ECL Finance

ECL Finance NCD Issuance

ECL Finance Rating History

ECL Finance NCD Stucture

Financial Snapshot

ECL Finance is a part of Edelweiss group, ECL Finance is a non-deposit taking NBFC, which focuses on offering a broad suite of secured corporate loan products and retail loan products, which are customized to suit the needs of corporates, SMEs and individuals. Corporate and retail loan products include

Structured Collateralised Credit- are offered mostly to corporates against collateral such as liquid market securities, pledge of other securities, pledge of shares by promoters, immovable property, etc. Structured collateralized credit loans constituted 18.97% of total loan book.

Wholesale Mortgages- includes various structured financing solutions for finance to developers for real estate projects under construction, wholesale mortgages constituted 37.78% of the total loan book.

SMEs -includes credit facilities and short term loans to SMEs for meeting their business requirements, sme constituted 11.67 % of the total loan book.

Loans against securities include loans to investors against their existing portfolio of investments, which constituted 17.16 % of the total loan book.

Retail Mortgages – Loans against Property: This includes loans offered to self-employed individuals for business purposes against a mortgage of residential or commercial property, which constituted 12.57 % of the total loan book.

Agri Credit – As a part of agricultural value chain services, ECL finance extends short term finance against Agri commodities inventory stored in warehouses, agri credit constituted 1.85 % of the total loan book.

Credit Positives

·         Experienced Promoter

·         Pan India Presence

·         Strong Capital Position

·         Asset Quality

Credit Negatives

·         Loan against securities

·         Real Estate exposure

·         Economic downturn hurting borrowers

Established Brand- ECL finance is  part of the Edelweiss Group ,which is one of India’s prominent financial services organization. ECL finance relationship with the Edelweiss Group provides brand recall and ECL finance continue to derive significant marketing and operational benefits. ECL finance uses a range of resources from the Edelweiss group such as information technology and infrastructure. ECL finance leverage Edelweiss groups experience in the various facets of the financial services sector, which allows ECL finance to understand market trends and mechanics and helps in designing products to suit the requirements of target customer base.

PAN India Presence- ECL finance operates through a wide network of 119 branches, pan India presences reduce the reliance on any one region in India, geographic diversification also mitigates some of the regional, climatic and cyclical risks, such as heavy monsoons or droughts.

Adequate Capital Adequacy Ratio– ECL finance capital position is strong, its capital adequacy ratio (CAR) is above 15% as mandated by the RBI. As of December 2018, CAR stands at 18.63%, for March 2017 CAR was at 16.14%,  and for March 2016 CAR was at 16.56%.

Strong Growth in Loan Book & Strong Asset Quality- ECL finance loan growth has been substantial, the CAGR of the total loan book was 37.84%, from Rs 60.96 billion in  FY14 to Rs 220.08 billion in FY18.  ECL finance asset quality is strong, it provides secured finance, which ensures lower NPAs and fewer recovery related problems. As of December 2018, 89.26%, of the total loan book is secured. Gross NPA & Net NPA as of December 2018, is at 1.71% & 0.64% respectively.

Funding Profile– ECL finance funding profile is well diversified, funding requirement is sourced through credit facilities from banks and by the issuance of NCDs. As of December 2018, Loans from banks constitute 50.13% of total funding, NCDs constitute 38.96%, CP constitute 3.77% and subordinate debt constitute 6.93% of total funding.

Loans against Securities– Loan against securities constituted 17.16% of the company loan book, these loans are secured by marketable securities at a pre-determined margin level, in the event of a volatile stock market or adverse movements in stock prices, the collateral which secures the loans may decrease significantly in value, which might result in losses

Real Estate Exposure– Retail mortgages- loans against property constituted a significant portion of ECL finance total loan book, wholesale mortgage financing, and retail mortgages – loans against property constituted 37.78%, and 12.57%, respectively of the total loan book. Any adverse development in the real estate sector would adversely affect ECL operations.

Liquidity– As on December 2018, liquidity position of EFSL was comfortable with positive cumulative mismatches in all the time brackets. EFSL had a liquidity cushion of Rs 71 billion consisting of mutual funds of Rs 48 billion, FD & Bank balance of Rs 7 billion, and undrawn bank lines of Rs 16 billion. It also had other liquid assets of Rs 69 billion which consists of LAS book and liquid assets which can be converted to cash within 30-45 days. As on March 15, 2019, EFSL had a liquidity cushion of Rs 53 billion.