Rating Rationale
September 06, 2024 | Mumbai

 Aether 2W 2022
(Originator: Manba Finance Limited)
Rating Reaffirmed

 

Rating Action

Trust Name

Details

Amount Rated (Rs.Cr)

Outstanding Rated Amount$

(Rs.Cr)

Future pool principal $

(Rs.Cr)

Original Tenure#

(Months)

Residual Tenure# (Months)

Credit Collateral

(Rs Cr)

Ratings&

Rating Action

Aether 2W 2022

Series A1 SNs

18.66

3.16

5.23

29

13

2.07

CRISIL A+ (SO)

Rating Reaffirmed

Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
$After July 2024 payout
#Indicates door to door tenure; actual tenure will depend on the level of prepayments in the pool, exercise of the clean-up call option
& Series A1 PTC holders are entitled to receive timely interest and ultimate principal

 

Detailed Rationale
CRISIL Ratings has reaffirmed its ‘CRISIL A+ (SO)’ rating to Series A1 securitisation notes (SNs) issued by AETHER 2W 2022. The pool is backed by two-wheeler loan receivables originated by Manba Finance Ltd (Manba; not rated by CRISIL). The ratings are based on the credit support available to the SNs, the credit quality of the underlying pool receivables, Manba’s origination and servicing capabilities, and soundness of the transaction’s legal structure.

The transaction has a 'Par with flowback EIS' structure, wherein the trust settled by Catalyst Trusteeship Limited (CTL) will issue SNs in exchange of a purchase consideration equal to 90.0% of the pool principal at the time of securitisation. Total credit support available in the transaction is as follows:

  • Internal credit support in the form of scheduled cash flow subordination aggregating Rs 4.24 crore, which includes overcollateralisation of Rs 2.07 crores (10.0% of pool principal)
  • External credit-cum-liquidity collateral of Rs 2.07 crores (10.0% of pool principal or 8.3% of pool cashflows) also provides support to the SNs.

Series A1 SN holders are entitled to receive timely interest on a monthly basis, while the principal payment is promised on an ultimate basis. CTL has been appointed to monitor the transaction on behalf of the SN holders. Manba will continue to service the pool contracts as the servicing agent.

The pool is eligible for reset of credit enhancement. CRISIL Ratings has evaluated the reset in line with regulatory guidelines. However, investor consent is yet to be received. On receiving consent of the investor and trustee, a maximum amount of Rs 0.87 crore (42.0% of the current cash collateral) can be released from the credit enhancement.

Sr. no

Collateral details

Current outstanding CC (Rs. Cr.)

CC eligible for release (Rs. Cr.)

Residual CC assuming full reset (Rs. Cr.)

1

Fixed Deposit

2.07

0.87

1.20

Key Rating Drivers & Detailed Description

Strengths:

  • Credit support available in the structure
    • As of July 2024 payout, credit collateral covers 64.1% future PTC payouts, provides support to Series A1 PTCs. The PTCs also benefit from scheduled internal subordination approximating Rs 2.43 crore (75.1% of the future PTC payouts)
  • Healthy Collection Metrics
    • As of July 2024 payout, the CCR of the transaction is 99.1%. The 3-month average monthly collection ratio (MCR)[1] is 98.9%.

 

Weakness:

  • Susceptibility to political and regulatory environment:
    • The 2 wheeler industry remains susceptible to risks arising out of socio-political issues and regulatory changes. Such events have the ability to disrupt loan repayments of underlying borrowers. The unsecured nature of microfinance loans and inherent modest credit risk profile of the borrowers have been considered by CRISIL Ratings in its analysis.

[1]MCR = Monthly collections in the pool / Monthly billings

Liquidity: Strong

Liquidity is strong given that the credit enhancement (internal and external combined) in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls.

CRISIL Ratings has adequately factored these aspects into its rating analysis.

Rating sensitivity factors

Upward

  • Credit enhancement  (based on both internal and external credit enhancements) available in the structure exceeding 2.50 times the estimated base case shortfalls on the residual cash flows of the pool.

