| Roha Housing Finance Private Limited | ||||||||
| Ratings reaffirmed at 'Provisional CRISIL A (CE) / Stable , CRISIL A (CE) / Stable , CRISIL BBB / Stable' | ||||||||
| Rating Action | ||||||||
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| & A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures, and is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015 directive ‘Standardizing the term, rating symbol, and manner of disclosure with regards to conditional/ provisional/ in-principle ratings assigned by credit rating agencies' by Securities and Exchange Board of India (SEBI) and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ respectively by SEBI. | ||||||||
| 1 crore = 10 million | ||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A (CE)/Provisional CRISIL A (CE)/CRISIL BBB/Stable’ ratings on the bank facilities of Roha Housing Finance Pvt Ltd (Roha Housing).
The ‘CRISIL A (CE)’ rating is based on the strength of an unconditional and irrevocable corporate guarantee by the Roha group entity, Roha Dyechem Pvt Ltd (Roha Dyechem; 'CRISIL A/Stable/CRISIL A1'), which has provided a continuing unconditional and irrevocable guarantee that covers Rs 89.60 crore of the rated bank facilities of Roha Housing. CRISIL Ratings understands that Roha Dyechem has taken measures to monitor the cash flow of Roha Housing to ensure timely debt servicing.
Roha Dyechem is likely to provide a similar guarantee for the Rs 10.40 crore proposed bank facilities of Roha Housing, which has not been currently sanctioned, resulting in the ‘Provisional CRISIL A (CE)/Stable’ rating on the facilities. The provisional rating is based on the confirmation by the client to share the required documents in line with the structure submitted to CRISIL Ratings, post which the provisional rating will be converted into a final rating.
The ‘CRISIL BBB/Stable’ rating on the remaining non-guaranteed bank facilities of Roha Housing reflects the company’s adequate capitalisation supported by regular capital infusion by the Roha group (JJT Trust held 74.23% in Roha Housing as on March 31, 2022) and the experienced management team. These strengths are partially offset by the company’s nascent stage of operations.
Under the scheme announced by the RBI dated January 1, 2019, February 11, 2020 and August 6, 2020, May 2021 and the resolution framework for stressed accounts, Roha Housing has restructured accounts outstanding at 4.3% of gross advances as on March 31, 2022. Nevertheless, the ability of the bank to manage collections and asset quality going forward this fiscal, is a key monitorable. Going forward too, the impact of the fourth wave of the pandemic, if and when it comes in terms of its spread, intensity and duration, will also be closely monitored. |
Analytical Approach For the guarantee-backed bank facility, CRISIL Ratings has applied its criteria for rating instruments backed by guarantees. The 'CE' (credit enhanced) suffix reflects the payment structure, which is designed to ensure full and timely payment to lenders on account of the corporate guarantee by Roha Dyechem.
For arriving at the rating on the non-guaranteed instruments, CRISIL Ratings has considered the standalone business and financial risk profiles of Roha Housing. |
Key Rating Drivers & Detailed Description Strengths: Continuing unconditional and irrevocable corporate guarantee by Roha Dyechem For Rs 100 crore bank facilities The credit-enhanced rating is based on the strength of the continuing unconditional and irrevocable guarantee provided by the guarantor, Roha Dyechem. The credit quality of the rated facility thus reflects the credit quality of the guarantor. CRISIL Ratings understands that Roha Dyechem has taken measures to monitor the cash flow of Roha Housing to ensure timely servicing of debt.
Weakness: Nascent stage of operations The company commenced operations only in April 2018 and is a small player in the affordable housing finance industry with a loan book of Rs 347.1 crore as on March 31, 2022 as against 216 crore as on March 31, 2021. Delinquencies increased with gross non-performing assets (GNPAs) of 1.4% as on March 31, 2022 (2.8% as on December 31, 2021 and 0.3% as on March 31, 2021), ability to manage asset quality as the loan book increases will remain a monitorable. Moreover, asset quality remains susceptible to sudden upticks in delinquencies during periods of stress, given the inherently risky borrower profile (low-to-middle income group). Nevertheless, asset quality should benefit from the granular and secured nature of the portfolio, with average loan-to-value ratios of around 59%.
Given the initial stage of operations, earnings remain constrained due to high operating expenses because of heavy investments in setting up technology and branch infrastructure and higher provision cost. The company break even in fiscal 2020 with a profit after tax (PAT) of Rs 1.37 crore (primarily on account of deferred tax benefit) against a loss of Rs 8.5 crore in the previous fiscal. It reported a PAT of Rs. 2.9 crore and return on assets (RoA) of 0.8% in fiscal 2022(PAT of Rs 2.8 crore with RoA of 1.1% for fiscal 2021). Ability to successfully and sustainably scale up business in a profitable manner will remain a key rating monitorable. |
Liquidity : Adequate The structural liquidity statement as on March 31, 2022, had positive cumulative gaps across all buckets. The company has adequate liquidity cushion, comprising Rs 37.41 crore in the form of cash and equivalent (including fixed deposits) and unutilized bank lines of Rs 115.54 crore as on March 31, 2022. This will be sufficient to cover debt obligation of Rs 28.57 crore from May 2022 to October 2022. |
Outlook Stable The outlook may be revised to 'Positive' if the company scales up operations while maintaining healthy asset quality and earnings. The outlook may be revised to 'Negative' if asset quality or profitability weakens significantly.
