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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 25.00 | ACUITE BB | Stable | Downgraded | - |
| Bank Loan Ratings | 225.00 | Not Applicable | Withdrawn | - |
| Total Outstanding | 25.00 | - | - |
| Total Withdrawn | 225.00 | - | - |
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Rating Rationale |
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Acuité has downgraded the long-term rating of 'ACUITE BB+’ (read as ACUITE Double B Plus) to 'ACUITE BB' (read as ACUITE Double B) on the Rs.25.00 Cr. bank facilities of Sarala Development and Microfinance Private Limited (SDMPL). The outlook is ‘Stable’.
Acuité has withdrawn the long-term rating on the Rs.225.00 Cr. proposed bank facilities of Sarala Development and Microfinance Private Limited (SDMPL) without assigning any rating. The rating is withdrawn as per issuer's withdrawal request. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. Rationale for the rating The downgrade in the rating factors a significant deterioration in asset quality, decline in AUM and weakened profitability metrics. The asset quality weakened with GNPA increasing to 10.62 percent as on December 31, 2025 from 3.19 percent as on March 31, 2025, while NNPA also rose to 4.63 percent from 1.91 percent within same period. The profitability has weakened due to elevated credit costs and net interest margin compression. The company reported net loss of Rs. 5.13 Cr. in FY2025, which further widened to Rs. 17.79 Cr. in 9M FY26. The rating takes into account the continued asset quality stress and its resultant impact on the credit and financial profile of the company. Moreover, the significant stress levels in the MFI industry due to the higher borrower indebtedness which is directly attributable to the larger ticket sizes and loans taken by individuals that do not have the means to repay the loans taken which has led to the overleveraging and difficulty in maintaining a healthy collection efficiency ratio. The rating is also constrained due to geographically concentrated portfolio with West Bengal and Bihar together comprising ~80.00 percent and balance ~20.00 percent spread across Assam Jharkhand and Sikkim. Furthermore, the AUM levels declined to Rs. 147.45 Cr. as of 9M FY26 as compared to Rs. 223.77 Cr. during FY2025. However the rating continues to derive strength from SMFL’s established track record of operations in the microfinance lending of over a decade along with the support of the experienced management team. The rating also derives strength from its adequate capitalisation levels (58.59 percent as on December 31, 2025) and moderate gearing levels (0.32 times as on December 31, 2025). |
| About the company |
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Kolkata based SDMPL (erstwhile Unnati Trading and Fincon Pvt. Limited – incorporated in 1992) is an RBI registered non-systemically important NBFC-MFI. The company is engaged in extending microfinance loans to woman borrowers organized in Joint Liability Groups since 2014. SDMPL is co-promoted by Dr. Arabinda Kumar Sinha (Chairman) and Mr. Pranab Rakshit (Managing Director). Dr. Sinha forayed in the microfinance space in 2006 through Sarala Women’s Welfare Society (SWWS) which is a not for profit entity, constituted under Section 25 of the Indian Companies Act 1956, (now Section 8 of the Indian Companies Act 2013). Later in 2010, SWWS acquired Unnati Trading and Fincon Private Limited, changed its name to SDMPL and it was registered as an NBFC-MFI with RBI in 2014. SWWS operations were transferred to SDMPL with an objective to transform the microfinance operations under a recognized and regulated NBFCMFI. Presently the day to day operations of the company are managed by Mr. Pranab Rakshit who has over a decade of experience in financial services.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of SDMPL to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Established experience in microfinance lending:
SDMPL is engaged in extending micro credit to women entrepreneurs in the rural areas of eastern and north eastern part of the India under Joint Liability group (JLG) model. SDMPL has moderately diversified its geographical presence beyond West Bengal to other states like Bihar, Assam, Jharkhand and Sikkim. The Company operates through a network of 81 branches spread across all these states as on December 31, 2025. The company is engaged in a business correspondent relationship with a few lenders. The company is promoted by Dr. Arabinda Kumar Sinha (Chairman) and Mr. Pranab Rakshit (Managing Director). Its board comprises 6 members led by Mr. Pranab Rakshit (Managing Director). The members of the board have over two decades of experience in banking and financial services. The day to day operations of the company are managed by Mr. Pranab Rakshit. He was on the Board of SA-DHAN for four years, one of the Self-Regulatory Organizations for Microfinance Institution in the country and currently the Vice President of AMFI-WB, an Association of Microfinance Institutions of West Bengal. Acuité believes that the operations of SDMPL’s will be supported by established presence and experienced management. Adequate capitalisation and gearing levels SDMPL’s capital structure is marked by networth of Rs. 42.22 Cr. as on March 31, 2025 (Rs. 47.34 Cr. as on March 31, 2024) and a gearing of 0.53 times as on March 31, 2025 (0.97 times as on March 31, 2024). The company has adequate capitalization levels marked by Capital Adequacy Ratio (CAR) at 68.44 percent as on March 31,2025 from 65.72 percent as on March 31,2024. Acuité believes that the company’s comfortable capitalization levels will support current level of operations. |
| Weakness |
| Stressed asset quality and pressures in MFI segment
SDMPL primarily extends micro finance loans to borrowers with lack of access to formal credit in the rural areas in eastern and north eastern region, primarily in West Bengal and Bihar through the JLG model. Given the credit profile of microfinance borrowers, any impact on the income flow of these households as a result of economic shocks could impair their repayment ability. Additionally, SDMPL continued to report higher delinquencies; GNPA and NNPA stood at 3.19 percent and 1.91 percent respectively as on March 31, 2025 as compared to 3.85 percent and 1.23 percent respectively as on March 31, 2024. The GNPA and NNPA has further deteriorated to 10.62 and 4.63 percent as on December 31, 2025. Furthermore, fairly geographically concentrated portfolio also poses risk to asset quality. The stress levels in the MFI industry are due to the higher borrower indebtedness which is directly attributable to the larger ticket sizes and loans taken by individuals that do not have the means to repay the loans. This has led to a situation off overleveraging and a difficulty in maintaining a healthy collection efficiency ratio. Moreover, a multitude of evolved factors such as higher attrition rates among staff in the field and the rise of systematic frauds at grass root levels has affected the collection efficiency in the microfinance segment. Acuité believes, going forward, the ability of the company to maintain stable asset quality in the light of continuously evolving economic scenario will be a key monitorable. Weak earnings profile Profitability metrics declined during FY2025 mainly on the account of not being able to attain lower interest expenses due to the subsidised interest rates being retracted by the government which has affected the firms ability to raise debt. Consequently, SDMPL reported a loss of Rs. 5.13 Cr. in FY2025 vis-à-vis a profit of Rs. 0.69 Cr. in FY2024 this loss further widened to Rs. 17.79 Cr for 9M FY26. SDMPL's RoAA turned to negative 6.19 percent on FY2025 from positive 0.66 percent on FY2024. Acuité believes the risk of potential increase in credit losses in the near-to-medium term, profitability will remain a key monitorable. |
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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| Liquidity Position |
| Adequate |
| SDMPL has well matched profile as on March 31,2025 with no negative cumulative mismatches reported across time buckets. It reported cash and cash equivalents of Rs 5.93 Cr. as on March 31,2025. Acuité takes note that the company’s ability to raise fresh funds in a timely manner will be important from a liquidity perspective. |
| Outlook: |
| Stable |
| 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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