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IFMR Capital Finance Private Limited
Ratings of [ICRA]BBB+(SO)† has been assigned to non-convertible debentures (NCD) programme of
Arohan Financial Services Private Ltd. (Arohan), Disha Microfin Private Limited (Disha), Intrepid
Finance and Leasing Private Limited (intrepid), Pahal Financial Services Private Limited (Pahal) and
Sonata Finance Pvt. Ltd. (Sonata).
Table 1: Rating Summary
Description (NCDs issued by)
Amount
(Rs. crore*)
10.0
Maturity
Rating
Mar 2017
[ICRA]BBB+(SO)
Disha Microfin Pvt Ltd
20.0
Mar 2017
[ICRA]BBB+(SO)
Intrepid Finance and Leasing Pvt Ltd
15.0
Mar 2017
[ICRA]BBB+(SO)
Pahal Financial Services Pvt Ltd
15.0
Mar 2017
[ICRA]BBB+(SO)
Sonata Finance Pvt Ltd
15.0
Mar 2017
[ICRA]BBB+(SO)
Total
75.00
Arohan Financial Services Pvt Ltd
The ratings for the NCDs factor in the benefit of the common Corporate Guarantee to the extent of
17.5% of the initial value of the NCDs, which enhances the credit quality of the NCDs under the pooled
NCD programme over the respective Issuer’s stand-alone credit quality. The stand-alone credit quality
of the Issuers is weak to moderate, characterised by low to moderate profitability, stable asset quality,
comfortable liquidity profile and moderate to good length of operating track record. Most of the Issuers
have demonstrated their ability to raise debt from banks and other institutional lenders, however the
number of lenders for some of the Issuers has been limited. The capitalisation profile of some of the
entities (viz., Disha and Pahal) is stretched while it can be characterised as modest to good for the
others. Mandatory use of credit bureaus and regulatory ceiling on borrower indebtedness has reduced
concerns on overleveraging and multiple lending for MFIs. The ratings also draw comfort from the fact
that in addition to the Issuer’s overall cashflows, the NCDs are supported by security in the form of
exclusive specific charge over identified receivables of the Issuer with security cover of 1.10 times- the
collections from the collateral pool will be available to service the NCDs every month in case the
Issuers are unable to do so. However, the ratings are constrained by the moderate stand-alone credit
quality of the Issuers in the long-term. The ratings are also constrained by the vulnerability of the
Issuers to any adverse sector-wide development and to any political, communal or environmental
issues that could adversely affect their portfolios.
The ratings are sensitive to certain features of the transaction structure such as potential acceleration
of the NCDs under certain events (defined below “event of default”) which could trigger downgrade of
the NCDs. Moreover, the credit enhanced ratings have been assigned taking into account the relative
share of each Issuer in the pooled NCD programme. Thus, while the NCDs are freely transferable, a
sale / transfer of the NCDs by the NCD holders in a ratio other than the initial one may lead to a rating
action on the NCDs.
Key Features of the NCD programme
The scheduled interest servicing as well as principal amortisation on each of the NCDs is on a monthly
basis. The collateral pool of each Issuer consists of weekly, fortnightly and monthly-paying loan
contracts with no overdue. The Issuers are geographically diversified. In case, the Issuer is unable to
meet the scheduled interest / principal payout, the Guarantee will be invoked. The payment
mechanism is designed to ensure timely servicing of the amounts due to the investor even in the event
Guarantee has to be invoked.
This is the 7th pooled NCD program to be rated by ICRA.
†
For complete rating scale and definitions please refer to ICRA's Website www.icra.in or other ICRA Rating
Publications
*
100 Lakh = 1 crore = 10 million
About the Issuers
Arohan Financial Services Private Limited (Arohan)
Arohan was set up in January 2006 as an NBFC and started its operations in April 2006 in Kolkata.
Arohan’s focus was to provide financial services to the urban and semi-urban poor, however, since the
beginning of CY2010, Arohan has been lending to borrowers in rural areas as well. Arohan offers
credit to economically backward women and men by offering varied products to suit their requirements,
by using the Grameen Bank model of lending. The company has operations in West Bengal, Bihar,
Jharkhand and Assam. As on September 2014, Arohan had operations in 84 branches across 26
districts with a portfolio size of Rs. 272 crore. The overall 0+ delinquency for Arohan is at 0.81% as of
September 2014.
