~~RatingsProfessionalRiskOpinionCAREJRORl2017 -181256

~~Analytical bceliellCe

basis that you have no any comments to offer

Mr Vinod JainChairman and Managing Director5RG Housing Finance ltd321 SM lodha ComplexNear Shastri CircleUdaipur-313001

September 012017Confidential

Dear SirCredit rating for bank facilities

On the basis of recent developments including operational and financial performance of your

company for FY17 (Aud) amp QUY18 (UA) our Rating Committee has reviewed the following

ratings

FacilitiesAmount Rating Remarks(Rscrore)

CAREBBB-StableRevised from CARE

long term bank 3S04 [Triple BMinus OutlookBB+Positive [Double

facilities Stable)B Plus Outlook

Positive)3S04

Total (RupeesThirty five croreand four lakh only)

2 Refer Annexure 1 for details of rated facilities

3 The rationale for the rating will be communicated to you separately A write-up

(press release) on the above rating is proposed to be issued to the press shortly a

draft of which is enclosed for your perusal as Annexure We request you to peruse

the annexed document and offer your comments if any We are doing this as a

matter of courtesy to our clients and with a view to ensure that no factual

inaccuracies have inadvertently crept in Kindly revert as early as possible In any

case if we do not hear from you by September 02 2017 we will proceed on the

~~)Vi---------f lComplete definitions of the ratings assigned are available at wwwcareratinascom and in other CAREpublications

Page 1 of 9

CREDITANALYSISamp RESEARCHLTDCORPORATE OFFICE 4 Floor Godrej Coliseum Somaiya Hospital RoadOff Eastern Express Highway Sian (E) Mumbal 400 022Tel +91226754 3456 Fax+91-22-6754 3457Email carecareratingscom I wwwcareratingscom

CIN-l67190MH1993PlC071691

301304 Pashupatl Akshat Heights0-91 Madhosingh Road NT Collectorate Circle

BanI Park Jaipur 302 016Tele +91141-4020213214

4 CARE reserves the right to undertake a surveillancereview of the rating from time

to time based on circumstances warranting such review subject to at least one such

reviewsurveillance every year

5 CARE reserves the right to revisereaffirmwithdraw the rating assigned as also

revise the outlook as a result of periodic reviewsurveillance based on any event or

information which in the opinion of CAREwarrants such an action In the event of

failure on the part of the entity to furnish such information material or clarifications

as may be required by CAREso as to enabie it to carry out continuous monitoring of

the rating of the bank facilities CAREshall carry out the review on the basis of best

available information throughout the life time of such bank facilities In such cases

the credit rating symbol shall be accompanied by ISSUER NOT COOPERATING

CAREshall also be entitled to publicizedisseminate all the afore-mentioned rating

actions in any manner considered appropriate by it without reference to you

6 CARE ratings do not take into account the sovereign risk if any attached to the

foreign currency loans and the ratings are applicable only to the rupee equivalent of

these loans

7 Users of this rating may kindly refer our website wwwcareratingscom for latest

update on the outstanding rating

8 CARE ratings are not recommendations to sanction renew disburse or recall the

concerned bank facilities

If you need any clarification you are welcome to approach us in this regard

Thanking you

Yours faithfully

tA~(Aurag Jain)Deputy Manageranuragjaincareratingscom

Ene As above

(Harsh Raj Sankhla)Managerharsh raj sankh lacareratingscom

Page 2 of9

CREDITANALYSISamp RESEARCHLTD301304 Pashupati Akshat HeIghts 091 Madhoslngh Road Nr Col1ectorate Circle BanIParkJaipur 302 016

Tele +91-1414020213-214 1 Emailcarecareratingscom I wwwcareratingscomC1NL67190MH1993PlC071691

DisclaimerCAREs ratings are opinions on credit quality and are not recommendations to sanction renew disburse or recallthe concerned bank facilities or to buy sell or hold any security CAREhas based its ratings on informationobtained from sources believed by it to be accurate and reliable CAREdoes not however guarantee the accuracyadequacy or cOmpleteness of any information and is not responsible for any errors or omissions or for the resultsobtained from the use of such information Most entities whose bank facilitiesinstruments are rated by CAREhave paid a credit rating fee based on the amount and type of bank facilitiesinstrumentsIn case of partnershipproprietary concerns the rating assigned by CAREis based on the capital deployed by thepartnersproprietor and the financial strength of the firm at present The rating may undergo change in case ofwithdrawal of capital or the unsecured loans brought in by the partnersproprietor in addition to the financialperformance and other relevant factors

