| Auxilo Finserve Private Limited | ||||||
| 'CRISIL A/Stable' assigned to Non Convertible Debentures | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL A/Stable’ rating to the Rs 150 crore Non-convertible debentures of Auxilo Finserve Private Limited (Auxilo) and has reaffirmed its ratings on the bank facilities and other debt instruments at ‘CRISIL A/Stable/CRISIL A1’. The rating reflects the strong profile of the shareholders. The ratings also reflect the comfortable capitalisation metrics backed by regular capital infusion. These strengths are partially offset by the nascent stage of business operations with limited seasoning in the portfolio and moderate earnings profile constrained by high operating expenses.
Auxilo was promoted by Mr Akash Bhanshali (currently holding around 45% stake via ELME Advisors LLP) with Balrampur Chini Mills Ltd (Balrampur Chini; rated 'CRISIL AA+/Stable/CRISIL A1+', currently holding around 45% equity stake) as a strategic investor. The company is likely to benefit from the high level of experience of its shareholders and their past track record of running successful businesses. |
Analytical Approach CRISIL Ratings has analysed the standalone business and financial risk profile of Auxilo. The rating also factors in the financial flexibility and expected financial and operational support from the promoters. |
Key Rating Drivers & Detailed Description Strengths:
Auxilo was promoted by Mr Akash Bhanshali (currently holding around 45% stake via ELME Advisors LLP) with Balrampur Chini Mills Ltd (Balrampur Chini; rated CRISIL AA/Stable, currently holding around 45% equity stake) as a strategic investor. The company is likely to benefit from the high level of experience of its shareholders and their past track record of running successful businesses. Balrampur Chini’s presence as one of the strategic shareholder will also be beneficial to the company. Both the shareholders are actively involved in the company with regular monitoring of operational and financial performance. They have also extended support to the company via regular capital infusions having infused around Rs 315 crores since inception and also with debt funding post September 2018. The capital position of the company also benefits from the strong reputation of them in the market which is also reflective of their ability to rope in any third party for capital needs, if required. CRISIL Ratings expects their involvement in monitoring of the business to continue and also expects capital support in case of any distress.
The capitalisation metrics of the company remain comfortable with the company having raised around Rs 366 crores of equity since inception. Consequently, the networth of the company stood at Rs 388 crore as on March 31, 2022, with gearing metrics at 1.2 times. CRISIL Ratings expects the capitalisation of the company to remain strong and stay under 3.5 times over the medium term.
Weaknesses:
Auxilo commenced operations from October 2017 and is focussed on educational space in India and caters to the niche segment of funding students who are travelling abroad for studies (higher education loans, HEL) and education institutions lending (EIL). The company had assets under management of Rs 763 crore as on March 31, 2022, of which 79% was constituted by HEL and remaining 21% were EIL. The scale up in the portfolio has only been in the past couple of years with the AUM at Rs 265 crores as of March 31, 2019.
Given the scale up in the past couple of years only, the portfolio with limited seasoning. The asset quality metrics for the company have fared well with nil GNPAs as of March 31, 2020. However, the same has inched up to 1.62% as on March 31, 2022. The asset quality performance of the HEL portfolio has been strong with GNPA of 0.14% as on March 31, 2022, while for EIL portfolio, because of limited or non-operation of schools, the GNPAs increased to 7.02% in March 31, 2022. The collection efficiency of the company had improved to 95-110% since July 2021, before which there was marginal drop to 92% in May 2021 due to second wave of covid-19. The restructured assets of the company were Rs 5.21 crore (approximately 1% of the portfolio) as on June 30, 2021 of which outstanding as on March 31, 2022 was Rs 18.81 crore. With the reopening of the lockdowns post the second Covid wave, the asset quality metrics are expected to improve from Q2 of fiscal 2023 in the EIL portfolio, if there are no further covid related disruptions. Within HEL portfolio, about 83% of the portfolio is still under only partial interest/simple interest payment structure which will move to a full EMI structure over the next couple of years. While the company has put in place strong underwriting practices the loan portfolio has limited track of seasoning. Therefore, the performance of the asset quality metrics as the portfolio scales up remains a key monitorable.
Controlled credit costs and high yields have supported the earnings profile of the company, helping it turn profitable in just 3 years of operations. The company reported a return on managed assets (ROMA) of 1.6% in fiscal 2022 against 1.5% in fiscal 2021 against. The NIMs are supported by the yield on the portfolio which ranges between 11-15%. In addition to this, the credit costs, though marginally increased in fiscal 2022 because of impact from EIL portfolio, remained under control as a result of strong risk management practices. Nevertheless, given the nascent stage of operations, the earnings profile is expected to be constrained by high operating expenses primarily towards employee benefit and IT expenses. Therefore, the sustainability in the improvement in the earnings profile hinges upon the control on credit costs which remains a key monitorable. |
Liquidity: Strong The company intends to maintain a liquidity cover of 3 months on net basis as a policy. The liquidity of the company is comfortable with cash and equivalents of Rs 84 crore and unutilised working capital lines of Rs 22 crore as on March 31, 2022. Against this the company had debt repayments of Rs 48 crore for next three months (till end June 2022). The ALM profile as on March 31, 2022 also indicates no cumulative negative mismatches in the upto 12 months bucket. |
Outlook: Stable CRISIL Ratings believes that Auxilo will benefit from its experienced promoters and management team and will maintain its healthy capitalisation metrics going ahead. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Auxilo, formed on October 4, 2016, was promoted by Mr Akash Bhanshali (ELME Advisors LLP) and Balrampur Chini Mills Ltd (rated: CRISIL AA/Stable) has been a strategic investor – both holding around 45% stake each. The company received NBFC registration from RBI on May 3, 2017 and commenced operations in Oct 2017. The company has received multiple tranches of capital infusion over the years, with the latest one being in fiscal 2020 wherein ICICI Bank took a 9.9% stake in the company and the remaining share being equally held by Balrampur Chini Mills Ltd and Mr Akash Bhansali.
Auxilo is focussed on educational space in India and caters to the niche segment of funding students who are travelling abroad for studies (higher education loans) and also has a decent share of funding education institutions (education institutions lending). |
Key Financial Indicators
* Audited IndAS |
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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
* Unutilised; &Cash Credit sub-limit of Rs 5 crore |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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