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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 15.00 | ACUITE BB | Stable | Upgraded | - |
| Total Outstanding Quantum (Rs. Cr) | 15.00 | - | - |
| Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
| Rating Rationale |
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Acuité has upgraded the long-term rating to ‘ACUITE BB’ (read as ACUITE Double BB) from ‘ACUITE C’ (read as ACUITE C ) and ‘ACUITE D’ (read as ACUITE D) on the Rs. 15.00 Cr. bank Facilities of YVU Financial Services Private Limited (YVUFS). The outlook ‘stable’.
Reasons for Rating Upgrade The rating takes cognizance of the regularization of the repayment obligations and written feedback confirming the same by the lender. Further, the rating considers improvement in operational performance during FY2022. The disbursement levels have increased to Rs 18.72 Crs as on March 31,2022 as against Rs 11.71 Crs as on March 31,2021. The AUM stood at Rs 41.38 Crs as on March 31,2022 and Rs 40.98 Crs as on March 31,2021. The current month collection efficiency for 6 months ended August 2022 stood at an average of 93.24 percent. The rating is constrained by modest scale of operations with geographic concentration risk and decline in assest quality & financial performance.
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| About the company |
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Incorporated in 1993, Manipur based YVUFS, is a Non-Banking Finance Company Micro Financial Institution (NBFC-MFI) registered with RBI. The company is promoted by Mr. Tikendrajit Singh Akoijam, Mr. Bikendrajit Singh Akoijam, YVU Microfin and YVU Staff Mutual Benefit Trust, with an aim to extend income generating loans to women borrowers, through joint liability group (JLG) and Non JLG Individuals lending model. The operations of YVUFS are spread across nine districts of three states namely, Manipur, Assam and Tripura through a network of 14 branches as on March 31, 2022.
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| Analytical Approach |
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Acuité has considered the standalone business and financial risk profile of YVU Financial Services Private Limited to arrive at the rating.
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Key Rating Drivers
| Strength |
| Experienced management and track record of operations
YVUFS commenced its micro-finance operations in 1996, extending micro-credit to women borrowers engaged in income-generating activities under Joint Liability Group (JLG) model. YVUFS focuses on providing financial assistance by way of providing micro-credit loans. YVUFS is promoted by Mr. Tikendrajit Singh Akoijam, Mr. Bikendrajit Singh Akoijam, YVU Microfin and YVU Staff Mutual Benefit Trust. Mr Bikendrjit is the Managing director and have more than a decade of experience in microfinance sector. Mr Tikendrajit, Chairman & Director has over five decades of experience in social work, microfinance activities, he is the founding member of Youth Volunteer’s Union – a NGO. YVU Microfin is a trust registered under Indian Trust Act 1882. The board comprises of other members who have vast experience in the BFSI segment. YVUFS has Assets under Management (AUM) of Rs 41.38 Cr as on March 31, 2022(Rs 40.98 Cr as on March 31,2021) spread across 14 Branches, 9 districts in three states of Manipur, Tripura and Assam. Acuité believes, that YVUFS will continue to benefit from extensive experience of its promoters and management |
| Weakness |
| Modest scale of operations
YVUFS has been in the micro-finance lending space since 1996. The company has modest scale of operations with an outstanding loan portfolio of Rs. 41.38 Cr as on March 31, 2022 compared to Rs 40.98 Crs as on March 31,2021. GNPA stood at 1.67 percent as on March 31,2022 against 0.73 percent as on March 31,2021. NNPA stood at 0.29 percent as on March 31,2022 against 0.27 percent as on March 31,2021. The company reported a PAT of Rs 1.15 Crs during FY 2021 against Rs 0.85 Crs during FY2022. While YVUFS is in the process of scaling up its operations, going forward the ability of the company to infuse further capital and diversify lender base or resource mix will be a key factor in the scalability of the business. Susceptibility to risks inherent to microfinance segment YVUFS primarily extends unsecured loans to economically challenged borrowers who have limited ability to absorb income shocks. Since financial assistance to economic challenged borrowers is a sensitive issue, from government stand point the regulatory dispensation in respect of the policies becomes relevant. Any changes in the regulatory environment impeding the ability of entities to enforce collections, etc will have an impact on its operational performance. YUVFS portfolio is exposed to high geographical concentration risk, as 86.82 per cent of the total portfolio is concentrated in only state of Manipur. Besides the regulatory risks, the inherent nature of the business renders the portfolios vulnerable to event risks such as natural calamities in the area of operations.
Acuité believes that containing additional slippages while maintaining the growth in the loan portfolio will be crucial. |
| Rating Sensitivity |
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| Material Covenants |
| None |
| Liquidity Position |
| Adequate |
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YVUFS's overall liquidity profile remains adequate as on March 31, 2022 with no cumulative negative mismatches in near to medium term. The company has maintained unencumbered cash and bank balances of Rs. 1.22 Cr. as on March 31, 2022. The company avails term loan facilities from Banks & NBFC/FIs. YVUFS has debt obligations of Rs. 15.91 Cr. over a period of 1 year as per ALM statement dated March 31, 2022.
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| Outlook: |
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Acuité believes that YVUFS will maintain a 'Stable' outlook over the medium term supported by its established track record coupled with experienced promoter in Micro finance segment. The outlook may be revised to 'Positive' in case of higher-than-expected growth in AUM while maintaining key operating metrics and asset quality and liquidity. The outlook may be revised to 'Negative' in case of any headwinds faced in scaling up of operations or in case of any challenges in maintaining its asset quality, profitability metrics.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| None |
| Any other information |
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None
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| 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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