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The promoters have more than two decades of experience and a strong understanding of customer profile in the region they operate. Given the company’s long track record of presence of more than three decades in the state of Kerala, the company has built up good credibility among the borrowers. The company is promoted by Mr. Jacob Thomas and his family members. He holds ~69 percent of shares individually of MFL as on June 30, 2022, while rest shareholding is held by other family members. Mr. Jacob Thomas, the manging director of the company has long-standing experience in various business & also in financial services. The day to day operation of MFL is led by Dr.Ashly Thomas Jacob who is supported by his team of professionals.
Acuité believes that MFL will continue to benefit from its established presence of the Mulamoottil Group and experience of the promoters in the gold loan segment.
Asset quality has shown improvement marked by on time portfolio at 98.95 percent as on March 31, 2022, as against 98.38 percent as on March 31, 2021. On time dpd profile improved from 89.06 percent as on March 31,2020 to 98.95 percent as on March 31, 2022. MFL reported a Gross NPA stood at 0.67 percent in as on March 31,2022, as against 1.48 percent as on March 31, 2021, and NNPA of 0.33 percent as on March 31, 2022, as against 0.60 percent as on March 31, 2022. The company has provision coverage ratio of 50 percent as on March 31, 2022. The current GNPA and NNPA levels improved from 10.94 percent and 8.52 percent as on March 31, 2020, respectively. The improvement was led by the management’s focus on collection toward delinquent assets.
Going forward, the company’s ability to maintain asset quality will be key monitorable and risk arising from adverse gold prices would be critical.
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Mulamoottil Financers limited commenced its operation in 1994 and currently has a loan portfolio of Rs. 104.80 Cr as on March 31, 2022, as compared to Rs. 81.28 Cr in FY2021 and Rs. 88.28 Cr in FY2020. MFL is a mid-sized but a stable growing player in gold loans. MFL’s portfolio is currently concentrated in 5 districts of Kerala (i.e Pathanamthitta, Kottayam, Alappuzha, Kollam, Idukki) and has a branch base of 143 branches as on March 31, 2022. Going forward MFL plan to expand its network of branches in the neighbouring states of Kerala. The company's performance is expected to remain exposed to the competitive landscape in these regions and the occurrence of events such as natural calamities, which may adversely impact the credit profile of the borrowers.
Acuité believes that geographical concentration will continue to weigh on the company’s credit profile.
The capital structure of MFL is supported by Networth of Rs. 35.57 Cr., Total debt of Rs. 84.38 Cr. and resulted gearing of~2.33 times as on March 31, 2022. MFL borrowing profile comprises non-convertible debentures of Rs. 56.55 Cr. (~67 percent of the debt profile) followed by unsecured non-convertible subordinate debt of Rs. 17.07 Cr. (~20 percent of the debt profile) and facilities from Federal bank in the form of CC/OD, WCDL, Vehicle Loan of Rs. 10.76 Cr (~13 percent of the debt profile). The NCDs are privately placed with friends and family of the promoters for a tenor of 2 to 3 years. As the company has availed banking facility from one bank, the debt profile of MFL remains largely dependent on promoters for funding requirement. The company is in talk with other banks for raising additional funds.
Acuite believes that the ability of the company to mobilize additional funding through debt/equity will be critical.
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