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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 5.00 | ACUITE BB+ | Stable | Assigned | - |
| Bank Loan Ratings | 20.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 7.50 | ACUITE BB+ | Stable | Reaffirmed | - |
| Total Outstanding | 32.50 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs 20.00 Cr. bank facilities (including the proposed facilities) of Seeds FIincap Private Limited (SFPL). The outlook is 'stable'.
Acuité has reaffirmed the long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs 7.50 Cr. Non Convertible Debentures of Seeds FIincap Private Limited (SFPL). The outlook is 'stable'. Acuité has assigned its long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs 5.00 Cr. bank facilities of Seeds FIincap Private Limited (SFPL). The outlook is 'stable'. Rationale for rating The rating continues to factor in the company’s experienced management team, sound asset quality, and healthy growth in AUM levels in FY24. The company’s AUM grew to Rs. 328.50 Cr. as on March 31, 2024(prov), compared to Rs. 208.15 Cr. as on March 31, 2023. It has increased due to the healthy disbursement levels at Rs 294.73 Crore in FY2024 compared to Rs 70.44 Crore in FY2021. The rating further factors the comfortable asset quality indicators - marked by on-time portfolio of 98.75% percent as on March 31,2024. Reportedly, the company's GNPA is 0.35 percent and NNPA is nil as on March 31,2024. The rating, however, continues to remain constrained by SFPL’s weak earnings profile, modest networth base, and its nascent stage of operation. The company's profitability remained restrained with losses of Rs (4.10) Crore for FY24(prov) and Rs (3.97) Crore in FY23. These losses are on account of the high operating expenses pertaining to increase in branch networks. The rating also factors SFPL’s geographically concentrated portfolio due to its limited track record of operations. (Uttar Pradesh contributing 54% of total AUM as on March 31, 2024). Acuite believes that the company’s ability to timely infuse capital, improved networth base, and improvement in the profitability metrics, while keeping the momentum in growth of AUM, and disbursements would be a key rating monitorable. |
| About the company |
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Incorporated in 2019, Seeds Fincap Private Limited (SFPL) is a RBI registered non- deposit taking NBFC with its headquarters in Gurugram (Delhi). The company is currently Promoted by Mr Subhash Chandra Acharya as the CEO and Managing Director, and Mr Avishek Sarkar as a whole-time Director. They are engaged in providing unsecured loans to people/enterprises living in Tier II, III & IV Cities. It commenced its operations in February 2021, and currently operating in Haryana, Rajasthan, Uttar Pradesh, Bihar, and Uttarakhand with 90 branches as recorded on March 31,2024.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of SEEDS FINCAP PRIVATE LIMITED to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Experienced Management :
SFPL is engaged in extending unsecured loans to people and enterprises in Tier II, III and IV cities. It operates in eight states with branch networks of 90 branches. The company is headed by Mr Subhash Chandra Acharya as the Managing Director-CEO and Mr Avishek Sarkar as the Whole Time Director are supported by the seasoned professionals for the daily operations. The management has an extensive experience of over a decade in the industry. Acuité believes that company’s growth prospects will be supported by the promoter’s experience in this industry Healthy AUM growth while maintaining Asset Quality; The company’s loan portfolio significantly registered a growth Rs. 328.50 Cr. on March 31, 2024, compared to Rs. 208.15 Cr. as on March 31, 2023. The company extends loans to entrepreneurs, with ticket sizes ranging between Rs 50,000 to 10,00,000. The average tenure of these loans range between 19 to 36 months. SFPL has demonstrated sound asset quality marked by on- time portfolio of~ 99 percent as on March 31,2024. Acuité believes that SFPL’s ability sustain the growth in its loan book, while maintaining sound asset quality level in the near to the medium term will be key rating monitorable. |
| Weakness |
| Subdued profitability metrics:
SFPL was incorporated in 2019, and it is operating from Delhi since February 2021. The company is spread across 8 states, with the major exposure in state of Uttar Pradesh (54% of the portfolio o/s). The company expanded their branch network from 54 in March 31, 2023, to 90 in March 31, 2024, as to improve it's borrower base. This expansion resulted in high operating expenses primarily driven by staff expenses leading to subdued profitability metrics. The company reported losses to the tune of Rs 4.10 Cr. in FY24 (prov) against the losses of Rs 3.97 Cr. in FY23. SFPL’s ability to scale up its operations while maintaining its profitability metrics would be a key rating monitorable. Modest capital structure: SFPL offers loans for Trading, Agriculture & Dairy, Manufacturing & Production, Services and Consumer loan & MFIs which account for approximately 54%, 11%, 9%, 5% , 20% respectively of the portfolio. The company’s capital structure is marked by Networth of Rs 65.59 Cr. as on March 31, 2024 (prov) and total debt of Rs Cr. 298.12 resulting in debt/equity ratio of 4.55 times. There has been capital infusion of Rs 32 Cr. during FY2024 resulting in networth of Rs 65.59 Crore in FY2024 (prov) from Rs 37.02 Cr in FY2023. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
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As per ALM statement as on March 31, 2024, SFPL has no negative cumulative mismatches in any buckets upto 1 years. SFPL’s is able to maintain its monthly collection efficiency at the range of ~99 percent. SFPl’s maintained cash and bank balances of Rs.78.11 Cr. Acuité believes that the SFPL’s has adequate liquidity to meet its debt obligation in near to medium term.
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| Outlook: Stable |
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Acuité believes that SFPL will maintain ‘Stable’ outlook over the near to medium term owing to the experience of promoters. The outlook may be revised to ‘Positive’ in case SFPL demonstrates significant and sustainable growth in its scale of operations while mitigating asset quality risks in portfolio. Conversely, the outlook may be revised to ‘Negative’ in case of any challenges faced in scaling up operations, resource raising ability and in case the company faces higher than expected asset quality pressures or deterioration in profitability parameters.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income. |
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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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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.
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