Outlook for guaranteed facilities: Stable The outlook is based on the 'Stable' outlook on the guarantor's debt instruments. The rating will remain sensitive to any change in the rating on Roha Dyechem. |
Rating Sensitivity factors Upward factors:
Downward factors:
Rating sensitive factors (for guaranteed facilities)
Downward factors:
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Adequacy of credit enhancement structure The rating reflects the unconditional and irrevocable guarantee from Roha Dyechem. CRISIL Ratings understands that Roha Dyechem has taken measures to monitor the cash flow of Roha Housing to ensure timely servicing of debt (principal, interest and other monies payable on the guaranteed bank facility).
CRISIL Ratings has introduced the 'CE' suffix for instruments having an explicit credit enhancement feature, in compliance with SEBI's circular dated June 13, 2019. |
Unsupported ratings - CRISIL BBB/Stable CRISIL Ratings has introduced the 'CE' suffix for instruments having explicit credit enhancement feature in compliance with the Securities and Exchange Board of India's circular dated June 13, 2019. |
Key drivers for unsupported ratings Adequate capitalisation supported by regular capital infusion by JJT Trust Capital position is adequate as indicated by Tier 1 and overall capital adequacy ratio of 83.9% and 84.3%, respectively, as on March 31, 2022. The promoters have infused Rs 171.50 crore (including premium) till date and additional capital support of about Rs ~150 crore is expected in the next 2-3 years. Networth was Rs 175 crore in relation to a modest portfolio, resulting in low gearing of 1.5 time as on March 31, 2022 (Rs 142 crore and 0.9 times, respectively as on March 31, 2021). The gearing is expected to increase as the portfolio scales up but will not exceed 5 times as per the management philosophy.
Roha Housing benefits from being a part of the Roha group, with JJT Trust, the holding entity of Roha Dyechem, being the largest shareholder (over 74% stake as on March 31, 2022). The housing finance business has been identified as one of the focus area for the group’s diversification plans.
Experienced management team The company has an experienced management team, headed by Mr Sunil Kapoor who has a track record of setting up new products as well as distribution channels in the lending business. He is a Chartered Accountant with more than 27 years of experience in retail asset products including loans, cards, finance, mortgages and insurance. He has worked across functions including sales and distribution, operations, risk and credit (underwriting), collections and finance. The leadership team across critical functions such as sales, risk, strategy, finance, technology and operations is well qualified and professional with each member having two decades of experience.
The management had put in place adequate systems and processes, including a robust technology platform, for scaling up the business prior to commencing disbursements. This should hold the company in good stead as it scales up its business. |
Additional disclosures for the provisional rating The provisional rating is contingent on execution of the following documents:
The provisional rating shall be converted into a final rating after receipt of transaction documents duly executed within 90 days from the date of issuance of the instrument.
The final rating assigned post conversion shall be consistent with the available documents. If the duly executed transaction documents are not received within the mentioned timelines, the rating committee of CRISIL Ratings may grant an extension of up to another 90 days in line with its policy on provisional ratings. |
Rating that would have been assigned in the absence of the pending documentation In the absence of pending documentation considered while assigning the provisional rating as mentioned above, CRISIL Ratings would have assigned a rating of ‘CRISIL BBB’. |
Risks associated with the provisional rating: The 'Provisional' prefix indicates that the rating is contingent on occurrence of certain steps or execution of certain documents by the issuer, as applicable. If the documents received and/or completion of steps deviate significantly from the expectations, CRISIL Ratings may take an appropriate action, including placing the rating on watch or changing the rating/outlook, depending on the status of progress on a case to case basis. In the absence of the pending steps / documentation, the rating on the instrument would not have been assigned ab initio. |
About the Company Roha Housing is a housing finance company that received its license from National Housing Board in December 2017 and began commercial operations in April 2018. The company has two main products: housing loan (67% of the portfolio as on March 31, 2022) and loan against property (LAP). The average ticket size of housing loans and LAP was Rs 8 lakh and Rs 9 lakh, respectively. The company has 30 branches across 6 states (Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Chhattisgarh and the National Capital Region) and had a loan book of Rs 347 crore as on March 31, 2022.
In fiscal 2022, the company reported a PAT of Rs 2.9 crore on total income of Rs 46.8 crore (Rs 2.8 crore on total income of Rs 34.7 crore for fiscal 2021).
About the guarantor- Roha Dyechem Established in 1972 and promoted by Mr Ramakant Tibrewala, Roha Dyechem manufactures dyes and colours that are used in food and beverages, drugs and cosmetics. It has a wide global network with group companies across 20 countries. The company owns and operates three solar energy projects of 63.5 megawatt (MW) in Gujarat, Rajasthan and Maharashtra; and three wind energy projects of 31.5 MW in Maharashtra, Madhya Pradesh and Rajasthan. The energy generated from the solar plant in Maharashtra shall be used for captive purposes.
For fiscal 2021, at a standalone level, the company saw revenue decline of 3.54% and operating margin declined to 33.4%% from 34.7% in fiscal 2020. |
Key Financial Indicators : Roha Housing
Key financial indicators – Roha Dyechem (standalone)
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List of covenants The material covenants of the instruments pertain to, among others:
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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)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 17-Jun-2022 in line with the lender-wise facility details as on 30-Nov-2021 received from the rated entity.
Criteria Details
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