DishaMicrofin Private Limited (Disha)
Disha Microfin Private Limited (formerly known as Banas Finlease Private Limited) (rated [ICRA]BBB(stable) for its long term bank facilities and assigned Microfinance grading of M2+ by ICRA) was
formed in 1996. In June 2009, the management decided to venture into microfinance activities in
Gujarat based on the Grameen Bank Joint Liability Group (JLG) model. The company was renamed as
Disha Microfin Private Limited (Disha) in 2010. In October 2010, India Value Fund Advisors (IVFA) - a
private equity fund, acquired about 47% stake in the company. In order to achieve the level of
standardization that is being targeted across IVFA’s investments into microfinance entities and to
realise synergy benefits, IVFA formed a Central Management Company (CMC) – India FinServe
Advisors Private Limited (IFAPL) at Bangalore. The management team of IFAPL oversees the
business aspects such as Treasury Management, Information Technology, Operations, Legal and
Secretarial Services, Human Resource at the MF investee companies, including Disha. As on Sep-14,
Disha was present in 72 branches spread over 29 districts in 3 states with a portfolio size of Rs. 212
crore. As on Sep 2014, the 0+ delinquency level for the overall portfolio of Disha was negligible.
Intrepid Finance & Leasing Private Limited (FINO)
Intrepid Leasing and Finance Private Limited is a Microfinance institution and a Non-deposit accepting
NBFC registered with Reserve Bank of India. ILFPL was acquired by FINO PayTech (FINO) in 2010 to
originate microfinance loans on the books of the NBFC. Intrepid is currently operational in the states of
Maharashtra, UP, MP, Bihar and Karnataka, with a portfolio size of Rs. 84 crore as on September
2014. As on September 2014, Intrepid reported negligible 0+ delinquency levels for overall the
portfolio. IFLPL reported a PAT of Rs. 0.11 crore in FY14.
Pahal Financial Services Pvt. Ltd (Pahal)
Pahal started its operations in February 2011 by acquiring about Rs. 2.6 crore of micro loan portfolio of
LokVikasNidhi -a trust operating in Gujarat for over 25 years. The promoters also brought in the initial
equity to venture into microfinance activities in Gujarat. Pahal is operational in 31 branches spread
over 16 districts in the state of Gujarat with a portfolio size of Rs. 60 crore as on September 2014. As
on September 2014, the 0+ delinquency level for overall the portfolio of Pahal was 0.53%. ICRA has
assigned a grading of M2 on Pahal in Oct-14.
Sonata Finance Private Limited (Sonata)
Sonata Finance Private Limited (Sonata) is a Microfinance Institution (MFI) that was incorporated in
1995 and registered as Non Deposit taking NBFC in 2001. The microfinance operations of the
company were started in 2006 by Mr. Anup Kumar Singh, who is the Managing Director of the
company at present. Since its inception, Sonata has raised funds from social investors (institutional
and individuals) including Caspian Advisors Private Limited, Michael & Susan Dell Foundation (MSDF)
and impact investment firm Creation Investments. As of September 2014, Sonata had operations in
192 branches across 6 states of India- Uttar Pradesh, Madhya Pradesh, Uttaranchal, Rajasthan, Bihar
and Haryana with a portfolio size of Rs 432 crore. The 0+ dpd levels for Sonata was low at around
0.34% as on Sep-14.
March 2015
For further details please contact:
Analyst Contacts:
Mr. Kalpesh Gada (Tel. No. +91 22 6169 3369)
Head- Structured Finance
[email protected]
Relationship Contacts:
Mr. Jayanta Chatterjee (Tel. No. +91-80-43326401)
[email protected]
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Contents may be used freely with due acknowledgement to ICRA
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are subject to a process of surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator
of ICRA’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations,
with reference to the instrument rated. Please visit our website www.icra.in or contact any ICRA office for the latest
information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources
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