Tenure * (months) Varia ble

Transcription

1 Rating Rationale Rating of Pass Through Certificates issued by Pearl Trust March 2018 backed by LAP loan receivables (Principal outstanding Rs Cr) originated by StarAgri Finance Limited (SAFL) CARE has assigned a rating of CARE A (SO) [CARE A (Structured Obligation)] to the Series A PTCs issued by Pearl Trust March 2018 backed by LAP loan receivables originated by StarAgri Finance Limited (SAFL). The rating is finalized based on the structure provided to CARE by SAFL, the originator. The rating is confirmed after the copies of legal documents executed in accordance with the structure, a due diligence audit report by an external auditor and an independent legal opinion is furnished by the Assignor, to the satisfaction of CARE. Consequently, CARE has issued compliance letter. Obligati on Series A PTCs Structure Pool Principal Outstandin g (Rs Cr) PTC Principal Outstanding (Rs Cr) Tenure * (months) Par Yield Rating 1 Over $ Enhancement Varia ble Collateral (Rs. Credit Collateral (Rs. Cr) CARE A (SO) * Tenure / Door to Door maturity may change due to prepayments or changes in interest rates, if any. $ Credit Enhancement includes subordination of Over Collateral (OC) and Excess Interest Spread (EIS). The EIS / OC of a month shall be available for meeting the shortfalls in corresponding monthly payout and also replenishment of Credit Collateral, to the extent utilized. The remaining EIS, remaining, if any, in that month shall flow back to the originator, and shall not be available for any future shortfalls. 1 Complete definition of the ratings assigned are available at and in other CARE publications

2 Issuer / SPV Pearl Trust March 2018 Trustee Originator / Assignor / Collection Agent / Credit Enhancement provider Underlying Receivables Pool Principal Outstanding Pool Future Receivables Series A PTC Principal Catalyst Trusteeship Limited (CTL) StarAgri Finance Limited(SAFL) All receivables arising from LAP loans. Rs Cr Rs Cr Rs Cr Pool Cutoff Date 28 th February, 2018 Pool Commencement Date 1 st April, 2018 Legal Final Maturity* April 2032 Form of Credit Enhancement Total enhancement for Series A PTC is as follows: Subordination of Principal / Over-collateral (OC) of Rs Cr (3.0% of POS) Subordination of EIS of Rs Cr (37.92% of POS). Credit Collateral of Rs.2.35 Cr (7.00% of POS) provided by SAFL in the form of fixed deposit or guarantee as per CARE s criteria. * Actual tenure may be different due to prepayments or foreclosures in the underlying pool 2

3 I. Transaction Structure Obligors Monthly collection Servicer / Collection Agent (SAFL) Loan given Originator (SAFL) Sale of LAP loan receivables Purchase Consideration SPV (Trust floated by CTL) Collections Monthly Payouts Subscription Investors in PTC Subordinated Principal / Over Collateral Credit Enhancement provider (SAFL) PLEASE NOTE: Refer to the above table while reading the description of the transaction structure below. SAFL, the Originator will assign the identified loan receivables along with security interest to a Special Purpose Vehicle / Trust. The identified loan receivables comprise receivables from LAP loans given by SAFL in its normal course of business. Catalyst Trusteeship Limited (CTL) acting as a trustee to this transaction will settle a Trust (the SPV- Pearl Trust March 2018) for this purpose. The Trust will purchase from the Originator, the Receivables together with the Originator s rights, title and interest in the Facility Documents. The Trust will invite contributions from Series A PTC on specified terms and conditions. This contribution shall be utilized to pay the Purchase Consideration to the Originator for the sale of receivables. The Trust will issue Series A PTCs representing 97.0% of the pool principal outstanding. The remaining 3.0% represents the subordinated principal / over collateral. The PTC series represent the undivided beneficial interest in the underlying assets. The Trustee shall appoint Collection and Processing Agent (SAFL) to collect the Receivables from the Obligors. On each Payment Date, the investors shall be entitled to receive the Scheduled Payouts as determined under the Payment Waterfall Mechanism, as explained later. The transaction shall be structured at par. The Credit cum liquidity enhancement, comprising subordinated principal / Over-collateral (OC), subordinated Excess Interest Spread (EIS) and Credit collateral, shall be available for covering any shortfall in collections vis-à-vis the payouts to the PTCs (including amounts payable on account of prepayments). The Servicer will maintain a separate collection and payout account (CPA) into which the amount collected from the pool and so payable to the trust will be deposited by the Servicer. 3

