Rating Rationale
October 31, 2018 | Mumbai
Platinum Trust March 2017 - Tranche IV
(Originator: Cholamandalam Investment and Finance Company Limited)
Second loss facility rating upgraded to 'CRISIL A+ (SO) Equivalent'  
 
Rating Action
Transaction Details Amount Rated
(Rs. Cr.)
Outstanding Amount* 
(Rs. Cr.)
Original Tenure (Months) Balance Tenure (Months)* Initial Credit Collateral
(Rs. Cr.)
Ratings/ Credit Opinion
Platinum Trust March 2017 - Tranche IV Series A1 PTCs 43.17 - 53 35 23.9 CRISIL AAA (SO)
[Withdrawn]
Series A2 PTCs 29.47 - CRISIL AAA (SO)
[Withdrawn]
Series A3 PTCs 179.12 110.4 CRISIL AAA (SO)
[Reaffirmed]
Second Loss Facility 11.27 11.3 12.6 CRISIL A+ (SO) Equivalent
[Upgrade from CRISIL BBB+ (SO) Equivalent]
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
*As after September 2018 payouts
Detailed Rationale

CRISIL has withdrawn its ratings on its ratings assigned to Series A1, Series A2 and reaffirmed Series A3 PTCs at 'CRISIL AAA (SO)' and upgraded the credit opinion on second loss facility to 'CRISIL A+ (SO) Equivalent' from 'CRISIL BBB+ (SO) Equivalent'. The pool is backed by CV loan receivables originated by Cholamandalam Investment and Finance Company limited (CIFCL; rated CRISIL AA/Stable/CRISIL A1+). The ratings are based on the credit support available to the PTCs, credit quality of underlying pool receivables, CIFCL's origination and servicing capabilities, and soundness of the transaction's legal structure.
 
The pool has exhibited strong collection performance. The cumulative collection ratio for the pool is robust at 98.2%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 1.2%. The healthy collection performance coupled with high amortisation of around 56.2% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.
 
The pool is eligible for reset of credit enhancement, CRISIL has evaluated the reset in line with the RBI guidelines. However, investor consent is yet to be received.

Key Rating Drivers & Detailed Description
Supporting Factors
  • High amortisation and Credit support available in the structure
    • Credit collateral of Rs 23.9 crore (20.5% of the future payouts after September 2018 payouts) provides credit support to Series A3 PTCs.
  • Healthy collection efficiency metrics
    • CCR is robust at 98.2% after 18 months post securitisation and the 0+ OD is 1.2% of initial pool principal.
Constraining Factors
  • High Proportion of contracts with high LTV
    • 92.9% of the outstanding pool principal as of September 2018 payouts is from contracts with loan-to-value ratio exceeding 80% (LTV as of disbursement date).
About the pool
The pool securitised comprises HCV, MUV and LCV loan receivables. As of September 2018 payouts, the pool has high seasoning with weighted average seasoning of 29.2 months (from disbursement) and high weighted average loan to value ratio of 89.9% (LTV as of disbursed amount). The top 3 states in the pool account for 45.0% of pool principal. The pool has weighted average interest rate of 13.6%. 74.9% of the contracts are current as of September 2018 payouts. CRISIL has adequately factored all these aspects in its rating analysis1.
 
Pool Performance Summary (as after September 2018 payouts)

Parameters Platinum Trust March 2017 Tranche III
Asset Class New & used HCV ,LCV and MUV loan receivables
Months Post Securitisation 18
Balance Tenure (Months) 35
Principal Amortisation 56.2%
Cumulative Collection Ratio (%) 98.2%
Average Monthly Collection Ratio over Past 3 Months 98.5%
Credit collateral as % of Initial pool principal 9.5%
Cumulative Prepayments 6.8%
90+ Delinquency 0.5%
180+ Delinquency 0.1%
Credit collateral utilisation 0.0%
Threshold Collection Ratio (TCR) 75.1%
 

Key Rating Assumptions and Sensitivity
To assess the base case collection shortfalls for this ABS transaction, CRISIL has analysed vintage-wise static pool performance of loans disbursed across asset classes. This analysis has been done for originations by CIFCL from FY2005 to Q2FY2018 with performance up to June 2018. Performance of previously rated CIFCL transactions, as well as the performance of CIFCL's portfolio has also been considered. As of June 2018, 90+ delinquency for CIFCL's overall vehicle finance portfolio was 2.2%.

CRISIL has also factored in pool-specific characteristics and estimated base-case peak shortfalls for this transaction.

