Press Release July 05, 2024 VELICHAM FINANCE PRIVATE LIMITED Rating Assigned and Upgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	100.00	ACUITE BBB- | Stable | Assigned	-
Bank Loan Ratings	100.00	ACUITE BBB- | Stable | Upgraded | Positive to Stable	-
Total Outstanding	200.00	-	-

Rating Rationale

A­cuité has assigned its long-term rating of ‘ACUITE BBB-’ (read as ACUITE Triple B Minus) on the Rs. 100.00 Cr. bank facilities of Velicham Finance Private Limited (VFPL). The outlook 'Stable'. A­cuité has upgraded its long-term rating from ‘ACUITE BB+’ (read as ACUITE Double B Plus) to ‘ACUITE BBB-’ (read as ACUITE Triple B Minus) on the Rs. 100.00 Cr. bank facilities of Velicham Finance Private Limited (VFPL). The outlook has been revised from ‘Positive’ to 'Stable'. Reason for revision in outlook The revision in the rating takes in to consideration the growth in AUM, disbursements and profitability metrics  of VFPL. The AUM of VFPL stood at Rs.191.31 Cr.  (56% in ownbook) at the end of March 2024, which improved from Rs.119.19 Cr.  (49.41% in ownbook) at the end of March, 2023. The growth in AUM  was inline with the growth in disbursements  for FY2024, which stood at Rs.110.21 Cr. (56% towards own book). The profitability metrics of VFPL has captured the impact of the growth in the portfolio as the PAT for FY2024 improved to Rs. 6.57 Cr.  from Rs. 2.47 Cr. for FY2023. RoAA and NIM which stood at 6.84% and 10.95%, respectively, has seen similar growth in FY2024. The ratings continue to factor in VFPL’s established presence in its area of operations and experienced management. The rating also factors in healthy asset quality metrics of VFPL. The company’s  asset quality was marked by on-time portfolio of 98.75 percent with GNPAs at 0.24 percent as on March 31, 2024. VFPL classifies NPA at 120+ DPD. The asset quality was also aided by average overall collection efficiency for six months ended March 31, 2024, which stood at 98.06 percent. Going forward, the company’s ability to raise capital and profitably scale up its operations while maintainig asset quality shall be key monitorable.

About the company

­Chennai based Velicham Finance Private Limited (VFPL) is an NBFC engaged in extending loan against property (LAP) towards MSME borrowers and income generation loans. Velicham Finance Private Limited (VFPL) has its genesis with Bharathi Women Development Centre (BWDC), which was established in December 1987 as a Society by Mr. Nagarajan Muthukrishnan, who is the Managing Director of Velicham Finance Private Limited (VFPL). Along with Mr. Nagarajan (MD), Mr. Rahul Nagarajan is the executive director (ED) since 2021 who has been driving the company forward. The company operates in Tamil Nadu, Puducherry, Maharashtra and Kerala with a network of 28 branches as on March 31, 2024.

Unsupported Rating

­Not Applicable

Analytical Approach

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

Key Rating Drivers

Strength

­Experienced management in MSME segment VFPL is engaged in extending loans to MSMEs and for income generation purpose to women entrepreneurs in rural areas since 2016. The Company operates in Tamilnadu, Puducherry, Kerala with a network of 35 branches as on March 31, 2024. The company is promoted by Mr. Nagarajan (MD) who has over three decades experience in the micro finance business and has been associated with various societies and micro-finance institutions. Mr. Nagarajan is the secretary of Bharathi Women Development Centre, a society that primarily offers unsecured Income generation loans (IGL) to Self Help Groups (SHG - Women) and under Joint Liability Group (JLG) model for economically weaker section of women borrowers. The society has been in operations since 1987 and over the years has established its track record in social and micro finance activities. Mr. Nagarajan is supported by Mr. Rahul Nagarajan (ED), who joined VFPLin 2019, in the day-to-day operations of the company. The BoD also consists of Mr. Mathavan Krishna Kumar and Mr. Palavalasa Saikamalakar having close to three decades of experience in MFI, MSME and consulting services. Acuité believes that established presence of the promoters in the MSME segment will be central to support the business risk profile of the company in the near to medium term. Growth in AUM,profitability metrics and sustained healthy asset quality VFPL's AUM stood at Rs. 191.31 crore in March 2024 as against Rs. 119.19 crore in March 2023.  The off book  portfolio of VFPL, consisting of BC arrangements,  increased to Rs. 84.52 Crore in March 31, 2024 from Rs. 60.3 crore as on March 31, 2023. Its own book loan portfolio increased to Rs. 106.78 crore in March 2024 as against Rs. 58.89 crore in March 2023. The AUM growth was inline with the growth in disbursements for FY2024, which stood at Rs.191.31 Cr (56% towards own book). VFPL's PAT for FY2024 improved to Rs. 6.57 Cr. from Rs. 2.47 Cr. for FY2023. RoAA and NIM which stood at 6.84% and 12.88%, respectively. VFPL has healthy asset quality with GNPAs  at 0.24 percent on March 31, 2024. VFPL has reported an average  overall collection efficiency for 12 months ended March 31, 2024 at ~98.06  percent.

