AB Ratings Press Release Petes Rak Ope Nirmaan RMBS Trust - Series |- 2018 Originator: Dewan Housing Finance Corporation Limited ‘August 13, 2018 ati Credit Enhancement (Rs. Crs.) Amount Tenure Rating / Rating Becese Instrument [Rs. crore) Wield | (nonths) | Credit Opinion? ‘Action Over Credit | Collateral | Collateral Spread Serice | ing onethoceand four Provisional CARE AAA, Tracy | bude eleven crore Oana 4305 | ata Certificates. and ee lakh ObI on) only) Fixed | 181 Assigned 309.29 Equivalent to second 42.65 Provisional CARE At city | (Rs:Forty three crore (50) [CARE Single A ~ ns eay and sixty-five lakh only) plus (Structured Obligation)) Dei of instruments facies in Annexure T Credit-cum-liquidity Enhancement Particulars ‘Amt (Rs. crore) % of POS second Loss Failty (SL) 43.65 3.00 First Loss Facility (FL) 72.15 5.00 Total sar 8.00 Over Collateral 23.65 3.00 Excess Interest Spread> 309.29 21.26 "The tenure may change due to prepayments / foreclosures in the pool $Excess interest Spread (EIS) s calculated based on indicative yield to PTC investors. E15 arising inthe transaction shall be ‘available for meeting the shortfalls in corcesponding poyout and replenishment of Credit Collateral. The remaining EIS, if any, wil flow back to the assignor. However, subject to certain conditions, EIS would not flow back to the originator and be deposited ina Fixed Deposit Account by the Truste. Detailed Rationale & Key Rating Drivers CARE has assigned a rating of ‘Provisional CARE AAA (S0)' [pronounced as ‘Provisional CARE Triple A (Structured Obligation)’| to the Series A PTCs issued by Nirman RMBS Trust ~ Series | - 2018 backed by Housing, Plot Loans, LAP and. SME loan receivables (Principal outstanding Rs. 1,455.10 Cr) originated by Dewan Housing Finance Corporation Limited {DHFL), and Credit Opinion equivalent to ‘Provisional CARE A+ (SOJ' [pronounced as ‘Provisional CARE Single A plus (Structured Obligation)'] rating to the Second Loss Facility. The Second Loss facility amount needs to be paid back at the tend of the transaction. Its rated based on ultimate payment structure. ‘The rating / credit opinion is provisional based on the structure provided to CARE by DHFL, the Originator and Assignor. The rating will be confirmed after the copies of legal documents executed in accordance with the structure, a due fence audit report by an external auditor and an independent legal opinion is furnished by the Assignor, to the satisfaction of CARE. The rating is based on the credit quality of the underlying loans, the transaction structure and defined payment mechanism, support in the form of credit-cum-liquidity enhancement facility and the sound legal structure of the transaction. CARE has also factored in its experience in past rated-pools’ performance and the track record and overall performance of DHFL. ‘Complete definitian of the ratings assigned are available at www.careratings.com and other CARE publications 7 CARE Ratings LimitedAB Ratings Press Release Pre Rak Ope Detailed description of the key rating drivers The credit-cum-liquidity enhancement includes over collateral, credit collateral and subordination of excess interest spread (EIS) in the structure, Over collateral of Rs. 43.65 Cr is subordinate to the Series A PTCs. Credit collateral of Rs. 116.41 Gr will be in the form of fixed deposit with a lien marked in favour of the trust or in the form of guarantee as per CARE's criteria, Subordination of Excess Interest Spread (EIS) and over collateral is also available as a credit enhancement. EIS arising in a month shall be available for meeting the shortfalls in corresponding monthly payout and replenishment of Credit Collateral. The remaining EIS, if any, in that month will flow back to originator. However, subject to certain conditions, EIS would not flow back to the originator and be deposited in a Fixed Deposit Account by the Trustee. This transaction is structured at par. The scheduled payouts to the Serias A PTCs would be made on a monthly basis. DHFL will act asthe servicer to the transaction, In order to cushion against any negative fallout due to ‘basis risk’, the proposed structure incorporates a Cash flow Trapping Mechanism. In the event of the pool yield falling below a certain pre-defined threshold, the Excess Cash Flow ‘would not flow back to the originator. It would be deposited in the designated Fixed Deposit Account by the Trustee. This trapping mechanism would continue until such time that the deposited cash flow is equal to 3.00% of initial POS, and would be accumulate, until the pool IRR