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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1533.30 | ACUITE A | Reaffirmed & Withdrawn | - |
| Bank Loan Ratings | 5266.70 | ACUITE A | Stable | Reaffirmed | - |
| Bank Loan Ratings | 50.00 | Not Applicable | Withdrawn | - |
| Total Outstanding | 5266.70 | - | - |
| Total Withdrawn | 1583.30 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE A’ (read as ACUITE A) on the Rs. 5266.70 Cr. bank facilities of West Bengal Infrastructure Development Finance Corporation Limited (WBIDFC). The outlook remains ‘Stable’. Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE A’ (read as ACUITE A) on the Rs. 1583.30 Cr. bank facilities of West Bengal Infrastructure Development Finance Corporation Limited (WBIDFC). The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company. Acuité has withdrawn the long-term rating on the Rs. 50 Cr. bank facilities of West Bengal Infrastructure Development Finance Corporation Limited (WBIDFC) without assigning any rating as the instrument is fully paid off. The rating withdrawal is in accordance with Acuité's policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the company and NDC(No Due Certificate) received from the banker. Rationale for Rating The rating factors in WBIDFC’s strong parentage (Government of West Bengal holds~100 percent) and its strategic importance in providing credit to key infrastructure projects in West Bengal. The rating also considers the experienced managerial board at WBIDFC and comfortable capitalization levels. The company’s Capital Adequacy Ratio (CAR) increased to 74.60 percent as on March 31, 2024(Prov.), from 71.28 percent as on March 31, 2023. The company has reported a decline in loan book to Rs . 4790.84 Cr. as on March 31, 2024 (Prov.) from Rs 4869.00 Cr. as on March 31, 2023. WBIDFC majorly lends to its state government entities and projects and receives guarantee from GoWB for the same. WBIDC’s asset quality stood healthy marked by GNPA of 0.00 percent as on March 31, 2024 (Prov.) due to prudent underwriting practices. The company has reported a further improvement in GNPA from 0.95 percent for FY 2023. On account of state government ownership and support, the corporation enjoys strong resource raising ability at lower cost of funds thereby maintaining comfortable liquidity buffers to meet its funding requirements. These strengths are partially offset by large ticket size exposures and limited flexibility to go beyond its existing area and scope of operations. Going forward, continued support from GoWB, WBIDFC’s ability to profitably grow its loan portfolio while containing any additional slippages will be a key rating monitorable. |
| About the company |
| WBIDFC, a wholly-owned subsidiary of Government of West Bengal (GoWB), was incorporated in 1997 with an objective to support infrastructure development in West Bengal. The company’s primary objective is to mobilise funds from debt market and banks and on lend it to various state level enterprises, joint sector and Private sector companies. Besides Infrastructure, the company has also provided funding to department of food and supplies among others. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has adopted a standalone approach while assessing the business and financial risk profile of WBIDFC and has factored in benefits emanating from the ownership by Government of West Bengal. GoWB’s financial support to WBIDFC is in the form of its ~100 per cent equity ownership and its guarantee for certain borrowings of WBIDFC. Besides financial support, GoWB also extends managerial support through Board representation. |
| Key Rating Drivers |
| Strength |
| Strong support from Government of West Bengal WBIDFC is an RBI registered non-deposit taking NBFC engaged in financing for infrastructure development in West Bengal. The current board comprises Dr. Abhirup Sarkar (Chairman), Mr. Manas Dhar (Managing Director) along with various professionals and bureaucrats representing Government of West Bengal (GoWB). This provides strong managerial support on an ongoing basis to WBIDFC. WBIDFC’s funding profile is supported by the State Government’s moral obligation to support the capitalization levels both on an ongoing basis and in the event of distress. GoWB is ~100 per cent stakeholder in the corporation and is expected to support the corporation given its key role as a financier for infrastructure development in the state. WBIDFC’s capitalization levels remained adequate at 74.60 percent as on March 31, 2024 (Prov.). WBIDFC’s funding mix comprises equity contribution from GoWB and borrowings from banks. The Company’s outstanding debt is Rs 4959.95 Cr. as on March 31, 2024 (Provisional). The company’s borrowings comprised of bank borrowings (term loans and overdrafts). The ownership by the GoWB enables WBIDFC to borrow at fine pricing from various banks and institutions. Given the linkages with the West Bengal Government and its role in facilitating funding for several state enterprises as well as companies that play an important role in the state economy, Acuité believes that WBIDFC will continue to receive need based support in future as well. Since the support from GoWB is critical to the rating, the credit profile of West Bengal state is of key importance. Any further deterioration in the state metrics could impact the headroom to support the entities like WBIDFC, for whom it is obligated to extend support either on account of an explicit support arrangement or an implicit understanding with the lenders. The fiscal position and credit profile of West Bengal state will be a key rating sensitivity. Acuité believes that the company will continue to benefit from strong financial and managerial support from the State Government on an ongoing basis over the medium term. |
