Rating Rationale
October 29, 2018 | Mumbai
Amala Vivriti Capital 2018
(Originator: Home Credit India Finance Private Limited)
'CRISIL A1 (SO) for Series A1 PTCs' and 'CRISIL A3 (SO)' for Series A2 PTCs converted from Provisional Ratings to Final Ratings
 
Rating Action
Trust Name Trust Name Amount Rated (Rs Crore) Outstanding Amount
(Rs Crore)* 		 Original Tenure (Months) Balance
Tenure*		 Credit Collateral (Rs Crore) Ratings/ Credit Opinion Rating Action
Amala Vivriti Capital 2018 Series A1 PTCs 51.39 0.05 9 6 2.57 CRISIL A1 (SO)  Converted from Provisional Rating to Final Rating
Series A2 PTCs 1.68 1.68  CRISIL A3 (SO) 
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
As after September 2018 payouts
Detailed Rationale

CRISIL has converted the provisional ratings assigned to Series A1 pass-through certificates (PTCs) and Series A2 PTCs to final ratings of 'CRISIL A1 (SO)' and 'CRISIL A3 (SO)' respectively, issued by 'Amala Vivriti Capital 2018'. The provisional ratings were assigned on June 19, 2018. CRISIL has received the final legal documents executed for the transaction. The executed documents are in line with the transaction terms at the time of initial rating. Hence, CRISIL has convered the ratings to final ratings.
 
As required, CRISIL has received the following final documents. Accordingly, the 'provisional' ratings have been converted into 'final' ratings
 
Legal Documents 

  1. Trust Deed
  2. Deed of Assignment
  3. Power of Attorney

Other documents 

  1. Legal Opinion
  2. Information Memorandum
  3. Auditor's Certificate
  4. Reps & Warranties from Originator
  5. Trustee Awareness Letter

Please click on the link below for detailed information on CRISIL's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' ratings
 
The transaction is backed by consumer durable loan receivables origniated by Home Credit India Finance Pvt Ltd (HCIFPL; rated 'CRISIL BBB+/Stable'). The ratings are based on the credit support available to PTCs, credit quality of the underlying receivables and soundness of the transaction's legal structure. 
 
The transaction has a 'par' structure Total credit support available in the transaction at the time of securitisation was:
 

  • Internal credit support in the form of scheduled cash flow subordination, aggregating Rs 4.15 crore (7.4% of pool principal) and Rs 2.40 crore (4.3% of pool principal)  for Series A1 PTCs and Series A2 PTCs, respectively
  • External credit-cum-liquidity collateral of Rs 2.57 crore (4.58% of pool principal) in the form of fixed deposit provides support to Series A1 PTCs and Series A2 PTCs.

Series A1 PTCs are senior, and will have the first priority right on the trust property. These PTCs are entitled to monthly interest. Principal and interest payments for Series A2 PTCs are fully subordinated to payouts for Series A1 PTCs on each payout date. The transaction envisages ultimate payment structure for principal payouts for both Series A1 and Series A2 PTCs. On maturity of Series A1 PTCs, Series A2 PTCs are entitled to monthly interest. Catalayst Trusteeship Ltd (CTL) has been appointed to monitor the transaction on behalf of the PTC holders. HCIFPL will continue to service the pool contracts as the servicing agent. The trust is settled by CTL.

Key Rating Drivers & Detailed Description
Supporting Factors
  • Credit support available in the structure
    • Credit collateral of Rs 2.57 crore (4.58% of the pool principal) provides credit support to Series A1 and Series A2 PTCs. The PTCs also benefit from scheduled cashflow subordination aggregating Rs 4.15 crore for Series A1 PTCs and Rs 2.40 crore for Series A2 PTCs.
  • Moderate seasoning of contracts in the pool
    • The contracts in the pool have a weighted average seasoning of 3.8 months, and consequently, the pool is amortized by 60.7% as of the cut-off date.
 Constraining Factors
  • Risk profile of borrowers and low recoveries due to nature of underlying asset
    • The pool is backed by receivables extended to borrowers with limited or no credit history and consequently, the underlying borrowers have high credit risk. Performance of the pool will, hence, remain susceptible to risks inherent in the unsecured lending business (no recoveries expected due to the nature of underlying asset).
About the pool
The pool cash flow is securitised and comprises receivables from zero interest consumer durable loan receivables originated by HCIFPL. The pool has a weighted average net seasoning of 3.8 months, with Maharashtra, Gujarat and Delhi accounting for 44.5% of the pool principal outstanding. Average ticket size of the pool is Rs 11.3 thousand. All contracts in the pool were current as on the cut-off date (May 31, 2018). CRISIL has adequately factored all these aspects in its rating analysis.
 

