Key Credit Brief

KEY CREDIT BRIEF

A brief on credit rationales and analysis of less known credit papers in our portfolio.

Kotak Credit Process - Mitigating Risk Through Robust Practices

Select Statement Of Holdings In Our Fixed Income Funds As On

Credit Papers	Kotak Banking and PSU Debt Fund	Kotak Bond Fund	Kotak Bond Short Term Fund	Kotak Corporate Bond Fund	Kotak Credit Risk Fund	Kotak Dynamic Bond Fund	Kotak Low Duration Fund	Kotak Liquid Fund	Kotak Medium Term Fund	Kotak Money Market Fund	Kotak Savings Fund	Kotak Floating Rate Fund	Kotak Debt Hybrid Fund
HDFC Credila Financial Services Pvt Ltd
SMFG India Credit Company Ltd. (Formerly, Fullerton India Credit Company Ltd.)
360 One Wam Limited (Erstwhile IIFL Wealth Management Ltd)
Aadhar Housing Finance Limited
Bahadur Chand Investments Private Limited
Bharti Telecom Ltd.
Century Textiles and Industries Limited
Cholamandalam Investment and Finance Company Ltd.
DCM Shriram Ltd.
DLF Cyber City Developers Ltd
DME Development Limited
Embassy Office Parks REIT
First Business Receivables Trust
Future Lifestyle Fashions Ltd.
Godrej Properties Limited
HDB Financial Services Ltd.
IGH Holdings Private Limited
India Grid Trust
Indinfravit Trust
IOT Utkal Energy Services Ltd.
J M Financial Products Limited
Jamnagar Utilities & Power Private Limited
JM Financial Asset Reconstruction Co. Pvt. Ltd
JM Financial Credit Solutions Ltd.
JM Financial Services Ltd.
John Deere Financial India Private Limited
Julius Baer Capital (India) Pvt. Ltd
Kirloskar Ferrous Industries Ltd
Macrotech Developers Ltd.
Mindspace Business Parks REIT – NCDs
Motilal Oswal Financial Services Limited
Muthoot Finance Ltd.
ONGC Petro Additions Ltd.
Panatone Finvest Ltd
Performance Chemiserve Limited
Pilani Investment and Industries Corporation Ltd.
Piramal Enterprises Ltd.
Piramal Pharma Limited
Poonawalla Fincorp Ltd
Punjab National Bank
Sharekhan BNP Paribas Financial Services Pvt Ltd
Sharekhan Limited
Tata Steel Ltd.
TMF Holdings Limited
TVS Credit Services Limited
U P Power Corporation Ltd
Vivriti Capital Private Limited

Credit Papers

HDFC Credila Financial Services Pvt Ltd (CRISIL A1+)New(CRISIL Rationale Link)

HDFC Credila Financial Services Limited (“HDFC Credila” or “the company”) is a non-deposit taking NBFC with loan book of Rs. 15,298 crore as on March 31, 2023. It is the largest education financing NBFC in India with entire loan book being dominated by education loans.
Pursuant to restructuring within the group, HDFC Limited (current promoter) had entered into a definitive agreement to sell 90% of its stake in HDFC Credila to Kopvoorn B.V. (which is a part of the BPEA EQT Group) and Moss Investments Limited, Defati Investments Holding B.V., Infinity Partners (which are a part of the ChrysCapital Group), for Rs. 9,060 crore.
In addition, the acquirers will also infuse equity in the Company of Rs. 2,003.61 crore after the shareholding is transferred.
Post the proposed transaction, HDFC Credila will cease to be a subsidiary of HDFC with HDFC’s stake in the company declining to less than 10%. The proposed transaction is subject to various regulatory approvals including from the RBI and Competition Commission of India. The long stop date for the transaction is March 31, 2024.
Besides, the financial profile of the company stands comfortable with Return on assets (RoA) of ~2.2% in FY2023, CRAR% of 20.4% and gearing of 5.7x as on March 31, 2023.
Headline asset quality indicators continues to remain acceptable with gross stage 3% and net stage 3% at 0.17% and 0.10% respectively as on March 31, 2023.