 

Downward

  • Credit collateral (internal and external combined) falling below 2.10 times the estimated base case loss
  • A sharp downgrade in the rating of the servicer/originator 
  • Non-adherence to the key transaction terms envisaged at the time of the rating

About the Pool

The pool cash flow is securitised and comprises receivables from two-wheeler loans originated by Manba. On the cutoff date, the pool has a weighted average net seasoning of 5.9 months, weighted average LTV of 80.5% and top state Maharashtra accounting for 48.2% of pool principal. Average ticket size of the pool is Rs 75,536. All contracts in the pool are current as on the cut-off date.

 

CRISIL Ratings has adequately factored all these aspects in its rating analysis.

 

Pool Performance Summary (as after July 2024 payouts)

Parameters

Aether 2W 2022

Asset Class

2-wheeler Loan receivables

Months Post Securitisation

16

Balance Tenure (Months)

13

Principal Amortisation

74.8%

Cumulative Collection Ratio (%)

99.1%

Average Monthly Collection Ratio over Past 3 Months

98.9%

Credit collateral (% of scheduled future payouts)

74.8%

90+ Delinquency (% of initial POS)

0.4%

180+ Delinquency (% of initial POS)

0.05%

Credit collateral utilisation

0.0%

 

Rating Assumptions

To assess the base case shortfalls for the transaction, CRISIL Ratings has analysed moving portfolio delinquency and collection efficiency for two-wheeler loan portfolio provided by Manba till June 2024. 90+dpd and 0+dpd on the portfolio are 3.9 per cent and 12.5 per cent as of June-24 respectively.
 

CRISIL Ratings has also factored in pool specific characteristics and estimated the base case shortfalls in the pool by the maturity of the transaction in the range of 8.0% to 10.0% of cashflows.

 

  • CRISIL Ratings has assumed a stressed monthly prepayment rate of 0.5 to 1.0% in its analysis.
  • Based on its assessment of Manba’s short-term credit risk profile, CRISIL Ratings has factored in the risk arising out of commingling of cash flows.
  • CRISIL Ratings has adequately factored in the risks arising on account of counterparties (refer to counterparty details below)
  • CRISIL Ratings has run sensitivities based on various shortfall curves (front-ended, back-ended, and normal) and has adequately factored the same in its analysis.

 

Counterparty details

Capacity

Counterparty Name

Counterparty Rating

Effect on credit ratings in case of non-performance

Originator

Manba

Not rated by CRISIL

No effect.

Servicer

 

Manba

Not rated by CRISIL

Significant effect, because of change in servicing quality and replacement cost of servicer. However, currently CRISIL does not envisage the need for replacement. Under certain circumstances, the trust or investor has the right to change the servicer by providing an intimation to CRISIL.

Collection and Payout Account Bank

ICICI Bank

Rated ‘CRISIL AAA/CRISIL AA+/Stable'

Negligible effect. Account bank can be changed without impacting the rating.

Collateral in the form of Fixed Deposit

ICICI Bank

Rated ‘CRISIL AAA/CRISIL AA+/Stable'

Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.

Trustee

CTL

Not rated by CRISIL

Negligible effect. Can be replaced at minimal cost.

About the Originator
Manba Finance Ltd based in Mumbai, is an RBI registered NBFC which provides two-wheeler finance. The company started operations in 1996 as a DSA for ICICI Bank for two-wheeler loans till 2008, post which they started their own book. Manba is wholly owned by Mr. Manish Shah, either by himself or through group companies/relatives.

 

Manba has presence in four states: Maharashtra, Gujarat, Rajasthan, and Chhattisgarh.  Over the due course of operations, the company has also acquired the preferred financier tag for Suzuki, Yamaha, TVS, Piaggio and Hero MotoCorp in its operating region.

 Key financial indicators

As On/For the Period Ended

Unit

Mar-2024

Mar-2023

Mar-2022

Mar-2021

Own book

Rs crore

798.8

633.7

495.8

531.1

Total income

Rs crore

191.6

133.8

107.0

108.5

Gross NPA

%

3.9%

3.7%

4.9%

2.5%

Adjusted Gearing

Times

3.75

4.3

2.9

2.8

Profit after tax

Rs crore

31.2

15.2

9.5

11.4

Return on own book

%

4.4%

2.7%

1.9%

2.1%

 

Past rated pools

CRISIL Ratings has ratings outstanding on several securitisation transactions originated by Manba . CRISIL Ratings is receiving monthly performance reports pertaining to these transactions.

