Satin Creditcare is targeting a 15-20% growth in 2023: HP Singh, CMD
HP Singh, Chairman & Managing Director, Satin Creditcare, talks about Q2F22 numbers
HP Singh, Chairman & Managing Director, Satin Creditcare, talks about Q2F22 numbers, funds raised through preferential shares, demand situation, the performance of the subsidiaries and expansion plans among others during a candid chat with Zee Business' Swati Khandelwal. Edited Excerpts:
Q: Satin Creditcare's Q2FY22 numbers were not that strong. What was the main reason for it?
A: There was a lockdown due to the pandemic in the first quarter, which was completely wiped out. The lockdown was going on till June-July due to which there was a slight hit in the collection plus disbursement was not there. Our disbursements happen more on a touch basis from the customer because we work more in rural and 80% of our book belongs to rural. This is a reason that we were not able to gain that number in this quarter. But, as the lockdown came to an end and economic activity was back, the numbers reached the pre-COVID levels in terms of both collection and disbursement efficiency. So, I think, this was the main reason that we had to face a hit in the September quarter.
Q: You have recently raised about Rs 225 crore via preferential shares. How do you plan to utilise these funds?
A: The issue we are making is called a growth capital because the pandemic lasted for more than one and a half years. In this period, technically, our growth was almost flattish because we were not able to grow due to the frequent lockdowns as well as a decline in the activities of the unorganised sector. Having an eye on all these factors, as the economy started to recover and there was an improvement in other factors like our collection, disbursement, we are looking at the pent-up demand and the growth it can bring. So, we have raised this capital for the same growth and this capital will be looked at just as growth capital and we are targeting close to a 15-20% growth for the next year 2023.
Q: Tell us how the demand has improved in the last three months and from where the demand is coming from? Do you see it as the pent up demand or a sustainable and consistent demand growth will be seen?
A: We will consider, practically, that the pent up demand that existed had come and gone in September and October. The demand we are seeing at present is sustainable because the ongoing economic activity and economic recovery have been quite good in the rural space and if I can compare it to the pre-pandemic level then it is at the same stage. So, as soon as the growth and recovery will come at the same stage then its growth on a sustainable basis - the previous growth of the entire sector stood between 15-20% - as it is back to the pre-COVID level will be 10-20% and it is not pent up but it is like a full recovery and a demand, which on a sustainable basis is for a longer period.
Q: How has the subsidiary performance has been and what kind of demand are you seeing in the housing loans and MSME segments?
A: Housing finance is a shining star for the complete group. It is a shining star - although the subsidiary was started four years back and we are in the affordable segment - because our book is close to about Rs 250 crore. And, our NPA level in this Rs 250 crore is almost zero. So, the RBI guidelines that are coming on NPA classification and the guidelines that have been issued is not impacting us in terms of housing finance. This is why I said that our real thrust is going on the non-MFI sector, which is MSME and it is through our separate subsidiary, Satin Finserv, plus our housing company, Satin Housing, where we are working on affordable housing. So, our portfolio quality and year-on-year growth in these segments are quite good as well as sustainable. It is also moving in a very positive way. So, these two segments are a very good example that the subsidiaries are really picking up the pace even during the pandemic our collection efficiency in housing was at around 98-99%. And even in the MSME segment, the growth was close to 96-97%. So, it has been impacted very less and these subsidiaries are really firing up very well.
Q: You have said that the raised Rs 225 crore will act as the growth capital. So, do you foresee any M&A opportunity in it or it will be an organic growth?
A: Currently, there is no thought about it and there is nothing. Since we are looking that there will be tremendous growth, so, we are just geared up to look at the capital and the infrastructure and our entire thought process is going in the same direction. But if ever there arises any opportunity and we find any pattern for inorganic growth, we might look at it but there is nothing very specific. Currently, we are running for organic growth in all the subsidiaries as well as the parent company.
Q: Last time, you said that the company is foraying in new geographies and is reducing its exposure to older or traditional regions. Which all cities do you see the demand to be strong and you can grow well? Also, what will be your strategy on the front?
A: It is a microfinance business and a majorly our business belongs to the rural areas. Our distribution outreach franchisee is very strong as compared to banks. It is very easy for us to penetrate and deep dive into the geographies because our infrastructure and business model is completely geared up to deep dive into the existing geographies. On a pan-India basis, we are the most diversified microfinance institution. We are into 23 states and the only thing is that we do not have any plans to enter into any new state because we have 23 states and we are ready to take a deep dive into these states, which will be far wider geographical penetration in terms of our expansion and that will take us through for the next couple of years by looking at the growth and the way it is coming in.
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04:05 PM IST