Akme Fintrade India Limited (AFIL) is a non-banking finance company (NBFC) based in Udaipur, incorporated in 1996. It specializes in financing two-wheelers, four-wheelers, commercial vehicles, and offering loans against property (LAP) primarily to the SME sector. The company is promoted by Mr. Nirmal Kumar Jain. Recently, AFIL has been in the news for its IPO, with a price band of ₹114-120 per share and a reported grey market premium (GMP) of ₹33 per share.
Brief about Company of Akme Fintrade India
Overview of Akme Fintrade India
Company is a non-banking finance company (“NBFC”) incorporated in the year 1996 registered with the Reserve Bank of India as a Non-systemically important non-deposit taking company with over two decades of lending experience in rural and semi-urban geographies in India. We are primarily engaged in rural and semi-urban centric lending solutions to look after the needs and aspirations of rural and semi-urban populace. Our portfolio includes Vehicle Finance and Business Finance Products to small business owners. We have a long history of serving rural and semi-urban markets with high growth potential and have maintained a track record of financial performance and operational efficiency through consistently high rates of customer acquisition and retention and low cost expansion into underpenetrated areas. Therefore, we strategically focus on clients in the rural and semi-urban sector
History of Akme Fintrade India
Company was originally incorporated as ‘Akme Fintrade (India) Private Limited’ as a private limited company under the provisions of the Companies Act, 1956, pursuant to a certificate of incorporation dated February 5, 1996 issued by the Registrar of Companies Rajasthan, Jaipur. Thereafter, our Company was converted to a public limited company, pursuant to a special resolution passed by the shareholders of our Company at the extra-ordinary general meeting held on January 05, 1997
Year
Major events and milestones
1996
Incorporation of the Company.
1997
Conversion of the Company from a private limited company into public limited Company.
1999
Registration with RBI as Deposit taking NBFC
2012
Care BB rating assigned by CARE to bank facilities.
2014
New loan products introduced namely three wheeler & four wheeler loans.
2015
Achieved AUM of ₹ 8689.50 lakhs and loan disbursement of ₹7115.86 lakhs during FY 2015-16.
2016
Expanded business of operation in Maharashtra.
2017
Geographical reach to Madhya Pradesh Achieved AUM of ₹33891.02 lakhs and loan disbursement of ₹ 26354.44 lakhs during FY 2017-18Launch of new products namely business (secured).
2018
Geographical reach to Gujarat.
2019
ECB received from World Business Capital INC., USA ,The Company was granted NBFC-ND-SI registration on achievement of asset size ₹50,000,00 lakhs. Achieved AUM of ₹47405.06 lakhs and loan disbursement of ₹29172.90 lakhs
2020
Issue of Rated, Listed, Unsubordinated, Secured, Transferable, Redeemable, Non- Convertible Debentures of ₹ 1000.00 lakhs on a private placement basis to Union Bank of India.
2021
Achieved loan portfolio of ₹42100.78 lakhs, total income of ₹ 8,679.38 lakhs and loan disbursements of ₹ 5377.60 lakhs as on March 31, 2021
Proven execution capabilities with a strong rural focus;
Well established Vehicle Finance, small businesses lending business;
Stable and experienced management team;
Customer centric approach and deep understanding of target customers;
Access to Diversified Sources of Capital and Effective Asset Liability Management;
Robust underwriting process and risk management policies;
Hub and Spoke business model that improves efficiencies and decreases costs.
Strategy of Akme Fintrade India
Increase focus on Digitisation and expanding product portfolio
Deepen, strengthen, and expand geographical Presence
Continue to focus on small business owners and self-employed individuals
Enhance Brand Recall to Attract New Customers
Leverage our Network, Domain Expertise and Data to Enhance Product Offering.
