| Yogakshemam Loans Limited | ||||
| Rating reaffirmed at 'CRISIL BBB-/Stable' | ||||
| Rating Action | ||||
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| 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 |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB-/Stable’ rating to the long-term bank facilities of Yogakshemam Loans Limited (Yog Loans). The rating continues to reflect the extensive experience of management in lending space, adequate capitalisation for its current scale of operations. These strengths are partially offset by moderate scale of operations with geographic concentration, moderate resource profile and asset quality concerns in non-gold loan segments.
In terms of scale of operations, the company has registered a growth of 32% with assets under management (AUM) reaching to Rs 445.7 crore as of March 2023 from Rs 338.8 crore as of March 2022. Growth continued in fiscal 2024 with AUM reaching to Rs 471.7 crore as of June 30, 2023.
As far as asset quality is concerned, the 90+ dpd has improved to 4.3% as on June 30, 2023 (5.2% as on March 31, 2023) from 7.0% as on March 31, 2022. Within gold loan segment (which is about 70% of AUM), the 90+ dpd stood at around 2.1% as of June 2023 (4.4% as of March 2023). The asset quality challenges are predominantly in non-gold segments particularly in vehicle and SME loans. The ability of the company to monitor and improve its asset quality performance both in gold and non-gold segment will remain monitorable.
In terms of profitability, the average return on assets for Yog Loans for the past 3 years stood comfortable at 1.8% (during fiscal 2023 to fiscal 2021). The operating costs of the company have remained high, in the range of 8.0-9.5%% during last 2 years on account of expansion of branch network (with view to reduce concentration in Kerala region). During Q1 fiscal 2024, the company opened 12 branches that were mainly in AP, Karnataka and TN region. CRISIL Ratings, overall believes, ability of the company to scale-up portfolio in newer branches will be critical in order to reduce its operating costs and thereby improving profitability. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has evaluated the standalone business and financial risk profile of Yog Loans |
Key Rating Drivers & Detailed Description Strengths:
Yog Loan’s board members and senior management have immense amount of experience in the NBFC lending industry and banking space. Mr. Unnikrishnan, MD & CEO, has more than 25 years of experience in NBFC industry. The company’s board of directors comprises experienced professionals from different fields such as banking, finance, asset management and administration. The company’s senior management team is also well-experienced, Mr. Rajesh Kumar, K (EVP & Company Secretary), has industrial experience of more than 20 years in the fields of corporate laws, strategic management, and policy matters. Prior to joining with Yog Loans, he was the General Manager & Company Secretary of Manappuram Finance Ltd. He had worked with major business houses in Kerala such as, Kuttukaran Group, Popular Motors group, Malabar Gold and Manappuram Group in different capacities. Mr. Prasad, Chief Financial Officer, has ~12 years of experience in accounts, finance, and taxation in various sectors. He has worked with various companies like Manappuram Finance Ltd and Manappuram Jewellers Ltd and Kalyan Jewellers India (Pvt) Ltd. CRISIL Ratings believes that the company is expected to benefit from the expertise of the board and an experienced management team.
Yog loans capital position is adequate in relation to its scale and nature of operation. The capitalisation is supported by steady accretions. Yog loans has plans to infuse equity of ~Rs 40-50 crores by the end of fiscal 2024 or latest by Q1 of fiscal 2025. As of March 31, 2023, the company has networth of Rs 79.18 crore and gearing stood comfortable at 4.9 times as against the networth of Rs 75.34 crore and gearing at 3.8 times on March 31, 2022, and as on June 30, 2023, the networth stood at Rs 81.2 crores with gearing of 5.4 times. Furthermore, as gold loan segment contributes 72% of assets under management, the lower asset side risk (security of gold, which is liquid and is in the lender's possession), supports capitalisation.
