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 ~56 percent of shares individually of MFL as on March 31, 2024, 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.

Healthy Asset Quality

Asset quality has shown improvement marked by on time portfolio at 100 percent as on March 31, 2024. MFL reported a Gross NPA and Net NPA as nil as against 0.33 percent and 0.17 percent respectively as on March 31, 2023.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. 

Mulamoottil Financiers limited commenced its operation in 1994 and currently has a loan portfolio of Rs. 197.36 Cr. as on March 31, 2024 as against Rs. 149.97 Cr. as on March 31, 2023, and Rs. 104.80 Cr. in FY2022. 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 178 branches as on March 31, 2024. 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. However, the geographical concentration could evolve into being a niche in the gold loan market in Kerala for MFL as its primary focus and vision is to serve the rural community of Kerala and help this part of the community to grow. Moreover MFL does plan to penetrate this segment by opening more branches in the coming year which would help build its foundation in these communities. Furthermore, there is a drive to empower women in these areas and that is denoted by the high employment ratio of 95% which is in favor of women. Acuité believes that geographical concentration will continue to weigh on the company’s credit profile however the development in how this specific niche of operating in rural areas is developed would be key a monitorable.

Limited Financial Flexibility
The capital structure of MFL is supported by Networth of Rs. 53.57 Cr. ,Total debt of Rs. 168.69 Cr. and resulted gearing of~3.12 times as on March 31, 2024. MFL borrowing profile comprises non-convertible debentures followed by unsecured non-convertible subordinate debt and facilities from Federal bank and State Bank of India in the form of CC/OD, WCDL, Term Loan facilities. The NCDs are privately placed with friends and family of the promoters for a tenor of 3 to 7 years. As the company has availed banking facility from three banks, 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.