SMFG India Credit Company Ltd. (Formerly, Fullerton India Credit Company Ltd.)(ICRA A1+)New(ICRA Rationale Link)

The NBFC was formed in December 2005 and was a subsidiary of Temasek. Recently Japanese Group SMFG acquired 74.9% stake in the company and consequently the name has been changes to SMFG India Credit Company Ltd (SMICC). The company is expected to received strong support from SMFG group both in form of debt/equity capital support and operational/managerial synergies.
SMICC focusses on mass market borrowers traversing the under-served, aspiring class and middle-class segment with products designed for retail customers, small business finance and affordable housing.
SMICC primarily operates in Loan Against Property (LAP, 30%), Personal loans (29%), Business Loans (16%), Housing (11%) and rest towards mix of segments.
The company has pan India presence with 853 distribution points across 25 states. The AUM is geographically diversified among North (33%), South (34%), West (26%) and East (7%).
As of end of Jun’23 total consolidated AUM of SMICC was ~Rs 36,100 crores with profitable operations.
The company is well capitalised with capital adequacy ratio of 19.3% in Jun’23.
Asset quality continues to be acceptable with Net NPA of ~2.2% at consolidated level.

360 One Wam Limited (Erstwhile IIFL Wealth Management Ltd)(ICRA A1+)(ICRA Rationale Link)

IIFL Wealth Management Ltd (IIFLWAM) is one of the leaders in private wealth management in India. Key shareholders are promoters of IIFL group, General Atlantic and Fairfax.
IIFLWAM along with its wholly-owned subsidiaries, is primarily engaged in the distribution, advisory, asset management, broking, and lending solutions for clients in the wealth management segment
The company serves highly specialized and sophisticated needs of high net worth and ultra-high net worth individuals, affluent families, family offices and institutional clients through a comprehensive range of tailored wealth management solutions. It has consolidated asset under management (AUM) of Rs. 3.83 lac crores as of Jun'23
Consolidated Net Debt/Equity stood at 1.87 times as on March 31, 2023.

Aadhar Housing Finance Limited(CARE AA)(CARE Ratings Rationale Link)

Aadhar Housing Finance Limited (AHFL) is a housing finance company (HFC) engaged in providing affordable housing finance
Blackstone through its fund BCP TOPCO VII Pte. Ltd. holds majority stake in the company
As on 30th Jun 2023, the company had assets under management (AUM) of ~Rs. 179 billion.
The loan book is also well diversified with 478 branches and offices across 20 states and UTs as on 30th Jun 2023
Post take over by Blackstone, the cost of borrowing and liquidity position of the company has also improved considerably

Bahadur Chand Investments Private Limited(ICRA AA,ICRA A1+)(ICRA Rationale Link)

Bahadur Chand Investments Private Limited and its parent, Brijmohan Lal Om Prakash’s (BMOP), are the principal holding companies of Hero MotoCorp Limited (HMCL).
BCIPL has strong financial flexibility emanating from the market value of its investment in HMCL. It holds ~20% stake in HMCL
BCIPL and BMOP also hold equity and preference stake in a large number of group companies viz. Hero FinCorp Limited, Hero Future Energies Private Limited etc

Bharti Telecom Ltd.(CRISIL AA+)(CRISIL Rationale Link)

Bharti Telecom Ltd. (BTL) is promoted by Bharti group and Singtel, Singapore.
BTL holds 38.5% shareholding of Bharti Airtel Limited (BAL) (Jun'23).
Market value of BTL’s holding in BAL is around Rs. 1,96,961 crores (Aug 31, 2023) which provides financial flexibility to the Company

Century Textiles and Industries Limited(CRISIL AA)(CRISIL Rationale Link)

Incorporated in 1897, the company is promoted by Late Mr BK Birla and is a part of the Aditya Birla Group.
Following equity infusion in March and December 2015, the Aditya Birla group is a significant stakeholder in the company.
Company operated a cotton textile mill until 1951. Since then, it has progressively expanded into diverse fields by setting up manufacturing units in rayon, cement and pulp and paper segments.
The company also ventured into the real estate business. In FY18, the company incorporated a wholly owned subsidiary, Birla Estate Pvt Ltd to focus on the residential real estate business.
It manufactures a variety of paper products (including multi-layer packaging board and tissue paper) with total installed capacity of 4.81 lakh tonne per annum.
The company had a gearing ratio of 0.26x as on Mar’23 on consolidated basis.

Cholamandalam Investment and Finance Company Ltd.(ICRA AA+,CRISIL A1+)(CRISIL Rationale Link)

Cholamandalam Investment and Finance Company Ltd (CIFCL), a non-banking finance company, is a part of the Chennai-based Murugappa Group of companies.
The company’s core business segments include vehicle finance and home equity (HE) loans. The company has recently launched new business verticals (i.e. Personal Loan, consumer and small enterprise loan and SME loan)
CIFCL has two wholly-owned subsidiaries viz., Cholamandalam Home Finance Limited and Cholamandalam Securities Limited.
The gearing of the company was 6.79x on consolidated basis as of Mar'23

DCM Shriram Ltd.(CRISIL A1+)(CRISIL Rationale Link)

