| Anjana Projects Private Limited | ||
| Rating migrated to ‘CCR BB+/Stable’ | ||
| Rating Action | ||
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| & *Issuer did not cooperate; based on best-available information | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Due to inadequate information, CRISIL Ratings, in line with the Securities and Exchange Board of India guidelines, had migrated its corporate credit rating of Anjana Projects Private Limited (APPL) to 'CCR BB+/Stable Issuer Not Cooperating'. However, the management has subsequently started sharing the requisite information necessary for carrying out a comprehensive review of the ratings. Consequently, CRISIL Ratings is migrating its corporate credit rating of APPL to 'CCR BB+/Stable'.
The rating factors in APPL’s adequate capitalisation and sustained improvement in earnings profile. The improvement in capital position continues to be driven by higher accretions; during nine months ended December 2021. These rating strengths are partially offset by moderate scale of operations and high concentration in loan portfolio.
APPL has reported strong growth in its assets under management (AUM) that stood at Rs 228 crore as on December 2021 as compared to Rs 60 crore as on March 31, 2021. However, the company has managed this growth by providing loan to single borrower. The company has small borrower profile and there is high concentration in loan portfolio. The 90+ dpd for the company as on December 31, 2022, stood at 1.29% as compared to (90+ dpd as on March 31,2021 stood at 5.8%, the 90+ dpd for the period majorly accounts for an old account (Rs 2.93 crore) i.e., before 2017. As part of one-time restructuring, the company has not restructured any account till date.
In terms of resource profile, as on date, the company has external borrowings from 23 private companies i.e., mainly from friends or relatives. The average cost of borrowing for the company stood at 12%. The ability of the company to diversify its resource profile by raising funds from banks/FIs as it scales up its book size will be a key monitorable. |
Analytical Approach CRISIL Ratings has evaluated the standalone business and financial risk profiles of APPL. |
Key Rating Drivers & Detailed Description Strengths:
Capital position is adequate with networth of Rs 130 crore and gearing of 1.27 times as on December 31, 2021. The investment book of the company comprises of investment in equity shares which are risky in nature, however, even after adjusting the entire investment book from reported networth the adjust gearing of the company remains comfortable at 2.6 times. The promoters are willing to infuse capital in the company as and when required. On a steady state basis, gearing metrics are not expected to exceed 3 times over the medium term. However, given the high degree of concentration in clientele base any default in high ticket size loan may put pressure on capitalisation.
The earnings profile of APPL has remain volatile over the past three years. However, the average three-year return on total assets stood around 6%. The client charges interest rate taking into consideration the loan amount and tenor of loan. Also, over the last 5 years client has earned profit on sale of investment which adds up to the overall income of the company. The company has been able to maintain steady state ROA over the past 5 years ranging between 2-9% (including POSI income). During period ended December 31, 2021, the profit on sale of investment of the company stood at Rs 11.6 crore. The company reported profit after tax of Rs 13.3 crore on total income of Rs 33.4 crore for nine months ended December 31, 2021, as compared to profit after Tax of Rs 11.9 crore on total income of Rs 19.5 crore as on March 31, 2021. Furthermore, the operating expense of the company continue to remain low at 2% over the past 3 years as compared to 5% in Fiscal 2018. CRISIL Ratings believes that APPL’s ability to scale up the lending and investment portfolio while managing asset quality and risk associated with capital market will be critical to support profitability.
Weaknesses:
Total asset was Rs 307.1 crore as on December 31, 2021. The company witnessed sharp increase in loan portfolio that stood at Rs 228.1 crore as on December 31, 2021, as compared to Rs 66.4 crore as on March 31, 2021, however the growth has been on account of onboarding single borrower i.e., Manav Investment and Trading Company (RK Birla Group Company) that accounts for 92% of the overall book size. The loan is secured in nature against collateral in the form of property and pledged shares of Kesoram Industries (rated: CRISIL BB+/Positive). The company has small clientele portfolio that has remained concentrated since the beginning of its operations. The company mostly provide unsecured loans to borrowers that are individuals or companies who are known to the promoters and have strong cash flow. The investment book of the company stood at Rs 67.0 crore as on December 31, 2021, as compared to Rs 54.0 crore as on March 31, 2021. Furthermore, the investment book is diversified across equity, bonds, and mutual funds. Proportion of the top five investments in listed equity shares stood at 62% as on December 31, 2021, as compared to 47% as on March 31, 2021. CRISIL Ratings believes that the company’s ability to maintain portfolio quality and collection efficiency will be crucial as APPL scales up its operations.
Equity markets are inherently volatile, and driven by economic, political, and social factors that guide investor sentiments. Global events also influence the fortunes of the domestic market. These investments are subject to price fluctuations owing to volatility in markets. Company's strategy towards such future investments will remain a key rating sensitivity factor. |
Liquidity: Adequate The liquidity position of the company stands adequate supported by the availability of credit lines from the promoter as and when required. The company had total liquidity of Rs 9.83 crore in the form of cash and cash equivalents as on May 31, 2021. Against this, the company has total repayments of Rs 5.62 crore (including operating expense) during next 3 months (i.e., June 2022, July 2022, and August 2022). Liquidity cover for 3 months is adequate above 1.5 times |
Outlook: Stable CRISIL Ratings believes that APPL's capitalisation will remain adequate over the medium term. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company APPL is as a non-banking finance company promoted by Mr. Karan G. Mehta commenced its operations in 2006 by acquiring an existing NBFC. The company primarily invests in shares, bonds and mutual funds and provides unsecured short term business loans. The company provides loans based on reference from friends, family, and relatives. |
Key Financial Indicators
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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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* - Issuer did not cooperate; based on best-available information
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Criteria Details
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