Press Release July 27, 2026 VARTHANA FINANCE PRIVATE LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Non Convertible Debentures (NCD)	0.00	65.70	ACUITE BBB | Reaffirmed | Rating Watch with Positive Implications	-	MCA
Total Outstanding	0.00	65.70	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuité has reaffirmed the long-term rating to ’ACUITE BBB’ (read as ACUITE triple B) on Rs 65.70 Cr. Non-Convertible Debentures facilities of Varthana Finance Private Limited (VFPL) and is on Rating Watch with Positive Implications. Rationale for Rating Watch Acuite takes note of TVS Holdings' announcement  dated July 15, 2026, stating that Home Credit India Private Limited (part of the TVS VENU) will acquire Varthana Finance in all cash deal of Rs 967 Cr. subject to customary purchase price adjustments as stipulated in the agreement. The transaction is in line with the group’s broader strategy of expanding its presence in the financial services sector.Following the completion of the transaction, Varthana Finance Private Limited would become a wholly owned subsidiary of Home Credit India Private Limited and a step-down subsidiary of TVS Holdings Limited.However, the transaction remains subject to the receipt of necessary regulatory approvals from the Reserve Bank of India (RBI). The approval and integration process, including completion of the merger, is expected to take around six to nine months. Acuite  believes that the proposed acquisition would have an overall positive impact on Varthana Finance Private Limited’s business growth and strengthen its overall profile given the financial strength, scale and distribution network of the TVS group. Acuite will continue to monitor the progress of the transaction and related regulatory developments and will endeavor to resolve the Rating Watch once there is greater clarity on the completion and implications of the acquisition. The rating reaffirmation factors in the adequate capitalization, diverse funding profile and experienced management. The company’s net worth has shown healthy growth, increasing from Rs 537.50 Cr. in FY24 to Rs. 559.08 Cr. as on March 31, 2025, and Rs. 590.18 Cr. as on March 31, 2026. VFPL reported a Capital Adequacy Ratio (CAR) of 28.30% as on March 31, 2026, and a gearing of 2.68 times. Further, The company has a large and diversified borrowing profile which has 50+ lenders. As on March 31, 2026, the company has a total outstanding debt of Rs. 1581.69 Cr. which comprises of a mix of Term loans, External commercial borrowings (ECBs) and non-convertible debentures (NCDs) and PTC transactions. However, the rating remains constrained by the profitability and asset quality levels, going forward, timely equity infusion would be crucial.Further, the ability of the company to contain asset quality pressures while scaling up the portfolio along with improving the profitability will remain a key rating monitorable.

About the company

­Based in Bangalore, ­Varthana Finance Private Limited is a non-deposit taking non-banking financial company incorporated in 1984. It commenced financing operations in 2013 post acquisition of the company by the current promoters, Mr. Steve Hardgrave and Mr. Brajesh Mishra. VFPL extends credit mainly through secured and unsecured loans to private schools for expansion purposes. The company has 43 branches with presence across 15 states and Gross loan portfolio stood at Rs 1,853.36 Cr as of March, 31 2026.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered the standalone financial and business risk profile of VFPL to arrive at the rating.

Key Rating Drivers

Strength

­Experienced management VFPL has an experienced management team led by Mr. Steve Hardgrave, Vice Chairman, Mr. Brajesh Mishra,MD & CEO who have relevant experience in the business segment of school financing. Mr. Hardgrave had worked in early stage venture funds which target social purpose businesses. Mr. Mishra has total experience close to three decades in retail banking, rural, and agri-lending and automotive finance. In addition, the company is backed by institutional investors such as ChrysCapital, Elevar Equity, LightRock, Kaizen PE among others.  Acuité believes that VFPL’s business profile will be supported by its experienced promoters and investors and will be able to leverage their expertise to raise funding and grow its loan book. Slight Moderation in AUM and Disbursements levels but expected to improve with operating leverage The company has demonstrated strong operational performance, with disbursements rising from Rs 858.43 Cr. in FY24 to Rs 1,240.20 Cr. in FY25. However, the disbursements reduced to Rs. 942.28 Cr. for FY26 due to reduction and rundown of the student loan portfolio.The AUM stood at Rs .1828.61 Cr. for FY26 due to the reduced disbursements in student loan category and high voluntary foreclosures from school customers. TVS Holdings announced that Home Credit India Private Limited (part of the TVS VENU) will acquire Varthana Finance Private Limited in all cash deal of Rs 967 Cr. Varthana Finance Private Limited is expected to benefit from the TVS Group's financial strength and distribution network, while the acquisition supports the group's financial services expansion strategy. Acuite believes the transaction could strengthen Varthana's growth prospects and business profile. However, its completion remains subject to shareholder and RBI approvals, with the process expected to take around six to nine months. Diverse funding profile and adequate capitalization. The company has a large and diversified borrowing profile which has 50+ lenders. As on March 31, 2026, the company has a total outstanding debt of Rs 1581.69 Cr. which comprises of a mix of Term loans, External commercial borrowings (ECBs) and non-convertible debentures (NCDs) and PTC transactions.Additionally, the company’s net worth has shown healthy growth, increasing from Rs 537.50 Cr. in FY24 to Rs 559.08 Cr. as on March 31, 2025, and Rs 590.18 Cr. as on March 31, 2026. VFPL reported a Capital Adequacy Ratio (CAR) of 28.3% as on March 31, 2026, and a gearing of 2.68 times, providing sufficient headroom to pursue future growth plans. Going forward, Acuite expects VFPL to continue benefiting from consistent support from external investors, thereby maintaining adequate capitalization.