Page 3 of9

CREDIT ANALYSIS amp RESEARCH LTD

301304 Pashupatl Akshat Heights 091 Madhoslngh Road Nr Collectorate Circle Bani Park Jalpur 302 016Tele +911414020213214 I EmailcarecareratJngscom I wwwareratlngscom

CINl671 90MH1 993PlC071 691

Annexure 1

Details of Rated Facilities

1 Long-term facilities

LA Secured Rupee Term Loan(Rs Crare)

Sr Name ofRated Amount

RemarksDebt Repayment Terms

No BankRepayable in 53 monthly installments of

1 353 OutstandingRS023 crare each and 54th installment of

State RS031 crore commencing fram April

Bank of 2014

India Repayable in 60 monthly installments of

2 2250 Outstanding Rs050 crore each commencing framMay 2016

3 Proposed 551 - -Total 31S4

as on July 15 2017

LB Fund Based limits(RScrare)

Sr No Name of Bank Fund Based Limits

CC Others Total fund-basedlimits

1 State Bank of India 350 - 350

Total 350 - 350

CC-Cash Credit

~ Total Long-term bank facilities Rs 3504 crore

Page 4 of9

CREDIT ANALYSIS amp RESEARCHLTD

301304 Pashupatl Akshat Heights 091 Madhoslngh Road Nt Collectorate Circle Bani Parklaipur 302 016Tele +911414020213214 I Emailcarecareratlngscom I wwwcareratingscom

(IN l67190MH 1993PlC071691

Annexure-II

SRGHousing Finance ltd

Rating

Facilities AmountRating Rating Action(Rscrore)

Longterm bank CAREBBB-Stable Revised from CAREBB+

facilities 3S04 [Triple BMinus Positive [Double B PlusOutlook Stable) Outlook Positive 1

3S04Total (RupeesThirty five crore

and four lakh only)Details of instrumentsfacilities in Annexure-I

Detailed Rationale amp Key Rating Drivers

The revision in the rating of SRG Housing Finance Limited (SHFL) is on account of increase in

scale of operations in FY17 and QlFY18 along-with infusion of equity and diversification in

resource base The rating continues to derive comfort from the promoters experience in the

housing finance segment moderate profitability comfortable capital adequacy ratio (CAR)

adequate internal control system amp MIS system and diversified product and customer profile

The rating of SHFL remained constrained on account of its moderation in asset quality and low

geographical diversification of its loan portfolio The rating is further constrained due to the

relatively low level of seasoning of its portfolio with high exposure to riskier self employed

segment exposure to the cyclical real estate sector and risk associated with the volatility ininterest rates

Increase in the scale of operations with greater geographical diversification expansion ofresource base as well as improvement in asset quality and capital adequacy are the key ratingsensitivities

Detailed description of the key rating driversKey rating strengths

Experienced promoter group SHFLhas been promoted by Jain family represented by Mr Vinod

Jain who looks after overall management of the company Mr Vinod Jain has an overall

experience of more than 20 years in different businesses such as transport finance insuranceand construction and has been associated with SHFLsince inception

Growing scole of operations Disbursements grew by 7352 in FY17 as compared to FY16resulting in increase in the loan book by 5358 to RS8381 crore as on March 31 2017 as

fAr compared to RS5328 crore March 31 2016 The same has further increased to RS10004 crore

~ Complete definitions of the ratings assigned are available at wwwcareratingscom and in ather CAREpublications

PageSof 9

CREDITANALYSISamp RESEARCHLTO301304 Pashupatf Akshat Heights 0-91 Madhosingh Road Nr Coltectorate Circle Bani Park Jalpur 302016

Tele +911414020213-214 I Emailcarecareratingscom I wwwcareratlngscomCIN l67190MH 1993PlC071691

as on June 30 2017 Further the companys total operating income grew by 42 in FY17due tohigher growth in disbursements in the last two years

Improvement in resource base SHFLhas raised money through equity infusion as well as from

NHB Banks and Financial Institutions during the year SHFLhas also raised funds through longterm instruments in the current year

