Lendingkart largely unaffected by the NBFC crisis while cost of funds goes up
Rukmini Rao September 6, 2019
Leading fintech company Lendingkart that provides short-term loans to Micro, Small and Medium Enterprises (MSMEs) through its NBFC arm Lendingkart Finance says that the sector is seeing a rationalisation of credit line with performance of both the companies and portfolio taking precedence like never before. The company has disbursed Rs 3800 crore so far since inception in 2014. In FY19 alone, it disbursed Rs 1700 crore.
Speaking about how the company has been relatively unaffected by the NBFC cash crunch, Harshvardhan Lunia, Cofounder and CEO, Lendingkart, said that several parameters such as performance of the company, adequate capitalisation and what is the leverage along with the team and investors are now taking a centre stage while raising credit. "We have been adequately raising equity to be well capitalised at a reasonable time and have not levered ourselves too high," said Lunia. Over the last six months, the company says, it has raised nearly Rs 1000 crore from banks and mutual funds.
According to the company, it has clocked a revenue growth of over 175 per cent in FY19, and its customer base grew by 150 per cent. Over 80 per cent of Lendingkart's customers are largely people seeking loan from non-metro cities. Regionally, North India leads the total amount of loans disbursed with 35 per cent, followed by West with 29 per cent, South with 26 per cent and East with 10 per cent. Speaking about how the economic slowdown has not affected much of its write-off rates, Lunia explains that since essential consumption and retail business have not been hit badly, the write-offs have remained in the range of 3-3.5 per cent.
Like other industry players, Lunia says they are in a wait-and-watch mode to see if the rate cut transmission from banks would actually translate into anything meaningful. "Our cost of funds post IL&FS crisis has actually gone up by 100- 150 basis points. We still don't see any rationalisation happening in the borrowing costs," said Lunia. While recent steps taken by the government towards banks recapitalisation and RBI tweaking norms towards priority sector lending are yet to show meaningful outcome, the current economic slowdown will still act like a big barrier with only better players in the market with proven performance who will be able to reap the benefits, added Lunia.
Over the last six years, the company has processed half a million applications, disbursing over 60,000 loans to more than 55,000 MSMEs in 1300 cities across 29 states and union territories. The group till date has raised around 750 crore in equity from international investors such as Fullerton Financial Holding (100 per cent subsidiary of Singapore Sovereign Fund Temasek Holdings), Saama Capital, Mayfield India, Bertelsmann, Darrin Capital Management, Sistema Asia and India Quotient, among others. The company also recently strengthened its executive leadership by inducting finance veteran Sudeep Bhatia as its group CFO, and Deepesh Goel as Vice President - New initiatives & Strategy, to build new products and capabilities across geographies and domains.Absconding promoters get back control of Sterling Biotech