DCM Shriram Limited (“DCM” or “the company”) is a diversified company with interests in agri-value chain (i.e. urea, sugar, seeds and trading of agri-inputs) and the chloro-vinyl chain (chlor-alkali and PVC). Apart from the above mentioned businesses the company also has cement and UPVC door manufacturing business
DCM is the second largest chlor-alkali manufacturer in India. The Company is also integrated into PVC, and captively consumes a part of its chlorine production.
Most of the operation of the plant are integrated with various business division which results in effective utilization of by-products and helps in margin expansion
The manufacturing facility of the company is spread across Rajasthan, Gujarat and Uttar Pradesh
The company has stable financial metrics with Debt/Equity ~0.73x and Total Debt/EBITDA of 1.02x as of Mar’23.

DLF Cyber City Developers Ltd(CRISIL AA)(CRISIL Rationale Link)

DLF Cyber City Developers Ltd (DCCDL) is involved in the business of developing, setting up and maintaining of commercial offices, retail spaces, technology parks and software parks. GIC Singapore owns 33.33% in DCCDL and the balance 66.67% is held by DLF Limited.
The company has total operational leasable area of 39.6 msf as of Jun 2023
The Group’s portfolio is spread across major cities such as Gurugram, Chennai, Kolkata, Hyderabad, Noida and Chandigarh with a diversified tenant mix comprising leading multi-national and Indian corporates.
DCCDL has profitable operations with positive operating cash flow and acceptable balance sheet structure.

DME Development Limited(CRISIL AAA)(CRISIL Rationale Link)

DME Development Limited (“DME” or “the company”), is a Special Purpose vehicle (SPV) formed by National Highway Authority of India (“NHAI” or “the authority”) with 100% shareholding
DME was incorporated to undertake development of approximate 1,312 km-long expressway between Delhi and Mumbai on a greenfield alignment. This would be an eight-lane expressway with a provision to expand to 12 lanes.
The project is having concession period of 20 years including construction period of 3 years and is expected to be completed by 2023/2024
DME has further entered into an implementation agreement with NHAI for construction and maintenance of the project, there by transferring the risk of construction and maintenance of the project to NHAI
NHAI has nominated its senior and experienced personnel to DME’s board including representation of one senior official from Ministry of Road Transport and Highways

Embassy Office Parks REIT(CRISIL AAA)(CRISIL Rationale Link)

Embassy REIT is registered as an irrevocable trust under the Indian Trust Act, 1882, and as a real estate investment trust (REIT) with SEBI’s Real Estate Investment Trust Regulations.
It is sponsored by BRE Mauritius Investments (part of the Blackstone group) and Embassy Property Development Pvt. Ltd (part of the Embassy group). Investment is in NCD issued by REIT, it gets stable cash flow primarily from rental of commercial assets
It has a portfolio of assets which include 13 commercial assets (office parks and city centric offices), 96 buildings, 1,614 hotel keys (including under construction) and 100 MW solar power plant as of Jun 30, 2023
The commercial assets enjoy robust occupancy of around 85% and have upside potential for rentals, given the good asset and service quality.
The projects are located in prime areas of Mumbai, Pune, Bengaluru, and National Capital Region.
The net debt to total assets ratio was 0.28 times as on Mar’23

First Business Receivables Trust(CRISIL AAA(SO))(CRISIL Rationale Link)

It is a securitization where loan given by Reliance Industries Limited (RIL) to Reliance Corporate IT Park Ltd (RCIPTL) has been assigned to PTC Holder. The same will be serviced from service receivable from Reliance Industries Limited, Reliance Retail Limited (RRL) and Reliance Jio Infocomm Limited (RJIL).
Reliance Corporate IT Park Ltd (RCITPL) provides infrastructure, IT and IT enabled services across India including from its office complex in Ghansoli, Navi Mumbai to RIL, RJIL and RRL, for which it has entered into ’Business Service Agreements’ (BSA) for a period of 13 years.
The same is rated as AAA(SO) by CRISIL as the primary risk is predicated on RIL,RJIL,RRL which are rated as AAA.