  • CRISIL has assumed a stressed monthly prepayment rate of 0.5 to 1.0 per cent in its analysis.
  • CRISIL does not envisage any risk arising on account of commingling of cash flows since CRISIL's short term rating on the servicer is 'CRISIL A1+'.
  • CRISIL has adequately factored in the risks arising on account of counterparties (refer to counterparty details below).
  • CRISIL 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/ Track record

Effect on credit ratings in case of non-performance

Originator and seller CIFCL Rated 'CRISIL AA+/Stable/CRISIL A1+'  
No effect.
 
Servicer CIFCL Rated 'CRISIL AA+/Stable/CRISIL A1+' Significant effect, because of change in servicing quality and replacement cost of servicer (not factored in by CRISIL given CRISIL's rating on the servicer). However, CRISIL does not envisage the requirement for replacement.
Collection and Payout Account Bank IDFC Bank Not Rated Negligible effect. Account bank can be changed without impacting the rating.
First Loss Facility in the form of Fixed Deposit Axis Bank Rated 'CRISIL AAA/CRISIL AA+/Stable/CRISIL A1+' Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.
Second Loss Facility in the form of Bank Guarantee IndusInd Bank Rated 'CRISIL AA+/CRISIL AA/Stable/CRISIL A1+' Significant effect; the guarantee consists of a rating trigger according to which if CRISIL's rating of the guarantor falls below 'CRISIL AA', the existing guarantor (at its own cost) must arrange for another guarantor or substitute the credit enhancement in the form of a fixed deposit as per CRISIL's criteria
Trustee ITSL Adequate track record Negligible effect. Can be replaced at minimal cost.
 
About the Originator
Part of Chennai-based Murugappa group, Chola Finance was incorporated in 1978. The company mainly provides vehicle financing and LAP, along with home loans, MSME (micro, small and medium enterprises) and agri loans. Chola Finance had 873 branches across 27 states in India, with 79% presence across tier III and tier IV cities, as on March 31, 2018.
 
Between April 2005 and March 2010, the company operated as a joint venture between DBS Bank and the Murugappa group. In March 2010, DBS Bank sold its 37.48% equity stake in Chola Finance to the Murugappa group. Chola Finance exited the unsecured personal loan segment in October 2008. It also exited its asset management business through a complete stake sale in DBS Chola Asset Management to L&T Finance Ltd in September 2009. The Murugappa group currently holds 53.1% equity stake in Chola Finance, of which 46.2% is held by TI Financial Holdings Limited, a group company. Chola Finance  currently has three subsidiaries: Cholamandalam Securities Ltd (for stock broking and depository services), Cholamandalam Distribution Services Ltd (for fixed-income and insurance products) and White Data Systems India P Ltd. (freight aggregating business).
 
For fiscal 2018, Chola Finance reported a PAT of Rs 974 crore on a total income (net of interest expense) of Rs 3,118 crore, against a PAT of Rs 719 crore on a total income (net of interest expense) of Rs 2,429 crore for fiscal 2017.
 
Past Rated Pools
CRISIL has rating outstanding on four transaction originated by CIFCL. CRISIL is receiving monthly performance reports pertaining to CRISIL-rated CIFCL originated securitisation transactions. The collection efficiency has been in line with CRISIL's expectations.
Key Financial Indicators
As on / for the period ended March 31 Unit 2018 # 2017 #
Total Assets Rs crore 39,505 30,595
Total income Rs crore 5,426 4,660
Profit after tax Rs crore 974 719
Gross NPA % 2.9 4.7
Adjusted gearing Times 7.4 7.1
Return on managed assets % 2.4 2.1
#Per IGAAP

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
Type of Instrument Rated Amount
(Rs Cr.)
Date of Allotment Maturity Date* Coupon Rate (%) (Annualised) Outstanding
Rating
Credit cum liquidity Enhancement
(Rs Cr.)
Series A1 PTCs 43.2 23-Mar-17 18-April-18 6.59% CRISIL AAA (SO)
[Withdrawn]
23.9^
Series A2 PTCs 29.5 18-April-18 6.59% CRISIL AAA (SO)
[Withdrawn]
Series A3 PTCs 179.1 18-August-21 6.59% CRISIL AAA (SO)
Second Loss Facility 11.3 18-August-21 - CRISIL A+ (SO) Equivalent 12.6
*Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option
^Additional credit support includes Rs 6.87 crore in form of scheduled EIS (assuming zero prepayments, after September 2018 payouts)
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A1 PTCs LT 0.0 Withdrawn 13-07-18  CRISIL AAA (SO)  11-08-17 CRISIL AAA (SO)   --    --  -- 
            21-04-17 Provisional CRISIL AAA (SO)          
Series A2 PTCs  LT 0.0  Withdrawn 13-07-18  CRISIL AAA (SO) 11-08-17 CRISIL AAA (SO)   --   -- --
            21-04-17 Provisional CRISIL AAA (SO)          
 Series A3 PTCs LT 110.4 CRISIL AAA (SO) 13-07-18  CRISIL AAA (SO)  11-08-17 CRISIL AAA (SO)          
            21-04-17 Provisional CRISIL AAA (SO)          
Second Loss Facility LT 12.1 CRISIL A+ (SO) Equivalent 13-07-18   CRISIL BBB+ (SO) Equivalent 11-08-17 CRISIL BBB+ (SO) Equivalent   --   -- --
            21-04-17 Provisional CRISIL BBB+ (SO) Equivalent          
All amounts are in Rs.Cr.
Links to related criteria
CRISILs rating methodology for ABS transactions
Evaluating risks in securitisation transactions - A primer
Legal analysis in structured finance transactions

