Thrissur-based gold loan company Manappuram Finance Ltd expects no impact from rising prices of the precious metal.
Company joint general manager N Raghu Mohan said this was because its pricing of gold loans was not connected to daily or weekly variations in prices, but is determined on a moving average of one year.
He was addressing the media on the company's upcoming maiden public issue of secured non-convertible debentures (NCDs) to raise Rs 400 crore, with an option to retain an oversubscription of Rs 350 crore.
The company is already in the process of raising around Rs 620 crore through private placement of bonds, and this is its first public issue.
"At present, 53 per cent of our working capital requirements are sourced from banks. As bank rates are steadily going up, this issue would help us diversify the source of funds away from a dependence on banks," Mohan said.
Its current cost of borrowing is 11 per cent, while the net interest margin (NIM) was 25 per cent in the 2010-11 fiscal and net non-performing assets ratio was 0.13 per cent.
Over the next one year, it would also expand its branch network by adding 200-300 branches in rural and semi-urban areas, Mohan said.
The company's gold holdings rose from 13 tonnes in 2009 to 53 tonnes in 2011, while the number of customers grew over the same period from 220,000 to 11.9 million. The average ticket size ranges from Rs 30,000 to Rs 45,000. Its assets under management rose 50 per cent over two years to Rs 7,500 crore in 2011.
