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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 200.00 | ACUITE A+ | Stable | Assigned | - |
| Bank Loan Ratings | 400.00 | ACUITE A+ | Stable | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 600.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has assigned the long term rating of ‘ACUITE A+’ (read as ACUITE A plus) on the Rs. 200.00 Cr. bank facilities of Protium Finance Limited (PFL) erstwhile Growth Source Financial Technologies Private Limited (GSFTPL). The outlook is ‘Stable’.
Acuité has reaffirmed the long term rating of ‘ACUITE A+’ (read as ACUITE A plus) on the Rs. 400.00 Cr. bank facilities of Protium Finance Limited (PFL) erstwhile Growth Source Financial Technologies Private Limited (GSFTPL). The outlook is ‘Stable’. The rating continues to factor in PFL’s experienced management, healthy capital structure and support from marquee investors. PFL is wholly owned subsidiary of Consilience Capital Management; funded and backed by marquee global investors. As on March 31, 2022, the company reported networth of Rs. 1,255.57 Cr. with Rs.379.37 Cr. of borrowings while its Capital Adequacy Ratio (CAR) stood at 80.59 percent. The rating takes into account the capital infusion of Rs. 760 Cr. in FY2022 from its existing investor Consilience Capital Management. The firm has invested around Rs. 1,255 Cr. in PFL since FY2019. The rating also factors in PFL’s efficient risk management systems along with high level of digitation and collection processes as reflected in its on-time portfolio of 97.76 percent as on March 31, 2022 and overall average collection efficiency of 99.48 percent for 6 months ended March 31, 2022. While Acuite takes cognizance of subdued business volumes during Q1FY2022 on account of pandemic, the company’s disbursals and collections have shown traction since July 2021. The company disbursed Rs. 1856 Cr. for FY2022 [FY2021: Rs.382.44 Cr.]. The rapid disbursements and branch expansion led to increase in loan portfolio to Rs.1415 Cr. as on March 31, 2022 from Rs. 321.16 Cr. as on March 31, 2021 and from Rs. 4.26 Cr. as on March 31, 2020. The demonstrated growth in loan portfolio and extensive experience of the management in financial services has enabled PFL recently, to raise funds from Banks at competitive rates of borrowing. The rating is constrained by limited track record and low portfolio seasoning (majority of portfolio origination taken place in FY2021 & FY2022). Further, the inherent risks of lending towards MSME segment. Going forward, the ability of the company to scale up its operations while maintaining profitability will be key credit monitorable. |
| About the company |
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Incorporated in 2019, Protium Finance Limited (PFL) erstwhile Growth Source Financial Technologies Private Limited (GFSTPL) is a Mumbai based NBFC engaged in lending secured and unsecured loans to SME, MSME and Consumer finance segments. The company is promoted by Consilience Capital Management and led by Mr. Peeyush Misra (Partner & Director) who has over 2 decades of experience in risk management and running global businesses. PFL operates through a network of 62 branches spread across 43 districts/cities and having a presence in 15 states. PFL has a borrower base of around 99,957 borrowers as on June 30, 2022.
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| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of PFL to arrive at the rating. |
Key Rating Drivers
| Strength |
| Experienced management team; demonstrated support from marquee investors
PFL extends secured & unsecured loans towards SME & MSME segments. The company also extends loss guaranteed MSME & consumer finance loans through their channel partners. PFL is promoted by Consilience Capital Management which is backed by marquee global investors. Over the past two years of operations, PFL has received continuous support in the form of periodic capital infusion from the promoter company and are expected to support the growth plans as and when required. Consilience Capital Management infused additional ~Rs. 760 Cr. in FY2022 in the form of Compulsory Convertible Preference Shares (CCPS) and have in total contributed around ~Rs. 1,255 Cr. in the form of equity and CCPS since FY2020.