Weakness

­Moderate asset quality;albeit improving The asset quality marked by the GNPA  saw some deterioration to 3.14 percent as on March 31, 2026 to  as against 1.94 percent as on March 31, 2025. The increase in GNPA was on account of delinquencies from the student loans portfolio which were elevated during FY26. Going forward, the ability of the company to improve the asset quality while limiting additional slippages and credit costs would be a key monitorable.  Subdued profitability The company reported a PAT of  Rs 18.65 Cr. in FY26 as against a PAT of Rs 23.66 Cr. in FY25. FY26 saw an increase in total impairment including write-off amounting to Rs 41.35 Cr. in the year which impacted profitability.The profitability remains susceptible to the additional credit costs pertaining to the slippages in the outstanding restructured portfolio. Acuite believes that the company's ability to contain asset quality pressures and credit costs while improving its profitability parameters will be a key rating monitorable.

ESG Factors Relevant for Rating

­VFPL belongs to the NBFC sector which complements bank lending in India. Some of the material governance issues for the financial services sector are policies and practices with regard to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and social development, responsible financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. VFPL offers financial services for private schools for expansion purposes. The company has a well-placed grievance redressal mechanism; it has made adequate disclosures with respect to related party transactions. It also adheres to Reserve Bank of India’s Fair Practices Code and has the necessary interest rate and grievance redressal policies. The company’s board comprises of three independent directors out of total nine directors. VFPL supports community development through CSR projects mainly aimed at promotion of education, eradication of hunger, environmental sustainability, promoting gender equality and empowering women among other causes.

Rating Sensitivity

Potential triggers (individual or collective) for an upward rating action:

Significant improvement in the disbursement and AUM level on a steady basis Improvements in the earnings profile and profitability Reduction in the operating expenses and credit costs on a sequential basis

Potential triggers (individual or collective) for a downward rating action:

Deterioration in the asset quality, with the 90+ DPD deterioration impacting earning profile Moderation in capital position with gearing exceeding 4 times

Liquidity Position

Adequate

VFPL has adequately matched asset-liability profile as on March 31, 2026 with no negative cumulative mismatch for a period of one year. The company has maintained cash and bank balances of Rs 225.28 Cr. as on March 31, 2026. The company has debt obligations of Rs 678.57 Cr for a period of one year as against collections from loans stood at Rs 470.73 Cr  given longer tenure of school loans. However, the inflows supported by collections, investments and cash stand at Rs 781.81 Cr as per the ALM dated March 31, 2026.

Outlook: Not Applicable

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Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY26(Actual) FY25(Actual) Total Assets Rs. Cr. 2222.38 2295.97 Total Income* Rs. Cr. 186.43 161.58 PAT Rs. Cr. 18.65 23.66 Net Worth Rs. Cr. 590.18 559.08 Return on Average Assets (RoAA) (%) 0.83 1.21 Return on Average Net Worth (RoNW) (%) 3.25 4.32 Debt/Equity Times 2.68 3.06 Gross NPA (%) 3.14 1.94 Net NPA (%) 1.93 0.93 *Total income equals to Net Interest Income plus other income.

Status of non-cooperation with previous CRA (if applicable):

­Not Applicable

Any other information

­None

Applicable Criteria

• 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

­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.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 18 Dec 2025 Non-Covertible Debentures (NCD) Long Term 20.00 ACUITE BBB | Positive (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE BBB | Positive (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 20.70 ACUITE BBB | Positive (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 12.00 ACUITE Not Applicable (Withdrawn) 18 Dec 2024 Non-Covertible Debentures (NCD) Long Term 12.00 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Non-Covertible Debentures (NCD) Long Term 20.00 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Non-Covertible Debentures (NCD) Long Term 20.70 ACUITE BBB | Stable (Upgraded from ACUITE BBB- | Stable) Proposed Non Convertible Debentures Long Term 34.30 ACUITE Not Applicable (Withdrawn) Non-Covertible Debentures (NCD) Long Term 8.00 ACUITE Not Applicable (Withdrawn) 09 May 2024 Proposed Non Convertible Debentures Long Term 34.30 ACUITE BBB- | Stable (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 8.00 ACUITE BBB- | Stable (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 12.00 ACUITE BBB- | Stable (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 20.00 ACUITE BBB- | Stable (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE BBB- | Stable (Reaffirmed) Non-Covertible Debentures (NCD) Long Term 20.70 ACUITE BBB- | Stable (Reaffirmed) 11 May 2023 Proposed Non Convertible Debentures Long Term 120.00 ACUITE BBB- | Stable (Assigned)

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Nattasha Venkatesh Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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