Press Release October 23, 2024 NATIONAL CO-OPERATIVE DEVELOPMENT CORPORATION Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	8000.00	ACUITE AAA | Stable | Assigned	-
Bank Loan Ratings	70000.00	-	ACUITE A1+ | Assigned
Total Outstanding	78000.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has assigned the long term rating of 'ACUITE AAA' (read as ACUITE triple A) on the Rs 8,000.00 Cr. Bank Loan Facilities of National Co-operative Development Corporation (NCDC). The Outlook is 'Stable'. Acuite has assigned the short term rating of 'ACUITE A1+' (read as ACUITE A one plus) on the Rs 70,000.00 Cr. Bank Loan Facilities of National Co-operative Development Corporation (NCDC).   Rationale for Rating The rating for National Co-operative Development Corporation ( NCDC) factors in the strategic support and ownership from the Government of India (GoI) , being 100% owned by the Government of India (GoI). NCDC was established by an Act of Parliament in 1963 i.e under the NCDC Act 1962. It is a statutory cooperation under the Ministry of Cooperation previously under Ministry of Agriculture, Cooperation and Farmers Welfare .The rating further factors in the steady growth in the business profile indicated through an increase in the asset base to Rs 37,028.88 Cr in Prov. FY 24 as against Rs 28,508.18 Cr. in FY 23, accordingly NCDC registered a robust growth in PAT which stood at Rs 573.93 Cr. for Prov. FY 24 as against Rs 527.34 Cr. for FY 23. The rating also takes into consideration the healthy asset quality levels indicated by the GNPA for Prov. FY 24 at 1.12% as against 1.11% in FY 23 and the NNPA for FY 23 and Prov. FY 24 stand at zero percent. Their collection efficiency / recovery of loans has been at 99.70% for Prov. FY 24  which has steadily improved from 99.67% for FY 23. However, the rating is constrained by limited regulatory supervision over NCDC and significant exposure to the Agriculture and related sectors.

About the company

­­The National Co-operative Development Corporation (NCDC) was established by an Act of Parliament in 1963 as a statutory Corporation under the Ministry of Agriculture, Cooperation and Farmers Welfare. NCDC is engaged in the planning, promotion and development of cooperatives in agriculture and rural-oriented activities. It provides financial assistance for production, processing, marketing, storage, export and import of agricultural produce, food stuffs and certain other notified commodities besides income-generating activities such as poultry, dairy, fishery, sericulture and handloom. The corporation provides loans in the form of working capital loans to regional and state-level marketing federations, term loans for creation of infrastructure facilities like godowns, cold storages, equipment, transport vehicles boats and other tangible assets and margin money loans to cooperatives to raise working capital finance. The corporation operates through a General Council of 51 members to give shape to its policies and programmes and Board of Management (BoM) of 12 members to cater to the day-to-day activities. Besides its Head Office, NCDC functions through 18 Regional/State Directorates. Various functional divisions look after the programmes. The field offices play an important role in project identification/formulation and oversee its implementation. NCDC provides loans to cooperative societies, state government, and cooperative banks and to multi-state societies. The Registered office is located at New Delhi.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has adopted a standalone approach to analyse the business and financial profile of National Co-operative Development Corporation (NCDC) while factoring the ownership and strategic support from the Government of India.(GoI).

