Muthoot Cap Plans to Raise .₹ 450 cr to Fund Expansion
Co to mobilise funds by raising subordinated debt, public deposits, NCDs and bank loans
Mumbai: Kerala-based two wheeler financing firm Muthoot Capital Services plans to raise .₹ 450 crore this fiscal year to fund its business expansion.
The plan is to mobilise the funds, including raising a subordinated debt of .₹ 50 crore, public deposits of .₹ 50 crore, .₹ 150 crore of non-convertible debentures, and balance .₹ 200 crore through bank loans, a senior company official said. “So far the company’s requirement was met by financing from banks, but now we are planning to diversify sources of finance,” R Manomohanan, chief executive officer at Muthoot Capital Services, said.
“We have definite plans to have tier-II capital. We have specific plans for subordinated debt or si- milar instrument and it will be qualified,” he said. Having dispersed loans worth more than .₹ 1,000 crore in the year-ended March, the flagship company of Muthoot Pappachan Group eyes a 50% growth in its business for the current year, led by geographical expansion of two-wheeler financing business and growth in corporate funding business.
Muthoot Capital Services posted a 19% growth in its turnover for FY16 at .₹ 228.5 crore. Its profit grew marginally by 2.5% to .₹ 22.9 crore, pulled down by higher non-performing assets (NPA) on account of stringent central bank norms. Manomohanan said the company targets to bring down its NPA to 3.5% of the overall book size from 4.34% last fiscal year by improving efficiency and reducing costs.
As part of its cost-cutting measures, Muthoot Capital Services plans to redeploy its workforce and outsource collection work to over 60 outside agencies.
Muthoot Capital Services started offering corporate loans last year to bring stability to its books. Its expansion to north and east India is expected to boost its two-wheeler finance business this year.
The company expects about .₹ 150crore incremental disbursals from non-south markets in FY17, up from just .₹ 3 crore last fiscal.
Muthoot Capital Services’ loan book touched .₹ 1,039 crore in FY16, including .₹ 919 crore of two-wheeler loans. Manomohanan said the company targets to increase its loan disbursals to cross .₹ 2,500 crore in 3-4 years, with corporate loans accounting for 40%.