In an in-depth conversation Rajesh Sharma, Managing Director, Capri Global Capital discusses the details of the past funding and future plans:
Ravi Lalwani: What has been the trend in fundraising at your NBFC over the last 5 years?
Rajesh Sharma: Our business is funded through retained profits along with borrowings from banks and market. In the last 5 years, our consolidated borrowings have increased 3x from Rs15.6 bn in FY18 to Rs48 bn in FY22. In the same period, our consolidated net worth has risen from Rs12.5 bn in FY18 to Rs19.2 bn in FY22, driven mainly by retained profits. During FY21 and FY22, we further diversified our borrowing mix through the issuance of debentures and refinance from term lending institutions like NHB, SIDBI, and NABARD. As of March 2022, we had borrowing relationships with 19 financial institutions across commercial banks, MFs, insurance companies, and public sector financial institutions. Our gearing (borrowings / net worth) was 2.6x as of March 2022.
Which are the top 3 sources of funds in the recent past?
Scheduled commercial bank borrowings have been a major source of funds, followed by borrowings from refinancing institutions and NCDs. As of FY22, the share of commercial bank borrowings was 79%; refinance institutions contributed 12%, while NCDs contributed the balance.
How much funding do you plan to raise in the near future? What are the different sources you have short-listed?
In July’22, we filed a Draft Letter of Offer (DLOF) with the market regulator SEBI seeking permission to raise Rs12 bn through a rights issue. This is our first significant equity issuance in over a decade. We had fresh sanctioned limits of Rs7.15 bn and undrawn limits of Rs6.53 bn as of Q1FY23. We shall also seek to increase our banking relationships as the cost of borrowings from commercial banks is still attractive vis-à-vis market borrowings like NCDs. We will also continue to tap institutions like NHB, NABARD, etc. Given the long-term nature of our loan products, we have diligently avoided commercial papers to ensure we do not run any short-term liquidity risks and the ALM is well-matched.
What are the liquidity management measures you have taken in the last 2 years?
The covid19 pandemic posed significant short-term challenges to growth and balance sheet management. With a disbursal slowdown, our liquidity management shifted to pre-payment of costlier liabilities. During FY21, we pre-paid approximately Rs4.8 bn of our borrowings falling due during FY21 and additionally pre-paid Rs2.8 bn of borrowings falling due beyond FY21. We also favorably negotiated and reset our cost of borrowings with lending institutions. During FY22, we focused on expanding our borrowing limits to cater to the strong growth appetite as lockdowns eased and normalcy returned.
Who have been your key partners in fundraising?
We have a strong and professional treasury team responsible for all aspects of liquidity management, including new relationships, ALM, and regular liaisoning with our lenders. Our total debt funding is thus managed in-house, thereby helping us manage our cost of funds better.