PFL is led by Mr. Peeyush Misra (Partner & Director) who has an experience spanning over two decades in risk management and running global businesses. He was earlier associated with Goldman Sachs (U.S.) as a Partner handling business including mortgages, asset backed securities, interest rate products amongst others. PFL has also on board Mr. P R Seshadri (ex- MD & CEO Karur Vysya Bank; ex CEO BFC Bank & Citi Financial Consumer Finance) and Mr. Praveen Kumar Gupta (ex-MD Retail & Digital Banking SBI) acting as Independent Directors bringing in over 3 decades of experience in financial services industry. The management team also comprises of professionals with experience in SME, Consumer, Retail lending, Treasury & Risk Management, Fintech and Investment Banking. Acuite believes that PFL’s business and credit profile over the near term will be supported by its ability to attract funding from diversified lenders/investors and confidence imposed by the investors in the business model of the company. Healthy growth in AUM and sound asset quality PFL commenced its business in February 2020. Over the years the company has expanded its presence in 15 states with its network of 62 branches spread across 43 districts/cities. PFL has been identifying geographies suited to its loan products and expanding rapidly with opening new branches and engaging with channel partners. The company had a branch network of 62 branches as on June 30, 2022. The company’s business sourcing model is a mix of branch led origination, via DSAs and via E-commerce partners whereby MSME loans are backed by FLDG. The company disbursed loans amounting to ~Rs. 382 Cr. in FY2021 and ~Rs. 1857 Cr. in FY2022. The rapid branch expansion fuelled by disbursements has helped PFL to grow its loan portfolio to ~Rs. 1415 Cr. as on March 31, 2022, from ~Rs. 321 Cr. as on March 31, 2021, and ~Rs. 4 Cr. as on March 31, 2020. The growth in loan portfolio was primarily funded by capital funds deployed by the company and now PFL looks forward to diversify its funding mix by accessing funds from Banks and NBFC/FI’s. PFL’s healthy asset quality was marked by on-time portfolio at 97.76 percent and GNPA at 0.16 percent as on March 31, 2022. Overall average collection efficiency for 6 months ended March 2022 stood at 99.48 percent .
Acuité expects PFL to maintain the growth momentum in a sustainable manner while diversifying its resource mix and maintaining asset quality. |
| Weakness |
| Susceptible to inherent risks amidst relatively low seasoned portfolio
PFL commenced its lending operation in February, 2020 extending SME, MSME loans (secured against property) having an average tenure of upto 9 years. The company also extends unsecured MSME loans having shorter tenure upto 2 years. PFL’s shorter duration loans also includes loss protected MSME and consumer finance loans through their channel partner having a tenure ranging 1.5-2 years. The company’s loan book of Rs. 1415.12 Cr. as on March 31, 2022 has grown significantly from Rs. 312.16 Cr. as on March 31, 2021 and from Rs. 4.26 Cr. as on March 31, 2020. Due to substantial growth in loan book in the last year, majority of the portfolio has a seasoning of around one year as on March 31, 2022 Around 53 percent of PFL’s portfolio of Rs. 1415.12 Cr. as on March 31, 2022 accounts for MSME loans (secured against property) and ~30 percent towards unsecured MSME loans. PFL’s overall credit profile is susceptible to concentration towards MSME loans which in turn are facing their own inherent risks and challenges. Further, since MSME loans are extended to self- employed individuals for business purposes, the serviceability of these loans is directly dependent on the level of economic activity in the region. The company’s operations are fairly diversified in Maharashtra with ~29 percent followed by Delhi with ~16 percent of the overall outstanding portfolio as on March 31, 2022. Occurrence of events such as slowdown in economic activity or shifting of activity to other geographies could impact the cash flows of the borrowers, thereby impacting credit profile of PFL. Relatively low seasoning of portfolio with inherent risk associated with MSME lending might result in increased asset quality pressures due to current operating environment. Acuité believes that the company’s ability to maintain its asset quality given the low seasoned loan book and increased presence in the newer geographies will remain a key rating monitorables. Modest profitability Given the nascent stage of company’s operations, it reported modest profits of Rs. 13.96 Cr. during FY2022 [FY2021: Rs. 0.42 Cr.]. The profits have been supported by higher disbursements coupled with nil leverage. Going forward, the company’s ability to attract debt funding at attractive rates, optimize its operating expenses while maintaining its growth trajectory shall be key monitorables. |
| Rating Sensitivity |
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| Material Covenants |
| None |
| Liquidity Position |
| Adequate |
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The company reported no negative cumulative mis-matches in near to medium term as per ALM statement dated March 31, 2022. PFL’s liquidity position is adequate with cash & bank balances of ~Rs. 301 Cr. The company’s collections during February and March 2022 were ~98- 99 percent of the scheduled collections. a
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| Outlook : Stable |
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Acuité believes that PFL's will maintain a stable outlook for the medium term, as the credit profile will be supported by its experienced management, support from resourceful promoters’/investor base and healthy capitalisation level. The outlook may be revised to ‘Positive’ in case the company is able to scale up its loan book significantly while maintaining its asset quality and profitability metrics. Conversely, the outlook may be revised to ‘Negative’ in case of significant deterioration in asset quality/ profitability metrics.
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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): |
| None |
| 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 |
| https://www.acuite.in/view-rating-criteria-55.htm |
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