Equitas Finance Private Limited

July 03, 2014
Mumbai

CRISIL assigns ‘CRISIL A (SO)’ to Series A1 PTCs and 'CRISIL A- (SO)' to Series A2 PTCs issued by Euporie CV IFMR Capital 2014 backed by used commercial vehicle loan receivables originated by Equitas Finance Pvt Ltd

Transaction Name Details Structure Yield Terms Amount Rated (Rs. Million) Tenure (Months)^# Rating Credit-cum-Liquidity Support (Rs. Million)^{^}
Euporie CV IFMR Capital 2014 Series A1 PTCs Par Fixed 247.7 41 CRISIL A (SO) 16.9^&
Series A2 PTCs Fixed 5.6 41 CRISIL A- (SO) 16.9^{^}

^#Indicates door-to-door tenure, which is the difference between pay-in date and last payout date. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option
^& Additional credit support for Series A1 PTCs of Rs.77.5 million in form of subordination of cash flows, expected to be collected over and above the scheduled payouts promised to Series A1 PTCs.
^{^} Additional credit support for Series A2 PTCs of Rs.71.9 million in form of subordination of cash flows, expected to be collected over and above the scheduled payouts promised to Series A2 PTCs.

CRISIL has assigned its ‘CRISIL A (SO)’ rating to the Series A1 pass-through certificates (PTCs) and ‘CRISIL A- (SO)’ rating to the Series A2 PTCs issued by Euporie CV IFMR Capital 2014. The PTCs are backed by used commercial vehicle loans receivables originated by Equitas Finance Pvt. Ltd. (EFPL; rated ‘CRISIL BBB+/Stable).

The ratings are based on the credit quality of the pool cash flows, EFPL’s origination and servicing capabilities, the credit-cum-liquidity enhancement, principal subordination, payment mechanism, and the legal structure of the transaction. The PTC payouts receive support from the excess interest spread, which is subordinated to the PTC payouts, the principal subordination, and the credit-cum-liquidity enhancement.

The transaction is structured at ‘par’, wherein EFPL has assigned the pool to the trust for a consideration equal to the pool principal at the time of securitisation.

This is the second securitisation transaction of EFPL being rated by CRISIL. The performance of the past rated pool has been in line with CRISIL’s expectations.

About the Pool
The pool has moderate geographical concentration, with the top state, Tamil Nadu, contributing 47.3 per cent. The pool has a good seasoning profile, with a weighted average net seasoning of 9.5 months (weights being principal outstanding on the contracts). All the contracts in the pool are current on payment. The pool has a moderate proportion of long-tenure contracts: the weighted average original tenure is 34.3 months.

About the Originator
EFPL is a systemically important non-deposit-taking asset-financing non-banking financial company incorporated in 1993. Equitas Holdings acquired VAP Finance Ltd in March 2011, and converted it into EFPL, through which it started the used-CV financing business in June 2011. EFPL finances the purchase of used CVs by small road transport operators and first-time users of CVs. The company also provides loans against property and loans to small and medium enterprises; at present, such loans comprise less than 5 per cent of its total loan book. EFPL had a presence across nine states in India through 98 branches, as on March 31, 2014; Tamil Nadu had the highest share of the assets under management (AUM) at 38 per cent as on this date. EFPL disbursed loans of Rs.3.0 billion in 2012-13 (refers to financial year, April 1 to March 31) and Rs.8.2 billion in 2013-14. As on March 31, 2014, it had AUM of Rs.8.8 billion.

EFPL reported a profit after tax (PAT) of Rs.158 million on a total income of Rs.1.3 billion for 2013-14, against a PAT of Rs.0.38 million on a total income of Rs.0.48 billion for 2012-13.

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Last updated: May, 2013

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