Arohan Financial Services Limited | Annual Report 2022-23

limit of INR 409 Cr. Further, the Liquidity Coverage Ratio (LCR) as of the financial year end was reported at 415%. RAISING FUNDS DURING THE YEAR THROUGH STRUCTURED FINANCE The appetite for Microfinance loans changed during the FY 2023, post the RBI harmonization, and the evolving macro-economic situation as the further spread of COVID-19 reduced. This led to a growth in Non-Recourse Transactions (DA) in the business year, across the microfinance industry along with Partial Recourse Transactions (PTC). Accordingly, multiple Partial Recourse Transactions were executed during the financial year. The Company has raised over INR 1,531 Cr in the FY 2023 through these two modes i.e. PTC (INR 985.11 Cr) and DA (INR 545.90 Cr). Arohan raised INR 115 Cr of subordinated debt in the form of Non-Convertible Debentures and INR 248 Cr in equity through CCPS in this financial year. The Company has reported a healthy Capital Adequacy Ratio of 28.74% as on March 2023. The Company preferred to retain its diversified lender base and borrowed from various lenders and ensured to remain liquid while maintaining a low Cost of Borrowing. Currently, Arohan has active relationships with 40 lenders. Some of the prominent lender relationships are with the International Finance Corporation, State Bank of India, Bank of Baroda, Indian Bank and IDFC First Bank along with Development Financial Institutions such as SIDBI and NABARD. During the financial year, Arohan successfully established new lender relationships with a few more institutions including IndusInd bank, Mahindra Finance, Manapuram Finance and Credit Saisson. The graph below depicts our borrowing mix as of March 31, 2023. 21% 45% PSUs Private Banks NBFC & FIs 34% 6% 2% 22% 0.02% 62% 9% Term Loan Sub-Debt CC & RC Sec & Assign ECB NCDs CREDIT RATING Arohan is a dual credit-rated organisation. During FY 2023, both CARE and ICRA have reaffirmed the Company’s rating as “A-”, while ICRA has revised the outlook to Stable outlook from earlier the negative outlook. The Company has obtained the highest grading of MFI-1 from CARE Advisory Limited. This grading is a testimony of Arohan’s commitment to continue operating with a high degree of transparency while maintaining financial and operational sustainability and scalable processes. Way forward in FY 2024 To ensure healthy growth and support its expansion plans, the Company expects to raise ~INR 6000 Cr in debt through multiple instruments including Term Loan, External Commercial Borrowings (ECB), Direct Assignment, and Securitization. The Company will also expect to diversify its lender base to include new lenders from the domestic, as well as international markets while also reducing the cost of borrowing. Management Discussion & Analysis Annual Report 2022-23 | 52