Rating Rationale
January 17, 2020 | Mumbai
Vivriti Moyer 11 2019
(Originator: WheelsEMI Private Limited)
'Provisional CRISIL A- (SO)' assigned to Series A1 PTCs
 
Rating Action
Trust Name Details Amount Rated
(Rs Crore)		 Pool Principal
(Rs Crore) 		 Original Tenure (Months) Credit Collateral
(Rs Crore)		 Ratings/ Credit Opinion@ Rating Action
Vivriti Moyer 11 2019 Series A1 PTCs 13.34 15.16 30 0.76 Provisional CRISIL A- (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'.
Detailed Rationale

CRISIL has assigned its 'Provisional CRISIL A- (SO)' rating to Series A1 pass-through certificates (PTCs) issued by Vivriti Moyer 11 2019. The pool is backed by two-wheeler loan receivables originated by WheelsEMI Pvt Ltd (WEPL; 'CRISIL BBB/Stable/CRISIL A2'). The ratings are based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, WEPL's origination and servicing capabilities, and soundness of the transaction's legal structure.
 
The transaction has a 'par with monthly subordinated excess interest spread (EIS)' structure, wherein the trust settled by Catalyst Trusteeship Limited (CTL) will issue Series A1 PTCs in exchange of a purchase consideration equal to 88.0% of the pool principal at the time of securitisation. Total credit support available in the transaction is as follows:

  • Internal credit support in the form of scheduled cash flow subordination, aggregating Rs 3.59 crore (23.7% of pool principal or 20.1% of pool cashflows) for Series A1 PTCs,
  • External credit-cum-liquidity collateral of Rs 0.76 crore (5.0% of pool principal or 4.2% of pool cashflows) also provides support to Series A1 PTCs.

Series A1 PTCs are entitled to receive monthly interest, while the principal payment is promised on an ultimate basis.  CTL has been appointed to monitor the transaction on behalf of the PTC holders. WEPL will continue to service the pool contracts as the servicing agent.
 
This is a 'provisional' rating and will be converted into a 'final' rating on receipt of the following documents:

  • Trust deed
  • Assignment agreement
  • 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 into 'final' following receipt of all the required final legal documents 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 support available in the structure
    • Credit collateral of Rs 0.76 crore (5.0% of the pool principal or 4.2% of pool cashflows) provides credit support to Series A1 PTCs. The PTCs also benefit from scheduled cashflow subordination aggregating Rs 3.59 crore for Series A1 PTCs.
  • Moderate seasoning of contracts in the pool
    • The contracts in the pool have a weighted average seasoning of 7.8 months, and consequently, the pool is moderately amortised by 34.9% as of the cut-off date
Constraining Factors
  • High risk profile of underlying asset class
    • Nearly 50% of the pool is backed by receivables extended to borrowers with limited or no credit history and 8% of the pool comprises used two wheeler loans and 16.9% of the pool comprises loan against 2 wheeler. The underlying borrowers have relatively high credit risk. Performance of the pool will, hence, remain susceptible to risks inherent in the unsecured lending business.
These aspects have been factored by CRISIL in its rating analysis
 
Rating Sensitivity factors
Upward factors
  • Credit enhancement (based on both internal and external credit enhancements) available in the structure exceeding 1.90 times the estimated base case shortfalls on the residual cash flows of the pool.
Downward factors
  • Credit enhancement (internal and external combined) falling below 1.60 times the estimated base shortfalls on the residual pool cash flows
  • Deterioration in the credit quality of the servicer/originator
  • Non-adherence to the key transaction terms envisaged at the time of the rating
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.
About the pool
The pool cash flow is securitised and comprises receivables from two-wheeler loans originated by WEPL. The pool has a weighted average net seasoning of 7.8 months, with Maharashtra, Telangana and Karnataka accounting for 56.8% of the pool principal outstanding. Average ticket size of the pool is Rs 43,968. All contracts in the pool were current as on the cut-off date (November 30, 2019).
 

Rating Assumptions

To assess the base case shortfalls for the transaction, CRISIL has analysed static pool information (with data on 30+ and 90+ delinquencies) on two wheeler loan portfolio provided by WEPL for originations in the period FY2018 to FY2019 (with performance data till June 2019). As of June 2019, 90+ dpds for used two wheeler loans, new two wheeler loans and loan against two wheelers are  4.1%, 1.9% and 2.5% respectively.
CRISIL has also factored in pool specific characteristics and estimated the base case peak shortfalls in the pool in the range of 10.0% to 12.0% of pool cash flows.
  • Based on its assessment of WEPL's short-term credit risk profile, CRISIL has factored in the risk arising out 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

Capacity

Counterparty Name

Counterparty Rating/ Track record

Effect on credit ratings in case of non-performance

Originator WEPL Rated 'CRISIL BBB/Stable/ CRISIL A2' No effect.
Servicer
 		 WEPL Rated 'CRISIL BBB/Stable/ CRISIL A2' Significant effect, because of change in servicing quality and replacement cost of servicer. However, currently CRISIL does not envisage the need for replacement. Under certain circumstances, the trust or investor has the right to change the servicer by providing an intimation to CRISIL.
Collection and Payout Account Bank DCB Bank Rated 'CRISIL AA-/Stable/CRISIL A1+' Negligible effect. Account bank can be changed without impacting the rating.
Collateral in the form of Fixed Deposit DCB Bank Rated 'CRISIL AA-/Stable/CRISIL A1+' 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
WEPL is a non-deposit taking non-systemically important NBFC engaged in financing of used and new two-wheelers, electric two-wheelers and also offers loans against vehicles. WEPL started its operations in April 2017 in Pune after its promoters acquired an erstwhile NBFC (Varadnarayan Savings and Investment Co. Pvt. Ltd.). WEPL is currently operating with 11 branches and has presence in 7 states. WEPL specialises in financing of used two-wheelers.
 
Past rated pools
This is the first securitisation transaction originated by WEPL being evaluated by CRISIL.
Key Financial Indicators
As On/For The Period Ended March 31 Unit 2019 2018
Total assets Rs cr 158 25
Advances* Rs cr 76.6 19
Total income(after finance cost) Rs cr 12.67 3.3
Profit after tax Rs cr -17.6 -7.7
Gross NPA % 3.2 0.19
Gearing** Times 0.5 0.3
Return on assets % -ve -ve
* on book portfolio
**excluding preference share capital

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 (%) Outstanding
Rating		 Credit cum liquidity Enhancement
(Rs crore)
Series A1 PTCs 13.34 21-Dec-19 17-Jun-22 11.25% Provisional CRISIL A- (SO)* 0.76
*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.3.59 crore in form of scheduled cash flow subordination (assuming zero prepayments) ' Includes overcollateralization of Rs. 1.82 crore (12.0% of pool principal)
Annexure - Rating History for last 3 Years
  Current 2020 (History) 2019  2018  2017  Start of 2017
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A1 PTCs LT  13.34 Provisional CRISIL A- (SO)                  
All amounts are in Rs.Cr.
Links to related criteria
CRISILs rating methodology for ABS transactions

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