remains below the pre-defined threshold, The pool assigned to the SPV by DHFL, consists of 4,950 loan contracts aggregating to principal outstanding of Rs. 41,495.10 crores. Loan contracts comprise LAP: 40.33%, SME: 30.11%, HL: 19.27% and Plat: 10.28% loan receivables generated in the ordinary course of business through finance extended by the originator to salaried (28.59%) or self- employed (71.41%) individuals. Plot loans are lent to fund the purchase of land (residential plot) and subsequently Construct a house on the plot in the agreed time line. As per NHB guidelines, the HFC is permitted to treat these loans as 2 “Home Loan’ for the first three years from sanction and disbursement. Loan receivables are backed by mortgage of property. The pool has high weighted average net seasoning of 24.93 months on the pool cut-off date. The pool is well diversified in terms of geography; top three states being 41.24% of the pool principal, and top state 19.42%. The pool is concentrated in terms of obligor exposures, with the top loan contract accounting for 1.26% of the pool; and top ten contracts comprising 10.45% of POS. CCARE has rated 13 pools of DHFL and has analyzed the performance of these pools. Key characteristics of assigned pool as on cut-off date June 30, 2018 are as below: Description Value Asset Type Housing Plot Loans, LAP & SME loans No. of Loans 4.950 Pool principal (Rs. Cr 1,455.10 Poo! cash flows (Rs. Cr) 2,593.50 ‘Average Original Loan Amount (Rs.) 33,66,489 ‘Average POS (Rs.) 29,39,592 ‘Amortization (54) 12.68 Weighted Avg, Instalment to Income Ratio (IR}* (%) 45.68 Weighted Avg. Original Loan to Cost Ratio (UCR)* (%) 48.72 Weighted Avg. Rate of Interest (ROI)* (%) 1173 Weighted Avg, Initial Tenure* (months) 163.61 Weighted Avg, Net Seasoning* (months) 24.93 Weighted Avg. Balance Tenure® (months) 133.43 Top 10 Obligors (%) 10.45 Top 5 branches (4) 24.07 (OD contracts (Current, OD) 100%, 0% Top 3 states - Property location (%) 41.24 Key Rating Strengths: Available Credit Enhancement comprising of Credit Collateral of Rs. 116.41 Cr (8.0% of POS), Over Collateral of Rs. 42.65, Cr [3.0% of POS) andl EIS of Rs. 309,29 Cr (21,26% of POS) High net seasoning of 24.93 months, and amortization of 12.68%, aT CARE Ratings LimitedAB Ratings Press Release ‘Prose Mah Cpe Geographics diversion with op 2 states comping 4.2% of oo Key Rating Weaknesses: Top 10 contracts account for 10.45% of POS, indicating high obligor concentration. Basis risk due to fixed rate of PTC and variable rate of underlying loans Analytical approach & Applicable Criteria CARE’s methodology for Asset / Mortgage Backed Securitization Key Rating Assumptions 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 performance of static pools provided by the originator and overall portfolio performance of the originator. Considering the borrower profile, nature of loan, pool characteristics, portfolio performance and credit profile of originator, CARE has assumed the shortfall between 3.0% ~ 4.0% 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. About the Company Incorporated in 1984, DHFL is the third-largest housing finance company in India with total AUM of Rs. 1,10,086 crore as fon March 31, 2018, The company has a successful track recard of aver 30 years of lending in the low and middle income group in Tier Il and Tier Ill cities, primarily to salaried individuals. DHFL had a loan portfolio of Rs. 91,932 crore as on March 31, 2018. The company operates through a network of over 347 offices (incl. branches and service centres). During FY18, DHFL earned consolidated PAT of Rs, 927 crore (Rs. 729 crore in FY16) on total incame of Rs. 8,631 crore (Rs. 6,971 crore in FY16). As on March 31 2017, Net NPA ratio was 0.58% (0.58% as on March 31, 2016). The Capital Adequacy Ratio (CAR) \was comfortable at 15.29% as on March 31, 2018, as compared to 19.34% as on March 31, 2017. Asset quality was stable, with Gross NPA ratio at 0.96% as on March 31, 2018; as compared to 0.94% as on March 31, 2017. Brief Financials (Rs. erore) FYI7 (A) Fvi8 (A) Total operating income 8,654 10,025 Reported PAT 2,896. 