Speaking to ET, Shah said the non-banking financial company, which falls in the middle layer as per RBI’s scale-based regulations, also plans to raise ₹500 crore-₹1,000 crore from its parent for lending activity.As per RBI’s scale-based regulations, NBFCs are classified in layers comprising the base, middle and upper layer, with the regulatory framework applicable to them defined in these rules.
“It’s our view that these businesses need capital regularly and from a governance perspective, our current view is that in the next three to four years, we would be looking to list,” Shah said in an interview. “By then, we would have made a sizable book, proved our model, seen the business through a couple of cycles; it’s the proof of concept playing out.”
Shah said once Godrej Capital, wholly owned by Godrej Industries, attains a sizeable scale, it would not require further capital infusion from the group.
“By the end of this fiscal year, we will have ₹3,000 crore of group capital invested in us. We already have ₹2,500 crore, another ₹500 crore will come in the next couple of quarters,” Shah said. “We don’t think we will need much more than another ₹500 crore-₹1,000 crore to meet our first major goal, which is ₹50,000 crore AUM by FY28.”
Godrej Capital had assets under management (AUM) of ₹10,500 crore as of March-end. Its loan book stood at about ₹13,000 crore in the first five months of this fiscal and plans to end the year with a book size of ₹17,000 crore. It aims to reach a book size of ₹50,000 crore by FY28.Currently, the company has a ₹7,000 crore exposure to the micro, small and medium enterprise (MSME) sector, and ₹5,000 crore to the housing business. Shah said the company is planning to start offering affordable housing loans by the end of this fiscal.”We are aiming for a 3x jump in profitability this year, targeting ₹175 crore, along with an expansion of our balance sheet to ₹17,000 crore,” Shah said. “In comparison, last year, we achieved a profit of ₹56 crore. Our credit quality has been quite solid so far. We have near zero NPAs on our secured book and well under 1% on our unsecured book.”
Shah said Godrej Capital currently has borrowings worth 10,000 crore which include bank borrowings, non-convertible debentures, and commercial papers. It recently raised its first external commercial borrowing (ECB) and a few more are in the pipeline.
“The foreign money or ECBs will become a prominent source of funding for us in the quarters and years to come,” Shah said, without elaborating.