Leverage Technology to Grow Our Business
Industry Outlook
NBFCs’ Assets Under Management is expected to grow in single digits (between 7-8%) in FY24 on the back of NBFCs continued focus on extending credit facilities to that segment of consumers where the penetration of bank is relatively low, the demand for credit from the retail segment will also continue to flow to NBFCs. Continuous investments in technology infrastructure and ease of access to internet will fuel the growth of NBFC in upcoming years. There would be steady demand from retail segments specially from Housing loans and Vehicle loans segments which will continue growth momentum of NBFC sector.
Retail Loans
Home loans is the largest segment within the retail loan segment in India, accounting for approximately 40% of total outstanding retail credit as on 31 March 2023. Personal loan & Agriculture loan, the next largest segments accounts for 14% & 12% of the total respectively. Nearly 60% of total retail credit outstanding on 31st March 2023 was accounted by nine credit products. Retail loan segment probably has the highest level of competition, with active presence from all type of financial services companies – including banks, home finance companies, NBFCs, MFI, insurance firms, and specialized boutique lending firms (including digital lending). On the other hand, commercial loan segment is clearly dominated by banks. In retail loan segment, NBFCs has an active presence in almost all segments except home loans which is dominated by banks and housing finance companies.
Penetration of NBFC in Indian Retail Lending Market (percentage of total outstanding loans)
Type of Retail Loan
Banks
NBFC
Others
Personal Loans
76.1%
20.0%
3.2%
Two Wheeler Loans
31.7%
66.9%
1.4%
Auto Loans
72.6%
24.5%
2.9%
Business Loans
26.3%
73.7%
0.00%
Consumer Durable Loans
76.1%
20.00%
3.2%
Indian NBFC Industry
Indian NBFC industry is a minor player in global NBFC space, and accounts for less 1% of the total NBFC asset base globally. Between 2002 and 2020, share of India’s NBFC industry in global NBFC asset base have increased by 50 to 60 basis points. This reflects the aggressive credit growth achieved by Indian NBFC sector, as it supplemented the mainstream bank financing segment. During the same period, the size of India’s NBFC sector as a share of the country’s GDP increased from 18% to nearly 60%, underlining the importance of NBFC to the growth of Indian economy.
The last eight to ten years has witnessed strong growth in NBFC credit, due to a mix of favourable regulations, innovative product offering, and high credit appetite by consumers. The credit growth in NBFC sector has come at the expense of bank, with whom they are competing in the small sized retail loan segment. The significance of NBFCs can be gauged
Growth in Loan Book
Gross loans & advances outstanding in the NBFC sector stood at INR 26.9 Lakh Crore as on 30th September 2023. There was a slight dip in credit growth in this sector during first couple of quarters of FY 2021, but since then the growth has remained strong.
Credit Disbursement Pattern
Approximately 37% of total credit outstanding by the NBFC sector is concentrated in the industrial sector, making it the largest recipient of NBFC credit. Within the industry sector, nearly 82% of the outstanding credit is concentrated in large industrial segment. The MSME sector, which faces credit rationing and finds it challenging to raise credit from banking sector, continues to be under penetrated by the NBFC sector. Retail loans and loans to other non-food sector form the second and largest recipient of NBFC credit, as on September 2023.
Retail Loan Disbursement Pattern
FY 2023 witnessed aggressive growth of NBFC retail credit portfolio, as the segment became the largest disburser of retail loans. By end of September 2023, the total outstanding retail credit portfolio of the NBFC sector stood at INR 11.97 Lakh crore, accounting for nearly 30% of the total loan book of the NBFC sector. Vehicle loans dominated the retail loan portfolio of NBFC industry, accounting for nearly 40% of the total loan book as of September 2023. This dominance could be attributed to the leadership of NBFC industry in the two- wheeler loan segment – where it has the majority market share.
