Arka Fincap wants to grow assets by 25-30%, sees reasonable loan demand

“While specific numbers are not being discussed today, it is our aim — internally, as a target to the management — to grow our asset book in the range of 25-30% year-on-year,” said Vimal Bhandari, executive vice-chairman and chief executive of Arka Fincap.

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%. “There is always demand for money in a growing economy,” said Bhandari.

The company, 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 many companies need money mainly for long-term working capital. The third segment, Bhandari said, is construction financing for the real estate sector.

“As you know, the sector is doing really well and 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 from 9-10% per annum with quarterly and annual interest options. These securities have tenures 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 retailisation,” said Bhandari.

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

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

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

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Updated: 05 Dec 2023, 06:40 PM IST