Press Release
Save Microfinance Private Limited
August 01, 2022
Ratings
Amount
Facilities Rating1 Rating Action
(₹ crore)
CARE PP-MLD BBB-; Stable
Principal protected non-
(Principal protected market Linked
convertible market linked 20.00 Assigned
debentures
debentures
Triple B Minus; Outlook: Stable)
CARE BBB-; Stable
Non-convertible debentures 100.00 Assigned
(Triple B Minus; Outlook: Stable)
120.00
Total long-term
(₹ One Hundred
instruments
Twenty Crore Only)
Details of instruments/facilities in Annexure-1.
Detailed rationale and key rating drivers
The credit rating of Save Microfinance Private Limited (SMPL) draws comfort from the established position of the Save group
along with comfortable capitalisation profile supported by regular equity infusion from its promoters and adequate liquidity
position.
These rating strengths are, however, partially offset by relatively small portfolio size, relatively unseasoned book with majority
of disbursements happening over the past year, geographically-concentrated operations with 85% portfolio concentrated
towards Bihar, Jharkhand and Uttar Pradesh, higher portfolio vulnerability on account of relatively marginal income borrower
profile and moderate asset quality.
Rating sensitivities
Going forward, the ability of the company to scale up its operations in a profitable manner, while maintaining comfortable asset
quality and capitalisation profile would be the key rating sensitivities.
Positive factors – Factors that could individually or collectively lead to positive rating action/upgrade:
• Scale-up of operations in sustainable and profitable manner
• Comfortable asset quality with consolidated gross non-performing assets (GNPA) on a sustainable basis at around 2%
• Maintaining adequate capitalisation profile with overall gearing below 3x on a steady basis
• Improvement in credit profile of the parent
Negative factors – Factors that could individually or collectively lead to negative rating action/downgrade:
• Weakness in profitability, asset quality and/or capitalisation profile with gearing rising above 5x
• Any material changes in shareholding pattern leading to decline in parent/promoter support
• Deterioration in liquidity and financial flexibility to raise capital
• Deterioration in credit profile of the parent
Outlook: Stable
Detailed description of the key rating drivers
Key rating strengths
Established group position: Save Microfinance Private Limited (SMPL) is a 100% owned subsidiary of SAVE Solutions Private
Limited (SAVE). SAVE was founded by Ajeet Kumar Singh, Ajay Kumar Sinha and Pankaj Kumar to provide basic banking and
financial services particularly in rural parts of the country. The promoters have extensive experience in the business
correspondent segment with particular expertise in rural banking domain. Also, the investors of the parent company, Maj Invest
(holding 21.81% in SSPL) and Agrif Cooperatief (holding 17.22% in SSPL) have good understanding of the microfinance
business and hold stake in many large and mid-sized microfinance institutions (MFIs).
Comfortable capitalisation profile: The capitalisation profile of SMPL is adequate with tangible net worth of ₹ 116 crore
and external debt of ₹ 431 crore leading to overall gearing of 3.72x as on March 31, 2022 (1.14x as on March 31, 2021). The
company’s capitalisation profile is further supported by steady internal accruals coupled with regular equity infusion by the
parent company (₹ 22.50 crore was infused in FY21 & 75 crore loan was converted into equity in FY21).
The capital adequacy remains adequate well above the regulatory requirement at 21.18% as on March 31, 2022, although
moderated from 53.90% as on March 31, 2021, with increase in loan book from ₹ 197 crore to ₹ 473 crore during the year.
Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications
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Press Release
Adequate asset quality profile: The asset quality of the company is under control with GNPA at 1.26% and net non-
performing assets (NNPA) at 0.26% as on March 31, 2022 as compared to GNPA at 2.14% and NNPA at 0.63% as on March 31,
2021, owing to growing loan book and lower slippages to 90+ bucket. However, CARE Ratings Limited (CARE Ratings) notes
that loan book is relatively unseasoned with majority of disbursements happening over the past year. Going forward, the
company’s ability to maintain asset quality as it scales up its operations, remains a key monitorable.