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instruments

ISIN

Name of the instrument

Date of Allotment

Coupon Rate(%)

Maturity date#

Size of the issue (Rs.Crore)

Complexity level

Rating assigned

Cash collateral (Rs.Crore)

INE0P2Y15017

Series A1 SNs

27-Feb-23

11.60%

15-Aug-25

18.66

Highly Complex

CRISIL A+ (SO)$

2.07

#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, exercise of the clean-up call option
$Series A1 PTC holders are entitled to receive timely interest and ultimate principal 

Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A1 SNs LT 3.16 CRISIL A+ (SO) 31-05-24 CRISIL A+ (SO) 30-11-23 CRISIL A+ (SO)   --   -- --
      --   -- 15-11-23 CRISIL A+ (SO)   --   -- --
      --   -- 26-05-23 CRISIL A+ (SO)   --   -- --
      --   -- 14-03-23 Provisional CRISIL A+ (SO)   --   -- --
All amounts are in Rs.Cr.
Criteria Details
Links to related criteria
CRISILs rating methodology for ABS transactions
Evaluating risks in securitisation transactions - A primer
Meaning and applicability of SO and CE symbol

Media Relations
Analytical Contacts
Customer Service Helpdesk

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Ajit Velonie
Senior Director
CRISIL Ratings Limited
B:+91 22 3342 3000
ajit.velonie@crisil.com


Aparna Kirubakaran
Director
CRISIL Ratings Limited
B:+91 22 3342 3000
aparna.kirubakaran@crisil.com


Prateek Saraf
Manager
CRISIL Ratings Limited
B:+91 22 3342 3000
prateek.saraf@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK


CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') provided by CRISIL Ratings Limited ('CRISIL Ratings'). For the avoidance of doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for use only within the jurisdiction of India. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings provision or intention to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

The report is a statement of opinion as on the date it is expressed, and it is not intended to and does not constitute investment advice within meaning of any laws or regulations (including US laws and regulations). The report is not an offer to sell or an offer to purchase or subscribe to any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way.

CRISIL Ratings and its associates do not act as a fiduciary. The report is based on the information believed to be reliable as of the date it is published, CRISIL Ratings does not perform an audit or undertake due diligence or independent verification of any information it receives and/or relies on for preparation of the report. THE REPORT IS PROVIDED ON “AS IS” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, CRISIL RATINGS DISCLAIMS WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR OTHER WARRANTIES OR CONDITIONS, INCLUDING WARRANTIES OF MERCHANTABILITY, ACCURACY, COMPLETENESS, ERROR-FREE, NON-INFRINGEMENT, NON-INTERRUPTION, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USAGE. In no event shall CRISIL Ratings, its associates, third-party providers, as well as their directors, officers, shareholders, employees or agents be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

The report is confidential information of CRISIL Ratings and CRISIL Ratings reserves all rights, titles and interest in the rating report. The report shall not be altered, disseminated, distributed, redistributed, licensed, sub-licensed, sold, assigned or published any content thereof or offer access to any third party without prior written consent of CRISIL Ratings.

CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains or its associates. Ratings are subject to revision or withdrawal at any time by CRISIL Ratings. CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.

CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For more detail, please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the Securities and Exchange Board of India regulations (and other applicable regulations, if any), are made available on its websites, www.crisilratings.com and https://www.ratingsanalytica.com (free of charge). CRISIL Ratings shall not have the obligation to update the information in the CRISIL Ratings report following its publication although CRISIL Ratings may disseminate its opinion and/or analysis. Reports with more detail and additional information may be available for subscription at a fee.  Rating criteria by CRISIL Ratings are available on the CRISIL Ratings website, www.crisilratings.com. For the latest rating information on any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisilratings.com/en/home/our-business/ratings/credit-ratings-scale.html