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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 270.00 | ACUITE BBB+ | Stable | Reaffirmed | - |
| BOND | 100.00 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 150.00 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Total Outstanding | 520.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating at ‘ACUITE BBB+’ (read as ACUITE triple B plus) for the Rs. 270.00 Cr. Bank Loan Facility of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is ‘Stable’. Acuité has reaffirmed its long-term rating at ‘ACUITE BBB+’ (read as ACUITE triple B plus) for the Rs. 100.00 Cr. Bond of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is ‘Stable’. Acuité has reaffirmed its long-term rating at ‘ACUITE BBB+’ (read as ACUITE triple B plus) for the Rs. 150.00 Cr. Non Convertible Debentures of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is ‘Stable’. Rationale for Rating The rationale of the rating reflects the sustained growth in AUM while maintaining its asset quality, comfortable capitalization and the support from Hindon Mercantile Limited. The disbursement levels have shown significant traction; accordingly, the consolidated AUM levels have increased from Rs. 675.78 Cr. as on Mar 31, 2024, to Rs. 1021.87 Cr. as on 9MFY25. The rating also considers comfortable capitalization levels and the capital infusion of Rs 81.47 Cr. in FY2024 and Rs.223.65 Cr in 9MFY25 resulting in the improvement in Net worth from Rs 269.38 Cr. as on FY24 to Rs 504.67 Cr. as on 9MFY25, the Capital Adequacy Ratio (CAR) of the company stood at 34.70 percent as on March 31, 2024 and 35.04 percent as on 9MFY25. The rating continues to factor in rich experience of management in E- Vehicle financing, cumulatively the group has financed~80,000 E-vehicle since 2016. The rating strengths are partially offset by moderate scale of operations and low seasoning of the loan portfolio. The company scaled up its portfolio mainly in last quarter of FY2022 indicating low seasoning. Also, the portfolio remained geographically concentrated in Uttar Pradesh, Bihar and Delhi having a collective exposure of over 50 percent as on 9MFY24. Going forward, MGFL's ability to raise capital, demonstrate sustainable growth in its scale of operations while maintaining asset quality and profitability metrics will remain a key monitorable. |
| About the Company |
| Mufin Green Finance Limited is the Non-Banking Financial Company Non-Deposit Taking (NBFC-ND) registered with Reserve Bank of India. The Company was incorporated on 13th May 2016 in state of Rajasthan. Mufin Green Finance Limited was acquired by Hindon Mercantile Limited in March 2022. The company is now a part of the Mufin group. The group has been extending loans toward E- vehicles since 2016 and the portfolio of E-vehicles was later transferred to the taken over company Mufin Green Finance Limited. The company is engaged in financing overall electric vehicle ecosystem comprising of all kinds of vehicles running on battery and charging infrastructure. The objective of the company is to enhance the electric vehicle ecosystem of India. Mr Kapil Garg is the managing director of MGFL. |
| About the Group |
| Hindon Mercantile Limited (HML), incorporated in 1985. The company is engaged in the business of providing secured loans like business loans, vehicle loans, LAP and gold loans. The present directors of the company are Mr. Luv Khanna, Mr. Kapil Garg, Mr. Pradip Kumar Kar, Mr. Amol Sinha and Mr. Hemant Bhageria. The registered office of the company is in New Delhi. HML is the parent comany of Mufin Green Finance Limited where the parent company owns 54% of the subsidiary. |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has consolidated the business and financial risk profiles of Hindon Mercantile Limited (Parent Company) and its subsidiary Mufin Green Finance Limited. This consolidation is in the view of the common promoters and strong financial and operation synergies. |
| Key Rating Drivers |
| Strength |
| Comfortable Capitalization Levels and resource raising ability: Mufin Green Finance Limited (MGFL) is a Delhi based Non-Deposit Non-Bank Finance Company (NDNBFC) engaged in providing vehicle loans and loans used towards developing infrastructure for E-vehicles. The Mufin group since inception has financed ~80,000 E-vehicles. The Hindon Mercantile Limited (HML)owned 54.44% stake in MGFL as of March 2024. The company has a comfortable capitalization marked by a networth of Rs.244.1 Cr. and debt of Rs. 640.07 Cr. as on March 2024. MGFL received a capital infusion of Rs. 81.47 Cr. in FY2024 and from HNI and family funds and its existing investors. The company is in advance stages of discussions with various banks and FI for raising more funds. The company’s Overall CRAR has remained healthy at 35.79 