Key Rating Drivers

Strength

­Wholly owned by the Government of India National Co-operation Development Corporation (NCDC) was established by an Act of Parliament in 1963 i.e the NCDC Act 1962. It is a statutory cooperation under the Ministry of Cooperation previously under the Ministry of Agriculture, Cooperation and Farmers Welfare and is 100% owned by the Government of India. NCDC provides assistance to farmer cooperatives to improve productivity and production with respect to agricultural produce and processing, inputs supply such as seeds, fertilizers, kerosene oil, etc. NCDC also helps assist different types of cooperatives such as rural industrial cooperative sectors and services in rural areas such as agro credit, sanitation, etc. The corporation provides loans in the form of working capital loans to regional and state-level marketing federations, term loans for creation of infrastructure facilities like godowns, cold storages, equipment, transport vehicles boats and other tangible assets and margin money loans to cooperatives to raise working capital finance. NCDC provides the financial assistance under various Central Sector Schemes and NCDC Schemes. NCDC receives the support from the Government of India for recovery of loans. The corporation receives grants from the Government of India as and when a certain scheme is been instituted and the funding for the respective schemes is channelled through NCDC. Acuite notes that NCDC has a sanctioned grant of Rs 1000 Cr. ( of which Rs. 500 Cr. was received in FY 23 and the remaining Rs. 500 Cr. will be received in FY 25) from the Government of India for the sugar sector.  The corporation operates through a General Council consisting of 51 members to give shape to its policies and programmes and Board of Management of 12 members to cater to the day-to-day activities. The Managing Director of NCDC is also the additional secretary Ministry of Cooperation appointed by Government of India. Besides its Head Office, NCDC functions through 18 Regional/State Directorates. Various functional divisions look after the programmes. The field offices play an important role in project identification/formulation and oversee its implementation. NCDC provides loans to cooperative societies, state government, cooperative banks and to multi-state societies. Sound Asset Quality metrics The Corporation keeps 100% provisions of its NPA. NCDC is not a Non- Banking Financial Company (NBFC) and does not come under the purview of Reserve Bank of India (RBI) but, maintains steady asset quality metrics indicated by the GNPA for Prov. FY 24 at 1.12% as against 1.11 % in FY 23. Their collection efficiency/ Recovery of loans has been at 99.70% for Prov. FY 24 as against 99.67% for FY 23. NCDC tries to recover its NPA from borrowers and does not have any policy of write off and has not done any write offs till date. Steady earning profile National Co-operative Development Corporation (NCDC)  has seen a steady increase in profitability and  has  earned a PAT of Rs 573.93 Cr. for Prov. FY24 as against Rs 527.34  Cr. for FY 23. Owing to the lower cost of borrowings, NCDC has credit cost of the tune of 0.39% for Prov. FY 2024 as against 0.36% for FY 2023.  Broad Resource profile NCDC's resource profile consists of internal accruals, budgetary support from the central government, issuing NCDC bonds (backed by the government guarantee) and commercial paper as well as market borrowings. But currently as of FY 2024, haven’t issued any Bonds/ Commercial papers. And presently has market borrowings mainly in the form of lines of credit and term loans. The corporation receives grants from the central government as and when a certain scheme is been instituted and the funding for those schemes is channelled through NCDC. The corporation currently has a sanctioned limited of around Rs. 65, 510 Cr. and can avail the credit facilities from various financial institutions including public and private banks as well.

Weakness

­­Significant exposure to Agriculture and related sectors National Co-operative Development Corporation (NCDC) primarily provides financial assistance to the cooperative sector. For FY 24, NCDC has a majority lending exposure of ~78% of their loan portfolio to cooperative societies which include District Cooperative Banks and ~18% toward various State Governments. NCDC has majority of its disbursements extended to State Governments, or Government guaranteed loans or Government controlled loans.  NCDC has an increased sector concentration from marketing towards agriculture produce which contributes 77.36% of its credit portfolio for Prov. FY 24 as against 50.83% of its credit portfolio for FY 23. However, owing to strong risk management practices, the asset quality of the portfolio has remained healthy. Regulatory supervision As NCDC does not come under the purview of RBI, it is not required to maintain asset classification, capitalisation levels, it does not have sector specific thresholds while providing financial assistance. Hence it is crucial to monitor the impact on NCDC's asset quality periodically which would impact profitability going forward. Additionally, NCDC has its financials audited by the Comptroller and Auditor General (CAG) and the audited financials are presented before both houses of the Parliament. Though NCDC has internal protocols and various committees setup to scrutinize proposals and to periodically monitor and assess sector/section specific exposures and risks involved.

Rating Sensitivity

­ ­Continued support from the Government of India Changes in asset quality metrics Improvements in profitability and scale of operations

Liquidity Position

Adequate

­­Acuite believes that National Co-operative Development Corporation has an adequately place liquidity position marked by a total sanctioned limit of Rs. 65,510 Cr. as on September 30, 2024. Out of which the total utilisation has been to the tune of Rs. 27,645 Cr. NCDC additionally has cash and bank balances of Rs 147.13 Cr. (undisbursed grant) as on March 31, 2024 (Prov.).

