BackVistaar to raise loan portfolio by 10 times in next four years
Vistaar plans to expand to Rajasthan, Madhya Pradesh, Chhattisgarh and Uttar Pradesh and increase its network to 250 branches over next three years
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Bangalore: Vistaar Financial Services, which lends to micro enterprises such as groceries and power looms primarily in rural India, is looking to increase its loan portfolio by 10 times to ₹ 2,500 crore over the next four years, founder director and chief operating officer Ramakrishna Nishtala said in an interview.
The company plans to borrow ₹ 2,000 crore from banks, development finance institutions and others and raise an additional ₹ 500 crore in equity over the next four years to achieve this target. Vistaar—which has 92 branches across Tamil Nadu, Karnataka, Maharashtra, and Gujarat—also plans to expand to Rajasthan, Madhya Pradesh, Chhattisgarh and Uttar Pradesh and increase its network to 250 branches over the next three years.
“We’ve followed an adjacent expansion strategy. Each year we open, say, five to six branches in a state that is adjacent to one we’re already present in. Over one year we study and understand the state and then open 15-20 branches there. One of the states we are going to focus on is Uttar Pradesh. In terms of sheer market size, it is the largest in the country, particularly for the SMEs (small and medium enterprises)," Nishtala said.
Vistaar said on 23 May that it raised ₹ 160 crore from private equity firm WestBridge Capital and its existing investors including Omidyar Network and Saama Capital. It had raised ₹ 40 crore in August 2012 from private equity firms including SVB Capital Partners, Lok Capital and Omidyar.
Vistaar, which doesn’t give personal loans, claims to have non-performing assets (NPAs) of just 1.2%, significantly lower than banks as well as micro finance institutions.
Nishtala attributes this to the company’s “measured" expansion, extensive training given to credit managers and focus on lending only to sectors that its executives understand. “Although it’s a bit early for us, we’ve already started building a credit scoring model. It will help us to look at the history and past behaviour of our portfolio and use that to assign scores to potential customers. And if someone scores less than a number, we will discard these customers."
Apart from groceries and power looms, Vistaar’s customers include dairy businesses, hardware stores and small restaurants. The average loan value is about ₹ 4-5 lakh.
The company expects increasing competition in future.
“The size of the market is ₹ 300,000 crore. NBFCs (non-banking financial companies) and housing finance institutions have started entering this space. But if you want to be successful you have to have a focused play, it’s not something you can do on the side," Nishtala said.
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