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ASIRVAD Microfinance has set a target to grow its loan book to Rs 3,000 crore by March 2018. With no paucity of funds, the company has been multiplying its portfolio following its acquisition by Manappuram Finance in February 2015.
In the last 18 months, Asirvad has grown its portfolio from Rs 310 crore to Rs 1,500 crore, while the number of borrowers has gone up from over three lakh to nine lakh; the number of branches has increased from 140 to 510.
“The promoters and the investor Lok Capital were not able to infuse fresh funds into the company. Hence, we faced constraints in achieving further growth. Manappuram bought 85 per cent of the equity and has so far invested Rs 210 crore in the company. Of this, Rs 45 crore went to the investor as secondary sale of the equity, while the company got the remaining Rs 165 crore. Leveraging this amount by around six times, we brought in finance of another Rs 900 crore into the business,” said SV Raja Vaidhyanathan, MD and CEO, Asirvad Microfinance.
At present, banks account for 50 per cent of the finance, followed by NBFCs (30 per cent) and securitisation (20 per cent). As the eight large MFIs are set to exit the business after becoming differentiated banks, bank finance under priority lending rates will be available for players like Asirvad. “The credit rating of the company also has gone up — from BBB+ to A+ — since Manappuram came in. This has helped us in getting bank finance. We hope bank finance to go up to 75 per cent,” he said.
The company has also been expanding its presence to become a pan-India player. It currently operates in 12 states and aims to add three more states to the list by the year-end. However, Tamil Nadu, Karnataka and Kerala account for close to Rs 1,000 crore of the company portfolio.
The firms says efforts are on to operate in full capacity in the north-Indian branches, and hopes that the contribution of Tamil Nadu and Karnataka comes down to 40 per cent by March 2018.
Manappuram will be further infusing Rs 100 crore as tier I capital by the next June quarter. Asirvad will also be issuing non-convertible debentures of Rs 75 crore by December this year.
“With Manappuram’s backing, there will not any paucity of funds and this will help us scale faster,” added Vaidyanathan.