For further information contact:
Media Relations
Analytical Contacts
Customer Service Helpdesk
Saman Khan
Media Relations
CRISIL Limited
D: +91 22 3342 3895
B: +91 22 3342 3000
saman.khan@crisil.com

Naireen Ahmed
Media Relations
CRISIL Limited
D: +91 22 3342 1818
B: +91 22 3342 3000
naireen.ahmed@crisil.com

Krishnan Sitaraman
Senior Director - CRISIL Ratings
CRISIL Limited
D:+91 22 3342 8070
krishnan.sitaraman@crisil.com


Rohit Inamdar
Senior Director - CRISIL Ratings
CRISIL Limited
D:+91 22 4040 2985
Rohit.Inamdar@crisil.com


Vikram Raj Iyer
Rating Analyst - CRISIL Ratings
CRISIL Limited
B:+91 22 3342 3000
Vikram.Iyer@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. However, CRISIL alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites, portals etc.


About CRISIL Limited

CRISIL is a leading agile and innovative, global analytics company driven by its mission of making markets function better. We are India’s foremost provider of ratings, data, research, analytics and solutions. A strong track record of growth, culture of innovation and global footprint sets us apart. We have delivered independent opinions, actionable insights, and efficient solutions to over 1,00,000 customers.
 
We are 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

About CRISIL Ratings
CRISIL Ratings is part of CRISIL Limited (“CRISIL”). We pioneered the concept of credit rating in India in 1987. CRISIL is registered in India as a credit rating agency with the Securities and Exchange Board of India (“SEBI”). With a tradition of independence, analytical rigour and innovation, CRISIL sets 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 24,500 large and mid-scale corporates and financial institutions. CRISIL has also instituted several innovations in India in the rating business, including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We also pioneered a globally unique rating service for Micro, Small and Medium Enterprises (MSMEs) and significantly extended the accessibility to rating services to a wider market. Over 1,10,000 MSMEs have been rated by us.


CRISIL PRIVACY
 
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 forms part of and applies to each credit rating report and/or credit rating rationale that we provide (each a “Report”). 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 the jurisdiction of India only. 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 providing or intending to provide any services in jurisdictions where CRISIL does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this Report does not create a client relationship between CRISIL and the user.

We are not aware that any user intends to rely on the Report or of the manner in which a user intends to use the Report. In preparing our Report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the Report is not intended to and does not constitute an investment advice. The Report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind or otherwise enter into any deal or transaction with the entity to which the Report pertains. The Report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Rating are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities / instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL assumes no obligation to update its opinions following publication in any form or format although CRISIL may disseminate its opinions and analysis. CRISIL rating contained in the Report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. 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.

Neither CRISIL nor its affiliates, third party providers, as well as their directors, officers, shareholders, employees or agents (collectively, “CRISIL Parties”) guarantee the accuracy, completeness or adequacy of the Report, and no CRISIL Party shall have any liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the Report. EACH CRISIL PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Party 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.

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’s public ratings and analysis as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any) are made available on its web sites, www.crisil.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee – more details about CRISIL ratings are available here: www.crisilratings.com.

CRISIL and its affiliates do not act as a fiduciary. While CRISIL has obtained information from sources it believes to be reliable, CRISIL does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and / or relies in its Reports. CRISIL keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of the respective activity. As a result, certain business units of CRISIL may have information that is not available to other CRISIL business units. CRISIL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL has in place a ratings code of conduct and policies for analytical firewalls and for managing conflict of interest. For details please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html

CRISIL’s rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For latest rating information on any instrument of any company rated by CRISIL you may contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (0091) 1800 267 1301.

This Report should not be reproduced or redistributed to any other person or in any form without a prior written consent of CRISIL.

All rights reserved @ CRISIL