The businesses we lend to are the basic support system of the economy in day to day lives. The moment the economy opens up, these businesses will start coming back to full-fledged activity, says Rajesh Sharma, MD, Capri Global.
What happened as far as the quarter is concerned and firstly, is it right to look at the quarter because the business that you operate in — collections and lending — is a contact business and when the contact was not there because of various lockdowns, did all the numbers go haywire?
After restructuring cases accounting for about Rs 22 crore, collection efficiency in Q1 is about 95% in housing finance and 89% in the MSME sector. After March-May, when the lockdown eased out in June, activities picked up and we have seen quite good momentum in terms of things returning to normal.
In April and May, there were no activities on the ground and in certain cases, we had to offer restructuring. Barring that, the situation is good. On a quarter on quarter basis, it was quite good. It was higher than the March quarter.
You are targeting 20% year-on-year growth in your AUM in FY22. Which sectors will contribute to this growth and how much of it is actually achievable?
We intend to increase the number of branches. We have already added about 400 people on ground and we hope that even though there is talk about the third wave, thanks to vaccination and a little cautious approach of everyone including government organisations and all the state governments, we should see much less impact. I hope that it will be short lived. Covid 2.0 was horrible but short lived and Covid 3.0 should be better. We do not see much disruption and that’s why we plan to increase the number of branches.
Last year also, we grew about 30%. This year, we are targeting about 22% growth and there is enough demand on the ground. We are seeing quite good activity in the housing finance segment. We are seeing good demand and traction in the MSME segment in tier III, tier IV towns. The businesses we lend to are the basic support system of the economy in day to day lives. The moment the economy opens up, these businesses will start coming back to full-fledged activity.
Once the economy opens up the businesses that you cater to will see great growth coming in. That means there will be demand as well for a lot of funds. How are you preparing for that?
As far as growth is concerned, we have seen the July trend. Also, last year, we saw that the moment the economy opened up July-August onwards, there was quite a demand on the ground.
Similarly, we see that MSME businesses like grocery shops, tailoring shops bounce back very quickly. There is enough liquidity provided by the banks to retail oriented NBFCs. At Capri, we had so much excess liquidity. We were not disbursing in April and May.
So while there is good demand, sufficient funds as well as banking lines are available. We are quite confident of achieving 20% growth.
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