Future Lifestyle Fashions Ltd.(CRISIL D)(CARE Rationale Link)

Future Lifestyle Fashions Ltd. (FLF) operates in fashion retail and distribution. FLF operates retail outlets in 3 broad formats – Central (big-box fashion retailer), Brand Factory (fashion discount chain) and Exclusive Brand Outlets.
Lockdown/Covid-19 has impacted fashion/retail industry significantly, also impacting financial and operating performance of FLF.
Above resulted in multiple downgrade of external rating of company. The rating was downgraded to below investment grade in Oct’20.
We had exercised put option on NCDs issued by FLF, by virtue of which the maturity shifted to 9th Nov'20 from 9th Nov'22. The Company failed to make the repayment including interest payment on due date which resulted in downgrade of external rating to D.
In May’23, Hon’ble National Company Law Tribunal has allowed the admission of insolvency petition under insolvency and bankruptcy code. NCLT has appointed Interim Resolution Professional (IRP). Subsequently Committee of Creditors (CoC) has appointed it to Resolution Professional (RP). RP has asked for expression of interest from Prospective Resolution Applicants (PRAs). RP has finalized list of 13 RPRAs.
We value the investments at 21% (of the Face Value plus accrued till date of default), adjust for recoveries.
We will continue to monitor the developments in the company and take all necessary steps to recover the dues from the company, in the best interest of unit holders.

Godrej Properties Limited(ICRA AA+)(ICRA Rationale Link)

Godrej Properties Ltd (hereinafter, GPL) is currently developing residential, commercial and township projects spread across 10 cities with total saleable area of ~212 million sq. ft. as on Aug 2, 2023
GPL is a part of the Godrej Group which is amongst India’s most diversified conglomerates.
The Godrej Group was established in 1897 and comprises of a varied business portfolio that includes real estate development, fast moving consumer goods, advanced engineering, home appliances, furniture, security, and agri-care.
In 2010, Godrej Properties became a publicly listed company through a successful IPO. It is one of India’s only national developers with a strong presence across the country’s leading real estate markets.
The net debt-equity ratio was 0.36x as on Mar’23.

HDB Financial Services Ltd.(CRISIL AAA)(CRISIL Rationale Link)

HDB Financial Services Limited (HDB Finance) was set up as an non-banking finance company by HDFC Bank. HDFC Bank owns majority of equity shares in HDB Finance.
Apart from the lending business, HDB Finance is also engaged in the distribution of general and life insurance products for HDFC Ergo General Insurance Company and HDFC Standard Life Insurance Company, respectively. The company also runs BPO services that undertake collection services, back office and sales support functions under a contract with HDFC Bank.
HDB Finance receives support from HDFC Bank in terms of operational and managerial support with regard to formulation of credit policies, portfolio monitoring and collection practices and also receives regular funding support.
The company complements the parent's product portfolio and distribution network, and supports collection activities for the retail portfolio.
It has a consolidated gearing of 4.8x as on Mar'23

IGH Holdings Private Limited(CRISIL A1+)(CRISIL Rationale Link)

IGH Holdings Private Limited (“IGH”) is part of Aditya Birla Group and it is 100% subsidiary of Essel Mining and Industries Limited
IGH is one of the holding company for the Group and it holds stake in various operating listed companies of the Group such as Hindalco Industries, Grasim Industries, Aditya Birla Capital, Century Textiles and Industries, Aditya Birla Fashion and Retail etc
The market value of holding in listed companies is significantly higher than external debt of IGH

India Grid Trust(CRISIL AAA)(CRISIL Rationale Link)

India Grid Trust (IndiGrid) was set up on October 21, 2016, as an irrevocable trust under the provisions of the Indian Trusts Act, 1882, and was registered with SEBI as an Infrastructure Investment Trust (InvIT)
IndiGrid operates in power transmission sector and its portfolio primarily consists of power transmission assets
All SPVs (except one) under IndiGrid are interstate transmission system (ISTS) licensees and comes under the point of connection pool mechanism, where Power Grid Corporation of India, as the central transmission utility, collects monthly transmission charges from all designated customers on behalf of the licensees
IndiGrid was originally sponsored by Sterlite Power Grid Ventures Ltd (SPGVL). As of June 2023, KKR is the sponsor of the trust.
It has a gearing ratio of 2.88 as on Mar-23

Indinfravit Trust(ICRA AAA)(ICRA Rationale Link)

Indinfravit Trust is an Infrastructure Investment Trust under SEBI regulations, sponsored by L&T IDPL and backed by marquee investors such as CPPIB, Omers and Allianz Capital.
Till Mar 2023, trust had 13 road assets. It has acquired 4 road assets from Brookfield in Jun 2023. Hence the total size of portfolio has increased to 17 road projects.
The portfolio consists of 14 toll road assets and 3 annuity assets. The assets have an average operational track record of 10 years. The portfolio is well diversified and is spread across 7 states.
~95% of revenue is under concession from NHAI indicating low counterparty risk.
Indinfravit has comfortable credit metrics with Total Debt/Equity of 1.58x and Net debt/EBITDA of 3.8x in Mar 2023.

