Godrej Capital, the financial subsidiary of Godrej Industries launched in 2020, anticipates an infusion of about Rs 1,500 crore from the parent company over two years. In the current financial year (2023-24), the company has already secured nearly Rs 2,000 crore in capital, according to Manish Shah, managing director and chief executive officer of the company.
Additionally, the non-banking financial company (NBFC), which specialises in micro, small and medium enterprises and home loans, aims to expand its branches from the existing 30 locations to 60 by March 30, 2025, and approximately 100 locations in the next few years.
Recently, the Reserve Bank of India (RBI) increased the risk weighting against unsecured loans from 100 per cent to 125 per cent. The decision followed the RBI’s caution to banks and NBFCs about the rising unsecured segment.
Regarding the impact on the company’s cost of funds, Shah said that they are assessing the situation, emphasising that a large part of the company’s portfolio is still in the secured segment and is not likely to be significantly impacted.
“The unsecured lending business of the company is only five to six months old and amounts to Rs 500 crore of the total Rs 8,000 crore business. So, it does not impact us much,” Shah said.
However, the effects of the decision on the business still require assessment, and the company is prepared to approach the market if the need arises.
Currently, of the total borrowings of Rs 6,400 crore, bank borrowings are at Rs 5,000 crore, and market borrowing is at Rs 1,400 crore.
Furthermore, addressing the entry of Jio Financial Services into the NBFC space and the business dynamics, Shah observed that while competitive intensity in India has decreased, the market’s availability is growing.
“The pie is not the same at $3 trillion. It is expected to grow to $5 trillion and maybe $10 trillion in the next decade. It is that market share that the company is competing for,” he said.
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“We’re still in the early stages of our journey, and from our perspective, if our first ambition is Rs 50,000 crore, it’s still Rs 50,000 crore in over Rs 100 trillion. So, it’s still 0.5 per cent of the market,” Shah concluded.