NBFC Presence in Vehicle Financing
Vehicle Segment
Gross Loan Portfolio
Market Share
Two-Wheeler
INR 0.50 Lakh Crores
~67%
Four-Wheeler / Passenger Vehicle
INR 1.16 Lakh Crores
~27%
Commercial Vehicles (New & Used)
INR 4.19 Lakh Crore
~62%
Total
INR 5.85 Lakh Crore
Key Players
Notable Players in Indian NBFC Space: Vehicle Financing Segment
Chola mandalam Investment & Finance Company Limited (Chola)
Chola, established in 1978, is the financial service arm of Murugappa Group. The Company’s products include vehicle loans, home financing, SME loans, as well as rural specific loans. In vehicle finance, the company offers two-wheeler, four-wheeler, commercial vehicle, farm equipment and construction equipment loans. Their rural loan solution caters primarily to agribusiness segment. As per the Company’s FY 2022 annual report the asset under management in vehicle finance business stood at INR 52,000 Crores.
Sundaram Transport Finance Company Limited
One of the largest players in vehicle financing space in India, with financing products in commercial vehicle (light / medium / heavy), farm equipment, construction equipment and passenger vehicle space. As per the Company’s FY 2022 annual report, the total asset under management stood at INR 1.27 lakhs crores.
Bajaj Finance Limited (Bajaj Finserv)
Bajaj Finserv, founded in 2007, focuses on personal loans, consumer durable finance, home loans and gold loans. In vehicle finance, the company has presence in two-wheeler loans, and used car loans.
Mahindra & Mahindra Financial Services Limited
Established in 1991, Mahindra Finance has grown to become one of the largest agri equipment financing firms in India. Apart from farm equipment, the Company’s vehicle finance portfolio also comprises of auto & utility vehicle financing, passenger vehicle financing, commercial vehicle financing, and used vehicle financing. Outside of vehicle finance, the Company also offers SME financing, and personal loans apart from investment & advisory services.
Business Data of Akme Fintrade India
Verticals
Vehicle financing, comprising of Used Commercial Vehicle, 2 Wheeler Loans, Used 2 Wheeler Loans; and
Business Finance to small business owners and SME/MSME business owners.
Revenue contribution from Geography presence of Akme Fintrade India
Apart from Registered Office located at Udaipur, Rajasthan and our Corporate Office located in Mumbai, Maharashtra, we have network of 12 branches, spread across 4 states, Rajasthan, Maharashtra, Gujrat and Madhya Pradesh. Apart from our branch network we have our reach to 23 locations digitally. Though we do not have formal offices at these locations but our employees are present at these locations who manage business sourcing, collection and customer relations.
State wise Interest Income of our Company for the last 3 Fiscals is mentioned below:
(₹ in lakhs)
Branch
Fiscal2021
Fiscal2022
Fiscal2023
December 31, 2023
Interest Income
%
Interest Income
%
Interest Income
%
Interest Income
%
Ahmedabad
677.25
8.05%
566.35
8.73%
345.06
5.47%
378.51
7.46%
Mandsaur
489.55
5.82%
370.78
5.72%
394.11
6.24%
419.41
8.26%
Thane
218.58
2.60%
119.27
1.84%
246.18
3.90%
367.15
7.23%
Chittorgarh
381.42
4.53%
266.52
4.11%
229.96
3.64%
152.62
3.01%
Jodhpur
47.16
0.56%
36.36
0.56%
41.87
0.66%
33.06
0.65%
Sabla
43.56
0.52%
27.21
0.42%
23.99
0.38%
21.47
0.42%
Salumber
59.35
0.71%
30.23
0.47%
51.86
0.82%
33.30
0.66%
Head office
6499.99
77.23%
5070.22
78.16%
4977.96
78.89%
3,567.02
70.26%
Ashta
0.00
0.00%
0.00
0.00%
0.00
0.00%
37.20
0.73%
Banswara
0.00
0.00%
0.00
0.00%
0.00
0.00%
22.08
0.43%
Reodhar
0.00
0.00%
0.00
0.00%
0.00
0.00%
6.81
0.13%
Surat
0.00
0.00%
0.00
0.00%
0.00
0.00%
16.65
0.33%
Pune
0.00
0.00%
0.00
0.00%
0.00
0.00%
21.95
0.43%
Total
8,416.86
100.00%
6,486.94
100.00%
6,310.99
100.00%
5077.23
100.00%
loan book in rural & semi-urban and urban areas is as under
Chola mandalam Investment and Finance Company Limited
2.00
1,085.40
13,105.59
32.44
32.38
33.52
6.22
174.52
18.58%
Arman Financial Service Limited
10.00
2,251.30
423.90
110.47
107.28
20.99
5.23
430.61
25.65%
CSL Finance Limited
10.00
485.75
117.53
22.02
21.40
22.70
2.78
174.85
12.59%
Customers
Individuals
Small business owners
Group companies
Star Housing Finance Limited;
Aarsh Fincon Limited;
Akme Build Estate Limited,
Akme Automobiles Private Limited;
Akme Buildmart Private Limited;
The Coronation Castles Private Limited;
Arvind Multi Industries Private Limited;
Akme Mineral Exim Private Limited.