Comfortable capital adequacy levels Overall gearing has improved from 258 times as on

March 31 2016 to 232 times as on March 31 2017 despite increase in debt for expanding its

portfolio on-account of equity infusion by the private investors in FY17 SHFL has reported

comfortable level of capital adequacy ratio (CAR)which improved to 7271 as on March 312017

Diversified praduct and customer profile with low LTV Ratio SHFLs product profile is

diversified as it offers housing loans as well as mortgage loans Further the customer profile of

the company is also diversified marked by salaried self-employed and builders The companyreduces its risk by maintaining low LTVratio which was on an average 50-55

Key rating weakness

Moderatian in asset quality and prafitability The asset quality of the company continued to

remain moderate Gross NPA moderated to 157 as on March 31 2017 from 101 as on

March 31 2016 mainly due to one-time impact of demonetization which resulted in slowdown

in collections in some cases SHFLs Net interest margin declined by 249 bps in FY17 as

compared to FY16 on account of higher increase in portfolio during last quarter and debt

funded portfolio expansion resulting into increase in finance cost ROTAhas declined by 60 bps

during FY17ascompared to FY16mainly due to increase in interest cost on account of increasein debt availed for funding portfolio growth

Low seasoning of portfolio Most of the portfolio of SHFL is unseasoned as majority of the

disbursements have taken place in FY17and Q1FY18and its ability to maintain the asset quality

of the growing loan portfolio is a key rating sensitivity Further exposure to riskier selfemployed segment and cyclical real estate sector is a key rating monitorable

Geographical concentration of the portfolio SHFLhad presence in three states viz Rajasthan

Maharashtra and Madhya Pradesh and has recently expanded its operations to Gujarat in July2017 by opening branch in Ahmedabad As of June 30 2017 8990 of the loan book wasconcentrated in Rajasthan and the remaining in Madhya Pradesh and Maharashtra

Industry Outlook In the past few years both National Housing Board (NHB) and the

government have announced regulatory changes specifically for the affordable housingsegment The revision of risk weights for housing loans the grant of infrastructure status to the

affordable housing segment in Budget 2017 and the Credit linked Subsidy Scheme (CLSS)

under the Pradhan Mantri Awas Yojana (PMAY) are expected to help spur demand and lowerthe cost of funding which are expected to provide impetus to the affordable housing segment

Page 6 of 9

CREDITANALYSISamp RESEARCHLTO301304 Pashupatl Akshat Heights 091 Madhoslngh Road Nr Collectorate CIrcle Bani ParkJalpur 302 016

Tele +911414020213214 I Emailcarecareratingscom I wwwcareratlngscomClN l67190MH1993PlC071691

Going forward affordable housing segment is expected to be the major driver of growth forhousing finance companies

Analytical Approach-Standalone

Applicable CriteriaCriteria on assigning Outlook to Credit Ratings

CAREs Policy on Default Recognition

Rating Methodology-Housing Finance CompanyFinancial Sector Ratios

About the company

SRG Housing Finance Ltd (SHFL) is an Udaipur-based small-sized housing finance company

engaged in the financing of housing loans and mortgage loans SHFL commenced operations

from 2002 after getting registered with National Housing Bank Initially the company was

incorporated as Vita lise Finlease Pvt Ltd on March 10 1999 Subsequently the name of the

company was changed to SRG Housing Finance Pvt Ltd in December 2000 and further its

name was changed to SHFLand its constitution was changed to public limited in January 2004

SHFL came out with equity public issue in September 2012 and raised RS701 crore from the

IPO proceeds and got listed on BSEsSME segment SHFL has outstanding loan portfolio of Rs

8183 crore as on March 31 2017 SHFLhas total employee strength of 55 and financing is done

through more than 50 direct selling agents (DSAs)

SHFL has other group companies which are also promoted by the same promoters ie SRG

Securities Finance Ltd (SSFLListed rated CAREBB Stable 1and Hriday Fincorp Pvt Ltd (HFPL

rated CARE BB Stable) These are NBFCs and are mainly into financing of vehicle loans

business loans and equipment and machinery loans etc

Brief Financials (Rscrore) FY16(A) FY17(A)Total operating income 1025 1456PAT 169 238Interest coverage (times) 165 167Total Assets 5895 11086Net NPA() 069 120ROTA() 341 281

