The financial services arms of Kerala-based Muhoot Pappachan Group – Muthoot Fincorp Ltd (MFL) and Muthoot Capital Services Ltd (MCSL) – are planning to raise around Rs 2,600 crore to support their business targets.
The two arms are non-banking finance companies.
Thomas Muthoot, director, Muthoot Fincorp Ltd, said the company had set a target to increase its gold lending business to Rs 5,500 crore by March 2011 from the current Rs 3,500 crore. To achieve this, it would expand its branch network to 1,600 from 960 for which it would raise Rs 2,000 crore by way of debt.
The company launched its new scheme – Smart Gold Loan – which it expects to contribute Rs 500 crore. Currently, gold loan accounts for 90 per cent of the total business, he said.
On the other hand, Muthoot Capital Services, which is listed on the Bombay Stock Exchange, has a turnover of around Rs 250 crore currently. The company is planning to increase this to Rs 1,000 crore.
“We are planning to raise around Rs 600 crore for MCSL,” he said, adding the company was also coming out with a rights issue in six months.
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It plans to enter new areas including commercial vehicle financing and second hand car finance in the next six and three months respectively, he said.
George Muthoot said the company would launch one more subsidiary to foray into the housing loan segment. The new company – Muthoot Housing Finance – will be based in Mumbai and will have an initial capital of Rs 100 crore.