Business risk factors
Company is experienced a decline in revenue in Fiscal Year 2022 and may consider to experience such decline in the future.
(₹ in lakhs)
SrNo.
Particulars
Fiscal 2021
Fiscal 2022
Fiscal 2023
As on nine months period ended December 31, 2023
1.
Loan book
42,100.78
35,131.79
35,416.11
37,946.28
2.
Fresh loan disbursement
5, 377.60
1,954.14
7,834.00
5,752.76
3.
Revenue from Operations
8617.72
6744.13
6951.37
5,340.49
The Company has higher levels of NPAs as compared to some of its peer companies and hence our business may be adversely affected if we are unable to provide for such higher levels of NPAs.
Financial Year
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
As on December31, 2023
Gross NPA ratio(%)
1.71%
1.88%
2.69%
3.57%
4.90%
4.57%
3.94%
Net NPA ratio(%)
1.51%
1.36%
2.24%
2.97%
4.06%
3.45%
1.94%
business and operational presence is concentrated in the State of Rajasthan and our result of operations may be adversely affected by difficulties in expanding our business or pursuing new business opportunities in new regions and markets
significantly depend on our business Loans and any adverse developments in this sector, or in the other industries in which our business loan customers operate, could adversely affect our business, results of operations, financial condition and cash flows.
Sector-wise Loan Book
Sector-wise Loan Book as on March 31,
Sector-wise Loan Book as on December 31,2023
2021
2022
2023
(₹ Lakhs)
%
(₹ Lakhs)
%
(₹ Lakhs)
%
(₹ Lakhs)
%
Vehicle Loan
9,574.29
22.74%
7,620.69
21.69%
7,525.18
21.25%
7,879.63
20.77%
Business Loans
32,526.49
77.26%
27,511.10
78.31%
27,890.94
78.75%
30,066.65
79.23%
Grand Total
42,100.78
100.00%
35,131.79
100.00%
35,416.11
100.00%
37,946.28
100.00%
Company has experienced negative cash flow in the past and may continue to do so in the future, which could have a material adverse effect on our business, prospects, financial condition, cash flows and results of operations.
(₹ in lakhs)
Particulars
Year Ended March31,2022
Year Ended March31,2023
For the nine months period ended December 31, 2023
Net cash flow from / (used in) operating activities
6,310.24
2,361.30
(2,129.08)
Net cash flow from / (used in) investing activities
159.66
(1,496.34)
157.01
Net cash flow from / (used in) financing activities
(7,455.85)
(201.64)
2,540.65
Net cash flow from / (used in) investing activities
159.66
(1,496.34)
157.01
Inability to maintain our capital adequacy ratio could adversely affect our business.
operate in a highly competitive industry and our inability to compete effectively may adversely affect our business.
A substantial portion of our customers are first time borrowers which increases risks of non-payment or default for us
Failure to train and motivate our 125 employees may lead to an increase in our employee attrition rates which is 15.79% as on December 31, 2023 and our results of operations could be adversely affected as a result of any disputes with our employees.
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