Medium and small industries focused loan platform Indifi recently claimed to have turned profitable in the first quarter of FY23. While we should be able to validate this claim only after the company files its financial numbers for the ongoing fiscal year (FY23), Indifi has posted a loss of about Rs 33 crore in FY22.
Indifi’s revenue from operations grew 66.3% to Rs 96.3 crore in FY22 from Rs 57.9 crore in FY21, as per the company’s annual financial statement filed with the Registrar of Companies (RoC). The company earns revenue from processing fees collected from borrowers as well as servicing fees offered to lenders which include managing collections.
The Gurugram-based company primarily enables collateral-free working capital or unsecured loans to SMEs across segments including travel, e-commerce, hotels, restaurants, retail businesses and trading entities through its own non-banking financial corporation (NBFC) Riviera and third-party lenders.
According to a CRISIL report, Riviera had Rs 635 crore assets under management (AUM) until FY22 with an NPA rate of 6.6%. Riviera’s standalone revenue from operations were recorded at Rs 81.2 crore in FY22 while the subsidiary posted a profit of Rs 8 lakh during the FY22.
Indifi also generated other income mostly from interest on fixed deposits which increased 19.3% to Rs 9.52 crore in FY22.
Moving over to the expense side, employee benefit expenses formed the largest cost element for the company constituting 32% of the overall cost. These costs increased 29% to Rs 43.9 crore in FY22 from Rs 34 crore in FY21.
As the company is in the business of facilitating loans, interest charges and borrowing costs were other major costs for the company, growing 63.6% to Rs 36.31 crore in FY22 from Rs 22.2 crore in the previous financial year (FY21).
Borrowing cost includes interest and other costs incurred in connection with the arrangement of borrowings. Indifi pays processing and arranger fees to facilitate borrowings to merchants from banks and NBFCs.
Significantly, Indifi wrote off Rs 33.11 crore as bad debts during FY22 as compared to Rs 15.08 crore in FY21. The cost of advertisement and promotion also increased 21.2% to Rs 1.43 crore in the fiscal year ending March 2022.
The Alok Mittal-led company also spent another Rs 1.71 crore on legal and professional fees which pushed its total costs to Rs 138.4 crore in FY22. Despite an over 35% increase in its expenses, Indifi has managed to reduce losses by 10.4% to Rs 32.8 crore in FY22 from Rs 36.6 crore in the previous financial year (FY21).
On a unit level, the company spent Rs 1.44 to earn a single rupee in FY22.
Indifi has demonstrated strong financial performance in FY22 after the pandemic-laden financial year (FY21). The company has scaled up at a quick pace in FY22 and also controlled its losses, a strong enough indicator of better, profitable times in the coming fiscal. Importantly, the company’s NBFC Riviera saw NPA’s improve from 11.1% in FY21 to 6.6% during the last financial year, a 45% improvement.
The group has raised about Rs 390 crore of equity since inception from a diverse set of sources such as private equity players, promoters and high net worth individuals (HNIs) with Rs 142 crore being raised in FY22. While the group has been reporting losses amidst the nascent stage of operations, the net worth remained comfortable at Rs 245 crore (including goodwill) while Riviera reported a net worth of Rs 151.8 crore and Tier I ratio of 29.3% as of March 31, 2022.
