Arka Fincap wants to grow assets by 25-30%, sees reasonable loan demand | Mint
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Business News/ News / India/  Arka Fincap wants to grow assets by 25-30%, sees reasonable loan demand
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Arka Fincap wants to grow assets by 25-30%, sees reasonable loan demand

As of 30 September, the company’s assets under management (AUM) stood at ₹4,033 crore. Its gross bad loan ratio was at 0.19%.

Arka Fincap’s capital adequacy ratio was at 27.59% as of 30 September, as against the regulatory requirement of 15% (iStockphoto)Premium
Arka Fincap’s capital adequacy ratio was at 27.59% as of 30 September, as against the regulatory requirement of 15% (iStockphoto)

Arka Fincap, a step-down subsidiary of Kirloskar Oil Engines Ltd, is witnessing loan demand in all its lending verticals and has set an internal target to expand its asset book by 25-30% on a year-on-year (y-o-y) basis, a senior official said on Tuesday.

“While specific numbers are not being discussed today, it would be our aim—internally as a target to the management —that we must grow our asset book in the range of 25-30% year-on-year," Vimal Bhandari, executive vice-chairman and chief executive officer of Arka Fincap told reporters.

As on 30 September, the company’s assets under management (AUM) stood at 4,033 crore. Its gross bad loan ratio was at 0.19% in the same period. “Demand for money in a growing economy is always there," said Bhandari.

The lender, he said, is seeing loan demand originate from the secured small and medium enterprise (SME) business vertical. On the corporate side, he said there is a granularization of borrowing units in the region of 25-50 crore and a lot of companies need money mainly for long-term working capital. The third segment, he said, is construction financing for the real estate sector. “As you know, the (real estate) sector is doing really well and the demand for money is coming from there too. If you see an aggregate macroeconomic perspective of credit growth, India is still experiencing reasonably good credit growth. It is just a question of picking and choosing the segments you want to operate in," said Bhandari.

The lender has announced the public issue of its secured, rated, listed, redeemable non-convertible debentures of up to 300 crore, including an option to retain oversubscription up to an amount of 150 crore. The NCDs offer coupon rate of 9-10% per annum with quarterly and annual interest options. These securities have three tenors of 24 months, 36 months and 60 months.

“We have done a large number of privately placed debenture issues but this is the first listed debenture issue, basically with an objective of retailization," said Bhandari.

He said the bond issue was planned as part of its liability diversification strategy. The company has been raising money from each component of the institutional market like banks, mutual funds and family offices.

Asked if the promoter would look at a capital infusion, Rahul Kirloskar, non-executive, non-independent director of Kirloskar Oil Engines Ltd said the lender does not require an additional infusion right now. “We might have to look at it in July or August. I cannot predict what I will do," said Kirloskar.

Arka Fincap’s capital adequacy ratio was at 27.59% as on 30 September, as against the regulatory requirement of 15%.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 05 Dec 2023, 06:40 PM IST
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