4 The collections made by the Servicer out of the assigned receivables, with respect to the billings of a particular month M, shall be deposited by the Servicer in the M+1 month into the CPA, on or before the scheduled PTC payout date. The Servicer shall hold the amount of receivables collected on their respective due dates, including the prepayment amount, in trust for and on behalf of the PTC investors. SAFL will provide Credit collateral, in the form of fixed deposit or guarantee as per CARE s criteria and shall be available till any amount is outstanding to the PTCs. If the credit collateral is provided in the form of a fixed deposit, it shall be lien marked in favour of Trust and in case it is in the form of a guarantee, it shall be from as per CARE s criteria. Credit Enhancement provided by the originators will be utilised to extent of shortfalls of their respective pools. The subordinated principal / over collateral is fully subordinated to the Series A PTCs. The Excess Interest Spread (EIS) is subordinated along with the subordinated principal / over collateral forms a part of Credit cum liquidity enhancement. The EIS of a month shall be available for meeting the shortfalls in corresponding monthly payout and also replenishment of Credit Collateral, to the extent utilized. The EIS / OC of a month shall be available for meeting the shortfalls in corresponding monthly payout and also replenishment of Credit Collateral, to the extent utilized. The Subordinated Principal or Over-collateral (OC) remaining if any, in that month shall flow back to the originator. The EIS, remaining, if any, in that month shall flow back to the originator. Such amounts shall not be available for any future shortfalls. The Credit Collateral shall be topped up from the excess amounts available from collections, if any. 4

5 II. Key Rating Factors Credit quality of the assigned pool of assets Pool has weighted average net seasoning of months, weighted average LTV of 51.50%, and well diversified geographically. Pool has high concentration in terms of obligor exposure, with top 10 obligors comprising 21.27% of POS, and top loan contract accounting for 2.76% of the pool. Credit Collateral and subordination of EIS Sound legal structure of the transaction Underwriting & servicing capabilities of SAFL Portfolio performance of SAFL. 5

6 III. Key Transaction Features a) Yield to PTC Investors The coupon payable to the PTC shall be the Pool Weighted Average Coupon (referred as Pool Yield in the note) minus 6.0% on the principal outstanding at the beginning of the month. The rate to the Assignee is payable monthly. For a particular payout date, it will be calculated as the nominal value of the current pool cashflows. b) Security On and after the assignment of receivables by SAFL to the trust, the security interest created for the repayment of the loan so assigned shall remain and be held by SAFL for the benefit of the PTC investors. All the documents pertaining to the security interest shall be in custody of SAFL solely for the purpose of and to the benefit of the PTC investors save and except for itself also under such circumstances as permissible in terms of the Agreement to Assign. c) Recovery on defaults and enforcement of assets SAFL will administer the loans given to the Obligors, in its capacity as the Servicing Agent. Administering of such loans will include follow-up for the recovery of the EMIs from the Obligors in the event of delays. In such cases, it is SAFL's practice to charge the obligors certain out-of-pocket expenses incurred by itself for recovery of the monies due. The entire amount of actual recovery of out-of-pocket expenses would not form part of the Receivables pool of the trust. d) Payment Mechanism The Trustee shall open a separate Collection and Payment Account (CPA) with an authorized Bank. SAFL will collect the monthly payments (EMI) from the underlying borrowers in the same manner as it collects payments against its existing loans, but in its capacity as the Servicer. The Servicer would provide collection details for a particular month (say month M) to the trustee by one day before payout date of the next month (i.e. M+1). Upon receipt of this reports / information, the trustee would examine the same and confirm / rectify the same along with payment details and instructions by the payout day of the same month (i.e. M+1). The Servicer will deposit the total monthly collections from the obligors, together with the amounts payable from the credit collateral, if any into the CPA on the payout date, failing which the Servicer will be required to pay penal interest for the period of delay. In the event of prepayment of any loan, the PTC investors would receive the prepayment amount on the immediately following payout date. The servicer shall hold the amount of receivables collected on their respective due dates, including the prepayment amount, in trust for and on behalf of the PTC investors. 6

