Keertana Finserv Private Limited

Keertana Finserv Private Limited

Keertana Finserv Private Limited (“Keertana”), a non-deposit taking NBFC. The company largely focuses on gold loans and MSME loans targeting the low income and middle-income households in rural areas, recently also started group loans (Microfinance)

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NameIssue SizeMaturityCoupon
Keertana Finserv Private LimitedCRISIL BBBINE0NES0703020.00Cr22 Feb 202511.65 %
Keertana Finserv Private LimitedCRISIL BBBINE0NES0702224.00Cr31 Jan 202511.60 %
Keertana Finserv Private LimitedICRA BBBINE0NES0706350.00Cr20 Jun 202511.60 %
Keertana Finserv Private LimitedICRA BBBINE0NES07048100.00Cr11 May 202511.60 %
Keertana Finserv Private LimitedICRA BBBINE0NES0705530.00Cr28 Feb 202511.60 %
Keertana Finserv Private LimitedICRA BBBINE0NES07071160.00Cr28 Nov 202511.60 %
Keertana Finserv Private LimitedICRA BBBINE0NES07089110.00Cr20 Feb 202611.50 %
Keertana Finserv Private Limited-INE0NES0701425.00Cr30 Sep 202514.90 %

About Keertana Finserv Private Limited

Promoter Ms. Padmaja Reddy and her founding team members bring with them over 100+ years of collective experience in the small business lending. Ms. Reddy after having spent over 2 decades in building one of India’s leading Microfinance Institution, Spandana Sphoorthy Financial Limited (SSFL; NBFC-MFI), parted ways to focus on evolving enterprise business segment whose credit demand is largely unmet. The focus areas chosen were Gold Loans and Micro Enterprise Loans both secured and unsecured to start with.

The idea of Keertana took birth in November 2021. However, an NBFC outfit was needed to further the vision, and towards this an existing NBFC registered in 2001, Rajshree Tracom Pvt Limited (incorporated in February 1996) was acquired by the promoters at the end of March 2022. Following the approval from the RBI for a change in management and control, the current promoters purchased all the shares of the erstwhile promoters, and the name of the company was changed to Keertana Finserv Private Limited.
The company, currently managed by Ms. Padmaja Reddy, acquired its gold loan business from Spandana Mutual Benefit Trust (SMBT) for approx. Rs. 191 crores and the MSME business from Spandana Rural and Urban Development Organization (SRUDO) for approx. Rs. 14 crores as per a business transfer agreement dated April 04, 2022.

Corporate Structure

Screenshot 2023-07-20 at 7.32.45 PM.png

Company’s Core Product Offerings

The company has 3 product verticals - Gold Loans, MSME Loans (consisting of Individual Unsecured Loans and Loan Against Property), Group Loans. Each of these loans has separate dedicated business heads, staffs, and branches. Though Keertana began its business only with a focus on Gold loan, the management soon realising the need to diversify the risk, two more verticals were added to the product line in the 2nd and 3rd quarter of FY23.

Company’s O/s Portfolio

The product-wise split as on March 31, 2023

Products (₹ in Crore)

FY23

FY23 (%)

Gold Loans

384.30

63.09%

Group Loans (MFI)

131.89

21.65%

MSME- Business Loans

59.95

9.84%

MSME- LAP Loans

31.53

5.18%

Consumer Loans

1.49

0.24%

Total

609.16 

100.00%

The region-wise breakup as on March 31, 2023

Region (₹ in Crore)

FY23

FY23 (%)

Rural

523.88

86.00%

Urban

85.28

14.00%

Total

609.16 

100.00%

As on April 30, 2023, company had 242 branches in India spread across 35 districts. 199 branches are currently operative and the remaining 43 branches are Work-in-progress.

Gold Loan Industry

Gold Loans (also known as Loans Against Gold) refer to short-term loans sanctioned by banks, non-banking financial companies (NBFCs) and other lenders against the pledge of gold ornaments and jewellery and are popular with farmers looking to meet agricultural expenses and individuals or households who need to meet planned or unplanned expenses. Indians regard gold as a vital symbol of social status, financial security, and intergenerational legacy, and such is the emotional and cultural attachment to gold that households prefer to use gold as collateral for financing for key life goals like healthcare, farming, small business, education, and weddings, rather than liquidate the metal outright for cash. The gold loan is therefore a historically popular instrument, and the overall gold loan market consists of the organised sector (with regulated players such as banks, NBFCs, and Nidhi companies) as well the unorganised/informal finance sector (run by pawnbrokers and moneylenders). The World Gold Council (WGC) estimates that the overall gold loan market (organised and unorganised) in India has grown from Rs. 600 billion in FY2009-10 to Rs. 9,000 billion in FY2019-20, at a CAGR of 31.1 percent.

Company’s Financials

The Company commenced its operations from Q1FY23. The financials as of Mar 31, 2023, is highlighted below:

Attributes

FY23

AUM (₹ in Cr)

609.13

GNPA

0.01%

NNPA

0.01%

Net Worth (₹ in Cr)

174.29

Debt/Equity

2.91

PAT (₹ in Cr)

21.41

CRAR

26.36%

Tier I

26.36%

Tier II

0.00%

Credit Rating

Keertana

CRISILBBB (Stable)
ICRABBB- (Stable)

Borrowings of the Company

As of 31st March 2023, company has total o/s debt of ₹ 507.30 Crore, as follows:

Nature of Borrowings

O/s Amount

% Share

Secured Borrowings

    477.82

94.19%

Unsecured Borrowings

      29.48 

5.81%

Total

    507.30 

100.00%

Company has more than 25 lenders on its balance sheet.

Top 5 lenders: Top 5 lenders form ~40.57% of total borrowings

Lender (₹ in Cr)

O/s Amount

% Of Total Debt

IDFC Bank

61.88

12.20%

MAS Financials

50.00

9.86%

Oxyzo Financial Services Pvt Ltd

34.44

6.79%

Kotak Mahindra Bank Ltd

30.00

5.91%

SRUDO

29.48

5.81%

Comforts/Concerns on the Entity

Comforts

  • Adequate capitalization with gearing expected to remain below 4 on a steady state basis.
  • Extensive promoter experience with diverse management team to steer company’s growth over time.
  • Majority of the portfolio (~66%) comprises secured loans.

Concerns

  • Lack of presence of institutional investor.
  • The business operates through many rural and semi-urban branches and is exposed to operational risks including fraud.
  • Limited operating history with concentrated portfolio in Andhra Pradesh (~95%).
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