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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Pass Through Certificates (PTCs) | 35.26 | ACUITE AA | SO | Assigned | Provisional To Final | - |
| Total Outstanding Quantum (Rs. Cr) | 35.26 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has converted from Provisional to Final the rating of ‘ACUITE AA(SO)’ (read as ACUITE double A (Structured Obligation)) to the Pass Through Certificates (PTCs) of Rs. 35.26 Cr issued by Consilience BL-2206 (Trust) under a securitisation transaction originated by PROTIUM FINANCE LIMITED (erstwhile Growth Source Financial Technologies Private Limited) (PFL) (The Originator). The PTCs are backed by a pool of loans provided to borrowers of unsecured business loans with principal outstanding of Rs. 39.17 Cr (including Rs. 3.13 Cr of over collateralisation). The rating addresses the timely payment of interest on monthly payment dates and the ultimate payment of principal by the final maturity date, in accordance with the transaction documentation. The transaction is structured at par. The rating is based on the strength of cash flows from the selected pool of contracts; the credit enhancement is available in the form of i. Over collateralisation of 8.0% percent of the pool principal; ii. Cash collateral of 10.00% of the pool principal iii. Excess Interest Spread of 11.75% of the pool principal iv. A subordinated equity tranche of 2.00% of the pool principal, in the form of investment from PFL The final rating is assigned based on the fulfilment of the structure, terms and covenants detailed in the executed trust deed, legal opinion, trust deed and other documents relevant to the transaction. |
| About the Originator |
| 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. |
| Assessment of the Pool |
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PFL has unsecured business loans’ Asset Under Management of Rs. 419.86 Cr as on March 31, 2022 and the current pool being securitised comprises 9.3% of this portfolio. The underlying pool of Rs 39.17 Cr in the current Pass Through Certificate (PTC) transaction comprises of unsecured business loans extended towards 291 borrowers, displaying moderate granularity, with an average ticket size of Rs. 18.3 lakhs, minimum ticket size of Rs. 3.0 lakhs. and maximum of Rs. 35.0 lakhs. The current average outstanding per borrower stands at Rs.13.46 lakhs. The weighted average original tenure for the pool is 31.26 months (minimum 18 months & maximum 36 months). The pool has a healthy weighted average seasoning of 9.48 months (minimum 6 months seasoning and maximum of 23 months seasoning). None of the loans in the pool availed moratorium. Furthermore, none of the loans in the pool went into the non-current bucket since origination, which speaks of the proven repayment track record of the borrowers. The borrowers have a significant average business vintage of 11.4 years (minimum 3 years and maximum 101 years). Also, the average CIBIL score for the borrowers in the pool is 762.82, which indicates a healthy credit profile of the underlying customers. All the customers in the selected pool are current as of the cut-off date. While 48.16% of the customers in the pool belongs to the Sole Proprietorship category, 37.31% belong to the Private Limited Company and 14.52% to the Partnership Firm categories. 4.5% of the borrrowers belong to the Textiles, Textile Products, Leather and Footwear industries, followed by FMCG (4.2%), and the remaining from other industries. 17.99% of these borrowers are concentrated in Maharashtra followed by 17.12% in Tamil Nadu and 16.48% in Delhi. The top 10 borrowers of pool constitute 6.8% of the pool principal outstanding. Thus the geographical and the top 10 concentrations in the pool are moderate as per the asset class. |
| Credit Enhancements (CE) |
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The credit enhancement is available in the form of i. Over collateralisation of 8.0% percent of the pool principal; ii. Cash collateral of 10.00% of the pool principal iii. Excess Interest Spread of 11.75% of the pool principal iv. A subordinated equity tranche of 2.00% of the pool principal, in the form of investment from PFL |
| Transaction Structure |
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The transaction is structured at par. Collections of a particular month will be utilized to make promised interest and expected principal payouts to Series A1 PTCs, till the Series A1 PTCs are outstanding. On payment of Series A1 PTCs in full and till such time the Equity Tranche PTCs/Series A2 PTCs are outstanding, the collections will be utilized for the payment of expected Series A2 principal including any unpaid expected principal payouts to Series A2 PTCs from earlier collection periods. The rating addresses the timely payment of interest on monthly payment dates and the ultimate payment of principal by the final maturity date, in accordance with transaction documentation. |