7 e) Waterfall Mechanism On a Payout Date, proceeds available in the Collection and Payout Account together with any amounts drawn upon from the Credit Enhancement and transferred to the Collection and Payout Account will be utilized in the order of priority given below. On each Payout Date the monies lying in the Collection and Payout Account shall be applied in the following order of priority: 1) Payment of all statutory and regulatory dues; 2) Payment of any fees related to servicer fee, trustee, rating agency, due diligence auditor, legal counsel and any aforesaid expenses; 3) All overdue yield payments at the PTC Yield Rate due and payable to the Investors. 4) All overdue principal amortizations due and payable to the Investors. 5) All current scheduled yield payment at the PTC Yield Rate due and payable to the Investors 6) All current scheduled principal amortizations due and payable to the Investors. 7) All payments in relation to Prepayment due to the Investors 8) Reinstatement of Credit Enhancement to the extent of utilization; 9) Balance, if any, to the originator SAFL If the amount lying in the CPA is insufficient for making payments to the PTC investors, the credit collateral will be drawn to the extent of shortfall. The Subordinated Principal or Over-collateral (OC) and EIS remaining if any, in that month shall flow back to the originator. Such amount shall not be available for any future shortfall. The scheduled cash flow pattern for the PTC investors may change on account of prepayments/changes in terms of the loans including change in the rate of interest on the loans and reschedulements in the underlying pool. If the amounts collected from the underlying pool are insufficient for making payments to the PTC investors the collection agent shall draw amounts to the extent of the shortfall from the Credit Enhancement. f) Clean Up Call Option The assignor will have the option to repurchase the receivables pertaining to the performing contracts any time after the outstanding principal balance on the pool of receivables declines below 10% of the initial pool principal balance at a purchase consideration equal to the PTC principal outstanding amount. The clean up call option can be exercised only if the balance of credit enhancement is enough to cover the non-performing assets. When the clean up call option is exercised, it will have the same effect as prepayments in the pool and the investors would be exposed to reinvestment risk. 7

8 IV. Key Risks & Mitigants 1. Credit Risk It is the risk of non-payment by the underlying obligors. Credit cum liquidity enhancement shall be used to meet any collection shortfalls. Collection shortfalls in the pool may arise due to delay in collection and / or credit losses. The extent of shortfalls in the pool will depend on various factors including borrower s earning stability, interest rate movement and volatility in property prices. Credit cum liquidity enhancement stipulated adequately covers the shortfall risk, as per assigned opinion. However, the PTC investors shall bear loss in the unlikely event of the shortfalls in the pool exceeding credit cum liquidity enhancement. 2. Interest Rate Risk The yield to PTC is floating rate linked to pool yield which in turn is linked to SAFL s internal benchmark Lending Rate in case of variable rate loans. SAFL may also change the spread on its bench mark at which the underlying loans are disbursed. Due to PTC yield directly linked to pool yield the interest rate risk is mitigated. 3. Commingling Risk SAFL, the servicer shall collect monies from the underlying obligors and deposit the same into the designated collection account. However there is a time lag between the collection and deposit. This gives rise to commingling risk. The credit quality of SAFL minimizes this risk (standalone rating of SAFL is CARE BBB+). 4. Prepayment Risk The transaction has a par structure. Any prepayment would be passed on to the PTC investors to the extent of the principal outstanding corresponding to the prepaid contracts. The shortfall, if any, in collection arising as a result of the prepayment will be met from the credit cum liquidity enhancement. Also prepayments in the pool may adversely affect the excess interest spread available. Credit cum liquidity enhancement stipulated covers this risk adequately. 5. Servicer risk SAFL is acting as servicer to the transaction. The PTC investors face servicing disruption risk if the servicer fails to perform its duties and obligations as per Collection & Servicing Agreement. Strong servicing capability and good track record of SAFL provides comfort to the transaction. Further, the transaction documents also provide for appointment of alternate servicer, if needed. 6. Legal Risk The securitization transaction involves transfer of receivables which must be a valid sale as per law. This effectively means that the originator does not retain any control over the receivables. It should not contradict any of the terms of the underlying loan agreements. The trust should have unrestricted access to the receivables as well as credit cum liquidity support, subject to terms of its utilization. An independent legal opinion confirming the above would be obtained by seller to mitigate this risk. 8

