Godrej Capital Ltd will need₹1,000 crore a year for the next four years of equity capital, consistent with its aim to raise its loan book from about ₹8,000 crore now to ₹50,000 by around 2028, the company’s Managing Director & CEO, Manish Shah, told journalists here today. 

Godrej Capital is the holding company of the two operating subsidiaries, Godrej Housing Finance Ltd and Godrej Finance Ltd. The latter focuses on MSME lending.  

Godrej Capital will “go to our Board” for the equity, Shah said, ruling out raising funds from the market. The three-year-old company is, however, open to private equity, but said that there isn’t any proposal on the table right now; it first must generate sufficient track record to attract investments. 

The company, which broke even last quarter and expects to close the year with a profit, says its “sweet spot” is MSME customers whose turnover is between ₹5 crore and ₹50 crore. Its ticket size for secured loans is around ₹1.5 crore; for unsecured loans (such as for working capital, which it launched only a few months ago) its average loan size is ₹15-20 lakh. Lending rate can is anywhere between 8.75 per cent and 13 per cent. 

Nirmaan ready

In April, Godrej Capital had announced that it would bring in Nirmaan, a platform to help MSMEs grow their business “through expert advising, efficient facilitation and innovating financing solutions.” It is a not-for-profit initiative, which however might help expand the customer base later.  

Today, Shah said that the platform is almost ready for a pilot launch, with 10,000 customers and about ten partner companies.  Explaining the rationale behind Nirmaan, Shah observed that finance companies typically end up rejecting half of the loan applications received. (Godrej Capital’s approval rate is between one-third and half, he said.) If a loan application is rejected, the link between the loan applicant and the finance company ends.  

Godrej Capital’s idea is to convert the transactional relationship into a long-standing one. So, the company will help the loan applicant in whichever way possible to enhance his business—including by facilitating sales of any products to the Godrej group companies. 

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