Rating Rationale
November 13, 2019 | Mumbai
Star CV Trust June 2019
(Originator: IndoStar Capital Finance Limited)
'CRISIL AAA (SO)' converted from provisional rating to final rating for Series A PTCs
Rating Action
Transaction Details Amount Rated
(Rs Crore)
Outstanding Amount
(Rs Crore)*
Original Tenure (Months) Credit Collateral
(Rs Crore)
Ratings/ Credit Opinion Rating Action
Star CV Trust June 2019 Series A PTCs 82.42 74.29 54 13.64 CRISIL AAA (SO)  Converted from Provisional Rating to Final Rating
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
*After September 2019 payouts
Detailed Rationale

CRISIL has converted its provisional rating assigned to Series A pass-through certificates (PTCs), issued by 'Star CV Trust June 2019' to final rating of 'CRISIL AAA (SO)'.
CRISIL has received the final legal documents executed for this transaction. These executed documents are in line with terms of the transaction when provisional rating/credit opinion was assigned. Hence, CRISIL has converted the provisional rating/credit opinion to a final rating/credit opinion.
Please click on the following link for detailed information on CRISIL's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' ratings
As required, CRISIL has received the following final executed legal documents and other documents relevant to the transaction:
Legal documents:

  • Trust Deed
  • Deed of Assignment
  • C&P Agent Agreement
  • Cash Collateral Agreement
  • Cash Collateral Power of Attorney
  • Power of Attorney

Other documents:

  • Legal opinion
  • IM
  • Auditor's certificate
  • Trustee Awareness Letter
  • Seller's Representation and warranties

The pool is backed by commercial vehicle (CV), Car, Tractor, commercial equipment (CE) and farm equipment loan receivables originated by IndoStar Capital Finance Limited (IndoStar; rated 'CRISIL A1+'). The ratings are based on the credit support available to the PTCs, credit quality of underlying pool receivables, IndoStar's origination and servicing capabilities, and soundness of the transaction's legal structure.
The transaction has a 'par' structure. IndoStar assigned the pool to 'Star CV Trust June 2019', settled by IDBI Trusteeship Services Ltd (ITSL), which issued the PTCs to investors. The PTCs are supported by the credit collateral ' in the form of fixed deposit' and excess interest spread. The total credit support available in the transaction at the time of securitization was as below:

  • Internal credit support in the form of scheduled Excess Interest Spread (EIS), aggregating Rs 7.69 crore (9.3% of pool principal)
  • External credit-cum-liquidity collateral of Rs 13.64 crore (16.5% of pool principal) which is in the form of fixed deposit.

Series A PTCs are entitled to receive timely interest and timely principal on a monthly basis. IndoStar will continue to service the pool contracts as the servicing agent.

Key Rating Drivers & Detailed Description
Supporting factors
  • Credit support available in the structure
    • Credit collateral of Rs 13.64 crore (16.5% of the pool principal) provides credit support to Series A PTCs. The PTCs also benefit from scheduled EIS aggregating Rs 7.69 crore (9.3% of pool principal).
  • Good contracts in the pool
    • All the contracts are current as of the cut-off date of May 31, 2019
  • Moderately seasoned nature of the pool with weighted average seasoning of 8.7 months
Constraining factors
  • Track record
    • Unseasoned portfolio as disbursement for CV segment stared in Nov-17
  • Slight disruption in collection in CV after merger of India Infoline Finance Limited (IIFL) CV portfolio
Liquidity: Strong
  • Liquidity is strong given that the credit enhancement available in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls.
Rating sensitivity factors

  • Credit enhancement (based on both internal and external credit enhancements) falling below 2 times the estimated base case shortfalls
  • A sharp downgrade in the rating of the servicer/originator
  • Non-adherence to the key transaction terms envisaged at the time of the rating
About the pool
The pool cash flow is securitised and comprises receivables from CV, Car, CE, Tractor and Farm Equipment loans originated by IndoStar. The pool has a weighted average net seasoning of 8.7 months. The pool is moderately concentrated with top 3 states accounting for 62.8% of the pool principal. Average ticket size of the pool is Rs 6.9 lakh. All contracts in the pool were current as on the cut-off date (May 31, 2019). CRISIL has adequately factored all these aspects in its rating analysis.

