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Muthoot Capital Services Ltd profit up by 36% for the first quarter

Published in Banking & Finance Wednesday, 26 July 2017 17:33


 46% growth in hypothecation loan disbursement on a Year On Year basis

Muthoot Capital Services Limited (MCSL), the leading two-wheeler finance company and the first listed entity of the 130 -year-old Muthoot Pappachan Group, recorded a net profit of Rs 6.09 crores for the first quarter of 2017-18, registering an increase of 36% compared to the corresponding quarter last year. The Company has grown its AUM from Rs 1,090 crores as of 30th June 2016 to Rs 1,559 crores as on 30th June 2017, i.e. a growth of 43%, the current quarter.

The company disbursed 67,398 nos of 2 Wheeler loans amounting to Rs.340.56 crores during the quarter, compared to 48,566 nos of 2 Wheeler loans amounting to Rs.232.69 crores during the same quarter last year, thereby recording a growth of 46.4% during the quarter, compared to the corresponding quarter of the previous year.   

The Company extended its penetration in the Southern markets and also aggressively pushed its disbursements in the North and East Indian market. From an erstwhile policy of growth in semi-urban and rural areas, the company has shifted its focus on to large towns/cities and in certain metros as well. The increased focus on the Top-Up Loans also helped in increasing the disbursement, AUM and Revenue.

The total loan portfolio of the company increased to Rs 1,559 crores (including the managed portfolio) at the end of the quarter as against Rs 1,090 crores as at the end of the first quarter last year, recording an increase of 43%.  The company has 4,43,480 customers as at the end of the quarter, compared to     3,51,811 customers at the corresponding time last year.

For faster growth at lower costs, Muthoot Capital has moved away from the traditional methods of sourcing through own manpower by outsourcing the same but with a sound monitoring process. This has been done while retaining crucial credit appraisal, collection supervision and strategy within the company. The aim is to help spread faster in a controlled manner at lower costs. With volumes coming in from areas where the Company has spread last year and in the current quarter, the Company has been able to grow at a pace faster than the 2 Wheeler industry.

The company achieved a total income of Rs 79.76 crores for the quarter ended 30th June 2017 as against Rs 64.26 crores for the same period last year, a growth of 24.1%.

Financial expenses increased from Rs 25.24 crores to Rs 28.11 crores during the corresponding period, recording an increase of 11.4%.

Non-financial expenses increased from Rs 32.07 crores to Rs 42.25 crores, an increase of 31.7%.

The net profits stood at Rs 6.09 crores as against Rs 4.48 crores for the corresponding quarter in the previous year.

During the quarter the Company securitised its portfolio to the extent of Rs 88.51 crores and as of the end of the quarter had a total managed portfolio of Rs 245 crores.

Thomas George Muthoot, Managing Director, Muthoot Capital Services Limited, said: “We have been and continue to be a leading provider of two-wheeler finance in South India. Our aim is to emerge as a leading national player in the realm of two-wheeler loans, spreading our wings across the markets. New products are being looked at and would be done in the areas where the Company has a strong hold in the markets and keeping in mind the 2 wheeler customers. With aggressive emphasis on maximum utilisation of the Muthoot Fincorp branches for business sourcing activities, technology enabled processes and distribution spread across the country, we are hopeful that, over a period of time, we will be one of the premier financiers in this segment in India.

“The Company has been looking at cutting its cost and targeted substantial reduction in finance cost over the next 2-3 quarters. Banks have been supportive in this. Going forward with emphasis on other sources of funds including securitisation, NCDs and more aggressive push for Public Deposits, the Company will be in a position to cut its costs substantially. The Company during the quarter did its 5th securitisation transaction, which helped in increasing the availability of working funds at lower cost besides helping with better Capital Adequacy Ratio.”

Madhu Alexiouse, Chief Operating Officer of the company, stated: “During the quarter, we have been able to grow both Dealer as well as Branch Business. While the branch business grew by 22%, the Dealer counter business grew by 52%, basically driven by enhanced and wide-spread distribution. The North and East volumes at the Dealer Points have grown 7 fold over the same quarter last year indicating that in newer markets also Muthoot Capital brand is a force to reckon with. The technology driven sales process, especially launch of Mobile based application processing has led to faster TAT  enhancing the productivity of the Counter Sales Executives, besides reducing manual intervention in the processes. We have an ambitious growth target in the coming years and technology would be the key driver to this growth. ”

“We have been devising new schemes regularly for meeting the challenges of the existing markets and new territories that we are entering into. During the quarter we entered into several metros in the country where we were not present hitherto. Operationally we expect higher use of technology in these locations besides having a tighter collection plan to keep the portfolio healthy. New launches are planned in several locations in Western India and major ramp up in disbursements can be seen in these locations.”

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