percent as on March 31, 2024. The company has raised Series B equity in the form of warrants of Rs 140 Cr. out of which Rs.77 Cr. of the capital was received in FY24 and the remaining was received in later part of Q1FY2025 which has further improve the company's capitalization level. Improving AUM while maintaining its asset quality MGFL extends loan towards e-vehicles and its infrastructure with average ticket size ranging between 1.5 lakhs to 3.5 lakhs with average tenure from 18 to 36 months. Total AUM of Mufin Green Finance Limited stood at Rs. 624.13 Cr. as on March 31, 2024 as against Rs 261.61 Cr. as on March 31, 2023 and Rs. 48.39 Cr. as on March 31, 2022. This improvement in AUM was on account of improvement in disbursements which stood at Rs. 637.85 Cr. as on FY2024 and Rs. 273.45 Cr. in FY2023. MGFL's asset quality had witnessed improvement with GNPA and NNPA of 1.70 percent and 1.45 percent as on March 31, 2024 respectively as against 2.61 percent and 1.98 percent respectively in FY2023. Acuité notes the improvement in the on-time portfolio standing at ~87 percent as on Mar, 2024. |
| Weakness |
| Limited track record of operations coupled with limited seasoning of newly disbursed portfolio and geographical concentration: MGFL commenced its lending operations with vehicle loans and gradually diversified its product offerings to infrastructure financing for E-vehicles. MGFL caters to over 36,031 customers across 14 states via OEM and dealer network in India. The AUM stood at ~Rs 624.13 Cr.as on Mar 2024 (Rs.261.61 Cr. as on March 31,2023 and Rs.48.39 Cr. as of March 2022), of which vehicle loans comprised ~86% followed by loans towards infrastructure for E- Vehicles at ~13% and business & personal loan at ~1%. The AUM grew significantly in FY2023 and FY2024 mainly on account of E-vehicle loan disbursals (~75% of the total disbursements during FY2024). Though these loans are offered for short tenor ranging 18-24 months, disbursements of these loans were made largely in the FY2023 and FY2024 indicating limited seasoning of the newly disbursed AUM. As on March 31, 2024, the company’s AUM is majorly concentrated in Uttar Pradesh (26.27%) followed by Delhi (25.52 %), Bihar (15%), and rest 34% of AUM is covered in remaining states, namely, Uttarakhand, Madhya Pradesh and Rajasthan. Thus, the company's performance is expected to remain exposed to the competitive landscape in these regions, which may adversely impact the credit profile of the borrowers. Besides geography, the company will be exposed to competition and any changes in the regulatory framework, thereby impacting the credit profile of MGFL. Acuité believes that the ability of the company to maintain sustainable growth of portfolio while managing its asset quality through business cycles will be key monitorable. |
| ESG Factors Relevant for Rating |
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Mufin Green Finance Limited (MGFL) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behaviour. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry. The company’s board comprises of a total of six directors out of which four are independent directors and one female directors. MGFL maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. MGFL 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, MGFL is actively engaged in community development programmes through its CSR committee. For better servicing of its customers, the entity has disseminated a step-by-step guide for loan appraisal, the document requirements and its services and charges. |
| Rating Sensitivity |
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| All Covenants | ||||||||||||||||||
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Blue Orchard Covenants shall include, but are not limited to, the following: • The Borrower shall at all times maintain a Capital Adequacy Ratio, calculated according to the Capital Adequacy Standards as established by Reserve Bank of India, of at least 17% (or 200 bps above the regulatory requirement, whichever is higher). • The Borrower shall at all times maintain a ratio of the sum of (x) Portfolio at Risk over 90 days + Restructured Loans + Net Charge-Offs during the last 12 months divided by (y) the Outstanding Gross Loan Portfolio of no greater than 10%. • The Issuer shall at all times maintain a ratio of the sum of (x) Portfolio at Risk over 90 days + Restructured Loans – Loan Loss Reserves by (y) Tier 1 Capital of no greater than 10%. • The Borrower shall at all times maintain the Return on Assets (ROA) ratio net of Donations greater than 0% over a period comprising the preceding twelve months. • The Borrower shall at all times maintain the sum of the (x) Absolute Value of the Net Open Foreign Currency Position aggregate for all currencies divided by (y) Equity of no greater than 50%. The