IOT Utkal Energy Services Ltd.(CRISIL AAA)(CRISIL Rationale Link)

IOT Utkal Energy Services Ltd. (IOTUL) is a SPV which has set up crude and product storage tanks on Build-Own-Operate-Transfer (BOOT) basis for Indian Oil Corporation’s (IOC) Paradip refinery in Orissa.
IOTUL achieved successful completion and deemed commissioning of crude oil tankages in October 2013. The total project cost incurred for the construction of the facility was Rs.3,553 crore and the BOOT period is 15 years from COD (up to October 2028).
IOTUL’s crude and product storage tanks facility plays a critical role in the operations of IOC’s Paradip refinery. IOTUL also benefits from the fixed cash flows arising from its contractual agreement with IOC.
The NCDs of IOT Utkal are backed by an annuity based contract executed with its sole counterparty, Indian Oil Corporation Ltd.

J M Financial Products Limited(CRISIL A1+,ICRA AA)(CRISIL Rationale Link)

JM Financial Products Ltd (JMFPL) is the Non-Banking Finance Company (NBFC) arm of the JM Financial Group. It is a non-deposit accepting systemically important non-banking finance company registered with the Reserve Bank of India.
JMPFL specializes in borrowing and lending activities including Loan against Securities, IPO financing, ESOP financing, Real estate Financing, Structured Financing etc. It is one of the largest players in the securities based lending business.
The JM Financial Group is a diversified financial services player with an established track record and franchise and presence in investment banking, broking, wealth management, investment advisory services, asset management, private equity, lending and asset reconstruction.
The consolidated Debt/Equity ratio of JMPFL was 2.35 times as on Mar’23

Jamnagar Utilities & Power Private Limited(CRISIL AAA)(CRISIL Rationale Link)

Jamnagar Utilities & Power Private Limited (“JUPL”) is owned by promoters of Reliance Industries Ltd. (RIL)
It is primarily engaged in the business of setting up, operating and maintaining captive power plants at various manufacturing locations of Reliance Industries Limited (RIL).
JUPL has set-up power plants at various locations viz Dahej, Hazira and Jamnagar with aggregate capacity to generate over 2300 megawatt (MW) of power and over 10000 tonne per hour (tph) of steam.
Its power plants in Jamnagar, Hazira, and Dahej are captive to the existing petrochemicals and refining business of RIL and caters to most of its power requirement.

JM Financial Asset Reconstruction Co. Pvt. Ltd(CRISIL AA-)(CRISIL Rationale Link)

JM Financial Asset Reconstruction Company Limited is an Asset Reconstruction Company, registered with RBI and it is one of the leading ARCs in India. JM Financial Ltd is the holding company of JMARC.
The company invests in acquiring good quality assets at the right price and limiting the downside by ensuring sufficient underlying security value.
The AUM of JMARC is Rs 15,109 crores as of Jun’23 which is fairly diversified with presence across multiple sectors.
The company has low leverage in balance sheet with total CRAR of 24.7% as of Mar’23

JM Financial Credit Solutions Ltd.(ICRA AA)(ICRA Rationale Link)

JM Financial Credit Solutions Limited (JMCSL) is a non-banking financial company and is jointly promoted by the JM Financial Group and global fund led by Mr. Vikram Pandit, ex-Chief Executive Officer (CEO) of Citigroup. JM Financial Ltd is the holding company of JMCSL.
The company is engaged in secured wholesale lending, largely catering to the residential real estate sector through product offerings such as construction finance, loan against property, loan against land, loans for early-stage projects and loan against securities.
The company has profitable operations with low leverage in balance sheet with total CRAR of 40.6% as of Mar’23.
JMCSL has comfortable ALM profile.

JM Financial Services Ltd.(CRISIL A1+)(CRISIL Rationale Link)

JM Financial Services Ltd (JMFSL) is a 100% subsidiary of JM Financial Ltd (JMFL) and is engaged in providing equity broking, investment advisory, wealth management, and distribution services to corporates, HNIs, and retail investors.
It is also engaged in securities-based lending i.e. margin trade funding (MTF). JMFSL represents the Investment Advisory business of JM Financial Group and focusses on Investment Advisory and Wealth Management businesses for non-institutional clients.
The company has profitable operations since inception

John Deere Financial India Private Limited(CRISIL AAA)(CRISIL Rationale Link)

John Deere Financial India Private Limited (JDFIPL), incorporated in October 2011, is a systemically important non-deposit taking non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI).
It is a wholly-owned subsidiary of John Deere India Private Limited (JDIPL), which, in turn, is indirectly wholly owned by Deere & Company (Deere; through John Deere Asia (Singapore) Pte Limited), USA.
JDFIPL was incorporated with the aim to support sales of JDIPL vehicles in India.
It primarily offers retail finance for the purchase of farm equipment manufactured and sold by JDIPL and for the construction equipment manufactured and sold by Wirtgen India Private Limited (which was also acquired by Deere & Company in Dec’17).
The gearing ratio for the company is 3.56 as on Mar’23
Deere & Co, headquartered in US, is a world leader in farm and farm equipment manufacturing with a global presence. The company operates through three business segments: agriculture and turf, construction and forestry, and financial services.