9 V. Originator s Brief Profile StarAgri Finance Limited was incorporated in 1995, as Raylight Leasing & Finance Limited (RLFL). The Company got the Certificate of Registration from RBI for carrying business of a NBFC in February In 2015, StarAgriwarehousing and Collateral Management Limited (SACML) acquired 100% stake in the company and renamed it to StarAgri Finance Limited(SAFL). The promoter group has experience of over a decade in the segment of agri-warehousing and collateral management. SACML along with its subsidiary Farmers Fortune (India) Private Limited (FFIPL) provides the entire supply chain solutions for agricultural commodities. SAFL has been in the business of providing agriculture based and Loan against Property (LAP) loans. The portfolio stood at Rs.47 Cr in Mar 15 and has grown to around Rs.457 Cr by Dec 17. Lending business started in 2014 and the company has been growing in the rural and semi urban space. SAFL operates through a hub and spoke model, wherein they have a major branch and in a city/big town and smaller servicing branches are operated around it. SAFL has major focus on business generation through DST model, as it enables them to maintain a direct relationship with the client. Operations of the company are currently carried out from 7 branches and 25 spokes located in 5 states Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra. SAFL has branches at Mumbai, Karnal, sirsa, Jaipur, Rajkot, indore, and Nagpur. Rest locations (spoke) are serviced from these locations only. SAFL enjoys CARE BBB+ rating for its long term obligations. Financial profile (Amt in Rs. Cr) Year ended / As on 31-Mar-15, 12m 31-Mar-16, 12m 31-Mar-17, 12m Total Income PAT (1.61) Provisions and Writeoffs Overall CAR (%) Gross NPA (%) Nil Nil 0.84 Net NPA (%) Nil Nil 0.62 AUM

10 Origination SAFL has a team of around people who handle the business origination for the company. They report to the Sales Manager, who sits at the branch. A branch has small spokes attached to it, which are basically designed to service the clients. Business generation is majorly done through the DST model. SAFL earlier did business with DSAs but has been trying to curtail down the DSA model, for the last one year. Also SAFL has been trying to reduce the ticket size of loans and concentrate on borrowers less than Rs lakhs. Agri based clients are mostly referred through existing client relations, attained for the WHR business. Also the DSTs are local and experienced team who acquires clients who have been in the business for a reasonable time period. The file is logged in the system through the loan management system (Omnifin), along with the necessary set of documents. Once the credit bureau score is generated and the score is found satisfactory, the case is forwarded for underwriting. Products offered by SAFL: Agri Term Loan loans linked to agricultural business Warehouse Receipts Bullet Structured payment mechanism, generally for 6-9 months. ULIC Unsecured loans against imperfect collateral Secured Term Loans For small business owners, LAP loans. Credit Appraisal Process: The underwriter receives the relevant documents and credit bureau report of the client. When the case is forwarded to the underwriter for further process, the necessary valuation is triggered. Underwriting team has around 15 members and the structure is such that a credit manager at branch location, reports to cluster manager of the state, who in turn reports to the corporate office. Numbers of valuations triggered, are dependent on the loan amount applied for. For loan amounting more than Rs.25 lakhs, 2 valuation reports are generated. Valuations are done through empanelled technical vendors of SAFL. For cases wherein the liquid income assessment of the client is done, empanelled CAs are required to submit reports regarding the income assessment of the client. Post receiving a positive report from the CA, the underwriter visits the client for a personal discussion. The underwriter does his own analysis in determining the cash flows of the client, the business set up, stock in hand and other factors. The underwriter has to click pictures of the setup and make them a part of his report. 10

11 Post assessment, the underwriter reports the case to the relevant authority for approval. Other than the bureau report, SAFL has tie up with Karza, for knowing the credit/legal history of the borrower. This helps in filtering the clients who are more susceptible to be intentional defaulters. Cases with loan amount of more than Rs.20 lakhs are sanctioned from the head office. Cases with loan amounts of more than Rs.75 lakhs are approved by the sanctioning committee, which consists of board members and CEO. Sanction Process: The steps involved in the sanction process are: Login of files This is done by sales team once the file is received with the complete set of documents; Personal Discussion (PD) should be done at office address of the applicant; Business Reference (BR) should be checked of at least one reference; Loan Eligibility calculation is done by CA on completion of the above reports/activities and a Credit Approval Memo (CAM) is prepared; After the above process the credit manager is provided with all the reports and documents. The decision is taken based on the authority matrix and communicated to the Channel and Sales Manager. There could be three scenarios. a) Pending there may be some doubts regarding the applicant, in which case additional information is sought from the client directly by the credit department; b) Reject the case may be rejected and reason for the same is updated on LOS and all documents are retained except any originals submitted by the customer, which is returned along with the rejection letter; c) Approval process of disbursement undertaken. Any documents that may be pending to be received from the customer are mentioned on the sanction letter and the same are to be submitted by the customer before disbursement. Disbursal Process: Prior to disbursement, the operations team has to carry out a full check of all the necessary documents available. Once all the checks are done, the operations team proceeds with the disbursement. Loan amount is deposited in the bank account of the client and repayment cheques and ECS are also taken from the same account. 11