Key rating weaknesses
Small scale of NBFC and MFI operations with geographically-concentrated book: SMPL was incorporated in August
2016 and registered with RBI as NBFC-MFI; however it started its operations from November 2018. It is engaged in extending
joint liability group (JLG) loans with an average ticket size of ₹ 30,000. With the loan portfolio growing significantly over the last
year from ₹ 197 crore as on March 31, 2021 to ₹ 473 crore as on March 31, 2022, it remains relatively unseasoned. Also, given
the small scale of operations, SMPL’s operations are geographically concentrated with its operations majorly in six states, of
which Bihar constituted 56% of the gross loan portfolio end-March 2022, followed by Uttar Pradesh, Jharkhand, Haryana,
Rajasthan, and Chhattisgarh constituting 15%, 14%, 9%, 3% and 3% respectively.
High portfolio vulnerability on account of marginal-income profile borrowers: The company provides small ticket JLG
loans to low-income group of self-employed women or women working in informal sector, leading to high portfolio vulnerability.
Also, the company is largely exposed to those states which are characterised by higher poverty and larger proportion of migrant
labour which may lead to higher delinquencies in the portfolio.
Moderate profitability: During FY22, SMPL has reported a profit after tax (PAT) of ₹ 3.54 crore with return on average
assets (RoA) of 0.87% as compared to PAT of ₹0.50 crore and ROTA of 0.29% in FY21. Presently the operating cost stands at
6.42%, however, it is expected to moderate as the portfolio grows up and the company achieves economies of scale. The credit
cost of the company stood at 0.44%, which improved from 0.73% in FY21; however, it may increase as the portfolio seasons.
Since the company’s loan book has built up mainly over the past year, yields and cost of funds are yet to stabilise.
Liquidity: Adequate
The liquidity is expected to remain adequate given the short tenure nature of microfinance loans, which sufficiently covers
expected outflows over different buckets till three years. Furthermore, the liquidity is supported by cash and bank balance of ₹
52.19 crore as on March 31, 2022 against debt repayments of ₹ 73 crore over the next six months. However, liquidity profile
would remain susceptible to volatility as the company scales up its loan book by taking significant leverage.
Analytical approach: Standalone
Applicable criteria
Policy on default recognition
Factoring Linkages Parent Sub JV Group
Financial Ratios – Financial Sector
Rating Outlook and Credit Watch
Rating Methodology - Non Banking Finance Companies (NBFCs)
About the company
SMPL is a rural-focussed finance institute engaged in extending JLG loans, registered with RBI as NBFC-MFI, incorporated on
August 24, 2016. It is a 100% wholly owned subsidiary of Save Solutions Private Limited (SSPL). SAVE was established in Gaya,
Bihar as a Society in 2009 to socially develop the rural population of Bihar, Jharkhand, Uttar Pradesh (UP), Odisha and
Chhattisgarh. Later, it was converted into a Private Limited Company as SSPL to provide basic banking and financial services
particularly in rural parts of the country.
In order to further expand the operations and foray into the related segments, SSPL has floated two wholly owned subsidiaries
viz. Safe Financial Services Private Limited (SFSPL) and SMPL. Also, during Q4 FY 22, SSPL has acquired New Habitat Housing
Finance and Development Ltd. The total acquisition stood at ₹ 74 crore (for the entire 100% stake).
SSPL was founded by Ajeet Kumar Singh, Ajay Kumar Sinha and Pankaj Kumar who are promoter directors holding 19.56%
stake each in the company as on March 31, 2022. In July 2020, Denmark-based Maj Invest Financial Inclusion Fund III invested
₹ 120 crore in SSPL and currently holds 21.81% stake in the organisation. Agrif Cooperatief UA, the third fund of Denmark-
based FMO: Entrepreneurial Development Bank held 17.22% stake in SSPL end-March 31, 2022. The Bihar-based promoters
have extensive experience in the banking and financial services space with particular expertise in rural banking domain.
