Religare Finvest Ltd (RFL), a non-banking finance company wholly-owned by Religare Enterprises, plans to remain focused on the small and medium enterprises (SME) sector.
It would seek to bridge the existing gap in bank funding to SMEs as well as ride on the sector’s expected growth from 17 per cent of GDP in 2010 to 25 per cent by 2015.
RFL chief operating officer Pankaj Bhansali said, “SMEs offer a Rs 50,000-crore funding opportunity each year. Banks are serving 60 percent of the SME financing needs as against the norm of 75 per cent. We plan to operate in this gap of 15 per cent.”
At present, SMEs account for 69 per cent of RFL's total business, while the next biggest segment is retail capital market at 16 per cent. It disbursed Rs 9,900 crore in the first quarter of 2011-12, and expects to touch a level of Rs 14,000 crore by the end of the fiscal.
According to RFL’s regional business director (south & east) Abhijit Ghosh, even 7 per cent growth of Indian economy would be a big positive factor for its business outlook and would not mean a subdued climate.
He said the company’s average cost of funds was in the range of 10.5 to 10.75 per cent, and would pass on any changes in interest rate to its customers to maintain a net interest margin of 4.5 to 4.75 per cent.
The executives were addressing mediapersons here on the company's upcoming public issue of secured, redeemable non-convertible debentures (NCDs) to raise Rs 400 crore with a greenshoe option for an equal amount.
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The NCDs, with a face value of Rs 1,000, are issued in two series and carry an interest rate of 12.5 per cent for 5-year series and 12.25 percent for three-year series. The first-come first-served issue opens on September 9 and the closure date is set for September 26.
The minimum subscription is ten units, and 50 per cent of the issue is reserved for retail investors, while the rest is divided between institutions and high networth individuals in the ratio of 20:30. The NCDs would be listed on the Bombay Stock Exchange.