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
Acuite has assigned the long term rating of 'ACUITE B' (read as ACUITE B) on the Rs 10.00 Cr. proposed Non convertible debentures of Varth Capital Private Limited (VCPL). The Outlook is "Stable".
Rationale for Rating
The rating is constrained by the company's low scale of operations and weak asset quality profile. The company's scale of operations remains low, with AUM declining to Rs.4.24 crore as on March 31, 2026 (Prov.) from Rs.5.09 crore as on March 31, 2025, despite higher disbursements during the year. The asset quality profile remains weak, with GNPA and NNPA at 5.42 percent and 5.30 percent, respectively, as on March 31, 2026 (Prov.), compared to 4.35 percent GNPA and 4.35 percent NNPA as on March 31, 2025. However the rating is supported by the experienced management team. The company is managed by professionals having extensive experience in vehicle financing.
About the company
Incorporated in 1996, Varth Capital Private Limited (Erstwhile Sojatia Auto Finance Private Limited) is engaged in providing pre-owned passenger and commercial vehicle financing across Tier 2 and Tier 3 markets. The directors include Mr. Ujwal Shivprasad Bhutada, Ms. Aishwarya Santoshkumarji Tapdiya, Mr. Karan Shrinivas Kabra and Mr. Kailas Ashokkumar Sarda.
Unsupported Rating
Not applicable
Analytical Approach
Acuité has considered the standalone financial and business risk profile of Varth Capital Private Limited to arrive at the rating.
Key Rating Drivers
Strength
Experienced management
Varth Capital Private Limited benefits from the experience of its promoters and senior management team, particularly in the vehicle financing segment. The company is led by professionals having extensive experience in financial services, lending and portfolio management. The CEO, Mr. Shivprasad Asaramji Bhutada, has around 25 years of experience in vehicle financing and has previously worked with established institutions. The COO, Mr. B.M. Patil, possesses around 35 years of experience in the vehicle finance industry. Further, the promoter-director, Mr. Kailas Sarda, has been associated with the rural vehicle financing segment for more than a decade. The board is supported by professionals with expertise in finance, taxation, auditing and business strategy. Acuité believes that VCPL will continue to benefit through the experienced management.
Weakness
Low scale of operations and geographic Concentration
The company's scale of operations remains low, with AUM declining to Rs.4.24 crore as on March 31, 2026 (Prov.) from Rs.5.09 crore as on March 31, 2025, despite an increase in disbursements during the year. The small portfolio size exposes the company to concentration risks and earnings volatility. Further, the portfolio remains geographically concentrated, with a significant majority of the portfolio located in Maharashtra, exposing the company to region-specific economic and business risks.
Weak asset quality
The asset quality profile remains weak, with GNPA and NNPA increasing to 5.42 percent and 5.30 percent, respectively, as on March 31, 2026 (Prov.) from 4.35 percent each as on March 31, 2025. The deterioration was primarily due to stress in a single borrower account. Subsequently, the company wrote off the delinquent account, resulting in nil GNPA and nil NNPA as on June 30, 2026 (Prov.). While this has improved reported asset quality indicators, the portfolio remains relatively nascent and its ability to maintain asset quality as it scales up remains a key monitorable.
Rating Sensitivity
Potential triggers (individual or collective) for an upward rating action:
• Consistent growth in revenues and profitability; RoAA above 4.00 percent
• Sustained improvement in capitalisation.
Potential triggers (individual or collective) for a downward rating action:
Consistent decrease in Asset quality parameters like GNPA and NNPA taking GNPA above 5.00 percent.
Liquidity Position
Adequate
The company's liquidity profile remains adequate. As per the ALM statement dated March 31, 2026 (Prov.), the company reported positive cumulative mismatches in the medium to longer-term maturity buckets, with receivables from loans and advances aggregating to Rs.4.24 Cr. against borrowing obligations of Rs.1.00 Cr.. The borrowing profile comprises of secured NCD of Rs.1.00 Cr., carrying an interest rate of 14.00 percent and maturing in March 2030. Further, the company maintained cash and bank balances of Rs.1.64 Cr. along with fixed deposits of Rs.0.19 Cr. as on March 31, 2026 (Prov.), providing an additional liquidity buffer.
Outlook:
Stable
Other Factors affecting Rating
None
Key Financials - Standalone / Originator
Particulars
Unit
FY26(Prov.)
FY25(Actual)
Total Assets
Rs. Cr.
6.30
5.16
Total Income*
Rs. Cr.
0.40
0.23
PAT
Rs. Cr.
0.06
0.00
Net Worth
Rs. Cr.
5.20
5.14
Return on Average Assets (RoAA)
(%)
1.06
0.10
Return on Average Net Worth (RoNW)
(%)
1.17
0.10
Debt/Equity
Times
0.19
0.00
Gross NPA
(%)
5.42
4.35
Net NPA
(%)
5.30
4.35
*Total income equals to Net Interest Income plus other income
**Ratios are as per Acuite's calculation
Status of non-cooperation with previous CRA (if applicable):
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.
Contacts
List of instruments and names of regulators of the instruments