Outlook: Stable

­

Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY24 (Prov) FY23 (Actual) Total Assets Rs. Cr. 37793.93 29483.75 Total Income* Rs. Cr. 1366.24 906.52 PAT Rs. Cr. 573.93 527.34 Net Worth** Rs. Cr. 5849.63 5392.32 Return on Average Assets (RoAA) (%) 1.71 2.04 Return on Average Net Worth (RoNW) (%) 10.21 10.81 Debt/Equity Times 5.33 4.37 Gross NPA (%) 1.12 1.11 Net NPA (%) 0.00 0.00 *Total income equals to Net Interest Income plus other income. **Networth here means NCDC Corpus/funds

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

­None

Any other information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.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 :

­Not Applicable

Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating National Bank for Agriculture and Rural Development (NABARD) Not avl. / Not appl. Cash Credit 05 Feb 2024 Not avl. / Not appl. Not avl. / Not appl. 4800.00 Simple ACUITE A1+ | Assigned Punjab National Bank Not avl. / Not appl. Cash Credit 19 Aug 2023 Not avl. / Not appl. Not avl. / Not appl. 11000.00 Simple ACUITE A1+ | Assigned Union Bank of India Not avl. / Not appl. Line of Credit 23 Sep 2024 Not avl. / Not appl. 10 Sep 2025 3060.00 Simple ACUITE A1+ | Assigned State Bank of India Not avl. / Not appl. Line of Credit 13 Aug 2024 Not avl. / Not appl. Not avl. / Not appl. 20000.00 Simple ACUITE A1+ | Assigned Indusind Bank Ltd Not avl. / Not appl. Line of Credit 10 Mar 2023 Not avl. / Not appl. Not avl. / Not appl. 1000.00 Simple ACUITE A1+ | Assigned Bank of India Not avl. / Not appl. Line of Credit 25 Jun 2024 Not avl. / Not appl. 24 Jun 2025 8500.00 Simple ACUITE A1+ | Assigned Bank of Baroda Not avl. / Not appl. Line of Credit 11 Mar 2024 Not avl. / Not appl. Not avl. / Not appl. 3000.00 Simple ACUITE A1+ | Assigned South Indian Bank Not avl. / Not appl. Line of Credit 28 Aug 2024 Not avl. / Not appl. 11 Aug 2025 100.00 Simple ACUITE A1+ | Assigned Karnataka Bank Ltd Not avl. / Not appl. Line of Credit 28 Mar 2024 Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE A1+ | Assigned Axis Bank Not avl. / Not appl. Line of Credit 04 Apr 2024 Not avl. / Not appl. 11 Dec 2024 400.00 Simple ACUITE A1+ | Assigned Not Applicable Not avl. / Not appl. Proposed Long Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3450.00 Simple ACUITE AAA | Stable | Assigned Not Applicable Not avl. / Not appl. Proposed Short Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 9040.00 Simple ACUITE A1+ | Assigned Deutsche Bank Not avl. / Not appl. Short-term Loan 23 Aug 2024 Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE A1+ | Assigned Sumitomo Mitsui Banking Corporation Not avl. / Not appl. Short-term Loan 25 Jul 2023 Not avl. / Not appl. 31 Jan 2025 1500.00 Simple ACUITE A1+ | Assigned Central Bank of India Not avl. / Not appl. Short-term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4000.00 Simple ACUITE A1+ | Assigned Indian Bank Not avl. / Not appl. Short-term Loan 19 Jun 2023 Not avl. / Not appl. Not avl. / Not appl. 500.00 Simple ACUITE A1+ | Assigned ICICI Bank Ltd Not avl. / Not appl. Short-term Loan 03 Jul 2024 Not avl. / Not appl. 26 Jun 2025 2000.00 Simple ACUITE A1+ | Assigned HDFC Bank Ltd Not avl. / Not appl. Short-term Loan 05 Dec 2023 Not avl. / Not appl. Not avl. / Not appl. 300.00 Simple ACUITE A1+ | Assigned Punjab National Bank Not avl. / Not appl. Term Loan 19 Aug 2023 Not avl. / Not appl. Not avl. / Not appl. 950.00 Simple ACUITE AAA | Stable | Assigned Indusind Bank Ltd Not avl. / Not appl. Term Loan 10 Mar 2023 Not avl. / Not appl. Not avl. / Not appl. 300.00 Simple ACUITE AAA | Stable | Assigned State Bank of India Not avl. / Not appl. Term Loan 13 Aug 2024 Not avl. / Not appl. Not avl. / Not appl. 3300.00 Simple ACUITE AAA | Stable | Assigned Federal Bank Not avl. / Not appl. Working Capital Demand Loan (WCDL) 05 Jun 2024 Not avl. / Not appl. Not avl. / Not appl. 600.00 Simple ACUITE A1+ | Assigned

­

Contacts

Mohit Jain Senior Vice President - Rating Operations Nattasha Venkatesh 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.