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| Product | Quantum (Rs. Cr) (SEBI) | Quantum (Rs. Cr) (Other FSR) | Long Term Rating | Short Term Rating | Regulated By |
| Bank Loan Ratings | 0.00 | 200.00 | ACUITE BBB- | Negative | Downgraded | - | RBI |
| Non Convertible Debentures (NCD) | 0.00 | 50.00 | ACUITE BBB- | Negative | Assigned | - | MCA |
| Non Convertible Debentures (NCD) | 0.00 | 54.88 | ACUITE BBB- | Negative | Downgraded | - | MCA |
| Non Convertible Debentures (NCD) | 349.07 | 0.00 | ACUITE BBB- | Negative | Downgraded | - | SEBI |
| Non Convertible Debentures (NCD) | 74.04 | 0.00 | Not Applicable | Withdrawn | - | SEBI |
| Total Outstanding | 349.07 | 304.88 | - | - | - |
| Total Withdrawn | 74.04 | 0.00 | - | - | - |
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Rating Rationale |
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Acuité has downgraded the long-term rating from ‘ACUITE BBB’ (read as ACUITE triple B) to ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.349.07 Cr. Non Convertible Debentures facility of KLM Axiva Finvest Limited (KLM). The outlook is revised from 'Stable' to 'Negative'.
Acuité has downgraded the long-term rating from ‘ACUITE BBB’ (read as ACUITE triple B) to ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.54.88 Cr. Proposed Non Convertible Debentures facility of KLM Axiva Finvest Limited (KLM). The outlook is revised from 'Stable' to 'Negative'. Acuité has downgraded the long-term rating from ‘ACUITE BBB’ (read as ACUITE triple B) to ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.200.00 Cr. Bank Loan facility of KLM Axiva Finvest Limited (KLM). The outlook is revised from 'Stable' to 'Negative'. Acuité has assigned the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.50.00 Cr. Proposed Non Convertible Debentures of KLM Axiva Finvest Limited (KLM). The outlook is 'Negative'. Acuité has withdrawn the long term rating on the Rs 74.04 Cr. Non- Convertible Debenture of KLM Axiva Finvest Limited (KLM) without assigning any rating as the instrument is fully repaid and no longer an outstanding obligation of the company. The rating is being withdrawn on account of request received from the issuer and No Objection Certificate from the debenture trustee. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. Rationale for Downgrade and Negative Outlook: The rating downgrade takes into account the weakening financial and risk profile of the company, as reflected in the deterioration in asset quality, with GNPA and NNPA rising to 3.17% and 2.18%, respectively, in FY26 from 1.99% and 0.93% in FY25. The company also reported significant write-offs across the gold loan and MSME portfolios and created a sizeable impairment reserve for its MFI portfolio. Further, the capital position weakened with the Capital Adequacy Ratio (CAR) declining to 19.70% in FY26 from 23.90% in FY25, alongside a reduction in net worth to Rs 209.28 crore from Rs 267.78 crore, while gearing increased to 7.48 times from 5.74 times during the same period. The resignation of two Independent Directors during the year also remains a governance-related monitorable. However, these concerns are partly mitigated by the company's portfolio profile, with gold loans constituting approximately 75% of the AUM, providing the benefit of a largely secured lending book. Acuite believes that significant equity infusion is required to stabilise the capital position of the company. Going forward, the company's ability to scale operations while maintaining its asset quality within stipulated levels, improving its profitability metrics and mobilizing low cost funds will be key monitorable. |
| About the company |
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Hyderabad based KLM Axiva Finvest Limited was incorporated in 1997 as Needs Finvest Limited and in 2014, the current management took over and renamed it to KLM Axiva Finvest Limited . The company is led and promoted by the whole-time Director Mr Shibu Theckumpurath Varghese. As on March 31, 2026, 30.99% of the shareholding is held by promoters, directors and their relatives and the balance is held by other investors.
