Muthoot Microfin is looking at raising a total of Rs 9,000 crore in this fiscal year through external commercial borrowings (ECBs), banks, non-convertible debentures (NCDs), chief executive officer (CEO) Sadaf Sayeed said. The microfinance lender is looking to utilise the funds to opening more branches, among other things.
In terms of operations, Sayeed said that the lender will look at growing slowly in Bihar due to issues pertaining to stress on the portfolio.
Though no major stress is seen, the lender will open fewer branches in Bihar compared to states like Telangana and Andhra Pradesh and other south-Indian states where Sayeed said that Muthoot Microfin will open more branches.
Edited excerpts from the interaction.
Fall in disbursements, lower customer additions in Q1, how do you look at your Q1 numbers?
Our disbursements were down consciously because we had some challenges in Q1. One was the general elections which were going on and so because of which we consciously reduced the disbursements. And usually Q1 is a slower quarter plus there was a bit of a heat wave impact because there was excessive heat during Q1 in the northern part of India. And this was a challenge of getting customers into the center meeting.
Also the field staff finds it difficult to travel. So that's why there was an impact on disbursement, but we were very conscious and prudent in terms of our numbers.
What are the fundraising plans for FY25? How much are you looking at borrowing through ECBs?
From January till now, we have raised around Rs 1,000 crore through external commercial borrowings (ECBs). Going forward also, we will access more ECBs. Our effort is that in this financial year, we would raise around Rs 2,500 crore in ECB, and around Rs 400 crore is in the pipeline and another Rs 1,000 crore we will do in the remaining year.
Our bank borrowing is around 70 percent, out of which 48 percent is in the form of term loans and another 22 percent in the form of other structured instruments. And rest of the 30 percent of our borrowing is in the other format, which is ECB, non-convertible debentures (NCDs) and other instruments.
In the medium term, we would want to take this to a 60-40 percent ratio. And in this financial year, we plan to borrow in the range of around Rs 8,000 crore to 9,000 crore through these channels.
We have seen in the recent past some concern on high interest charged by some MFIs and the same highlighted by RBI. How has Muthoot Microfin worked on this?
We are conscious of the developments and our growth targets are moderated anyway. We have projected a 25 percent growth and we will retain that. This growth will come from our core markets, which are the states of Kerala, Tamil Nadu, Karnataka and we have also entered Andhra Pradesh and Telangana too. These two states have relatively less penetration of MFIs as of now so we will be focusing on these markets as well.
Also, there were reports of some business pressure for MFIs in some eastern and north eastern states. How is that working for you?
Bihar is a place which saw a lot of MFI action. And hence, we will be a little isolated. We have rationalised the disbursement that we need to look at Bihar. Our combination of new to credit and existing customers earlier was around 50-50.
What will be your guidance for FY25?
Yes, we have given guidance of 25 percent growth on assets under management (AUM) and by the end of this fiscal, we would be somewhere around Rs 15,000 crore of AUM.
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