~ Status of non-cooperation with previous CRA None

Page7 of9

CREDITANALYSISamp RESEARCHLTD301304 Pashupati Akshat Heights 091 Madhoslngh Road NT(olrectorate Circle Bani ParkJaipur - 302 016

Tele +91-141-4020213214 1 Emailcarecareratlngscom I wwwcareratingscom

CIN-L67190MH1993PLCO1691

Any other information None

Rating History (last three years) Please refer Annexure-2

CARE has classified instruments rated by it an the basis of complexity This classification is available atwwwcareratingscom Investorsmarket intermediariesregulators or others are welcome to write tocarecareratingscomforanyclarifications

Analyst ContactName Harsh Raj SankhlaTel U0141-4020213214Cell 9413969100Email harshrajsankhlacareratingscom

bullbull For detailed Rationale Report and subscription information please contact us at wwwcareratingscom

About CARE Ratilgs

CARERatings commenced operations in April 1993 and over two decades it has established itself as one of the leading creditrating agencies in India CAREis registered with the Securities and Exchange Board of India (SEBI)and also recognized as anExternal Credit Assessment Institution (ECAl) by the ReserveBank of India (RBI)CARERatings is proud of its rightful place in theIndian capital market built around investor confidence CARERatings provides the entire spectrum of credit rating that helpsthe corporates to raise capital for their various requirements and assists the investors to form an informed investment decisionbased on the credit risk and their own riskreturn expectations Our rating and grading service offerings leverage our domainand analytical expertise backed by the methodologies congruent with the international best practices

DisclaimerCAREsratings are opinions on credit quality and are not recommendations to sanction renew disburse or recall the concernedbank facilities or to buy sell or hold any security CAREhas based its ratingsoutlooks on information obtained from sourcesbelieved by it to be accurate and reliable CAREdoes not however guarantee the accuracy adequacy or completeness of anyinformation and is not responsible for any errors or omissions or for the results obtained from the use of such informationMost entities whose bank facilitiesinstruments are rated by CAREhave paid a credit rating fee based on the amount and typeof bank facilitiesinstruments

In case of partnershipproprietary concerns the rating outlook assigned by CAREis based on the capital deployed by thepartnersproprietor and the financial strength of the firm at present The ratingoutlook may undergo change in case ofwithdrawal of capital or the unsecured loans brought in by the partnersproprietor in addition to the financial performance andother relevant factors

Page 80f9

CREDIT ANALYSIS amp RESEARCH LTO301304 Pashupatl Akshat Heights 091 Madhosingh Road Nr Collectorate Circle Bani Park Jalpur 302 016

Tele +911414020213214 I Email carecareratlngscom I wwwcareratlngscomCIN-L67190MH 1993PLr07169

AnnexureAnnexure-1 Details of InstrumentsFacilities

Name olthe Date 01 Coupon Maturity Size 01 the Rating assignedInstrument Issuance Rate Date Issue along with Rating

(Rserore) OutlookFund-based - l T-Term - - April 2021 ~1S4 ~ARE BBB-StableloanFund-based - lT-Cash - - - ~SO CAREBBB-Stableredit

Annexure-2 Rating History of last three years

Sr Name olthe Current Ratings Rating historyNo InstrumentBank Type Amount Rating Date(s) amp Date(s) amp Date(s) amp Date(s) amp

Facilities Outstanding Rating(s) Rating(s) Rating(s) Rating(s)(Rs erore) assigned in assigned in assigned in assigned in

2017-2018 2016-2017 201S-2016 2014-20151 Fund-based -IT-Term IT 3154 CARE - l)CARE BB+ l)CARE BB+ l)CARE BB

Loan BBB- Positive (01-Mar-16) (OS-Feb-15)~table (03-Feb-17)

2 Fund-based - l T-Cash IT 350 KARE - l)CARE BB+ l)CARE BB+ l)CARE BBredit BBB- Positive 1(01-Mar-16) (OS-Feb-1S)

~table (03-Feb-17)

Page 9 019

CREDIT ANALYSIS amp RESEARCH lTD

301304 Pashupatl Akshat Heights 0-91 Madhosingh Road Nr Collector ate Circle Bani ParkJaipur - 302 016Tele +91-1414020213-214 I Email carecareratingscom 1 wwwcareratingscom

CIN-l67 190MH1 993PlC071 691