Key rating assumptions

To assess the base case shortfalls for the transaction, CRISIL analysed the moving portfolio delinquency information on CV asset class for performance from Jan-18 to Mar-19. CRISIL has also analysed the portfolio cuts based on Tenure, Asset type, State, etc. and compared the pool with the portfolio on these parameters.
Indostar started disbursement in CV from Nov-17. Portfolio has grown rapidly in last 1 year (almost 10 times; ~131 cr in Mar-18 and ~1496 crore in Mar-19. Unseasoned portfolio having 90+ dpd as of Mar-19 is 0.4% The portfolio is unseasoned and peaks are yet to be observed in static pool.
CRISIL has also factored in pool-specific characteristics and estimated base-case peak shortfalls for this transaction to be at 6-8% of pool cash flows. 

  • CRISIL has assumed a stressed monthly prepayment rate of 0.1-0.8% in its analysis
  • CRISIL does not envisage any risk arising on account 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


Counterparty Name

Counterparty Rating / Track record

Effect on credit ratings in case of non-performance

Originator and seller IndoStar CRISIL A1+  
No effect.
Servicer IndoStar 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 ICICI Bank Limited CRISIL AAA/CRISIL AA+/Stable Negligible effect. Account bank can be changed without impacting the rating.
First loss facility in the form of fixed deposit ICICI Bank Limited CRISIL AAA/CRISIL AA+/Stable Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.
Trustee ITSL Adequate track record Negligible effect. Can be replaced at minimal cost.
About the originator
IndoStar, incorporated in November 2011, and is registered with the Reserve Bank of India as a systemically important non-deposit taking non-banking financial company.  The company was founded and incorporated by private equity players (Everstone, Goldman Sachs Baer Capital Partners, ACPI Investment managers, and CDIB International) with an initial capital of about Rs 900 crore. The funds have been invested through IndoStar Capital Mauritius (Everstone holds 51% stake in the company), which holds 58% in IndoStar Capital Finance (June-2018)

The company started its business in fiscal 2011 as wholesale financier and then entered in SME finance (loan against property) in fiscal 2015. From fiscal 2018 onwards, the company has been growing in to vehicle finance and housing finance (via IndoStar Home Finance Pvt Ltd). As on June 30, 2018 the total assets under management were Rs 7,640 crore compared to Rs 4,968 crore in corresponding period of previous year. Total AUM for CV as of Mar-19 is Rs 1,496 crore.
Past rated pools
CRISIL has rating outstanding on one transaction originated by IndoStar. CRISIL is receiving monthly performance report pertaining to the transaction in a timely manner.
Key Financial Indicators
Particulars Unit 2018 2017
Total assets Rs.Crore 7296 5489
Total income Rs.Crore 510 407
Profit after tax Rs.Crore 224 211
Gross NPA % 1.3 1.4
Gearing % 2.3 1.8
Return on assets % 3.5 4.1

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 crore)
Date of allotment Maturity date* Coupon rate (%) (p.a.p.m.) Outstanding
Credit cum liquidity enhancement (Rs crore)
Series A PTCs 82.42 28-June-19 22-Dec-23 9.60% CRISIL AAA (SO) 13.64^
*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 7.69 crore in the form of scheduled EIS (assuming zero prepayments)
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A PTCs  LT  82.42 CRISIL AAA (SO)   05-07-19  Provisional CRISIL AAA (SO)    --   --   --  -- 
All amounts are in Rs.Cr.
Links to related criteria
CRISILs rating methodology for ABS transactions
Evaluating risks in securitisation transactions - A primer
Understanding CRISILs Ratings and Rating Scales

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