Press Release December 12, 2024 Wegrow Financial Services Private Limited Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	30.00	ACUITE BB+ | Stable | Reaffirmed	-
Total Outstanding	30.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­­Acuité has reaffirmed the long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) on Rs. 30.00 crore bank facilities of WeGrow Financial Services Private Limited. The outlook is 'Stable'. Rationale for the rating: The rating reaffirmed factors in the extensive experience of the management in the microfinance industry and stable asset quality. The company's board comprises of directors with over 3 decades of experience. The asset quality of the company remained stable with Gross NPA of 1.54  percent and Net NPA  of 0.26 percent as on September 30,2024. As the portfolio grows, the credit quality remains susceptible to risks due to the lending segment. The rating however, remains constrained by modest capital structure and geographical concentration risks. The company's gearing levels increased to 2.66 x as on Sep-24 from 3.94 x as on Mar-24. The company has presence in 2 states with highest concentration in West Bengal (~92 percent), and Bihar (~8 percent) of total portfolio as on Mar 31, 2024. Going forward, ­Acuité believes that the ability of the company to scale up the book while maintaining asset quality and capital structure would be a key rating monitorable.

About the Company

­West Bengal based WeGrow Financial Services Private Limited is a non-deposit taking NonBanking Financial Company – Micro Finance Institution (NBFC-MFI). The Company is engaged in providing microloans and is currently managed by Ms. Anuradha Gupta, Mr. Bishwajit Das, Mr. Rahul Johri, Mr. Mrinal Kanti Mandal, Ms. Tumpa Das and Mr. Chitta Ranjan Barai as directors. The company is based in Kolkata, West Bengal, and began its operations in 2019.

Unsupported Rating

­Not Applicable

Analytical Approach

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

Key Rating Drivers

Strength

­­Experienced management The company is promoted by Mr. Bishwajit Das (Chairman & MD) who has over 3 decades of experience in the microfinancing segment. The board is comprised of 6 directors including one independent director and 3 non-executive directors. The board is supported by Ms. Anuradha Gupta (non-executive director) (ex CGM SBI with over 37 years of experience), Mr. Mrinal Kanti Mandal (non-executive director) (ex-General manager NABARD with over 30 years of experience). The extensive experience of the management and the board has helped the company to grow to an AUM of Rs. 94.59 Cr. as on September 30,2024 (on book of Rs. 24.87 Cr. and off book of Rs. 69.71 Cr. as on Mar-24). Acuité believes that WFSPL’s business profile will be supported by its experienced promoter base and will be able to leverage their expertise to raise funding and grow its loan book.   Stable asset quality; limited seasoning of the book The company started lending operations in FY2020. The company’s asset quality is stable as marked by GNPA of 1.54 percent and NNPA  of 0.26 percent as on September 30,2024. The provisioning remains 100 percent. As the portfolio grows, the credit quality remains susceptible to risks due to the lending segment. Nevertheless, the granularity of the book mitigates the risks to some extent.

Weakness

­Modest capital structure The networth of the company stood at Rs. 10.78  Cr. as on Sep-24 with CRAR of 41.01 percent. The gearing improved  to 2.66 x as on Sep-24 from 3.99 x as on Mar-24. (4.77x as on Mar-23). Acuité believes that the company’s credit profile will remain susceptible to its ability to raise capital and external funding at competitive rates in order to support its growth objective. Risk inherent to microfinance segment; geographical concentration risks The activities of microfinance companies like WFSPL are exposed to concentration risks. The company has presence in 2 states with highest concentration in West Bengal (~92 percent), and Bihar (~8 percent) of total portfolio as on Mar 31 2024. This exposes the company to high geographical concentration risk. Thus, the company's performance is expected to remain exposed to the competitive landscape in these regions and the occurrence of events such as natural calamities, which may 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 the credit profile of WFSPL. Acuité believes that constraining additional slippages while maintaining the growth in the loan portfolio will be crucial.

Rating Sensitivity

­ Movement in collection efficiency and asset quality Movement in profitability metrics Scaling up of operations Ability to raise equity capital

Liquidity Position

Adequate

­As per ALM statement dated Sep-24, there are no negative cumulative mismatches upto 1 year bucket. The average collection efficiency for current month due stood at an average of 95 percent for 6 months ending Jun-24.

Outlook:Stable

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Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

Particulars Unit FY24 (Actual) FY23 (Actual) Total Assets Rs. Cr. 45.58 40.11 Total Income* Rs. Cr. 8.06 4.06 PAT Rs. Cr. 1.27 0.33 Net Worth Rs. Cr. 9.12 6.84 Return on Average Assets (RoAA) (%) 2.96 1.06 Return on Average Net Worth (RoNW) (%) 15.89 5.02 Debt/Equity Times 3.94 4.77 Gross NPA (On-book) (%) 0.67 0.25 Net NPA (On-book) (%) 0.00 0.00 *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 • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.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 11 Dec 2023 Term Loan Long Term 12.10 ACUITE BB+ | Stable (Assigned) Term Loan Long Term 2.49 ACUITE BB+ | Stable (Assigned) Term Loan Long Term 4.02 ACUITE BB+ | Stable (Assigned) Term Loan Long Term 4.39 ACUITE BB+ | Stable (Assigned) Proposed Long Term Bank Facility Long Term 7.00 ACUITE BB+ | Stable (Assigned)

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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. 7.07 Simple ACUITE BB+ | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Jan 2025 1.30 Simple ACUITE BB+ | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2025 4.04 Simple ACUITE BB+ | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Jul 2026 4.95 Simple ACUITE BB+ | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Aug 2026 3.51 Simple ACUITE BB+ | Stable | Reaffirmed Bandhan Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2025 2.00 Simple ACUITE BB+ | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 31 Jan 2025 1.32 Simple ACUITE BB+ | Stable | Reaffirmed Union Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Nov 2025 2.78 Simple ACUITE BB+ | Stable | Reaffirmed Indian Overseas Bank Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 30 Nov 2025 3.03 Simple ACUITE BB+ | Stable | Reaffirmed

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Contacts

Mohit Jain Senior Vice President - Rating Operations Ramesh Metri Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@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. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.