CRISIL’s rating on the long-term bank loan facility of Digamber Capfin Ltd (DCL) continues to reflect DCL’s small scale of operations with geographic concentration, low capitalisation, modest earnings profile, and exposure to risks inherent in the microfinance industry.
These rating weaknesses are partially offset by DCL’s healthy asset quality, supported by its healthy credit origination and collection practices, benefits it derives from its promoter’s experience in the microfinance business, and its adequate systems and processes for its current scale of operations.
CRISIL believes that DCL will continue to benefit from its promoters’ experience in the microfinance business. However, DCL’ operations is expected to remain small-scale and geographically concentrated over the medium term. The outlook may be revised to ‘Positive’ if DCL demonstrates sustained growth with stable profitability without vitiating its asset quality, and improves its capitalisation and funding profile, over the medium term. Conversely, the outlook may be revised to ‘Negative’ if DCL’ asset quality and profitability deteriorate, thereby weakening its capitalisation.
About Digambar Capfin
Incorporated in 1995, DCL is a non-deposit-taking non-banking financial company (NBFC-ND), registered with the Reserve Bank of India (RBI). DCL lends to joint-liability groups (JLGs) and provides top-up loans to clients in six districts of Rajasthan. It started microfinance business in 2007, before which it was involved in two-wheeler financing. As on March 31, 2012, DCL had 23,053 borrowers and a network of 18 branches. The company had outstanding loans of Rs.144.9 million as on March 31, 2012, against Rs.79.50 million as on March 31, 2011.
For 2011-12 (refers to financial year, April 1 to March 31), DCL reported a profit after tax (PAT) of Rs.1.3 million on a total income of Rs.25.2 million, against a PAT of Rs.0.5 million on a total income of Rs.15.7 million for the previous year.