detailed calculation of this ratio must be as follows: [ absolute value (Foreign Currency 1 assets – Foreign Currency 1 liabilities + off balance sheet hedges in Foreign Currency 1) + absolute value (Foreign Currency 2 assets – Foreign Currency 2 liabilities + off balance sheet hedges in Foreign Currency 2) + absolute value (Foreign Currency 3 assets – Foreign Currency 3 liabilities + off balance sheet hedges in Foreign Currency 3) + etc. for each Foreign Currency ] divided by Equity AK Securitization The Issuer shall maintain the below mentioned covenants during the entire tenor of the debentures and till all the amounts outstanding is being duly repaid: • Total Debt/Tangible Net Worth ratio to be within 4x. Tier I Capital Adequacy Ratio (CAR) of atleast 25% or as per applicable RBI regulation, whichever is higher. • Ratio of (PAR 90 + Trailing 12 Months write-off + Investment in Security receipts) to Segment wise Loan Portfolio shall not exceed 5% for B2C portfolio and 1% for B2B portfolio respectively. • Gross NPA not to exceed 4% of Gross Loan Portfolio. Net NPA not to exceed 3%. Net NPA to Tangible Net Worth shall not exceed 10%. Issuer to maintain a minimum Tangible Net-worth of Rs 300 Crores by 30th June,2025. • Earnings: After-tax Net Income (excluding extraordinary income) to remain positive. The Issuer at all times, to maintain minimum liquidity amount equivalent to next 3month liabilities after including Put Options/interest reset on liabilities in the form of unencumbered Cash and Cash equivalents. Unutilised CC from Banks shall be taken in account while testing. • Average monthly Collection efficiency for the quarter, i.e., current month arrears demand) to be maintained at minimum 90% till 31st Mar, 2025 and at minimum 94% thereafter. • Exposure to single party / single group must be below 10% of Tangible Net Worth of the Issuer. The share of off balance sheet portfolio shall not exceed 10% of the Total Loan Portfolio. Any Related Party Exposure taken by the issuer cannot exceed 15% of Tangible Net worth of the issuer at all times. • There shall not be any negative mismatches on cumulative basis in any of the buckets till the next one year of ALM statement after incorporating all the liabilities of the Issuer incorporating Put Options/ Reset Options etc. (in any form). The asset will include all the unencumbered Cash and Cash equivalent maturing across all the buckets of the ALM. Unutilized bank lines, undisbursed committed sanctions of the company and cash credit limits shall not be taken into account while testing the same. • Issuer shall not prepay any loans or redeem NCDs; voluntarily or mandatorily before its stated maturity such that it leads to a negative mismatch on cumulative basis in any of the buckets of ALM statement up to one year of the Debentures after incorporating all the liabilities of the Issuer including Put Options/interest reset on liabilities. Unutilized bank lines, undisbursed committed sanctions of the company and cash credit limits shall not be taken into account while testing the same. • Any other additional covenant as may be mutually agreed and shall form a part of the Transaction Documents. AAV Sarl The Issuer will at all times maintain: • Capital Adequacy ratio of not less than [15%] • Ratio of total debt to total equity (whereas “total equity” shall include subordinated debt to the extent that such can be accounted for as Tier II capital in accordance with applicable regulations) of not higher than 7. • Uncovered Capital Ratio below [15%] (defined as the PAR>[90] days + restructured portfolio minus loan loss provisions divided by Equity). • Less than 5% of its liabilities and assets in non-INR denominated currency • Ratio of outstanding off-balance sheet portfolio (including asset securitization) to total assets less than 40%. Infocin Investment Management The financial covenants outlined below should be considered standard covenants, but are subject to revision following a review of the Issuer's financial forecast and a final decision made by the investment committee.
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| Liquidity Position |
| Adequate |
| MGFL’s liquidity profile as on Mar, 2024 is well matched with no negative cumulative mismatches across time buckets. The company reported cash and cash equivalents of Rs.251.13 Cr. as on March 31, 2024. |
| Outlook |
| Stable |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Key Financials (Consolidated) | ||||||||||||||||||||||||||||||||||||
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| 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 |
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• 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 |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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