Weakness

­Modest capital structure  VFPL’s capital structure is modest marked by networth of Rs.24.46 Cr. for FY24.  The gearing stood at 3.93 times and the CAR stood at 28.56 percent. Even though Rs. 4Cr. of capital was infused by promoters in FY2024, Acuite believes that further infusions are necessary to scale up the business and to keep the gearing under control. Geographical concentration VFPL has presence majorly in Tamil Nadu with ~95 percent of the AUM spread across 14 districts as on March 31, 2024. This exposes the company to high geographical concentration risk. The company's performance is expected to remain exposed to competitive landscape in these regions and occurrence of events such as natural calamities, are likely to adversely impact the credit profile of the borrowers. Besides geography, the company will be exposed to competition and any changes in the regulatory framework thereby impacting credit profile of VFPL.

Rating Sensitivity

­ ­Resources raising ability Movement in profitability metrics Movement in collection efficiency and asset quality Movement in liquidity and capitalization buffers Changes in regulatory environment

Liquidity Position

Adequate

­VFPL’s liquidity profile is adequate as on March 31, 2024. The borrowings of VFPL have maturity of 24-60 months vis a vis the loan book which has average tenure of 18 - 24 months. There were no negative cumulative mismatches in ALM statement dated March 31, 2024.

Outlook: Stable

­Acuité believes that Velicham Finance Private Limited credit profile will have a 'stable' outlook in the near to medium term, as it draws support from its experienced management and will be able to continue the growth momentum. The outlook could turn 'positive' if there is substantial growth in the AUM while improving its capital structure, maintating its asset quality and profitablity metrics at healthy levels.The outlook could become 'negative' if there is significant deterioration in the asset quality/profitability levels.

Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY24 (Actual) FY23 (Actual) Total Assets Rs. Cr. 123.95 67.95 Total Income* Rs. Cr. 20.66 10.83 PAT Rs. Cr. 6.57 2.47 Networth Rs. Cr. 24.46 13.8 R e t u r n        on         A v e r a g e    Assets (RoAA) (%) 6.84 4.79 Return on Net Worth (RoNW) (%) 34.32 21.56 T  o  t   a  l     Debt/Tangible Net      Worth (Gearing) Times 3.93 3.77 Gross NPA’s (%) 0.24 0.11 Net NPA’s (%) 0.14 0.05

