Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL AAA (SO)’ rating for Series A pass-through certificates (PTCs) issued by ‘SANSAR TRUST MAR 2021 IV’ and upgraded its credit opinion to ‘CRISIL A (SO) Equivalent’ from ‘CRISIL BBB+ (SO) equivalent’ for the second loss facility. The transaction is backed by receivables from Used and new tractors, commercial vehicles (CV), and construction equipment (CE)loans originated by Shriram Finance Limited (SFL; rated ‘CRISIL AA+/PPMLD AA+/ Stable/ CRISIL A1+’). The rating/ credit opinion is based on the credit support available to the PTCs, credit quality of underlying receivables, SFL’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.

The pool has exhibited good collection performance as seen by strong collections ratios. The cumulative collection ratio for the pool is robust at 98.5%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 0.7%. The healthy collection performance coupled with amortisation of around 89.9% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.

About the Pool

The securitisation transaction is backed by a pool of used and new tractors, commercial vehicles (CV), and construction equipment (CE) loans originated by Shriram Finance Limited. The pool has amortised 89.9% over the past 25 payouts. The top 3 states (Uttar Pradesh, Tamil Nadu and Bihar) account for 36.5% of the pool principal. The average ticket size of pool loans is Rs 4.9 lakh, and the weighted average interest rate and LTV (at disbursement) for pool loans was 16.6% and 72.3% respectively.

Pool Performance Summary (as after May 2023 payouts)

Counterparty details

About the Originator

Following the consummation of the merger of Shriram City Union Finance (SCUF) and demerged undertaking of Shriram Capital Limited with Shriram Transport Finance Company Ltd. (STFCL), the company has been renamed to Shriram Finance Ltd (SFL). Shriram Housing Finance Ltd (SHFL) continues to operate as a subsidiary of SFL which holds around 85.02% stake in the same. Pursuant to the consummation of the transaction, Shriram Capital and Shriram City Union Finance Ltd (SCUF) cease to exist.

STFCL, incorporated in 1979, was registered with RBI as a deposit-taking, asset-financing non-banking financial company. STFCL provides financing for vehicles such as CVs (both pre-owned and new), tractors, and passenger vehicles.

SCUF, was incorporated in 1986 and predominantly operates in the retail financing segment with a focus on small enterprise loans, two-wheeler financing, gold loans, housing loans and others (auto and personal loans).

Past rated pools

CRISIL Ratings has ratings outstanding on 23 securitisation transactions originated by SFL. CRISIL is receiving monthly performance reports pertaining to these transactions.

Key Financial Indicators – SFL consolidated (CRISIL Ratings estimates)

Any other information: Not applicable

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