Rating Rationale
October 26, 2023 | Mumbai

SANSAR TRUST DEC 2022 VI

(Originator: Shriram Finance Limited)

Ratings Reaffirmed

 

Rating action:

Trust Name

Instrument details

Amount Rated (Rs.Crore)

Outstanding Rated Amount$

(Rs.Crore)

Original Tenure#

(Months)

Residual Tenure# (Months)

Credit Collateral

(Rs.Crore)

Ratings/ Credit Opinions&

Rating Action

SANSAR TRUST DEC 2022 VI

Series A1 PTCs

645.65

503.71

60

52

33.98

CRISIL AA+ (SO)

Rating Reaffirmed

Series A2 PTCs

33.98

33.98

CRISIL A- (SO)

Rating Reaffirmed

Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.

1 crore = 10 million

Refer to annexure for Details of Instruments & Bank Facilities

$After September 2023 payouts

#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

&PTC holders are entitled to receive timely interest and ultimate principal

 

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL AA+ (SO)’ rating on Series A1 pass-through certificates (PTCs) and reaffirmed its CRISIL A- (SO) rating on Series A2 pass through certificates (PTCs) issued by ‘SANSAR TRUST DEC 2022 VI’. This securitisation transaction is backed by receivables from loans originated by SFL, including used and new commercial vehicles (CV), passenger vehicles (PV), tractors and construction equipment (CE). The rating is based on the credit support available to the PTCs, credit quality of underlying receivables, SFL’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 98.6%. 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 20.9% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.

Key Rating Drivers & Detailed Description

Strengths:

  • Credit support available in the structure
    • As after September 2023 payout, credit collateral of Rs 33.98 crore (covering 6.1% of future Series A1 PTC payouts) provides credit support to the rating of the PTCs. The PTCs also benefit from scheduled EIS, approximating Rs 94.20 crore (16.9% of the future Series A1 PTC payouts) provides sufficient cushion to service future investor payouts
  • Healthy Collection Metrics
    • As of September 2023 payout, the CCR of the transaction is 98.6%. The 3-month average monthly collection efficiency is 98.2%.

 

Weakness:

  • Higher proportion of contracts with large ticket size in new-asset sub-segment of the pool:
  • Contracts having high ticket size have exhibited higher delinquencies in the new-asset segment at the portfolio level.
  • Potential effect of macro-economic headwinds
  • Borrowers in the underlying pool could come under pressure due to a challenging macroeconomic environment. Headwinds such as increased fuel costs, an increasing interest rate scenario, and moderation in demand on account of inflation and geo-political uncertainties. These factors may hamper pool collection ratios. 

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.

Rating Sensitivity factors

Upward factors:

  • For Series A1 PTCs: Credit enhancement (based on both internal and external credit enhancements) exceeding 2.5 times the estimated base case shortfalls.
  • For Series A2 PTCs: Credit enhancement (based on both internal and external credit enhancements) exceeding 1.7 times the estimated base case shortfalls.

 

Downward factors:

  • For Series A1 PTC: Credit enhancement (based on both internal and external combined) falling below 2.0 times the estimated base shortfalls on the residual pool cash flows.
  • For Series A2 PTC: 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

 

These aspects have been factored by CRISIL in its rating analysis.

About the Pool

The securitisation transaction is backed by a pool of  vehicles including used and new tractors, light commercial vehicles (LCV), heavy commercial vehicles (HCV), passenger vehicles (PV), and construction equipment (CE) loans originated by Shriram Finance Limited. The pool has amortised by 20.9% over the past 8 payouts. The top 3 states (Rajasthan, Maharashtra and Telangana) account for 32.9% of the pool principal. The average ticket size of pool loans is Rs 5.2 lakh, and the weighted average interest rate and LTV (at disbursement) for pool loans was 14.2% and 70.3% respectively.

 

Pool Performance Summary (as after September 2023 payouts)

Parameters

SANSAR TRUST DEC 2022 VI

Asset Class

New and Used CE, HCV, Tipper, LCV, Passenger, SCV, 3W, Tractor loan receivables

Months Post Securitisation

8

Balance Tenure (Months)

52

Principal Amortisation

20.9%

Cumulative Collection Ratio (%)

98.6%

Average Monthly Collection Ratio over Past 3 Months

98.2%

Credit collateral (% of scheduled Series A1 PTC future payouts)

6.1%

90+ Delinquency (% of initial POS)

0.3%

180+ Delinquency (% of initial POS)

0.0%

Credit collateral utilisation

0.0%

MCR = Monthly collections in the pool / Monthly billings

CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)}

TCR = The minimum cumulative collection ratio required on a pool’s future cash flows, to be able to service the investor payouts on time

 

Rating Assumptions

To assess the base case shortfalls for the transaction, CRISIL Ratings has analysed the static pool information (with information on 90+DPD) on new and used vehicles portfolio of SFL for originations in the period FY2013 to FY2023 (with performance data until June 2023). As of June 2023, 90+ delinquency for SFL’s used CV and new CV were 3.3% and 4.7% respectively.

 

CRISIL Ratings has also factored in pool-specific characteristics and estimated the base case peak shortfalls in the pool in the range of 5.0-7.0% of pool cash flows. The base shortfall estimate is for the current contracts in the pool. CRISIL Ratings has additionally factored in overdues in the pool, and applied stresses commensurate with the rating level to arrive at the rating of the transaction.

 

  • CRISIL Ratings has assumed a stressed monthly prepayment rate of 0.3 to 1.3% in its analysis.
  • CRISIL Ratings does not envisage any risk arising on account of commingling of cash flows since CRISIL Ratings' short-term rating on the servicer is 'CRISIL A1+'
  • CRISIL Ratings has adequately factored in the risks arising on account of counterparties (refer to counterparty details below)
  • CRISIL Ratings 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 and seller

SFL

Rated ‘CRISIL AA+/CRISIL PPMLD AA+/Stable/CRISIL A1+’

 

No effect.