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 07 Jun 2023 Term Loan Long Term 2.32 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.46 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 3.50 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 1.33 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 3.43 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 6.04 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 2.00 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.05 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.36 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.13 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.90 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 5.19 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 0.87 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 1.73 ACUITE BB+ | Positive (Reaffirmed) Term Loan Long Term 17.91 ACUITE BB+ | Positive (Reaffirmed) Proposed Long Term Bank Facility Long Term 0.38 ACUITE BB+ | Positive (Reaffirmed) Proposed Long Term Bank Facility Long Term 3.40 ACUITE BB+ | Positive (Reaffirmed) Proposed Long Term Bank Facility Long Term 50.00 ACUITE BB+ | Positive (Assigned) 07 Sep 2022 Term Loan Long Term 0.99 ACUITE BB+ | Stable (Reaffirmed) Proposed Term Loan Long Term 30.00 ACUITE BB+ | Stable (Assigned) Term Loan Long Term 2.75 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 1.47 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 0.42 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 0.24 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 0.95 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 1.00 ACUITE BB+ | Stable (Reaffirmed) Proposed Term Loan Long Term 0.94 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 4.62 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 2.00 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 2.00 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 1.96 ACUITE BB+ | Stable (Reaffirmed) Term Loan Long Term 0.66 ACUITE BB+ | Stable (Reaffirmed) 21 Oct 2021 Proposed Long Term Loan Long Term 14.01 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 1.37 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 1.20 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 0.58 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 0.67 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 0.28 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 1.10 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable) Term Loan Long Term 0.79 ACUITE BB+ | Stable (Upgraded from ACUITE BB | Stable)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 17.38 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 100.00 Simple ACUITE BBB- | Stable | Assigned City Union Bank Ltd Not avl. / Not appl. Secured Overdraft 10 Nov 2023 Not avl. / Not appl. Not avl. / Not appl. 0.08 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Cholamandalam Investment Finance Company Ltd. Not avl. / Not appl. Term Loan 30 Mar 2024 Not avl. / Not appl. 29 Mar 2026 2.00 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) FINSTARS CAPITAL LIMITED Not avl. / Not appl. Term Loan 23 Nov 2023 Not avl. / Not appl. 05 Aug 2025 1.04 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Incred Capital Finacial Services Private Ltd. Not avl. / Not appl. Term Loan 30 Dec 2023 Not avl. / Not appl. 23 Sep 2025 0.84 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Real Touch Finance Limited Not avl. / Not appl. Term Loan 29 Jul 2023 Not avl. / Not appl. 29 Jul 2025 0.70 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Real Touch Finance Limited Not avl. / Not appl. Term Loan 03 Nov 2023 Not avl. / Not appl. 03 Nov 2025 0.80 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Alwar General Finance Co. Pvt. Ltd. Not avl. / Not appl. Term Loan 19 Aug 2023 Not avl. / Not appl. 19 Aug 2025 1.56 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Alwar General Finance Co. Pvt. Ltd. Not avl. / Not appl. Term Loan 02 Feb 2024 Not avl. / Not appl. 02 Feb 2026 2.41 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Electronica Finance Ltd. Not avl. / Not appl. Term Loan 20 Jun 2023 Not avl. / Not appl. 20 Jun 2025 0.88 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Electronica Finance Ltd. Not avl. / Not appl. Term Loan 20 Dec 2023 Not avl. / Not appl. 20 Dec 2025 1.85 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) SHRIRAM FINANCE LIMITED Not avl. / Not appl. Term Loan 09 Jun 2023 Not avl. / Not appl. 09 Jun 2026 0.70 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) SHRIRAM FINANCE LIMITED Not avl. / Not appl. Term Loan 28 Nov 2023 Not avl. / Not appl. 09 Jun 2025 4.60 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) MAS Financial Service Ltd. Not avl. / Not appl. Term Loan 23 Feb 2024 Not avl. / Not appl. 25 Feb 2026 1.94 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) MAS Financial Service Ltd. Not avl. / Not appl. Term Loan 30 Nov 2023 Not avl. / Not appl. 30 Nov 2025 2.50 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) MAS Financial Service Ltd. Not avl. / Not appl. Term Loan 22 Feb 2024 Not avl. / Not appl. 22 Feb 2026 1.92 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Tamil Nadu Mercantile Bank Not avl. / Not appl. Term Loan 11 Nov 2022 Not avl. / Not appl. 31 Jan 2027 1.17 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) UC Inclusive Credit Private Limited Not avl. / Not appl. Term Loan 27 Mar 2024 Not avl. / Not appl. 28 Mar 2026 5.00 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Vivrit Capital Private Ltd. Not avl. / Not appl. Term Loan 30 Sep 2023 Not avl. / Not appl. 28 Feb 2025 2.50 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Caspian Impact Investment Private Ltd. Not avl. / Not appl. Term Loan 30 Jan 2024 Not avl. / Not appl. 30 Jan 2026 4.83 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Friends of WWB Not avl. / Not appl. Term Loan 25 Jul 2023 Not avl. / Not appl. 25 Jul 2025 0.70 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Friends of WWB Not avl. / Not appl. Term Loan 25 Jul 2023 Not avl. / Not appl. 25 Jul 2025 0.83 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Rar Fincare Limited Not avl. / Not appl. Term Loan 29 Jul 2024 Not avl. / Not appl. 29 Jul 2025 0.74 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Rar Fincare Limited Not avl. / Not appl. Term Loan 22 Mar 2024 Not avl. / Not appl. 23 Mar 2026 1.00 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) State Bank of India Not avl. / Not appl. Term Loan 25 Jul 2023 Not avl. / Not appl. 25 Jul 2026 20.67 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Millap Social Ventures Private Limited Not avl. / Not appl. Term Loan 31 Oct 2023 Not avl. / Not appl. 20 Oct 2025 1.39 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Tamil Nadu Mercantile Bank Not avl. / Not appl. Term Loan 11 Nov 2022 Not avl. / Not appl. 10 Nov 2027 1.47 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) UC Inclusive Credit Private Limited Not avl. / Not appl. Term Loan 27 Mar 2024 Not avl. / Not appl. 01 Apr 2026 2.49 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Vivrit Capital Private Ltd. Not avl. / Not appl. Term Loan 30 Sep 2023 Not avl. / Not appl. 09 Feb 2025 0.86 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) A U Small Finance Bank Not avl. / Not appl. Term Loan 28 Nov 2022 Not avl. / Not appl. 07 Oct 2024 0.17 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Caspian Impact Investment Private Ltd. Not avl. / Not appl. Term Loan 30 Jan 2024 Not avl. / Not appl. 23 Dec 2024 1.55 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Friends of WWB Not avl. / Not appl. Term Loan 31 Aug 2023 Not avl. / Not appl. 12 Aug 2025 0.35 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) Rar Fincare Limited Not avl. / Not appl. Term Loan 25 Mar 2024 Not avl. / Not appl. 25 Mar 2026 0.78 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ ) State Bank of India Not avl. / Not appl. Term Loan 21 Jul 2023 Not avl. / Not appl. 10 Jun 2026 12.30 Simple ACUITE BBB- | Stable | Upgraded | Positive to Stable ( from ACUITE BB+ )

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Contacts

Analytical Details	Contact Details
Mohit Jain Senior Vice President - Rating Operations Tel: 022–49294017 mohit.jain@acuite.in Shabad Palakkal Associate Analyst - Rating Operations Tel: 022-49294065 shabad.palakkal@acuite.in	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

­Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.