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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 33.00 | ACUITE BB+ | Negative | Reaffirmed | Stable to Negative | - |
| Total Outstanding | 33.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs. 33.00 Cr. bank facilities of Valar Aditi Social Finance Private Limited (VASF). The outlook is revised to 'Negative' from ‘Stable’. Rationale for the rating The revision in the outlook takes into consideration the decline in AUM, disbursements, and earnings profile till March 31,2025 (prov.) . The overall AUM level stood at Rs 51.65 Cr. as on March 31,2025 (prov.) (Rs. 64.62 Cr. as on March 31,2024 , Rs 53.41 Cr. as on March 31, 2023 and Rs 26.43 Cr. as on March 31, 2022). The company reported disbursements of Rs 42.12Cr. till March 31,2025 (prov.) (Rs 65.03 Cr. during FY2024 and Rs 52.96 Cr. during FY2023). The company reported PAT of Rs 2.34 Cr. as on March 31,2025 (prov.) (Rs 2.86 Cr. during March 31,2024 and Rs 1.41 Cr. during March 31, 2023).The ratings continue to factor in VASF’s experienced management, comfortable capitalization levels and moderate asset quality metrics. The company’s CAR stood at 47.7 percent as on March 31,2025 (prov.) aided by internal accruals. The company’s asset quality was marked by on-time portfolio of 95.5 percent with GNPA at 2.30 percent as on March 31,2025 (prov.) supported by average overall collection efficiency of 97.5 percent for six months ended March 31,2025 (prov.). The rating is however, constrained by its modest scale of operations and geographic concentration and risks inherent to micro finance sector. Going forward, the ability to leverage on experience of management, maintain comfortable capitalization levels and profitably scale up its operations while maintaining its asset quality and collection efficiency will be a key rating monitorable. |
| About the company |
| Valar Aditi Social Finance Private Limited (VASF) is a Non-Deposit Accepting Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI). It is promoted by Dr. I. Sebastian and Tranquebank ApS. The company is engaged in micro financing activity directed to the benefit of poor women groups/individual for enhancement of their livelihoods. The company started its activities from 2010 onwards and has presence in Tamil Nadu and Puducherry. VASF currently operates in Tamil Nadu and Puducherry with its network of 9 branches as on March 31,2025. |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of VASF to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Established presence in the micro-finance segment: VASF commenced its micro-finance operations in 2010, extending micro-credit to women borrowers engaged in income-generating activities under the Joint Liability Group (JLG) model. The company caters to the rural areas of Tamil Nadu and Puducherry. It has a network of 9 branches with a loan portfolio of Rs. 51.65 crore as on March 31,2025 (prov.) (Rs. 65.26 crore as on March 31, 2024). VASF is promoted by Mutual Benefit Trusts developed by Dr. I Sebastian’s charitable trust – St. Joseph Development Trust (SJDT) and Tranquebank ApS. He has around three decades of experience in rural developmental activities. Dr. Sebastian is adequately supported on the board with Ernst Michaelsen – Managing Director of Tranquebank ApS, Mr. Sridhar Sampath,Mr. Reji Chandra,Mr. Ravi Prakash Singhee – Nominee Directors. Acuité believes that VASF will continue to benefit from its established presence and experience of the promoters in the microfinance segment. Adequate capitalisation levels: VASF primarily focuses on micro-credit to women borrowers engaged in income-generating activities under the Joint Liability Group (JLG) model. The company’s CAR stood at 47.7 percent as on March 31,2025 (prov.) (35.3 percent as on March 31,2024 and 35.45 percent as on March 31,2023) . The overall AUM level stood at Rs 51.65 Cr as on March 31,2025 (prov.) (Rs 64.62 Cr. as on March 31, 2024, Rs 53.41 Cr. as on March 31, 2023 and Rs 26.43Cr. as on March 31, 2022). Acuité believes that going forward the ability of the company to maintain it's adequate capitalization levels will be key rating sensitivity. |
| Weakness |
| Modest Scale of operations; Geographical concentration risk VASF commenced its operations in 2010 and currently operates through a network of 9 branches located across 10 districts in two states namely, Tamil Nadu and Puducherry. Its Assets Under Management (AUM) stood at Rs.51.65 Cr. as on March 31,2025 (prov.) as against Rs.64.62 Cr. as on March 31, 2024. Against this backdrop, the company has highly concentrated portfolio with Tamil Nadu alone contributing ~86 percent of the overall AUM as on March 31,2025 (prov.). Resultantly, the company's performance is expected to remain exposed to competitive landscape in these areas and occurrence of events such as natural calamities may adversely impact the credit profile of the borrowers. Acuité believes that the company’s modest scale of operations coupled with geographic concentration in the will continue to weigh on the company’s credit profile over the near to medium term. Moderate Asset Quality The asset quality is marked by its on-time portfolio at 95.5 percent as on March 31.2025 (prov.) This is supported by moderate collections where collection efficiency stood at an average of 97.5 percent for 6 months ended March 31,2025 (prov.). The company reported a GNPA of 2.30 percent as on March 31,2025 (prov.) and NNPA of 1.32 percent as on March 31, 2025 (prov.) Susceptibility to risks inherent to microfinance segment VASF primarily extends unsecured loans to economically challenged borrowers who have limited ability to absorb income shocks. Since financial assistance to economically challenged borrowers is a sensitive issue, from government stand point the regulatory dispensation in respect of the policies becomes relevant. Any changes in the regulatory environment impeding the ability of entities like VASF to enforce collections, etc will have an impact on its operational performance. Besides the regulatory risks, the inherent nature of the business renders the portfolios vulnerable to event risks such as natural calamities in the area of operations. Acuité believes that containing additional slippages while maintaining the growth in the loan portfolio will be crucial. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| VASF’s overall liquidity profile remains adequate in near to medium term. The company’s assets and liabilities are well matched with no cumulative deficit in near to medium term time buckets. VFPL’s borrowings stood at ~Rs. 34.83 crore with a gearing of ~1.38 times as on March 31, 2025 (prov.) . The company has maintained cash and cash equivalents of ~Rs. 9.22 crore as on March 31, 2025 (prov.). |
| Outlook: |
| Negative |
| 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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