Muthoot Cap Plans to Raise .₹ 450 cr to Fund Ex­pan­sion

Co to mo­bilise funds by rais­ing sub­or­di­nated debt, pub­lic de­posits, NCDs and bank loans

The Economic Times - - Economy: Macro, Micro & More - Ke­tan.Thakkar@ times­

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%.

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