Term 24.71 ACUITE A- | Stable (Assigned) Term Loan Long Term 19.99 ACUITE A- | Stable (Assigned) Term Loan Long Term 10.00 ACUITE A- | Stable (Assigned) Term Loan Long Term 9.58 ACUITE A- | Stable (Assigned) Term Loan Long Term 17.50 ACUITE A- | Stable (Assigned) Term Loan Long Term 4.50 ACUITE A- | Stable (Assigned) Term Loan Long Term 4.71 ACUITE A- | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Indian Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A- | Stable | Reaffirmed A U Small Finance Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A- | Stable | Assigned HDFC Bank Ltd Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.00 Simple ACUITE A- | Stable | Assigned Federal Bank Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE A- | Stable | Assigned Kotak Mahindra Bank Not avl. / Not appl. Dropline Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 5.06 Simple ACUITE A- | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3.25 Simple ACUITE A- | Stable | Reaffirmed Bandhan Bank Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 1.00 Simple ACUITE A- | Stable | Assigned DCB Bank Limited Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Oct 2026 13.50 Simple ACUITE A- | Stable | Reaffirmed Utkarsh Small Finance Bank Ltd. Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 Jun 2026 11.20 Simple ACUITE A- | Stable | Reaffirmed Fincare Small Finance Bank Ltd. Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 13 Jan 2026 8.84 Simple ACUITE A- | Stable | Reaffirmed Federal Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 17 Apr 2026 6.88 Simple ACUITE A- | Stable | Reaffirmed Federal Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Mar 2026 6.56 Simple ACUITE A- | Stable | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Mar 2026 4.38 Simple ACUITE A- | Stable | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 03 May 2026 3.83 Simple ACUITE A- | Stable | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Mar 2025 3.75 Simple ACUITE A- | Stable | Reaffirmed South Indian Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 18 Dec 2026 10.00 Simple ACUITE A- | Stable | Reaffirmed A U Small Finance Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 03 Aug 2024 0.83 Simple ACUITE A- | Stable | Reaffirmed A U Small Finance Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 17 Mar 2025 2.78 Simple ACUITE A- | Stable | Reaffirmed A U Small Finance Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 03 Oct 2025 6.67 Simple ACUITE A- | Stable | Reaffirmed A U Small Finance Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 29 May 2025 7.08 Simple ACUITE A- | Stable | Reaffirmed Bandhan Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 29 Sep 2025 11.33 Simple ACUITE A- | Stable | Reaffirmed Federal Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 14 Sep 2025 12.50 Simple ACUITE A- | Stable | Reaffirmed Fincare Small Finance Bank Ltd. Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 15 Aug 2024 1.19 Simple ACUITE A- | Stable | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 20 Jun 2025 3.25 Simple ACUITE A- | Stable | Reaffirmed HDFC Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2025 3.91 Simple ACUITE A- | Stable | Reaffirmed ICICI Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 22 Jul 2024 0.41 Simple ACUITE A- | Stable | Reaffirmed ICICI Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2025 3.36 Simple ACUITE A- | Stable | Reaffirmed Indian Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Jul 2027 11.67 Simple ACUITE A- | Stable | Reaffirmed Indusind Bank Ltd Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 28 Feb 2025 11.11 Simple ACUITE A- | Stable | Reaffirmed Small Industries Development Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 10 Dec 2026 20.77 Simple ACUITE A- | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 26 Dec 2026 27.63 Simple ACUITE A- | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Dec 2026 41.66 Simple ACUITE A- | Stable | Reaffirmed Utkarsh Small Finance Bank Ltd. Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 28 Mar 2026 8.11 Simple ACUITE A- | Stable | Reaffirmed Union Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 14 Sep 2025 17.50 Simple ACUITE A- | Stable | Reaffirmed Tourism Finance Corporation of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 15 Oct 2026 16.65 Simple ACUITE A- | Stable | Reaffirmed Tourism Finance Corporation of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 10 Dec 2026 9.34 Simple ACUITE A- | Stable | Reaffirmed South Indian Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 18 Dec 2026 5.00 Simple ACUITE A- | Stable | Assigned Tourism Finance Corporation of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Mar 2028 9.00 Simple ACUITE A- | Stable | Assigned Bank of Maharashtra Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Dec 2026 20.00 Simple ACUITE A- | Stable | Assigned Indian Overseas Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2030 20.00 Simple ACUITE A- | Stable | Assigned A U Small Finance Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Jun 2027 20.00 Simple ACUITE A- | Stable | Assigned

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Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Nivedita Gokul Associate Analyst - Rating Operations Tel: 022-49294065 nivedita.gokul@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@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.