12 Collection Mechanism and Recovery: The medium of collection for SAFL is ECS only. The initial EMIs are being presented through cheques. Bucket-wise monitoring is done and Key Performance Indicators are set for the personnel according to performance. Collections, earlier was a shared function for all the asset classes. Since Apr 16, collections up to 90 days is handled by the business team and cases that cross 90 DPDs are taken care of, by the shared collections team. Loans getting in delinquency buckets are handled by the local sales team, till the time they are below the 60 day bucket. For the clients going into buckets more than 60 days, the collections are handled by recovery team. SAFL has a special recovery team of about 10 people who look after the hard bucket cases. A legal team of 2 people, sitting in Mumbai and Jaipur each, is hired for the legal procedure to be followed. 12

13 VI. Portfolio Analysis Disbursements -LAP Disbursement in FY17 stood at Rs Cr as against Rs Cr in FY16, growing by 40.36%. Disbursement in 9M FY18 stood at Rs cr. Portfolio Movement & Delinquency SAFL s LAP portfolio rose to Rs cr at the end of FY17, up 40% from Rs cr at the end of FY16. The minimum and maximum 90+DPD levels for SAFL s LAP Portfolio has been in the range of 0.80% and 1.30% for the period Mar 15 till Jul 17. On the other hand, the 180+DPD has consistently remained in the range of 0.80% and 1.0% during the same period. However, during the period Aug 17 and Dec 17, 90+ and 180+ DPD levels for SAFL s LAP Portfolio has increased to 3.00% and 2.08% respectively. 13

14 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 STRUCTURED FINANCE Static Pool Analysis SAFL has provided the contract wise portfolio data across all the products since inception till Dec CARE has analyzed the contracts across products under secured portfolio category. We have formed quarterly static pools and provided vintages starting from Q1 FY 16. For all the vintages, performance is available till Dec % LAP Static Pool 90+DPD 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% M1 M4 M7 M10 M13 M16 M19 M22 M25 M28 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 The static pool performance is very volatile due to presence of big ticket loans in the portfolio. Since past 12 months SAFL has restructured the business and moved away from big ticket loans. Average Incremental disbursements come down to Rs. 20 to Rs. 25 lakhs and future performance may not be as volatile. The tenure for which the performance of this asset class is available is not adequate to estimate the average shortfall likely to be witnessed. However we have considered industry data to estimate the average peak shortfalls. Prepayment 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Prepayment 0.0% CARE has analyzed the prepayment data since inception for the LAP portfolio. CARE has observed the volatility in the prepayments arising due to presence of bulky contracts in the portfolio. CARE has relied on industry data to arrive at prepayment level for this pool. 14

15 VIII. Collateral Analysis i) Pool Selection Criteria: The pool has been selected by SAFL, from the loan contracts currently on its books, by applying the following key criteria as on the cut-off date (28 th February 2018): All the loans in the pool are fully disbursed loans; None of the loan contracts should have been restructured or rescheduled; The selected loan contracts should be free from any encumbrances; SAFL is the sole legal and beneficial owner of the loans; SAFL should not have initiated nor should it currently propose to initiate legal / repossession action against any obligors; Key pool characteristics: Description Value Asset Type LAP Loans No. of Loans 181 Principal Outstanding (Rs. Cr) Future Receivables (Rs Cr.) Average Original Loan Amount (Rs.) 20,19,255 Average POS (Rs.) 18,50,833 Amortisation (%) 8.34 Weighted Avg. Rate of Interest (ROI)* (%) Weighted Avg. Original Loan to Value Ratio (LTV)* (%) Weighted Avg. Initial Tenure* (months) Weighted Avg. Net Seasoning* (months) Weighted Avg. Balance Tenure* (months) *Weight Average Values, weights being the pool principal outstanding Description Proportion of Pool Value Top 10 Obligors (%) Top 3 states (%) OD contracts (Current, OD) 100%, 0% Key observation All contracts are current as on cut-off date. Top three states account for 77.32% of the total principal of the pool with the top state accounting for 30.63% (Gujarat). Since origination pool has amortized by around 8.34%. Seasoning of the pool is months. The weighted average original Loan to Value Ratio of the pool is 51.50%. 15