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Press Release
Brief Financials (₹ crore) March 31, 2020 (A) March 31, 2021 (A) March 31, 2022 (A) Q1 FY 2023
Total operating income 14.89 24.20 62.47 NA
PAT 0.26 0.50 3.54 NA
Interest coverage (times) 1.05 1.06 1.15 NA
Total assets 93.67 248.14 566.19 NA
Net NPA (%) 0.00 0.63 0.26 NA
ROTA (%) 0.38 0.29 0.87 NA
A: Audited; NA: Not available
Status of non-cooperation with previous CRA: NA
Any other information: NA
Rating history for the last three years: Please refer Annexure-2
Covenants of the rated instruments/facilities: Detailed explanation of covenants of the rated instruments/facilities is
given in Annexure-3
Complexity level of various instruments rated for this company: Annexure-4
Annexure-1: Details of instruments/facilities
Name of the instrument ISIN Date of Coupon Maturity Size of Rating assigned
issuance rate date the issue along with rating
(₹ crore) outlook
Principal protected non- INE0JAH07013 September 17, Linked to October 20.00 CARE PP-MLD BBB-;
convertible market linked 2021 BSE 31, 2024 Stable
debentures SENSEX
Non-convertible debentures INE0JAHO7021 October 29, 13.75% September 5.00 CARE BBB-; Stable
2021 30, 2024
Non-convertible debentures Proposed - - - 95.00 CARE BBB-; Stable
Annexure-2: Rating history for the last three years
Current Ratings Rating history
Name of the Date(s) & Date(s) & Date(s) & Date(s) &
Sr. Amount
Instrument/Bank Rating(s) Rating(s) Rating(s) Rating(s)
No. Type Outstanding Rating
Facilities assigned in assigned in assigned in assigned in
(₹ crore)
2021-2022 2020-2021 2019-2020 2018-2019
1 Principal protected non- LT 20.00 CARE PP- - - - -
convertible market MLD BBB-;
linked debentures Stable
2 Non-convertible LT 100.00 CARE BBB- - - - -
debentures ; Stable
*Long term/Short term.
Annexure-3: Detailed explanation of the covenants of the rated instruments/facilities
Name of the Instrument Detailed Explanation
A. Financial covenants
a. CAR & Tier-I Should be > 17% and 12% respectively
b. PAR 90 as a percentage of gross loan portfolio Should not be > 20%
c. PAR 90 (including write off) as a percentage of Should not be > 5%
gross loan portfolio
d. Gross loan portfolio to tangible net worth Should not be > 7x
e. Maintain positive cumulative mismatches At least 5% of total assets
Annexure-4: Complexity level of various instruments rated for this company
Sr. No. Name of Instrument Complexity Level
1 Principal protected non-convertible market linked debentures Simple
2 Non-convertible debentures Simple
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Press Release
Note on complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis of
complexity. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any
clarifications.
Contact us
Media contact
Name: Mradul Mishra
Phone: +91-22-6754 3596
E-mail: [email protected]
Analyst contact
Name: Gaurav Dixit
Phone: +91-11-4533 3262
E-mail: [email protected]
Name: Neha Kadiyan
Phone: +91-11-4533 3262
E-mail:
[email protected]Name: Prabhjyot Kaur
E-mail:
[email protected]Relationship contact
Name: Swati Agrawal
Phone: +91-11-4533 3200
E-mail: [email protected]
About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise
capital and enable investors to make informed decisions. With an established track record of rating companies over almost
three decades, CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise,
backed by the methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in
developing bank debt and capital market instruments, including commercial papers, corporate bonds and debentures, and
structured credit.
Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated
instrument and are not recommendations to sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or
hold any security. These ratings do not convey suitability or price for the investor. The agency does not constitute an audit on
the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible sources.
CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible
for any errors or omissions and the results obtained from the use of such information. Most entities whose bank
facilities/instruments are rated by CARE Ratings have paid a credit rating fee, based on the amount and type of bank
facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the
capital deployed by the partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in
case of withdrawal of capital, or the unsecured loans brought in by the partners/proprietors in addition to the financial
performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has no financial liability
whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger
clauses as per the terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades.
However, if any such clauses are introduced and triggered, the ratings may see volatility and sharp downgrades.
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