CRISIL has assigned its ‘CRISIL BBB (SO)’ rating to the Series A pass-through certificates (PTCs) under the securitisation transaction of Equitas Micro Finance Pvt Ltd (EMFPL; rated ‘CRISIL A-/Stable’); erstwhile Singhivi Investment and Finance Pvt Ltd and earlier by its holding company, Equitas Holdings Pvt Ltd (EHPL; erstwhile Equitas Microfinance India Pvt Ltd). The PTCs are backed by receivables against microfinance loans originated by EMFL. The ratings are based on the credit quality of the pool cash flows, EMFPL’s origination and servicing capabilities, the credit support available to the PTCs, the payment mechanism for the transaction, and the soundness of the transaction’s legal structure.

The transaction has a ‘par with monthly sub-ordinated EIS’ structure wherein the seller will assign the loan receivables to EMF Microloans Pool - Sapta - December 2014 in exchange for a purchase consideration which is equal to the pool principal. The trust will issue Series A PTCs which are promised scheduled monthly interest and principal as specified in the transaction documents. IDBI Trusteeship Services Ltd will be appointed as the trustee to monitor the overall transaction on behalf of the PTC investors.

About the Pool
The pool consists of receivables against microfinance loans originated by EMFPL. The pool has a weighted average net seasoning of 7.8 months, with the top state, Tamil Nadu, accounting for 66.0 per cent of the pool principal. The average ticket size of the contracts in the pool is Rs.13, 790. All the contracts in the pool are current as on the pool cut-off date.

Rated Pools
CRISIL has rating outstanding on six transactions originated by EMFPL. All rated pools of EMFPL have demonstrated strong collection performance and negligible delinquencies.

About the Originator
The Equitas group was set up by Mr. P N Vasudevan in 2007. Set up in 1994 and acquired as a wholly-owned subsidiary by Equitas Holdings in 2011, EMFPL is a non-deposit-taking non-banking finance company (NBFC), registered with the Reserve Bank of India. The company is an MFI, lending to women organised into joint-liability groups. Equitas Finance Pvt Ltd. (EFPL), the vehicle financing arm of the Equitas group, commenced operations in March 2011 and had 127 branches in twelve states, with a portfolio of Rs.12.7 billion, as on September 30, 2014. The company extends loans largely to small road transport operators and first-time users for the purchase of pre-owned commercial vehicles. EFPL also launched additional products namely, loans against property and SME loans during FY 2013-14. EHFPL began operations in June 2011. EHFPL focuses on self-employed, non-professional borrowers and provides home loans for self-construction as well as purchase of homes; the average ticket size of these loans is Rs.1 million. EHFPL is currently operating with 7 branches in Tamil Nadu, 2 in Maharashtra, and 1 branch in Bengaluru, Karnataka.

The Equitas group had an AUM of Rs.32.6 billion as on September 30, 2014 with a network of 476 branches. The group's consolidated net worth increased to Rs.7.9 billion as on September 30, 2014, from Rs.4.7 billion as on March 31, 2013. The group's gearing (including securitisation loans) stood at 350 times as on September 30, 2014. The Equitas group reported a profit after tax (PAT) of Rs.0.74 billion in 2013-14 on a total income of Rs.4.8 billion (Rs.0.33 billion and Rs.2.8 billion, respectively, for the previous year). For the half year ended September 30, 2014, Equitas group reported a PAT of Rs.0.43 billion on a total income of Rs.3.42 billion.

About EMFPL
EMFPL had 338 branches, with around 2.1 million borrowers and AUM of Rs.18.5 billion, as on September 30, 2014 (Rs.15.0 billion, as on March 31, 2014). EMFPL reported a PAT of Rs.0.57 billion on a total income of Rs.3.4 billion for 2013-14, vis-a -vis a PAT and total income of Rs.0.28 billion and Rs.2.3 billion, respectively, for the previous year. For the half year ended September 30, 2014 EMFPL reported a PAT of Rs.0.32 billion on a total income of Rs.2.1 billion.