Investors picking up equity in Satin Credit is a reaffirmation of faith, Chairman H P Singh said. Edited excerpts:
ET Now: I am sure of the bulk deal which we are discussing. The NBFC space because of the crisis that happened in the sector became a strict no-no for investors and a sharp contraction happened. A lot of worries, but now such a big fund is picking up stake. So it does give out a message regarding the sector and the quality of companies Indian midcaps have. What is your initial reaction?
HP Singh: It is probably a reaffirmation of the faith in the microfinance sector. That is for one and in the larger scheme of things, it is also a reaffirmation of the faith the financial services sector in India. Why I say this is probably for the microfinance institutions, post demonetisation was probably not a good place for the sector as such. Having gone ahead, if you look at the business model, if you look at the push in the rural space from financial services and especially for the microfinance industry, it is a leap of faith.
And the scale and the way I think we probably have been growing reaffirms the faith when these kinds of investors pick up equity in our stock and that is a long term reaffirmation of the faith.
ET Now: Your company has been growing phenomenally at a very high growth and one section of the analysts actually looks at it as a bit of a concern and probably the same growth rates may not be replicated going ahead. What is your take on it and give us a view on how costs for you have gone up in the last couple of months and what is the outlook on the company growth from here on?
HP Singh: The costs have increased by about 0.5 bps to about 1 per cent in terms of our cost of funds. It actually entails that we will have to pass on this increase to our borrowers, which will not be very significant.
We have a margin cap of about 10 per cent. We will have to pass it on to our borrowers. That takes care of our cost of funds technically, but in terms of our growth, we have been very cautious in the last six months or so.
We have actually grown by about 70 per cent year-on-year, but this year we have slightly tapered our growth considering the emerging circumstances. Still a 25-30 per cent growth rate which is fairly stable and fairly cautious will be done by us probably for March 2019.
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