1172 Interest coverage (times) 1.51 123 Total Assets 92,206 107,436 Net NPA (%) 0.58 0.56 ROTA (%4) 116 LIT Status of non-cooperation with previous CRA: Not Applicable lating History for last three years: Pleace refer Annexure-2 Note on complexity levels of the rated instrument: CARE hos classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulatars or others are welcome 10 write to care@careratings.cam for any clarifications. Analyst Contact: Name: Ramadasu Bandar Tel: 022-67543402 Mobile: 91-9769592242 Email: ramadasu,bandaru@ careratings.com ***For detailed Rationale Report and subscri information, please contact us at www.careratings.com ‘About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India, CARE Is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAl) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the ladian capital market built around investor confidence. CARE Ratings provides the entire spectrum aT Cane Ratings TedAB Ratings Press Release Petes Rak Ope of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own rsk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CCARE’s ratings are opinions on credit quality and are nat recommendations to sanction, renew, éisburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources belioved 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 of for the results obtained from the use of such information. Most entities whose bank faclties/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank faciitias/instruments. In case of partnership/proprictary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook 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. Annexure-1: Details of Instruments/Faci Name of the Date of Coupan ‘Maturity [Size ofthe Issue [Rating assigned along] Instrument tesuance Rate Date (Rs. crore) _| with Rating Outlook Series A Pass Through Provisional CARE AAA Centfcates : - - 1Ai.ad (60) Provisional CARE Ae Socond Loss Faclity - - - 43.65 ‘oo. Annexure-2; Rating History of last three years: Current Ratings Rating history sp, Name ofthe am Date(s) & | Datels)& | Date(s) & | Datels) & | Instrument/Bank yount Rating(s) ) | Ratingtey | Retin) fe Macias (TWP) Outstanding |Rating | seemed | aarignedin | asaignedin | 6Ned ss crore) 2018-2019 2017-2018 2016-2017 oie ~ Provisional Sera as "Irmugrcatieste] | M144 CARE ABA Provisional 2|sscondtoseractay] ur] sa.65 |"GaReae'| . . . {so} aT Cane Ratings TedPress Release ‘Ms. Meenal sikehi Cell: +91 98190 09839 E-mail: mecnal sikchi@careratings.com (Ms, Reshma! Narvankear Cell: +91 99675 70625 E-mail; cashmi.narvankar@careratings.com AB Ratings CONTACT Head Office Mumbai Mr. Ankur Sachdeva CCel:+91 98196 98985 E-mail: ankur sachdeve @careratings.com (Mr, Satkat Roy Cell:+91 98209 98779 E-mail ssikat.sov@careratings.com CARE Ratings Limited (Formerly known as Credit Analysie & Research Ltd.) Corporate Office: sth Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022 Tel: #91-22-6754 3456 | Fax: +91-22-6754 2457 | E-mail: core@careratings.com AHMEDABAD ‘Mr, Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satelite, Ahmedabad - 380015, Cell: 491-9099028864 Tel: 491-79-4026 5656 E-mail: deepak praiapati@careratings.com BENGALURU (Mir V Pradeep Kumar Unit No. 1101-1102, 21th Floor, Prestige Meriian I, No. 30, M.G. Road, Bangalore - 560 001. cell: #91 98407 54522 Tel: #91-80-4115 0445, 4165 4529 Email: pradseo,kumar@careratinas.com ‘CHANDIGARH ‘Mr, Anand Jha SCF No. 54-55, First Floar, Phase 11, Sector 65, Mohali ~ 160052 Chandigarh Cel: +91 a5111-53911/99251-42264 Tel: #91-0172-490-4000/01 Email: nan jhaw@careratings com ‘CHENNAL ‘Mr. V Pradeep Kum: Unit No. 0-509/C, Spencer Plaza, Sth Floor, No. 769, Anna Salsi, Chennai - 600 002. Cell: 491 98407 54523 Tol: 491-44-2849 7812 / 0811 Email: pradsep.kumarGieareratings.com cOIMBATORE (Mr. V Pradeep Kumar T.3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore - 641 037. Tel: #91-422-4332399 / 4502399 Email: pradeep.kumar@careratings.com HYDERABAD (Mr, Ramesh Bob 4401, Ashoka Scintilla, 36-502, Himayat Negor, Hyderabad ~ 500 023. Cell: + 9190520 00522 Tel: 191-40-4010 2030 E-mail: ramesh.bob@careratings.com JAIPUR (Mr. Bikhil Soni 4204, Pashupati Akshat Heights, Plot No. 0-91, Madho Singh Road, Near Cellectorate Circle, Bani Park, Jaipur - 302 O16. Cell: 491 ~ 95490 33222 Tel: 491-141-402 0213/14 E-mail: rkhilsonim@careratings.com KOLKATA (Mis. Pritt Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 120A, Shakespeare Sarai, Kolkata - 700.071 Cell: #91-98319 67110 Tel: 91-23-4018 1600 E-mail: prt anarwal@ careratings.com ‘New DELHI ‘Ms. Swat Agrawal 13th Flaor, €-1 lock, Vieacon Tower, shandewalan Extension, New Delhi - 110 055. Cell: 491-98117 45677 Tel: +91-11-4533 3200 E-mail swat. ograwal@careratings.com PUNE ‘Mr.Pratim Baneriee ‘9th Floor, Pride Kumar Senate, Plot No, 970, shamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: 491-98361 07331, Tel: 491-20- 4000 9000 E-mail: pratin baneriae @careratings com CIN - 157190MH1993PLC071691 sT CARE Ratings Limited