Rationale

The ratings upgrade factors in Blacksoil Capital Private Limited’s (BCPL) improving scale of operations, satisfactory financial profile with a consistent track record of adequate capitalisation and profitability, and the completion of its merger with Caspian Impact Investments Private Limited1 (CII). The integration is expected to support BCPL’s business profile by expanding its customer network and generating operational synergies through complementary capabilities across both entities. Besides, the capital structure has strengthened following the onboarding of CII’s institutional shareholders and lenders. The merger, announced in September 2024, received Reserve Bank of India (RBI) approval in March 2025 and National Company Law Tribunal (NCLT) clearance in October 2025, with combined operations effective from October 31, 2025. Post merger, the unified business operates under the ‘Blacksoil’ brand, and CII’s small and medium enterprise (SME) loan product has been rebranded as Udhyam Debt. BCPL’s post-merger capitalisation was marked by a net worth of ~Rs. 635 crore and gearing of 1.9 times as on October 31, 2025 compared to Rs. 485 crore and 1.4 times, respectively, as on March 31, 2025. Subsequent capital infusions of Rs. 60 crore by Dutch Entrepreneurial Development Bank (FMO) and Rs. 5 crore by Mr. V Prasad (promoter of CII) in December 2025 further strengthens the capitalisation profile. While ICRA notes that incremental growth will be largely debt-funded and the leverage is expected to rise over the medium term, the management has indicated their intent to operate with a gearing of less than 3.0 times in the medium term. BCPL’s headline profitability has been steady over the years with a consolidated return on managed assets (RoMA) in the range of 3.0-4.0% during FY2020-FY2024. However, the profitability moderated in FY2025 (RoMA: 2.8%), given the contraction in lending spreads following the marginal uptick in borrowing costs due to efforts to expand the lender base and the systemic interest rate trajectory in the period preceding December 2024. Additionally, investment income declined following the sale of investments in units of alternative investment funds (AIFs) managed by Blacksoil Asset Management Private Limited (BAMPL; wholly-owned subsidiary of BCPL)2 . While the merger will gradually lead to benefits of economies of scale, BCPL’s headline profitability will be impacted during the transition phase due to CII’s relatively modest profitability