Capital First to raise capital, deal to up capital adequacy

Anuj: About 17 percent is a large equity dilution - what was the need for that because as you have mentioned in the press release that your capital adequacy ratio was already quite strong so what was the need for this large scale equity dilution?

A: The dilution is close to about 14 percent actually. This is a financial services company and it’s good to be adequately capitalised. Secondly as far as the growth opportunity is concerned for the next two-three years we continue to see significant opportunities. In the last two years we have been growing at 30 percent per year compounded and we see this opportunity in future as well. So, in that sense it makes sense for us to raise some additional equity for growth.

Ekta: Post this preferential issue that will be completed of Rs 178 crore, what will the capital adequacy ration stand at?

A: Right now the capital adequacy is 21.4 percent and after this issue it will be 24 percent.

Ekta: Would there be any more incremental money that you will look to raise via any other sort of source or would you be adequately compensated at least in the near-term?

A: For the next 12-18 months we do not see the need for any additional infusion of capital at this point of time and we are quite comfortable at this point of time.

Ekta: I just wanted to actually focus on the asset under management (AUMs) which you have spoken about in your press release as well. Can you just detail how this current quarter is spanning out for you all in terms of your total assets under management and how exactly business is doing on a fundamental basis as well?

A: Businesses at fundamental level is doing very well and as I mentioned earlier we have grown 30 percent. Last year our assets under management was Rs 7,000 crore, this year it has grown to about Rs 9,070 crore and a substantial part of this growth is coming from the lending to the small and medium enterprises sector that too against pledge of property that frankly is a very large market in India and from the small base we are coming from to continue to post maybe at 30 to 35 percent growth is really not an issue at all. At this point of time that business is doing very well.

The other lines of businesses which we are doing are relatively smaller in ticket size but in a way are quite a niche area for example look at two-wheeler financing business or durable financing business - each one of these businesses from the base we are starting from is growing quite well. So, this Rs 9,000 crore is composed of about Rs 6,000 crore of mortgages and the rest is split between the other businesses.

Anuj: What's the plan going forward, would you be consolidating in some of these businesses or are you looking at some new lines of businesses as well?

A: These three or four consumer businesses are significantly the areas that we are looking to expand in the days to come. We are present in about 40 cities. We have about 1,200 employees, we are originating significant volumes out of this long term lending business which is mortgaged every month and clearly these are business which we are quite happy about.

We feel safe and secure in the current economic environment and of course the equity raise also gives us some additional cushion and additional insurance as far as capital is concerned. The lines of business are in a way insured because they all are secured against property. Between these two-two factors we look forward to good growth in the years to come.

To the shareholders who are probably listening to this program I can very confidentially tell them that the company is doing really very-very good the last many years and we just look forward to continue to grow.