16 The detailed characteristics of the actual pool are given below: State Total Gujarat 30.63% Haryana 28.44% Rajasthan 18.24% Madhya Pradesh 15.98% Maharashtra 6.70% Grand Total % Product Total Agri Term Loan 75.15% Secured Term Loan 24.85% Grand Total % ROI Total % % % % % > % Grand Total % Initial Tenure Total Less than 5 years 2.52% 5 10 Years 58.20% Years 39.28% Grand Total % Seasoning (Months) Total % % % % % > % Grand Total % Balance Tenure (Months) Total Less than % % % % % Grand Total % 16

17 Customer Type Total Individual 84.87% Corporate 15.13% Grand Total % LTV Total < % % % % % Grand Total % Initial Loan Amount Total <20 Lakhs 42.37% Lakhs 23.81% Lakhs 11.14% Lakhs 15.51% Lakhs 4.43% Greater than 100 Lakhs 2.74% Grand Total % Property Type Total Residential 70.18% Commercial 29.82% Grand Total % 17

18 IX. CARE S Analysis of the Transaction CARE has analyzed the transaction to assess whether the Credit cum liquidity enhancement is sufficient to cover shortfalls. Since the transaction is sensitive to credit quality of the underlying pool, CARE has analyzed the overall portfolio performance of the Originator. Considering the borrower profile and nature of loan, pool characteristics, portfolio performance and industry data for this asset class, CARE has taken the average peak shortfall from 5.0% to 6.0% of principal outstanding. The base case shortfalls were stressed along with other key factors such as the timing of shortfalls, the recovery assumptions and the time to recovery. CARE has found that the Credit cum liquidity enhancement provided is sufficient to cover shortfalls in stress scenario commensurate with the assigned rating. The summary of Credit cum liquidity enhancement coverage available at various scenarios of peak shortfalls is presented below: Peak Shortfalls Credit cum liquidity enhancement coverage (times) 5.0% % % 2.57 X. Legal Opinion For the legal risk analysis of the transaction, CARE requires a legal opinion from an independent legal counsel certifying the following - 1. That all transaction documents provide for adequate and necessary protection of the Acquirer s right and have been duly executed in accordance with the governing laws including the prevailing stamp duty and registration laws. 2. That the assignment of receivables to the Trust constitutes a valid sale as per prevailing legislations, regulations including RBI guidelines. That the assignment of loan assets and the underlying receivables is valid in terms of underlying loan documents. 3. That all the rights, title, interest and benefits in the underlying receivables including security interest have been transferred to Trust and the receivables are bankruptcy remote from the Originator. 4. That the credit enhancement facility If provided in the form of cash/fixed deposit/ term deposit, are bankruptcy remote of the provider. If provided in the form of bank guarantee, the same shall be valid, unconditional and irrevocable. 18

19 XI. Compliance & Monitoring SAFL has furnished the executed set of transaction documents and legal opinion to CARE within 90 days from the date of placement of issue. SAFL has also furnished an auditors certificate certifying the accuracy of the pool information furnished to CARE. Following this CARE has issued compliance letter. On an ongoing basis, in its capacity as the Servicer, SAFL will provide monthly information on the pool performance, including information on collections, delinquencies and prepayments to CARE. CARE will monitor the performance of the pool and keep the credit opinion under surveillance. XII. Transaction Documents The following documentation has been executed: 1) Deed of Assignment 2) Power of Attorney 3) Information Memorandum 4) Trust Deed 5) Legal Opinion 19

20 Analyst Contact Name: Ramadasu Bandaru Tel: CARE has classified instruments rated by it on the basis of complexity. This classification is available at Investors/market intermediaries/regulators or others are welcome to write to for any clarifications. Disclaimer: CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings o information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. 20