Rating Rationale
July 16, 2019 | Mumbai
Sansar Trust June 2019 IV
(Originator: Shriram Transport Finance Company Limited)
'Provisional CRISIL AAA (SO)' rating assigned to Series A PTCs 
Rating Action
Trust Name Instrument
Amount Rated (Rs Crore) Pool Principal
(Rs Cr)
Original Tenure (Months) Credit
(Rs Cr)
Ratings/Credit Opinions@ Rating Action
Sansar Trust June 2019 IV Series A PTCs 337.54 337.54 60 33.75 Provisional CRISIL AAA (SO) Provisional Rating Assigned
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
@A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures, and will be supported by certain critical documentation by the issuer, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015, Securities and Exchange Board of India (SEBI) directive, 'Standardising the term, rating symbol, and manner of disclosure with regard to conditional/ provisional/ in principle ratings assigned by CRAs 1
Detailed Rationale

CRISIL has assigned its 'Provisional CRISIL AAA (SO)' ratings to Series A Pass-Through Certificates (PTCs) issued by 'Sansar Trust June 2019 IV' under a securitisation transaction originated by Shriram Transport Finance Company Limited (STFCL; rated 'CRISIL AA+/CRISIL PP-MLD AA+r/FAAA/Stable/CRISIL A1+').
This securitisation transaction is backed by receivables from a pool of new and pre-owned heavy commercial vehicle, light commercial vehicle, passenger vehicle, and small commercial vehicle (including 3-wheelers) loans originated by STFCL. The rating is based on the credit support available to the PTCs, credit quality of underlying receivables, STFCL's origination and servicing capabilities, and soundness of the transaction's legal structure.
The transaction has a 'Par with Excess Interest Spread' structure. STFCL will assign the pool to 'Sansar Trust June 2019 IV', a trust settled by Catalyst Trusteeship Limited (CTL), which will issue the PTCs to investors. The Series A PTC payouts are supported by credit collateral in the form of Fixed Deposit and Excess Interest Spread (EIS).
The total credit support available in the transaction is as below:

  • Internal credit support from subordination of scheduled EIS assuming zero prepayments aggregating to Rs 36.85 crore (10.9% of pool principal or 8.5% of pool cash flows)
  • External credit collateral of Rs 33.75 crore (10.0% of pool principal or 7.8% of pool cash flows) in the form of a Fixed Deposit.

 Series A PTC holders are entitled to receive timely interest and timely principal on a monthly basis.
This is a 'Provisional' rating and will be converted into a 'Final' rating on receipt of the following documents:

  • Trust Deed
  • Deed of Assignment
  • Power of Attorney
  • Information Memorandum
  • Legal Opinion
  • Trustee Letter
  • Auditor's Certificate
  • Representations and Warranties Letter

Additional documents, if any, executed for the transaction should also be provided. A rating rationale/report indicating the conversion of the 'Provisional' rating to 'Final' rating post receipt of all the required final legal documentation will be published on the CRISIL website. Please click on the link below for detailed information on CRISIL's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' rating.

Key Rating Drivers & Detailed Description
Supporting Factors
  • Credit Enhancement
    • Credit collateral of Rs 33.75 crore (10.0% of pool principal) provides credit support to Series A PTCs. The PTCs also benefit from scheduled EIS (assuming zero prepayment) aggregating to Rs 36.85 crore (10.9% of pool principal).
  • Presence of contracts with low LTV and IRR
    • Contracts in the loan pool have a low weighted average IRR and weighted average LTV of 14.0% and 73.0% respectively.
  • No delinquent contracts in the pool
  • All contracts were current on repayment as of cut-off date (June 20, 2019).
Constraining Factors
  • Proportion of new vehicle loans
Loan contracts for new vehicles contribute to 30.2% of the pool principal. Relative to pre-owned vehicle loans, new vehicle loans exhibit higher delinquency at STFCL's portfolio level.

Liquidity Position 
The credit collateral available in the transaction is Rs 33.75 crore (10.0% of pool principal) which is in the form of a Fixed Deposit. The credit collateral fully covers 3 months of payout obligations to Series A PTC holders even with no collections from the underlying pool of receivables.