Julius Baer Capital (India) Pvt. Ltd(CRISIL A1+)(CRISIL Rationale Link)

Julius Baer Capital India Pvt. Ltd. (JBCIL) is ultimately owned by Julius Baer Group Ltd (JBG).
It is primarily involved in providing finance against security (margin funding and loan against share) of capital market instruments (equity stocks, bonds and mutual funds).
Julius Baer Group is Switzerland based wealth management group. JBCIL shares brand name and has demonstrated track record of operational and managerial support from the Group
JBCIL has gearing (Debt/Equity) of 2.8x as on March 2023
The NBFC lends to only wealth management clients of Julius Baer Group in India which have strong net worth. Consequently, asset quality is strong with NIL GNPA

Kirloskar Ferrous Industries Ltd(ICRA AA)(ICRA Rationale Link)

Kiroskar Ferrous has been operating in India for last 3 decades and is part of reputed Kirloskar group. The company manufactures high quality pig Iron and thin-walled quality grey iron castings to cater to the growing demand in industry sectors such as Tractors, Automotives and Diesel Engines.
The company works with marquee clients in tractor and Commercial vehicle segment and holds healthy share of their business.
It has a strong track record of adding new clients to the list. Kirloskar Ferrous acquired controlling stake in Indian Seamless Metal Tubes in Mar 2022. The company is also looking into the merger of Indian Seamless Metal Tubes with the company.
Financial profile is comfortable with consolidated gross gearing of 0.32x as on Mar’23.

Macrotech Developers Ltd.(ICRA A+)(ICRA Rationale Link)

Macrotech Developers Limited (“Macrotech” or “the Company) earlier known as Lodha Developers Limited
Macrotech is one of the largest real estate developers in India with significant presence in Mumbai and Thane market
It has track record of more than four decades and had developed around ~94 million square foot of development
The Company has reported healthy pre-sales and collections in last couple of years
The Company had deleveraged balance sheet in last few years with equity infusions and cashflow from business. The consolidated debt / equity stands at 0.74 times on Mar’23.

Mindspace Business Parks REIT – NCDs(CRISIL AAA)(CRISIL Rationale Link)

Mindspace REIT is registered as an irrevocable trust under the Indian Trust Act, 1882, and as a Real Estate Investment Trust (REIT) with SEBI’s REIT Regulations, 2014. Mindspace REIT’s portfolio assets are held through the asset SPVs.
The real estate investment trust (REIT) owns eight special purpose vehicles (asset SPVs) comprising 10 commercial offices, information technology (IT) parks and special economic zone (SEZ) assets, and houses the facility management division.
The net debt to total assets ratio was ~0.18 times as on Mar’23

Motilal Oswal Financial Services Limited(ICRA A1+)(ICRA Rationale Link)

Motilal Oswal Financial Services Limited (MOFSL) is among India’s leading provider of capital market related services.
Motilal Oswal group is majorly present in fee-based businesses like broking, asset & wealth management and investment banking
MOFSL, ranks among the top ten equity brokers by active number of active clients in the broking industry.
MOFSL, had a debt-equity ratio of 1.64 times on consolidated basis as on Mar'23

Muthoot Finance Ltd.(CRISIL AA+,ICRA AA+,CRISIL A1+)(CRISIL Rationale Link)

Muthoot Finance Ltd. (MFL) was incorporated in 1997 and is India’s largest gold loan focused NBFC with consolidated loan book of ~Rs 70,554 crs, and a net worth of ~Rs 22,153 crore (consolidated) on Mar 31, 2023.
Muthoot Finance Limited (MFL) is the flagship company of the Kerala-based business house, The Muthoot Group, which has diversified operations in financial services, healthcare, real estate, education, hospitality, power generation and entertainment.
It had a consolidated debt-equity ratio of 2.5 times as on Mar’23.

