Transaction Name	Details	Structure	Yield Terms	Amount (Rs. Million)	Tenure (months)#	Ratings	Credit-cum-Liquidity Support (Rs. Million)^
MFL Securitisation Trust XXV	Series A1 PTCs	Par	Fixed	606.8	54	CRISIL AA (SO)	64.0*
	Series A2 PTCs		Residual	41.2	54	CRISIL AA (SO)**	64.0*
	Second-loss facility		-	40.4	54	CRISIL BBB (SO) Equivalent	23.6

CRISIL has assigned its ‘CRISIL AA (SO)’ rating to the Series A1 and Series A2 pass-through certificates (PTCs) issued by MFL Securitisation Trust XXV. The PTCs are backed by receivables against commercial vehicle (CV), tractor, and car - passenger vehicle loans originated by Magma Fincorp Ltd (MFL; rated ‘CRISIL A1+’). The second-loss credit facility under the transaction has been assigned a credit opinion equivalent to a rating of ‘CRISIL BBB (SO)’. The rating and credit opinion are based on the credit quality of the pool cash flows, MFL’s origination and servicing capabilities, the transaction’s credit-cum-liquidity enhancement and payment mechanism, and the legal structure of the transaction.

The transaction is structured at ‘par’—MFL has assigned the pool to the trust for a consideration equal to the pool principal at the time of securitisation. The PTC payouts and second-loss facility in the transaction also receive support from the excess interest spread, which is subordinated to the PTC payouts and credit collateral.

About the Pool
The pool is geographically diversified, with the top three states collectively accounting for 37.9 per cent of the principal outstanding. The pool has a moderate seasoning profile, with a weighted average net seasoning of 12.4 months (weights being principal outstanding on the contracts) and all contracts in the pool are current on payments. The pool has a moderate proportion of long-tenure contracts: the weighted average original tenure is 45.7 months.

Rated Pools
CRISIL has outstanding ratings/credit opinions on 28 transactions backed by receivables against retail loans originated by MFL. The performance of the rated pools has been in line with CRISIL’s expectations.

About the Originator
MFL was originally incorporated as Magma Leasing Ltd (MLL) in 1988 at Kolkata, and commenced operations in 1989. MFL has become a significant player in the asset finance business today with assets under management of Rs.150 billion as on September 30, 2013. It has grown through both the organic and the inorganic routes since its inception. MLL merged with Arm Group Enterprises (AGE) in 1992. In 2001, AGE acquired Consortium Finance and expanded its network in North India. In 2007, it acquired Shrachi Infrastructure Finance Ltd, a medium-sized CV-financing non-banking financial company (NBFC) and merged it with itself. This company’s name was changed to Magma Shrachi Finance Ltd, which was renamed as MFL in August 2008.

The Magma group, of which MFL is a part, has been jointly promoted by Mr. Mayank Poddar (chairman of MFL), and Mr. Sanjay Chamria (vice chairman and managing director). Mr. Chamria anchors policy formulation and leads the management team.

Headquartered in Kolkata and registered as a non-deposit-taking NBFC with the Reserve Bank of India, MFL is primarily engaged in providing CV and CE finance to small road transport operators and small entrepreneurs, a large proportion of which are first-time buyers. It also has a significant presence in the passenger car and utility vehicle finance segments where it mainly caters to the self-employed and to a small extent to the commercial-operator segment. MFL has also diversified its product offerings by financing tractors and used CVs, and lending to the small and medium enterprise sector, during the past three years. Currently, it has around 6600 employees and a network of 240 branches spread across 21 states and union territories.

Magma ITL, incorporated in 2007 as an NBFC, is a joint venture between MFL and International Tractors Ltd (ITL; the manufacturer of Sonalika tractors). MFL had set up this joint venture to enter the tractor financing business. The initial years of business were dedicated to developing an understanding, and setting up underwriting, collections, and other systems and processes in this segment. Until 2009, Magma ITL had separate employees sourcing business exclusively for the company. However, it was proving to be cost intensive and inefficient. Consequently, MFL’s employees source business for tractor financing across the various tractor manufacturers. The loans sourced for the Sonalika brand of tractors are booked in Magma ITL’s balance sheet. Magma ITL has no employees, branches, or other infrastructure facilities. Only compliance, internal audit, and accounts are separated from MFL. Magma ITL pays a fee to MFL for all other services. Origination, collections, underwriting, and monitoring are done by MFL using its own systems and processes.

The Magma group reported an adjusted profit after tax (PAT; adjusted for accounting policy changes) of Rs.2.3 billion on an adjusted total income (adjusted for accounting policy changes) of Rs.18.4 billion for 2012-13 (refers to financial year, April 1 to March 31), as against an adjusted PAT of Rs.1.8 billion on an adjusted total income of Rs.12.7 billion for the previous year.