|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding | 100.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed the long term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 100.00 Cr. bank loan facilities of Invent Assets Securitisation and Reconstruction Private Limited (IASRPL) The outlook is ‘Stable’.
Rationale for the rating The rating reaffirmation takes into consideration the improvement in earning profile and adequate capitalisation level. The company reported a PAT of Rs 5.83 Cr. in FY24 as against Rs 1.59 Cr. in FY23. In H1FY25 the company reported a PAT of Rs 5.74 Cr. The impairment cost remained low with Rs 39.17 Cr. in FY24 as against Rs. 79.84 Cr. for FY2023 (P.Y: Rs. 27.18 Cr.) improving the overall profitability. The company has adequate capitalization level with CRAR of 61.67 percent in FY24 as compared to 49.58 percent in FY23. The rating, however, continues to take into account IASRPL’s established position in the asset reconstruction industry, presence of institutional investors and their demonstrated support in the form of regular capital infusions. The rating also factors in the company’s moderate recovery track record (Rs. 558.16 Cr. during FY2024, Rs. 920.82 Cr. during FY2023 and Rs. 411.12 Cr. during FY2022). Going forward, IASRPL’s ability to maintain steady growth in revenues while containing impairment costs through successful resolution of distressed assets will be key monitorables. |
| About the company |
| Incorporated in 2003, Invent Assets Securitisation and Reconstruction Private Limited (IASRPL) is a Mumbai based ARC that commenced its operations in 2009 after receiving license from RBI in 2008. The ARC focuses on Small Medium Enterprises (SME) segment and follows sector agnostic approach with its exposure spread across varied industries including textile, Iron and Steel, Real Estate, Manufacturing, Automobiles, Hospitality, among others. IASRPL reported outstanding Security Receipts (SRs) of Rs. 2,937.42 Cr. as on March 31, 2024. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has adopted a standalone approach on IASRPL’s business and financial risk profile for arriving at the rating. |
| Key Rating Drivers |
| Strength |
| Strong institutional investors along with domain expertise of key promoters
IASRPL is sponsored by West End Investment and Finance Consultancy Pvt Ltd. (WEIFCPL). IASRPL benefits from sponsor support in the form of capital infusion, both equity as well as debt. The ARC is promoted by leading professionals including Mr. G. N. Bajpai, former Chairperson of Securities and Exchange Board of India (SEBI) and also Life Insurance Corporation of India (LIC), Mr. M. N. Singh, IPS, former Commissioner of Police, Mumbai and Mr. Pankaj Gupta, a Chartered Accountant with vast experience in banking, insurance, merchant banking and financial services. Apart from the promoter directors, the board members of the company consists of eminent directors such as Mr. Raj Bharadwaj, former Chairman of Life Insurance Corporation , Mr. G. Gopalkrishna and Mr. Eugene Karthak, former executive directors of RBI with over three decades of experience with RBI. It has marquee investors like Canara Bank, Bank of India, Central Bank of India, and DBS Bank. The management team comprises of seasoned professionals in various domains such as acquisition, resolution, legal and compliance, monitoring, among others. Acuité believes that IASRPL will continue to benefit from the domain expertise of the promoters and the ability of the promoters to attract diverse investors both as equity shareholder as well as QBs for their acquisitions. Recovery track record IASRPL commenced ARC business in 2009 and reported outstanding SRs of Rs.2,784.52 Cr. in H1FY25 as against Rs 2937.42 Cr. as on March 31, 2024 (Rs. 3,156.54 Cr. as on March 31, 2023). The ARC follows sector agnostic approach with its exposure spread across varied industries .The ARC maintained moderate recovery track record (Rs. 558.16 Cr. during FY2024, Rs. 920.82 Cr during FY2023 and Rs. 411.12 Cr during FY2022). |
| Weakness |
| Volatile earnings profile
The company reported a PAT of Rs 5.83 Cr. in FY24 as against Rs 1.59 Cr. in FY23. In H1FY25 the company reported a PAT of Rs 5.74 Cr. The impairment cost remained low with Rs 39.74 Cr. in FY2024 as against Rs. 79.84 Cr. for FY2023 (P.Y: Rs. 27.18 Cr.) improving the overall profitability. Inherent challenges in the Asset reconstruction business IASRPL is likely to continue to face challenges given the inherent uncertain and time consuming nature of the recoveries asset reconstruction business. The current disposition does not provide any significant benefits to the banks (sellers of these distressed assets) in case the investment of the bank in these SR’s exceed a threshold limit, incentivizing the banks to go for cash deals and tilting the balance in favor of those ARCs who are able to acquire assets for direct cash conditions as against issuance of security receipts. While the regulation has allowed investment by QBs, the ability of any ARC to tap this route will depend to a large extent on their demonstrated track record of recovery. Any challenges in achieving meaningful resolution of these assets will also have a bearing on the ability of the ARC to attract future support from the QBs for their acquisitions. Given the scale up of the operations of IASRPL in recent years, the sustainability of the recovery performance will be visible over the medium term, especially as NPA resolution is a long process and is linked to level of industrial and economic activity in the country, which will also have a bearing on earnings profile. |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| Company reported cash and cash equivalents of Rs. 38.52 Cr. as on March 31, 2024. The company’s liquidity profile is adequate in medium term as the acquisitions are mainly funded through a mix of equity, QB funds and promoter funds with no large scheduled repayments in the near term. The cash flows of ARCs are generally uneven and a portion of revenues will depend on inflows from the resolution of SRs and upside revenues. Any challenges in ensuring steady revenue flow through timely resolution of the distressed assets will impact the liquidity buffers. |
| Outlook:Stable |
| |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| 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 • Asset Reconstruction Companies: https://www.acuite.in/view-rating-criteria-85.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
||||||||||||||||||||||||||||||||||||
|
| |
|
Contacts |
About Acuité Ratings & Research |