ONGC Petro Additions Ltd.(ICRA AAA(CE))(ICRA Rationale Link)

ONGC Petro additions Limited is a Joint Venture incorporated in 2006, promoted by Oil and Natural Gas Corporation Limited (ONGC) and GAIL (India) Limited (GAIL) and co-promoted by Gujarat State Petroleum Corporation Ltd. (GSPC) with stake of 49.36%, 49.21% and 1.43% .
OPaL has setup a 1.1 MMTPA (million metric tonnes per annum) Greenfield petrochemicals complex at Dahej SEZ in Gujarat. The principal business of OPaL is to produce, purchase, treat, market, distribute, import, export and trade petrochemicals products and its by-products.
There are strong linkages with ONGC as OPAL remains strategically important to ONGC and ONGC has also infused capital in the form of warrants and has provided backstopping support for CCDs. OPaLs project is a part of forward integration plans of ONGC. Entire feedstock for OPaL is currently sourced from ONGC.
The bonds have letter of comfort from ONGC

Panatone Finvest Ltd(CRISIL A1+)(CRISIL Rationale Link)

Panatone Finvest Ltd (PFL) is principal telecom & media holding company of Tata Group and is held ~100% by Tata Sons.
The Company is registered as Core Investment Company (CIC) with Reserve Bank of India
PFL currently holds significant stake in Tata communications Ltd (TCL) and Tejas Networks Ltd (TNL).
The market value of its investment in group companies is significantly higher than debt outstanding

Performance Chemiserve Limited(ICRA AA- (CE))(ICRA Rationale Link)

Performance Chemiserve Limited (“PCL” or “the company”), is a step-down subsidiary of Deepak Fertilisers and Petrochemicals Corp. Limited (DFPCL).
PCL is setting up an ammonia manufacturing facility of 1,500 MTPD (~510,000 MTPA) at Taloja, Maharashtra, close to the existing facilities of DFPCL. The plant is of strategic importance to the group as ammonia is a critical raw material for the group
The company has signed an take or pay agreement with group for off take of ammonia which provides assured revenue visibility
The group has comfortable capital structure with Net Debt/EBITDA of 1.16x and Total Debt/Equity of 0.6x as of Mar’23
The borrowing of PCL is secured by tangible assets and is also guaranteed by DFPCL and its group companies

Pilani Investment and Industries Corporation Ltd.(CRISIL A1+)(CRISIL Rationale Link)

Pilani Investment and Industries Corporation Limited (PIICL) is an investment holding company of “Birla Group”
Investments in group companies including Hindalco Industries Limited, Grasim Industries Limited, UltraTech Cement Limited, Century Textiles and Industries Limited, Aditya Birla Capital Limited, Aditya Birla Fashion and Retail Limited etc
The Company is registered as NBFC with Reserve Bank of India
The market value of its investment is listed companies is significantly higher than debt outstanding

Piramal Enterprises Ltd.(CRISIL A1+)(CRISIL Rationale Link)

Piramal Enterprises Limited (PEL) is flagship company of Ajay Piramal Group
In 2022, the group has undergone restructuring with the pharma business within PEL being carved out into a new entity Piramal Pharma Limited
PEL is now a NBFC, registered with Reserve Bank of India
It has a presence in retail lending, wholesale lending, and fund-based platforms, primarily through standalone operations and its wholly-owned subsidiary, i.e. Piramal Capital & Housing Finance Limited
PEL also holds substantial stake in Shriram group companies.
It has a consolidated gearing of 1.6x as on Mar’23.

Piramal Pharma Limited(CARE AA-)(CARE Rationale Link)

Piramal Pharma Limited (PPL) is a part of Piramal group.
The company primarily undertakes contract development and manufacturing (CDMO), complex hospital generics (critical care), and consumer healthcare (OTC)
The company has presence in more than 100 countries and has manufacturing plants in India, the UK, and North America. Over the years, the company has majorly grown through inorganic acquisitions.
The company derives substantial portion of its revenue from regulated markets i.e. North America, Europe and Japan.
The company has Total Debt/Equity of 0.7x as on Mar’23 on consolidated basis.

Poonawalla Fincorp Ltd(CRISIL AAA)(CRISIL Rationale Link)

PFL is non-deposit-taking non-banking finance company, having presence over 30 year in asset backed financing. Major portfolio includes pre-owned cars, affordable housing finance, SME LAP, Loan to professional etc.
The group was founded by Mr. Sanjay Chamaria and Mayank Poddar. However, Poonawalla Group lead by Mr Adar Poonawalla acquired majority stake in the company in May 2021 for ~Rs. 3,500 crore
Post the takeover by Poonawalla, the company realigned its strategy and exhibited growth with standalone AUM growing to ~Rs. 17,776 crore as of 30th June 2023

Punjab National Bank(CARE A1+,CRISIL A1+,ICRA A1+,CRISIL AA+)(CRISIL Rationale Link)

Punjab National Bank is the second largest Public Sector Bank in India
Govt. of India (GOI) owns 73.15% as on Jun'23
As on Jun 30, 2023 PNB had total capitalization of 15.54% with Tier-1 of 12.29%.