Rating Assumptions
To assess the base case shortfalls for the transaction, CRISIL has analysed static pool information (with data on 30+ and 90+ delinquencies) on zero interest consumer durable loan portfolio provided by HCIFPL for originations in the period FY2016 to May 2018 (with performance data till May 2018). As of April 2018, 90+ dpd for zero interest consumer durable portfolio is 5.7%

CRISIL has also factored in pool specific characteristics and estimated the base case peak shortfalls in the pool in the range of 4.0 to 6.0% of pool cash flows.
  • Based on its assessment of HCIFPL's short-term credit risk profile, CRISIL has factored in the risk arising out of commingling of cash flows.
  • 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 HCIFPL Rated 'CRISIL BBB+/Stable' No effect.
Servicer
 		 HCIFPL Rated 'CRISIL BBB+/Stable' Significant effect, because of change in servicing quality and replacement cost of servicer. However, currently CRISIL does not envisage the need for replacement. Under certain circumstances, the trust or investor has right to change the servicer with an intimation to CRISIL.
Collection and Payout Account Bank ICICI Bank Rated 'CRISIL AAA/Stable' Negligible effect. Account bank can be changed without impacting the rating.
Collateral in the form of Fixed Deposit HDFC Bank Rated 'CRISIL AAA/CRISIL AA+/Stable' Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.
Trustee CTL Adequate past track record Negligible effect. Can be replaced at minimal cost.
 
About the originator
Home Credit India launched operations in 2012 and has presence in 20 states in India. The company initially offers loans for purchase of consumer durables (primarily consisting of mobile phones), and subsequently offers cash loans to borrowers with good repayment track record. It also has a two-wheeler portfolio, which is not expected to increase materially. Its loan book was Rs 4284 crore as on March 31, 2018, of which, 39% was for purchase of consumer durables, 2% for purchase of two-wheelers, and 59% comprised cash loans.
 
Net loss was Rs 426 crore on total income of Rs 617 crore in fiscal 2017, against a net loss of Rs 208 crore on total income of Rs 233 crore in fiscal 2016. During fiscal 2018, the company reported net loss of Rs 261 crore on total income of Rs 1497 crore.
 
Past rated pools
CRISIL has  ratings outstanding on 9 securitisation transactions originated by HCIFPL. CRISIL is receiving monthly performance reports pertaining to these transactions.
Key Financial Indicators
As On/For The Period Ended March 31 Unit 2018 2017
Total assets Rs cr 5297 2355
Total income Rs cr 1497 617
Profit after tax Rs cr -261 -426
Gross NPA % 5.6 4.1
Gearing Times 2.5 2.3
Return on assets % -4.9 -26.5
 

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 (%) Outstanding
Ratings		 Credit cum liquidity Enhancement
(Rs Cr.)
Series A1 PTCs 51.39 28-Jun-18 17-Mar-19 10.15%! CRISIL A1 (SO) 2.57&
Series A2 PTCs 1.68 28-Jun-18 17-Mar-19 15.00% CRISIL A3 (SO) 2.57^
!p.a.p.m.
*Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool
& Additional credit support includes Rs.4.15 crore in form of scheduled cash flows subordination (assuming zero prepayments) - Includes overcollateralization of Rs. 3.09 crore (5.5% of pool principal) and Series A2 PTCs of 1.68 crore (3.0% of pool principal)
^ At the time of securitisation, Additional credit support includes Rs.2.40 crore in form of scheduled cash flow subordination (assuming zero prepayments) ' Includes overcollateralization of Rs 3.09 crore (5.5% of pool principal)
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  ST 0.05 CRISIL A1 (SO) 11-07-18  Provisional CRISIL A1 (SO)   --    --    --  -- 
Series A2 PTCs  ST 1.68 CRISIL A3 (SO) 11-07-18  Provisional CRISIL A3 (SO)   --    --    --  -- 
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

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