Manappuram Finance Ltd, which is planning its maiden public issue of bonds, is targeting gold loan receivables of Rs 12,000 crore by the fiscal-end.
“We plan to use 75 per cent of the issue proceeds for business requirements,” Mr N. Raghu Mohan, Joint General Manager – Treasury, Manappuram Finance, told Business Line . Currently, the NBFC's gold loan receivables stand at Rs 9,000 crore, including a portfolio of Rs 630 crore given to commercial banks.
As of March 2011, the NBFC had assets of Rs 7,500 crore under management, almost three times the previous fiscal's Rs 2,590 crore. The growth has been possible thanks to the NBFC's reach to people “who want short-tenor loans, which takes a long time to avail through banks,” he said. The NBFC has about 2,300 branches, he said.
Manappuram Finance is planning to raise additional funds through similar issues, commercial papers, and bank debt for furthering its loan book and expanding its branch network. Its current capital adequacy ratio is 29.5 per cent.
The NCD issue proceeds of Rs 750 crore would be used to “offset the volatility arising from the fluctuating interest rate scenario,” he said. According to him, the interest rate movement has impacted the cost of borrowing for the NBFC, but has not “hindered availing unrealised limits”.
Mr Mohan also said the RBI's directive on priority sector status to NBFCs has “had a small impact” on his company's net interest margins. Currently, Manappuram Finance's NIM is at 14 per cent, while its yield on advances is over 25 per cent.