| Assessment of Adequacy of Credit Enhancement |
| Acuité has arrived at a base case delinquency estimate of 1.7% – 3.0% in respect of the loan Acuité Ratings & Research Limited www.acuite.in assets being securitised. Acuite has further applied appropriate stress factors to the base loss figures to arrive at the final loss estimates and consequently the extent of credit enhancement required. The final loss estimates also consider the risk profile of the particular asset class, the borrower strata, economic risks and the demonstrated collection efficiency over the past several months. Acuité has also considered the track record of operations of the originator and certain pool parameters while arriving at the final loss estimate. Acuité has accounted for the probable impact of COVID19 in the transaction for its analysis. The PTC payouts will also be supported by internal credit enhancement in the form of overcollateralisation, excess interest spread and a subordinated equity tranche provided by PFL. |
| Legal Assessment |
| The final rating is assigned based on the fulfilment of the structure, terms and covenants detailed in the executed trust deed, legal opinion, trust deed and other documents relevant to the transaction. |
Key Risks
| Counter Party Risks |
| The pool has average ticket size of Rs. 18.3 lakhs, minimum ticket size of Rs. 3.0 lakhs. and maximum of Rs. 35.0 lakhs . Considering their credit profile of the borrowers, the risk of delinquencies/defaults are moderately elevated. These risks of delinquencies are partly mitigated, considering the efficacy of the originator’s origination and monitoring procedures. |
| Concentration Risks |
| Since the pool comprises of unsecured business loans extended towards 291 borrowers, displaying moderate granularity, hence the risk is partially mitigated. 17.99% of these borrowers are concentrated in Maharashtra followed by 17.12% in Tamil Nadu and 16.48% in Delhi. The top 10 borrowers of pool constitute 6.8% of the pool principal outstanding. |
| Servicing Risks |
| There is limited track record of servicing PTCs, since this one of the first few PTC transactions for the originator. |
| Regulatory Risks |
| In the event of a regulatory stipulation impacting the bankruptcy remoteness of the structure, the payouts to the PTC holders may be impacted. |
| Prepayment Risks |
| The pool is subject to prepayment risks since rate of interest is high and borrowers may be inclined to shift to low cost options (based on availability). Prepayment risks are partially mitigated by prepayment penalty levied by the company for pre-closures. In case of significant prepayments, the PTC holders will be exposed to interest rate risks, since the cash flows from prepayment will have to be deployed at lower interest rates. |
| Commingling Risk |
| The transaction is subject to commingling risk since there is a time gap between last collection date and transfer to payout account. |
| Rating Sensitivity |
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| Material Covenants |
| The following covenant is included in the transaction structure: The purchase consideration to be paid by the issuer to the originator for purchasing the pool is equal to Series A1 issue price. |
| Liquidity Position |
| Adequate |
| The liquidity position in the transaction is adequate. The cash collateral available in t he transaction amounts to 10.00% of the pool principal. The PTC payouts will also be supported by internal credit enhancement in the form of over collateralisation, excess interest spread and a subordinated equity tranche provided by PFL. |
| Outlook - Not Applicable |
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| Key Financials - Originator | ||||||||||||||||||||||||||||||||||||||||
Status of non-cooperation with previous CRA (if applicable) None Any other information None |
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| Applicable Criteria |
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• Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Securitized Transactions: https://www.acuite.in/view-rating-criteria-48.htm |
| Note on Complexity Levels of the Rated Instrument |
| https://www.acuite.in/view-rating-criteria-55.htm |
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