Overview – The Sonata Finance Bond on Altifi

Details of the offering:

• Name of the Issuer: Sonata Finance Pvt Ltd
• Product: Senior Secured Bonds (regulated by SEBI)
• Yield: 10.75% p.a.
• Tenure: 15 months
• Min Investment: ~Rs. 10,22,000
• Interest repayment: Quarterly
• Principal repayment: Maturity
• Rating: India Ratings “BBB+“

Key Highlights:

• Sonata is a leading microfinance institution in India, registered with the RBI
• The company’s shareholders include marquee equity investors including SIDBI, Proparco, Triodos Investment Management, Creation Investments and Caspian Funds, as of Mar’23.
• Kotak Mahindra Bank has announced its acquisition of Sonata Finance - https://www.kotak.com/content/dam/Kotak/about-us/media-press-releases/2023/media-release-sonata-10th-feb.pdf
• The company has been continuously profitable for last 5 years despite macroeconomic shocks like Covid-19.
• The company has witnessed strong growth in FY23 - balance sheet grew by ~40% to INR 2,405.07 crore, revenue growth by 33% reaching INR 406.77 crore and PAT grew by 200% to INR 41.56 crore

Overview:

Sonata Finance Private Limited is a Microfinance company registered as NBFC-MFI (Non-Deposit taking) Non-Banking Finance Company with Reserve Bank of India, with its registered office in Lucknow.

Established in 2006, the company provides JLG (Joint Liability Group) and individual loans to primarily women borrowers across the country. It has operations across 130 districts in 9 States, viz., Uttar Pradesh, Madhya Pradesh, Jharkhand, Maharashtra, Uttarakhand, Punjab, Haryana, Bihar & Rajasthan. Sonata provides loans to joint liability groups as well as individuals for a range of income-generating activities. It caters to more than seven lakh clients mostly, in rural and semi-urban areas. Besides lending for income generation activities, the company provides a wide range of products including sanitation loans, housing loans, utility loans, two-wheeler loans individual loans and MSME loans and to meet the financial needs of its customers.

Management:

Mr. Anup Kumar Singh is one of the pioneers in India’s microfinance sector with more than 20 years of experience to his credit. He is presently serving as the Managing Director on the Board of the company. Before establishing the company, Mr. Anup underwent training with Grameen Bank in Bangladesh. Mr. Singh was associated for more than 8 years with the Cashpor group of Companies, and was acting as an ex-officio chief executive. He holds a Master’s degree in Economics & Sociology, a Postgraduate Diploma in Rural Development and Management, and a MBA in Finance.

Key Financials:

All figures in INR crore

The various Products of the company are as follows:

Loans:

Income Generating Loans:

Sonata’s core offering is a basic loan product, which is strictly restricted to income generating activities. It ranges from Rs. 20,000 - Rs. 1,00,000 for a tenure ranging from 12-24 months.

Individual Lending:

The Company offers Individual Loans ranging from Rs. 28,000 – Rs. 1,00,000 for a tenure ranging from 24-36 months to its existing borrowers with excellent repayment record in the form of business loans to facilitate financing of small enterprises.

Micro Enterprise Loan:

The Micro Enterprise Loan product was introduced for the purpose of supporting clients for Business or Asset Expansion, Working Capital requirement or Term Loans. The loan amount is in a range of Rs. 1,00,000 – Rs. 5,00,000/- for a tenure of 24 to 36 months.

Utility Finance:

The Company has innovatively developed products for financing bicycles, stoves and sewing machines as well – which are not only enablers to business but also provide relief to the poor. It ranges from Rs. 10,000 – Rs. 20,000 for a tenure of 6 to 18 months.

Sanitation Loan:

The Company offers sanitation loan products to its clients to help them live a life of dignity. The loan is offered for construction of toilets, bathrooms, and water connections. The amount of loan under this head ranges from Rs.15,000 - Rs. 35,000 for a period of 18 months.

Home Improvement Loan:

The Company offers Home Improvement Loan to their clients to facilitate repair, renovation, additional construction or completion of the property. It is in the range between Rs. 20,000 – Rs. 80,000 for a maximum period of 36 months.

Two Wheeler Loan- Sonata Wheels:

In order to tap its rural clientele base in its area of operations, Sonata has introduced two wheeler loans. It ranges from Rs. 30,000 – Rs. 60,000 for a maximum period of 36 months.

Lenders:

The prominent lenders in Sonata include:

Banks:

• Federal Bank
• YES Bank
• Bank of Baroda
• Union Bank
• DCB Bank
• Andhra Bank
• Vijaya Bank
• South Indian Bank

Financial Institutions:

• NABARD
• SIDBI

Disclaimer: The content of this blog should not be considered as financial or investment advice. Readers/Viewers may consult their financial advisor before any investment.