| Weakness |
| Risks inherent in big ticket lending: WBIDFC’s mandate is to offer financial assistance for infrastructure development. The company’s loan book had improved to Rs. 4869.00 Cr. as on March 31, 2023 from Rs 4424.09 Cr. as on March 31, 2022. The company’s loan book has seen decline to Rs 4790.84 Cr. as on March 31, 2024 (Prov.). The company’s asset quality remained healthy with GNPA of 0.95 percent as on March 31, 2023 (1.20 percent as on March 31, 2022 and 0.36 percent as on March 31,2021). The company has reported a further improvement in GNPA of 0.00 percent as on March 31, 2024(Prov.). Besides the risk of delinquency in large exposures, WBIDFC is also exposed to the risk of prepayments or delays in offtake in respect of sanctioned exposures. Since any improvement in operating performance is linked to growth in the loan book, the company will have to maintain a healthy pipeline of disbursements. It has been observed during FY2023-24, that there has been a divergence between the sanctions and the disbursements. This is attributable to sanctions to Government entities which remained undrawn mainly on account of funding arrangements being made by these entities from alternative sources like budgetary support. Acuité believes that the company’s ability to manage the risks inherent in the wholesale lending segment will remain a key rating sensitivity. Limited operational flexibility amidst an intensely competitive landscape: WBIDFC’s objective is to extend financial support to the infrastructure development in the state of West Bengal. The company has primarily focused on lending to Public sector, Private sector entities and entities owned and managed by Government of West Bengal. The company’s resource base comprises equity from GoWB and funding from banks and institutions. Currently on a networth base of Rs. 1381.26 Cr., the company is geared at 3.59 times as on March 31, 2024 (Provisional). As the borrowings increase, the overall cost of funds will be increasingly linked to the interest rates on these incremental debts. The likelihood of raising debt through GoWB guarantees is linked to the Government’s willingness to extend further guarantees. Since WBIDFC is required to pay guarantee commission to the Government for any guarantees, it adds to the cost of funding through that route. Hence, the company has always endeavored to raise funds on the strength of its standalone credit profile. The ability to access funds at competitive rates will be a key determinant of its future cost of funding.WBIDFC’s mandate of lending to Infrastructure projects/ entities in the State of West Bengal limits the lendable options in an intensely competitive environment. Acuité believes that against the above competitive backdrop and limited flexibility to go beyond its existing area and scope of operations, WBIDFC will have to maintain a healthy roster of highly rated Private and Public sector borrowers to sustain its profitability and growth. |
| ESG Factors Relevant for Rating |
| WBIDFC is a wholly-owned subsidiary of Government of West Bengal (GoWB), primary objective is to mobilise funds from debt market and banks and lend it to various state level enterprises, joint sector and Private sector companies. 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 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. WBIDFC board of directors comprises of Chairman , Managing Director, Independent Director and three directors. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| The company’s total debt stood at Rs. 4959.95 Cr. as on March 31, 2024 (Provisional) comprising term loans & overdraft facilities from Banks. The company had maintained cash and cash equivalents of ~Rs. 1000.96 Cr. |
| Outlook: Stable |
| Acuité believes that WBIDFC will maintain a ‘Stable’ credit profile over the near to medium term on the back of ongoing financial and managerial support from GoWB. The outlook may be revised to ‘Positive’ in case of significant and sustainable growth in its AUM while maintaining profitability and asset quality at healthy levels. Conversely, the outlook may be revised to ‘Negative’ in case of any significant deterioration in asset quality or profitability metrics. The ownership and control of GoWB will be a key ratings sensitivity. |
| 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 |
| 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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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