Fullerton India plans to raise Rs 100 bn in FY19 to fund lending operations

Fullerton India Credit Company Ltd, the Temasek-backed finance firm, plans to raise Rs 100 billion in FY19 to fund lending operations.

Rajashree Nambiar, CEO and MD of Fullerton India, said borrowings will be through a combination of bank lines, bonds, commercial papers and securitisation.

The company raised about Rs 70 billion the 2017-18.

Like many financing firms and housing finance outfits tapping retail investors to raise money through bonds, Fullerton may also issue securities (bonds) to small investors.

“We are considering retail options too, in the second half,” said Nambiar.

According to a presentation on FY18 results, the company raised Rs 69 billion through bonds and non-convertible debentures (NCDs), up from Rs 54 billion in FY17.

Assets under management (AUMs) rose 36 per cent in FY18 to Rs 157.75 billion at the end of March 2018, from Rs 115.97 billion at end of March 2017. 

Almost one-third (33 per cent) of its business comes from rural areas—17.9 per cent from group loans and 15.5 per cent from business loans. 

Personal loans also constitute 33.3% of business—in which share of credit to salaried class is 23.2 per cent and to business class 10.1 per cent. 

Loans against properties is substantial at 26.1 per cent. Commercial vehicle loans account for about 7.2 per cent.

The southern region leads the pack in the spread of business across regions, with 36.5 per cent, followed by the west with 32.7 per cent and north with 27.5 per cent. 

The share of the eastern region was quite small at 3.3 per cent. It had 559 branches, with close to 2 million customers in March 2018.

Fullerton has pegged the medium-term capital requirement at over Rs 40 billion. Temasek is a Singapore government-owned company.

According to rating agency Crisil, Fullerton Financial Holdings (FFH), the holding company of Fullerton India, has demonstrated its commitment towards its Indian arm during stressed times. It has regularly infused growth capital in the company. Since 2007, FFH has infused around Rs 20 billion with over Rs 6 billion being infused in 2009-2010, during the stressed environment.

Its capital adequacy ratio was 18.9 per cent with tier-I of 15 per cent in March 2018.

During FY17 and H1FY18, profitability was affected by demonetisation. This resulted in an increase in delinquencies, especially in the rural portfolio. Yet, profitability improved in FY18.

Net profit for FY18 rose to Rs 3.54 billion from Rs 2.14 billion in FY17. Revenues in FY18 rose to Rs 17.76 billion from Rs 16.08 billion in FY17.