About the Pool
The transaction is backed by receivables from a pool of new and used heavy commercial vehicle, light commercial vehicle, passenger vehicle and small commercial vehicle (including 3-wheelers) loan contracts. The pool is well seasoned as evidenced by its weighted average net seasoning of 13.6 months. Contracts in the pool are geographically diversified with top 3 states accounting for 24.3% of pool principal. The average ticket size for contracts in the pool is Rs 7.1 lakh, with a weighted average loan-to-value ratio (at disbursement) of 73.0%. The weighted average interest rate of contracts in the pool is 14.0%. All contracts in the pool were current on repayment as of cut-off date (June 20, 2019). CRISIL has adequately factored all these aspects in its rating analysis.

Rating Assumptions
To assess the base case shortfalls for the transaction, CRISIL analysed static pool information on new and used vehicles portfolio of STFCL for originations in the period FY 2009 to Q4 FY2018 (with performance data till Sep 2018). CRISIL also analysed performance of rated securitisation transactions, and the performance of STFCL's portfolio. As of Mar 2019, 90+ dpd for the used and new portfolio are 4.9% and 5.7%, respectively.
CRISIL has also factored in pool-specific characteristics and estimated the base case peak shortfalls in the pool in the range of 4% to 6% of pool cashflow. 

  • CRISIL has assumed a stressed monthly prepayment rate of 0.3 to 0.8% in its analysis.
  • CRISIL does not envisage any risk arising on account of commingling of cash flows since CRISIL's short term rating on the servicer is 'CRISIL A1+'.
  • CRISIL has adequately factored in the risks arising on account of counterparties (refer to counterparty details).
  • 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 STFCL Rated 'CRISIL AA+/CRISIL PP-MLD AA+r/FAAA/Stable/CRISIL A1+'  
No effect.
Servicer STFCL Rated 'CRISIL AA+/CRISIL PP-MLD AA+r/FAAA/Stable/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 Rated 'CRISIL AA+/CRISIL AAA/Stable' Negligible effect. Account bank can be changed without impacting the credit rating.
Credit collateral in the form of Fixed Deposit ICICI Bank Rated 'CRISIL AA+/CRISIL AAA/Stable' Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.
Trustee CTL Adequate Track Record Negligible effect. Can be replaced at minimal cost.

About the Originator
STFCL, incorporated in 1979, is the flagship company of the Shriram group. It is 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. It has pan-India presence, with about 1,545 branches and 838 rural centres as on March 31, 2019. In April 2018, STFCL completed the sale of its majority stake in wholly owned subsidiary Shriram Automall to MXC Solutions India Pvt Ltd (MXC, owner of CarTrade.com) for Rs 156.38 crore.

STFCL's reported total income (net of interest expense) and profit after tax (PAT) of Rs.7908 crore and Rs.2564 crore respectively, for fiscal 2019 against Rs. 7015 crore and Rs. 2461 crore, respectively, for fiscal 2018.

Past Rated Pools
CRISIL has ratings outstanding on 18 securitisation transactions originated by STFCL. CRISIL is receiving monthly performance reports pertaining to these transactions.
Key Financial Indicators
Particulars Unit  Mar 2019 Mar 2018
Total Assets Rs Cr 1,05,292 97,245
Total income (net of interest expenses) Rs Cr 7,908 7,015
PAT Rs Cr 2,564 2,461
Gross NPA (per IGAAP) % 8.29 9.15
Overall Capital Adequacy Ratio % 20.27 17.38
Return on Managed Assets % 2.5 2.7

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 Cr)
Date of Allotment Maturity
Coupon Rate (%) (p.a.p.m.) Outstanding
Ratings/credit opinions
Credit collateral (Rs Cr)^
Series A PTCs 337.54 27-Jun-19 15-Jul-24 8.30% Provisional CRISIL AAA (SO)$ 33.75
#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and possible exercise of the clean-up call option
^Additionally scheduled excess interest spread (EIS) amounting to Rs 36.85 crore (assuming zero prepayments) also provides credit support to PTCs
$Series A PTC holders are entitled to receive timely interest and timely principal payments on a monthly basis
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  337.54  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
Legal analysis in structured finance transactions

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