Sharekhan BNP Paribas Financial Services Pvt Ltd(ICRA A1+)(ICRA Rationale Link)

Sharekhan BNP Paribas Financial Services Private Limited (“SFSL” or “the company”) is a wholly-owned subsidiary of Sharekhan and is registered with the Reserve Bank of India (RBI) as a non-banking financial company (NBFC). The ultimate parent of the company is BNP Paribas SA a leading bank in Europe
SFSL provides loans/finances to retail clients of Sharekhan group under various schemes such as loan against shares, initial public offer (IPO), follow-on public offer (FPO), rights issue, new fund offer, employee stock option scheme (ESOP)/employee stock purchase scheme (ESPS), and issuance of bonds and other financial product.
The company remains strategically important to Sharekhan and BNP Paribas
The company has healthy financial metrics which negligible NPA, Total Debt/Equity of 0.43x and CRAR of 69% as of Mar’23

Sharekhan Limited(CRISIL A1+,ICRA A1+)(CRISIL Rationale Link)

Sharekhan Limited (“Sharekhan” or “the company”) is a security broking service provider, registered with the Securities and Exchange Board of India (SEBI). The company is wholly owned by BNP Paribas S.A., a leading bank in Europe
The company is one of the leading broking house in India with presence since 2007 and also has international presence through its branch in UAE. The company is having sizeable presence in western and north-western parts of the country
Sharekhan’s main business activity includes share broking (primarily in the retail segment) and the distribution of mutual fund products. It also has a small presence in portfolio management services
Apart from broking business, the company through its wholly owned subsidiary provides financing solution to retail clients of the Group through various capital market products
The consolidated gearing of company stands at 1.18x as of Mar'2023

Tata Steel Ltd.(IND AA+,BWR AA+,ICRA A1+)(ICRA Rationale Link)

Tata Steel Limited was established as India’s first integrated steel company in 1907.
The company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products.
The company offers a broad range of steel products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes and wires.
Tata steel has an annual steel production capacity of 35 million tonnes per annum globally
The company is one of the most geographically diversified steel producers, with operations in various countries and commercial presence in more than 50 countries across the globe
Tata Steel is one of the leading company of the Tata Group
The debt equity ratio is 0.28 times as on Mar’23 on standalone basis.

TMF Holdings Limited(ICRA A1+)(ICRA Rationale Link)

TMF Holdings Limited (“TMF”) is subsidiary of Tata Motors Limited (TML)
TMF is holding company of NBFCs of TML group which are primarily involved in business of vehicle financing
TMF is a non-banking financial company core investment company registered with Reserve Bank of India

TVS Credit Services Limited(CRISIL A1+)(CRISIL Rationale Link)

TVS Credit, a non-banking financial company, is a part of the Chennai-based TVS Group of Companies.
TVS Credit is a subsidiary of TVS Motor Company Limited
The company currently finances two-wheelers (of TVS Motor), new tractors, used tractors, used cars, consumer durables, used commercial vehicle and MSME.
The Company had CRAR of 18.75% as on Mar’23

U P Power Corporation Ltd(CRISIL A+ (CE) )(CRISIL Rationale Link)

U P Power Corporation Limited (“UPPCL” or “the Company”) is a power distribution company wholly owned by the UP Government (GoUP). The Company has issued bonds, to fund its operations, under the provisions of the UDAY (Ujwal DSICOM Assurance Yojana) agreement.
The bonds are secured by charge on receivables of UPPCL. It will be further supported by fund infusion from GoUP on quarterly basis through budgetary allocation i.e. debt servicing by GoUP. These are further secured by an unconditional and irrevocable guarantee from Govt. of Uttar Pradesh.
The structure has escrow mechanism wherein daily collections are deposited into escrow a/c which gets used for servicing of bonds.

Vivriti Capital Private Limited(CARE A)(CARE Rationale Link)

Vivriti Capital Private Limited (VCPL) is a Non-Bank Finance Company (NBFC) registered with Reserve Bank of India
VCPL is in the business of providing lending to financial and non-financial entities
It also lends to retail clients through co-lending agreements with other NBFCs
It had consolidated Assets under Management (AUM) of ~Rs 4,533 crs as on Mar 31, 2023
The Company is backed by private equity investors such as Creation Investments, Lightrock and TVS Capital Funds. It had raised equity of Rs 1,297 crs from these firms over last few years

Disclaimers: The above disclosure on credit quality of the debt instruments is based on the information provided by rating agencies/respective companies. Few schemes of Kotak Mutual Fund have taken exposure in the debt instruments issued by above companies. In future, the Fund Manager at their discretion may or may not invest in the Debt instruments issued by above companies.

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