Muthoot Finance plans to raise Rs 500cr via NCDs issue

In the first quarter of the current year, loan book de-grew by about 5%. This quarter we will see more of a flat growth.

Oommen Mammen

CFO

Muthoot Finance

Muthoot Finance  's non-convertible debentures (NCDs) issue will open on September 17, 2012.

In an interview to CNBC-TV18, Oommen Mammen, chief financial officer of Muthoot Finance says the issue is for Rs 250 crore with an option to retain oversubscription for another Rs 250 crore. "We are planning to raise Rs 500 crore," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.

Q: Can you give us the main characteristics of your debenture issue? Is it meant towards your tier-II capital, are they secured debentures? How do they compare in terms of annual yield?

A: The issue is for Rs 250 crore with an option to retain oversubscription for another Rs 250 crore. We are planning to raise Rs 500 crore. It is a secured instrument. This doesn't come under the tier-II category.

We are offering five options to investors; a two-year instrument at 11.5%, a three-year instrument at 11.75%, a five-year instrument with a monthly option targeting retail investors, pensioners with a coupon of 11.75% monthly, and annual instrument of five years at 12% and another scheme with cumulative option for six years.

Q: How much will the six-year cumulative option yield annually?

A: Annually 12.25%. Since we are looking at more and more retail participation, we have issue under physical mode also.

Q: What exactly your liability mix would look like for the company now?

A: Forty percent of our liability will come from bank sources, 30% is from NCDs and 10-15% will be the other CPs, remaining portion of the securitised portfolio and the rest will be the networth.

Q: We have seen gold prices increase to record highs in rupee terms. How exactly your loan book would grow? What sort of estimates are you working with now?

A: In the first quarter of the current year, we de-grew by about 5%. This quarter we will see more of a flat growth. Because of the regulatory uncertainties, we thought we will treat this year as more of a consolidation phase. We are looking forward to getting some amount of comfort from the regulator as well as market participants, so that we can take our growth path again further.