Muthoot Capital Services (MCSL), one of the fastest growing NBFCs in India, has switched gears to used car financing, in a slow progression from its core business of two-wheeler credit. The south India-based vehicle financier, part of the 130 years old Muthoot Pappachan group, has also notched 80% growth in business in North this fiscal, especially in Gujarat and parts of Maharashtra, including Mumbai and Pune. Recently, the company had got QIP (qualified institutional placement) shareholding from nine MFs, namely Aditya Birla Capital, Sundaram Mutual, SBI MF, DSP Blackrock, India Small and Midcap Gems Fund, Morgan Stanley France, IDBI Mutual, Aurigin Master Fund Limited, GS Singapore Entity.
“We have piloted a used car financing scheme in the current fiscal and its a natural upgrade. Consider this, in last 10 years, we’ve disbursed over 12 lakh loans for two-wheelers alone. As its a critical mobility product for the customer, rather than a life-style product, there’s rapid demand for credit, in tune with the Rs 7,000-crore two-wheeler market. Now, we’ve realised that time is ripe to move this bottom-of-the-pyramid customers to the four-wheeler segment. The used car financing programme addresses this shift,” Vinod Panicker, CFO, Muthoot Capital, told FE. However, as much as 90% of the company’s business is still rooted in two-wheeler loans, as they fetch steady demand from up trends in rural demand and normal-to-good monsoon.
In the first quarter of the current fiscal, the net profit grew 238% vis-a-vis, the same period in last year. Loan portfolio grew from Rs 1,058 crore to Rs 2,367 crore, year on year. Total asset under management (AUM) grew by 51% to `2,367 crore, as on June 30, 2018, including securitised portfolio of Rs 453.7 crore. The parent group Muthoot Pappachan, one of the biggest employers in the country with 20,000 staffers, is spread out through 3,500 branches pan India. So Muthoot Capital Finance’s plan to breaking into new geographies is no pipe-dream. “Last year, we registered our presence in west,east and north — especially in Himachal, Uttarakhand, Gujarat, West Bengal and Maharashtra. Though south accounts for 75% of business, the major growth was in non-south markets,” says Panicker.