Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA (SO)’ rating for Series A pass-through certificates (PTCs) issued by ‘Platinum Trust September 2021’ and upgraded its credit opinion to ‘CRISIL A (SO) Equivalent’ from ‘CRISIL BBB+ (SO) Equivalent’ for the second loss facility. The transaction is backed by receivables from vehicle loans originated by Cholamandalam Investment & Finance Company Limited (CIFCL; rated ‘CRISIL A1+’). The rating/ credit opinion is based on the credit support available to the PTCs, credit quality of underlying receivables, CIFCL’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
The pool has exhibited good collection performance as seen by strong collections ratios. The cumulative collection ratio for the pool is robust at 99.4%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 0.4%. The healthy collection performance coupled with amortisation of around 64.2% has led to an increase in the credit cover available to future PTC payouts from the cash collateral. |
Key Rating Drivers & Detailed Description Supporting factors
Constraining factors
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Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is above 1.5 times the estimated base shortfalls on the residual pool cash flows.
These aspects have been factored by CRISIL in its rating analysis |
Rating Sensitivity factors Upward factors: For Series A PTC: None For Second Loss Facility: Credit enhancement (both internal and external combined) available in the structure exceeding 1.6 times the estimated base shortfalls on the residual pool cash flows of the pool.Downward factors: For Series A PTC: Credit enhancement (based on both internal and external combined) falling below 2.3 times the estimated base shortfalls on the residual pool cash flows. For Second Loss Facility: Credit enhancement (based on both internal and external combined) falling below 1.3 times the estimated base shortfalls on the residual pool cash flows. A sharp down grade in the ratings 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 vehicle loans originated by CIFCL. At the time of securitisation, the pool had a weighted average seasoning of 23.4 months, with top 3 states (Maharashtra, Madhya Pradesh & Bihar) cumulatively accounting for 28.4% of the pool principal. Average ticket size of the pool was Rs 7.9 lacs. All contracts were current as on cut-off date (Aug 31st, 2021).
Pool Performance Summary (as after May 2023 payouts)
Rating Assumptions To assess the base case shortfalls for the transaction, CRISIL Ratings has analysed the static pool performance (with information on 90+ delinquencies) on the portfolio of CIFCL for originations in the period FY 2014 to FY2022 (with performance data till March 2022). CRISIL Ratings has also analysed performance of past rated securitisation transactions and the performance of CIFCL’s vehicle finance portfolio. 90+ delinquency (as % of managed assets) for CIFCL’s vehicle finance portfolio was 3.6% as of December 2022.
CRISIL Ratings has also factored in pool specific characteristics and estimated the base case shortfalls in the pool by the maturity of the transaction in the range of 4.0% to 6.0% of pool principal.
Counterparty Details
About the Originator Part of the Chennai-based Murugappa group, Chola Finance was incorporated in 1978. The company provides vehicle financing and LAP as well as home loans, MSME and agricultural loans. It has ventured into new businesses in the consumer and MSME ecosystems, namely CSEL, SBPL and SME finance in the second half of fiscal 2022. It had 1,166 branches across 29 states in India, with 80% presence across tier III to tier VI cities, as on December 31, 2022.
Between April 2005 and March 2010, the company operated as a joint venture between DBS Bank and the Murugappa group. In March 2010, DBS Bank sold its 37.5% equity stake to the Murugappa group. Chola Finance exited the unsecured personal loan segment in October 2008 and subsequently from the asset management business. The Murugappa group holds 51.6% equity stake in Chola Finance, of which 45.5% is held by Cholamandalam Financial Holdings Ltd, a group company.
Chola Finance has two subsidiaries: Cholamandalam Securities Ltd (CSEC) and Cholamandalam Home Finance Ltd (CHFL), a joint venture with Payswiff and three associates: White Data Systems India Pvt Ltd, Vishvakarma Payments Pvt Ltd and Paytail Commerce Pvt Ltd.
For FY2023, profit after tax (PAT) was Rs 2,666 crore on total income (net of interest expense) of Rs 7,229 crore, against Rs 2,147 crore and Rs 1,515 crore, respectively, for the previous fiscals. |
Key Financial Indicators
Past rated pools CRISIL Ratings has ratings outstanding on 9 securitisation transactions originated by CIFCL. CRISIL Ratings is receiving monthly performance reports pertaining to these transactions. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, exercise of the clean-up call option and extension due to moratorium ^Scheduled excess interest spread (EIS) approximating Rs. 4.79 crore (assuming zero prepayments) also provides credit support to PTCs $Series A PTC holders are entitled to receive timely interest and timely principal. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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