Muthoot Mercantile Limited

Muthoot Mercantile Limited are a non-deposit taking non-banking financial company- base layer (NBFC – Base Layer) registered with the RBI bearing registration no. N-16-00178 dated December 12, 2002 under section 45-IA of the RBI Act primarily engaged in the gold loan sector lending money against the pledge of household and/or used gold jewellery (“Gold Loan”) primarily to retail customers who require immediate availability of funds, but who do not have access to formal credit on an immediate basis and are also engaged in providing unsecured loans (“Pronote Loan”) to individual customers for their personal needs. As of March 31, 2024, they disbursed Gold Loan and Pronote Loan to the customers from a network of 242 branches of the Company in 9 states and union territory of India namely Tamil Nadu, Kerala, Delhi, Haryana, Maharashtra, Madhya Pradesh, Odisha, Punjab, Uttar Pradesh, and Rajasthan. As of March 31, 2024 they employed 830 persons in the operations. The branches function as the key point of contact for loan origination, disbursement, and collection processes as well as facilitating customer interaction. They are headquartered in the south Indian state of Kerala. The Company commenced operations from Thiruvananthapuram, Kerala and have decades of established history in the money lending business, mainly in small-scale money lending against household and/or used gold jewellery. The operating history has evolved over a period of 84 years since late M. Ninan Muthoot (the father of our Promoter, Mathew Mathaininan) founded a gold loan business in 1939 under the heritage of a trading business which was originally established in the year 1925. Since the formation, they have broadened the scale and geographic scope of the gold loan operations. For the period ended December 31, 2023 and Fiscal 2023, 2022 and 2021, the interest income from the Gold Loan business constituted 97.49%, 96.58%, 98.66% and 98.97% respectively of the total income. Historically, they have also provided other related services, including asset finance, money transfer and foreign exchange, sales of gold coins and business and personal lending. The Company was incorporated as a Public Limited Company in the year 1997 and was registered as a NBFC by the Reserve Bank of India in the year 2002. They are also having arrangements with various agencies and brokers for Money Transfer and Insurance Business. The Gold Loan portfolio as of December 31, 2023 comprised approximately 0.97 lakhs customers aggregating a principal amount of ?57,924.78 lakhs in Gold Loan, which accounted for 95.12% of the total loans. The Gold Loan portfolio as of December 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 had outstanding principal amounting to Rs 57,924.78 lakhs, Rs 49,469.77 lakhs, Rs 33,255.80 lakhs and Rs 28,468.69 lakhs respectively and has grown at a CAGR of 29.47% from Fiscal 2021 to December 31, 2023. Company has shown average results, and rating is 'IND BB / Stable' by India Ratings & Research Private Limited, which will be considered to have moderate degree of safety regarding timely servicing of financial obligations and moderate credit risk, coupon rates are also good. So we give AVOID rating to this debt offer.

• 1 Mathew Mathaininan
• 2 Richi Mathew