The asset quality has shown improvement with 90+dpd at 5.2% as on March 31, 2023, from 7.0% as on March 31, 2022. As of June 2023, the 90+dpd stood at 4.3% and 180+dpd stood at 1.5%. The 180+ dpd on as on March 31, 2023, stood at 1.3% as against 1.8% as on March 31, 2022. Asset quality deteriorated with GNPA (180+dpd) in first half of fiscal 2022, from 1.5% as on March 31, 2021, to 4.2% as of September 30, 2021, which later gradually improved to 1.8% as on March 31, 2022, and eventually 1.3% in fiscal 2023, the decline in asset quality was on account of 2nd wave of pandemic. The 180+dpd of gold loan segment has been zero but for the non-gold loan segment it stood at 8.0% for SME and 3.9% for vehicle loan.
Weaknesses:
As on March 31, 2023, the AUM stood at Rs 445.7 crore compared to Rs 338.8 crore crore in previous fiscal. The company registered growth of ~32%. As on June 30, 2023, the AUM stood at Rs 471.7 crore. The company has wide range of asset classes including gold loans (72%), vehicle loans (18%), small and medium enterprise (SME) business loans (7%), Micro loans (3%). The company has plans to further increase its vehicle finance portfolio in the coming fiscal, however they will continue to maintain gold loan as major proportion of loan portfolio going forward. Additionally, operations are geographically concentrated in 3 states in southern region of India i.e., Kerala, Karnataka and Tamil Nadu. Recently they have ventured into the market of Andra Pradesh. As of fiscal 2023, Kerala dominates the portfolio with over 55% followed by Karnataka with 29%, followed by Tamil Nadu and Andra Pradesh with 14% and 2%, respectively. Even though the company’s operations are concentrated in southern region of India, there is high growth potential to tap other geographies as far as gold loans are concerned.
The company’s resource profile consists of term loans (43%), NCDs (21%), Sub Debt (21%) and CC/working capital loan (15%) of the total borrowings as on March 31, 2023. The company was able to raise Rs 291.5 crore from April 2020 onwards. However, with the ability of the company to diversify its borrowing profile and increase the share of bank funding to fund its future growth and reduce overall cost of borrowing while it scales up in size will remain key monitorable. |
Liquidity: Adequate Yog Loans has adequate liquidity buffer to cover total debt obligation and operating expenses in the coming months. As on July 31, 2023, the company had cash and cash equivalents of Rs 44.03 crore, against which it had debt repayments of Rs 84.9 crore for the next three months. The liquidity cover considering 50% collection for 3 months is 2.5 times.
In terms of ALM profile, it has remained comfortable with positive cumulative mismatches till 3 months and 6 months. This is because majority of Yog Loans portfolio is towards gold loans which are short term in nature. |
Outlook: Stable CRISIL Ratings believes that Yog Loans will continue to benefit from the experience of its management team, maintain its adequate capital position |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company Yogakshemam Loans Ltd (formerly Yogakshemam Kuries & Loans Private Limited) was incorporated on February 13, 1991. The company became an NBFC in the year 2000 by registering with the Reserve Bank of India. The Company was originally promoted by Mr. N D Narayanan, Chairman with an objective of doing lending against gold and other financial products. In the year 2015, the promoters joined hands with Mr. Unnikrishnan, a chartered accountant by qualification & a former MD of Manappuram Finance Ltd and Mr. Ramachandran, a chartered accountant by qualification & the CEO of Choppies Group. They have jointly expanded the capital base of the company to broad base the products offerings and to go for spatial expansion outside Kerala.
The Company has been mainly operating in the gold loan space and to a limited extent in business support loan for small and medium enterprises and vehicle and term loans to small and medium enterprises. The company focuses on gold loans, which comprised 72% of the overall portfolio as on March 31, 2023, followed by vehicle loans (18%) and MSME loans (7%). The operations are extended across three states but remain concentrated in Kerala (55%), followed by Karnataka (29%), Tamil Nadu (14%) and Andhra Pradesh (2%). |
Key Financial Indicators
*CRISIL Ratings Adjusted |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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Criteria Details
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