| INDIAN RECEIVABLE PGDA DEC19 C | ||||||||||||||
| (Originator: Tata Motors Finance Limited) | ||||||||||||||
| Rating continues on 'Watch Developing' | ||||||||||||||
| Rating Action | ||||||||||||||
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| & Equivalent* After January 2020 payouts# Indicates door to door tenure from pool cut-off date. Actual tenure will depend on the level of prepayments in the pool, extension due to moratorium and exercise of the clean-up call option | ||||||||||||||
| 1 crore = 10 million | ||||||||||||||
| Refer to annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings credit opinion of ‘CRISIL A (SO)’ Equivalent on acquirer payouts under INDIAN RECEIVABLE PGDA DEC19 C continues on 'Rating Watch with Developing Implications'. The payouts are backed by a pool of vehicle loan receivables originated by Tata Motors Finance Limited (TMFL; 'CRISIL AA-/CRISIL A/Negative/CRISIL A1+').
The rating action was initially driven by administrative delays at the end of the assignee bank (which is also the bank where cash collateral (CC) is maintained in the form of fixed deposit) in utilising CE.
Consequently, CRISIL had placed the transaction on ‘Rating Watch with Developing Implications’. Link
However, in April 2020 payout, CC was utilised to the extent of shortfall up to March 2020 payouts and transaction waterfall was followed. For April 2020 – August 2020 collection, in accordance with RBI’s COVID-19 package, investor had provided consent for moratorium and subsequently for any shortfall CC was not utilised.
In October 2020 payout, adjustment was made to the billing on account of advance/part prepayment collected for the period March 2020 – August 2020 from contracts that were under moratorium. The collection for September 2020 was sufficient to pay investor after adjustment of advance/ part prepayment and replenish CC (partial).
In November and December 2020 payouts, the structure was adhered to and CC was utilised to pay any shortfall in the assignee payout. Adjustments were made to billing for collections from contracts under moratorium. The collections from the contracts under moratorium have been treated as advances and the billing of these contracts in the subsequent months have been covered to the extent of the advance payments made.
In the end of December 2020, TMFL had exercised buy-back of identified contracts from the pool at the request of the investor, as per clause agreed initially in deed of assignment. However, timelines for which had been delayed due to lockdown on account of COVID-19.
For contracts which should have matured in 2020 as per schedule, but had opted for moratorium, the tenure could not be extended due to operational challenges. Therefore, payment has been made to the investor, to the extent of future receivables of these contracts, by utilising CC in January 2021 payout. Post this, the outstanding CC amount stands reduced to 20.25 (Rs Crore).
CRISIL will monitor the adjustments in billing and collection from these contracts over the next few months and the watch will be resolved based on the steady collection.
The credit opinion factors in credit quality of pool cash flows backing the payouts, TMFL's origination and servicing capabilities and the credit enhancement available in the transaction structure. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
CRISIL has adequately factored these aspects in its rating analysis |
Liquidity: Strong
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Rating Sensitivity factors Upward factors
Downward factors
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About the Pool The pool consists of vehicle loan contracts comprising mostly of commercial vehicles. After January 2021 payout, the weighted average seasoning of the pool was 36.4 months, and the pool is geographically diverse, with the top three states accounting for 35.9% of the pool principal, with a weighted average loan-to-value ratio of 95.1% and average ticket size of Rs. 14.3 lakhs.
Counterparty Details
About the Originator In March 2016, TMFHL acquired 100% stake in TMFL (earlier Sheba Properties Ltd), a non-banking finance company registered with RBI, for Rs 405 crore from TML. As on March 31, 2016, TMFL had total assets of Rs 205 crore, of which the investment portfolio constituted 94% of the assets or Rs 193 crore.
With the implementation of the scheme of arrangement effective January 2017, the entire new vehicle finance business has been transferred from TMFHL to TMFL. Post transfer, TMFL is a non-deposit taking, systemically important, non-banking financial and asset financing company and will be one of the major financiers of CVs and cars for TML's customers and channel partners. In fiscal 2020, the company reported profit after tax (PAT) of Rs 59 crore on total income (net of interest expenses) of Rs 1,372 crore (basis Indian Accounting Standards), as against a net profit of Rs 204 crore (net of interest expenses) and total income of Rs 1,208 crore in the previous fiscal.
Past Rated Pools CRISIL have ratings outstanding on 7 securitisation transactions originated by TMFL. CRISIL is receiving monthly performance related to all the TMFL transactions |
Key Financial Indicators
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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)
1 crore = 10 million # Indicates door-to-door tenure; actual tenure will depend on the level of prepayments in the pool, exercise of clean-up call option, extension due to moratorium and the extent of shortfalls &Acquirer payouts holders are entitled to receive timely interest and timely principal on a monthly basis |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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