1. Healthcare

Tata Capital Housing Finance Limited
Instrument
Non Convertible Debentures Programme
(Subordinated Debt)
Amount
Rs. 100 crore
Rating Action
[ICRA]AA+(Stable) [assigned]
IICRA has assigned the rating of [ICRA] AA+ (pronounced ICRA double a plus) with „Stable‟ outlook to
the Rs. 100 Subordinated Debt programme of Tata Capital Housing Finance Limited (TCHFL).
Instruments with this rating are considered to have high degree of safety regarding timely servicing of
financial obligations. Such instruments carry very low credit risk. ICRA has a rating outstanding of
[ICRA]AA+ (stable) on subordinate debts programmes aggregating to Rs 175 crore and Secured
Redeemable Non convertible Debentures Programe of Rs 500 crores of the company. ICRA also has
a rating outstanding of [ICRA]A1+ (pronounced ICRA A one plus) on the Rs 150 crore Commercial
Paper programme and Rs 100 crore Short term bank borrowing of the company.
The ratings are primarily based on the strengths derived from TCHFL‟s ultimate parent. TCHFL is a
100% subsidiary of Tata Capital Limited (TCL), which in turn is 90.28% owned by Tata Sons Limited
(TSL), rated by ICRA at [ICRA}AAA and [ICRA] A1+. ICRA views the housing finance segment as an
important extension to the existing bouquet of financial products offered by TCL, making TCHFL
strategically important for the parent. The company enjoys benefits of the Tata group‟s strong
franchise, close board supervision and access to TCL‟s infrastructure, marketing and loans origination
teams which has enabled it to grow its business volumes. ICRA expects the company to remain
adequately capitalized as it continues to expand its portfolio given the strong capital commitment from
its parent; in 2013-14 and in H1 2015 TCL infused Rs. 149 crore and Rs. 75 crore into TCHFL. As on
Sep-14 gearing level for the company was 9.8 times. TCHFL enjoys a healthy financial flexibility to
mobilize long term funding at competitive rates on account of its strong parentage. While the ALM
profile of the company exhibits some mismatches in short term buckets these are adequately backed
by un-utilized banks lines. TCHFL has a moderate albeit improving earnings profile with its return of
asset increasing to 1.08% in 2013-14 against 0.86% in the previous financial year as the company
benefitted by enhanced scale efficiencies with operating expenses/ATA declining to 1.6% against 2.0%
in the previous financial year. In H1FY15, operating expenses/ATA increased slightly to 1.7%. Going
forward while the company‟s may continue to enjoy scale benefits as it leverages its branch network,
earnings profile would also be dependent upon its ability to maintain a control over asset quality
indicators given its focus on the self employed customer segment (~58% of book in Mar-14), whose
cash flows typically are more volatile compared to that of salaried customers. Asset quality indicators
of the company, although at a moderate level, have witnessed some deterioration with the Gross
NPA% increasing to 0.7% in Sep-14 against 0.4% in Mar-14. Going forward ability of the company to
maintain a control over its asset quality indicators as it continues to expand will be an important rating
consideration. Customer profile of TCHFL is largely in the self employed segment, which accounted for
58% in Mar-14. ICRA notes the focus of the company to increase the proportion of the portfolio
towards the salaried customers in Tier 2/3 cities and also by leveraging customers within the Tata
ecosystem. Average ticket size for the company is moderate at ~Rs. 30 lakhs and is expected to come
down as the company expands its focus in the affordable housing segment in Tier 2/Tier 3 locations.
TCHFL, a registered Housing Finance Company (HFC), commenced its lending operations in July
2009, and had a total loan book of Rs. 7699 crore as on September 30, 2014. Around 83% of the
company‟s portfolio was deployed in the home loan segment, balance was deployed in the relatively
higher yielding Home Equity segment. Going forward the company is expected to expand the scale of
its operations, while maintaining a similar mix between the Home loan and Home equity segments.
About the company
Tata Capital Housing Finance Limited (“TCHFL”) a 100% subsidiary of Tata Capital Limited (TCL) was
incorporated for providing long term finance for housing purposes. The incorporation of this company
was part of TCL‟s plan to augment its existing product pipeline in the retail segment to home loans.
National Housing Bank (NHB) has granted Certificate of Registration to TCHFL for commencement of
business as a Housing Finance Company. The company commenced its lending operations in July
2009 and as on September 30, 2014 had a total portfolio of Rs. 7699 crore. During the financial year
ended March 31, 2014 TCHFL reported a Profit after Tax of Rs. 58.28 crore on an asset base of Rs.
6429 crore against a PAT of Rs. 27.88 crore on an asset base of Rs. 4317 crore in the previous
financial year.
During the half year ended September 30, 2014 the company reported a PAT of Rs. 30.6 crore on an
asset base of Rs. 7654 crore against a PAT of Rs 26.07 crore and asset base of Rs 4317 crore core.
As on September 30, 2014, the company had a net worth of Rs. 692 crore and reported capital
adequacy of the company was 15.13%. As on March 31, 2014 the company operated out of a network
of 61 branches.
Tata Capital Limited
Primal Investments and Finance Limited was established in March 1991 and the name was changed to
Tata Capital Limited in May 2007. TCL is a subsidiary of Tata Sons Limited and as on March 31, 2014
TSL had a 90.28% shareholding in TCL. TCL is registered as Core Investment Company (CIC) and is
the holding company for the various financial services of the group including TCFSL, Tata Capital
Housing Finance Limited (TCHFL) and Tata Securities Limited. TCL also holds strategic and private
equity investments. As on March 31, 2014 the company had a net worth of Rs. 3971 crore and had an
asset base of Rs. 4484 crore. During FY14 TCL reported a PAT of Rs.77.6 crore.
Tata Sons Limited
Tata Sons Limited (Tata Sons), founded in 1917 by the Tata Group‟s founder, Shri J N Tata, is the
principal holding company for the Tata group and owner of the Tata brand and associated Tata
trademark. Charitable trusts including those endowed by the late Sir Dorabji Tata own majority of Tata
Sons‟ shareholding at 66%. While income from dividends and profit generated on sale of investments
constitute the principal revenue source for the company, it also includes royalty fees earned from
group companies for using the Tata brand. Such fees however are largely spent on the management
of the brand. Tata Sons also provides certain group level services to the Tata companies, key amongst
them being facilitating Business Excellence within the Tata Group by conducting training programme
(through Tata Quality Management Services), legal assistance and HR services. Tata Consultancy
Services division (TCS, one of the largest software companies in India and the highest contributor to
Tata Sons in terms of revenues and profits) was spun-off as a separate entity during 2004-05.
Currently, Tata Sons‟ equity investments are spread across seven major industry segments and
include investments in flagship concerns like Tata Consultancy Services Limited, Tata Steel Limited,
Tata Power Company Limited, Tata Motors Limited, Tata Chemicals Limited, Tata Teleservices
Limited, Tata Global Beverages Limited and so on.
January 2015
For further details please contact:
Analyst Contacts:
Ms. Vibha Batra, (Tel. No. +91-11-4545 302)
[email protected]
Relationship Contacts:
Mr. L. Shivakumar, (Tel. No. +91-22-2433 1084)
[email protected]
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