The company is engaged in lending business and offers gold loan, mortgage loan, vehicle loans, micro finance loans, etc. The company also provides foreign exchange services, money transfer and insurance broking services. The company has its branches in Andhra Pradesh, Tamil Nadu, Kerala, Hyderabad, Karnataka & Maharashtra. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has adopted a standalone approach to analyse the business and financial profile of KLM Axiva Finvest Limited. |
| Key Rating Drivers |
| Strength |
| Promoter support and experienced management team:
The company is headed by Mr. Shibu Varghese (whole time director) who has more than 30 years of experience in the Financial Services and is supported by seasoned professionals for the daily operations. The current promoters took over the company in 2014 and have been running the company for a decade now with the support of management having an extensive experience of over a decade in the industry. The company benefits from the rich experience of the promoters in the home state which remained significant for the overall capital raising capability of the company. Acuite believes that company will continue to benefit from the extensive experience of the promoters and management team along with Independent Director. Sustained AUM growth despite reduction in branch network: KLM’s AUM has seen a slight improvement to Rs.1636.22 Cr. as on March 31, 2026 despite the closure of ~100 branches during FY26, as against Rs. 1625.88 Cr. as on March 31, 2025. The disbursements significantly improved from Rs 3890.06 Cr. in FY 25 to Rs 5601.55 Cr. in FY26. KLM's loan portfolio is supported with majority portion~76 % of the total AUM contributed by Gold loans, followed by MSME loans at ~21 % of the total AUM while remaining being through the micro finance loans. Disbursements towards the micro finance loans were reduced basis delinquencies seen in this segment for the company. |
| Weakness |
| Leveraged capital structure:
KLM is engaged in loans against gold and MSME loans secured and unsecured for a period of 12 - 24 months. The company’s networth stood at Rs. 209.28 Cr. and total debt stood at Rs.1564.62 Cr. as on March 2026.The company has seen a significant increase in the gearing, KLM’s gearing stood at 7.48 times as on March 26 (5.74 times as on March 31, 2025). The total debt of Rs 1564.62 Cr. includes subordinated liabilities, NCDs and short term bank facilities as on March 2026, however the company was aided by an equity infusion in March 26 to the tune of ~Rs 10 Cr. To support the growth momentum KLM would require further debt and considering the already leveraged capital structure the promoters may be required to infuse additional equity to support any future business growth. Going forward, Acuité believes that the company’s ability to manage its gearing levels will be a key monitorable and infusion of capital would be required for containing gearing levels and to support business growth. Moderation in Earnings Profile; Reliance on Capital Infusion: The company has reported a PAT of Rs 20.19 Cr. with ROAA of 1.07 percent during FY2025 which saw a moderation to a PAT of Rs 8.86Cr. and ROAA of 0.48 percent during FY2026. The reduction in profitability was on account of higher finance cost and impairment on loan assets. Further, the operational costs are expected to rationalise in the coming years once the operational efficiency from the new branches is attained. The Capital Adequacy Ratio for the company reduced to 19.70 %, comprising of Tier 1 of 12.98% in FY 26 as against 23.90 % for FY25. The reduction was on account of increase in provisions for the year. The CAR remains above the regulatory stipulated level however, substantial equity infusion is required to boost the capital position and improve the gearing for the company. Acuité believes that KLM will be able to sustain its financial performance and any impact on profitability metrics due to higher provisioning requirements would remain key monitorable. Geographical and Funding profile concentration: KLM started its operations in the state of Kerala and gradually expanded to the states of Karnataka and Tamil Nadu and has expanded to other states like Hyderabad, Andhra Pradesh and Maharashtra thereby reducing the concentration in the state of Kerala. However, major concentration still remain in the state of Kerala. The company has reduced its branch network to ~600 branches for FY26 , approximately 100 branches were reduced as they were not profitable. KLM's resource profile is concentrated towards public and privately placed NCDs and sub-debt forming majorly proportion of the total borrowings as on March '26; though the share of bank loans has been increasing, it remains modest. Acuite believes that geographical concentration, coupled with improvements in the earning profile, will be key monitorables. Asset Quality Deterioration The company's asset quality weakened in FY26, with GNPA and NNPA increasing to 3.17% and 2.18%, respectively, from 1.99% and 0.93% in FY25. The ontime portfolio also reduced from 94.14 % in FY25 to 89.17 % in FY26. The deterioration was primarily driven by stress in MSME portfolio, along with the gold loan and MFI segments. During the year, the company undertook significant portfolio clean-up measures, including Rs 6.42 crore of gold loan write-offs pursuant to RBI observations, Rs 13.83 crore of MSME loan write-offs, and the creation of a Rs 57.50 crore impairment reserve for the unsecured MFI portfolio. |
Rating Sensitivity
| Potential triggers (individual or collective) for an upward rating action: |
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| Potential triggers (individual or collective) for a downward rating action: |
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| All Covenants |
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Subject to the terms of the Debenture Trust Deed, the Debenture Trustee at its discretion may give notice to the company specifying that the NCDs and or/any particular Options of NCDs, in whole but not in part are and have become due and repayable on such date as may be specified in such notice inter alia if any of the events of default including cross defaults, if any and consequences will be specified in the Debenture Trust Deed. Upon Occurrence of an Event of Default, the Debenture Trustee of the NCD Holders as the case maybe, shall enforce the hypothecation and exercise the power of sale as set out under Clause 4 of Part B or any other right over the Movable properties conferred on the Debenture Trustee under the Deed. All expenses incurred by the Debenture Trustee after an Event of Default has occurred in connection with: i) preservation of the company's assets(whether then or thereafter existing); and ii)collection of amounts due in respect of the NCDs: shall be payable by the company. |
| Liquidity Position |
| Adequate |
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The company has cash and cash equivalents of Rs 36.46 Cr. as on March 31, 2025 which stood at Rs 19.49 Cr. as of FY26. No negative cumulative mismatches for the company in the near term. The company has debt repayments of Rs 582.83 Cr. for a one year period as against collections from loans of Rs 1309.05 Cr. for the same period as per the ALM of March 31, 2026.
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| Outlook: Negative |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• 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 |
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| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Contacts |
List of instruments and names of regulators of the instruments |