 

Servicer

SFL

Rated ‘CRISIL AA+/CRISIL PPMLD AA+/Stable/CRISIL A1+’

Significant effect, because of change in servicing quality and replacement cost of servicer (not factored in by CRISIL Ratings, given its rating on servicer). However, CRISIL Ratings does not envisage the requirement for replacement.

Collection & Payout Account

The Hongkong and Shanghai Banking Corporation Ltd

Not rated by CRISIL

Negligible effect. Account bank can be changed without impacting the rating.

Cash collateral facility in the form of Fixed Deposit

The Hongkong and Shanghai Banking Corporation Ltd

Not rated by CRISIL

Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.

Trustee

CTL

Not rated by CRISIL

Negligible effect. Can be replaced at minimal cost.

 

About the Originator

Following the consummation of the merger of SCUF and demerged undertaking of Shriram Capital Limited with STFCL, the company has been renamed to Shriram Finance Ltd (SFL). Shriram Housing Finance Ltd (SHFL) continues to operate as a subsidiary of SFL which holds around 85.02% stake in the same. Pursuant to the consummation of the transaction, Shriram Capital and SCUF cease to exist.

 

STFCL, incorporated in 1979, was registered with RBI as a deposit-taking, asset-financing non-banking financial company. STFCL provides financing for vehicles such as CVs (both pre-owned and new), tractors, and passenger vehicles.

 

SCUF, was incorporated in 1986 and predominantly operates in the retail financing segment with a focus on small enterprise loans, two-wheeler financing, gold loans, housing loans and others (auto and personal loans).

Key Financial Indicators

Key Financial Indicators: STFCL Standalone

As on / for the period ending / year ending

Unit

Sep-22

Mar-22

Mar-21

Total assets

Rs. Cr.

155,209

1,42,106

1,29,761

Total income (net of interest expenses)

Rs. Cr.

5,452

9,540

8,382

PAT

Rs. Cr

2,032

2,708

2,487

Gross NPA

%

6.90

7.07

7.06

Overall capital adequacy ratio

%

22.48

22.97

22.50

Adjusted Gearing

Times

4.6

4.5

5.0

Return on managed assets (annualised)

%

2.7

2.0

2.0

 

Key Financial Indicators: SCUF Consolidated

As on/for the period ending/year ending

Unit

Sep-22

Mar-22

Mar-21

Total Assets

Rs. Cr.

48,144

44,558

37,866

Total income (net of interest expenses)

Rs. Cr.

2,575

4,264

3,821

Profit after tax

Rs. Cr.

739

1,165

1,078

Gross NPA (Gross Stage-3)

%

5.3

5.7

5.9

Adjusted gearing

Times

3.7

3.7

3.4

Return on assets

%

3.1

2.8

3.0

 

Key Financial Indicators: SFL consolidated

As on/for year ending

Unit

Mar-23

Total Assets

Rs. Cr.

2,10,600

Total income (net of interest expenses)

Rs. Cr.

17,577

Profit after tax

Rs. Cr.

6,020

Gross NPA (Gross Stage-3)

%

6.0*

Adjusted gearing

Times

3.8

Return on assets

%

3.0

*Gross Stage-3 estimated on combined basis for SFL and SHFL

 

Past rated pools

CRISIL Ratings has ratings outstanding on 23 SFL-originated securitisation transactions. CRISIL Ratings is receiving monthly servicer and payout reports pertaining to these transactions.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN

Type of

Instrument

Rated

Amount

(Rs.Crore)

Date of

Allotment

Maturity Date*

Coupon Rate

(%) (p.a.p.m)

Complexity level

Outstanding

Ratings/

credit opinions

Credit collateral#(Rs.Crore)

INE0ORR15019

 

Series A1 PTCs

645.65

27-Jan-23

18-Jan-28

7.95

Highly complex

CRISIL AA+ (SO)

33.98

INE0ORR15027

Series A2 PTCs

33.98

-

CRISIL A- (SO)

*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.

#Additionally, Internal credit support in the form of scheduled EIS assuming zero prepayments aggregating Rs 94.20 crore for Series A1 PTCs.

Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A1 PTCs LT 503.71 CRISIL AA+ (SO) 24-04-23 CRISIL AA+ (SO)   --   --   -- --
      -- 01-02-23 Provisional CRISIL AA+ (SO)   --   --   -- --
Series A2 PTCs LT 33.98 CRISIL A- (SO) 24-04-23 CRISIL A- (SO)   --   --   -- --
      -- 01-02-23 Provisional CRISIL A- (SO)   --   --   -- --
All amounts are in Rs.Cr.
Criteria Details
Links to related criteria
CRISILs rating methodology for ABS transactions
Evaluating risks in securitisation transactions - A primer
Meaning and applicability of SO and CE symbol

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Ajit Velonie
Senior Director
CRISIL Ratings Limited
B:+91 22 3342 3000
ajit.velonie@crisil.com


Wazeem Aboobacker
Associate Director
CRISIL Ratings Limited
B:+91 22 3342 3000
wazeem.a@crisil.com


Shreeya Saxena
Rating Analyst
CRISIL Ratings Limited
B:+91 22 3342 3000
Shreeya.Saxena@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK


CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

We are not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing our report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Ratings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The rating contained in the report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way. CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings Party shall have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. EACH CRISIL RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Ratings Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any), are made available on its website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to:
https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

This report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.

 

 

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html