Founded in 2017 by Srinivasan, who was earlier the chief executive of Reliance Commercial Finance, Profectus is backed by private equity firm Actis. “We should cross ₹4,000-4,500 crore by the end of this financial year. Ultimately, by about FY26, we should touch ₹10,000 crore,” Srinivasan said in an interview.

Its loan book stood at ₹2,363 crore as on 30 June, up 47% from the same period last year. The lender made a profit of ₹10 crore, on the back of ₹93 crore in revenues in the June quarter and its stage 3 ratio or bad loan ratio was at 1.53% in Q1 this year, up from 0.88% in Q1 of FY23.

“All the investments that are required to make this happen, in terms of technology, processes, branches and people, are all in place. We have about 25 branches and I do not think we really need to go beyond that but need to add manpower at the operating level,” said Srinivasan.

He said while the company will not look at hiring more senior executives, it will onboard people at the operating level in roles like sales managers. This, he said, would take the number of employees from 700 at present to 1,500 by FY26.

At present, the company lends to small businesses across 11 industries but wants to expand its coverage gradually. “Our ability to understand too many industries is limited and we did not want to spread ourselves too thin. We have chosen eight manufacturing and three services industries and are focussing only on that,” he said.

These include chemicals, pharmaceuticals, food proce-ssing, engineering, auto components, hospitality, education and healthcare.

The company has two loan offerings: property-backed lending and direct equipment purchase.

“While we have started with these 11 segments, these are not cast in stone. There are a lot of new sectors that are coming up. Take the case of the electronics sector where the government is putting in a lot of effort,” he said.

Srinivasan believes that although the semiconductor sector is restricted to large enterprises like Taiwanese electronics manufacturer Foxconn, a wider ecosystem will eventually develop in India.

“It may take time but that is a huge ecosystem and we are closely watching it. It would definitely be one of the areas we would like to get into,” said Srinivasan.

He said that while the Reserve Bank of India has raised the repo rate by 250 basis points, Profectus’ cost of funds went up about 100 bps, which it has been able to pass on to customers.

Srinivasan had told Mint in September 2018 that the company could reach a loan book of ₹10,000 crore in five years.

“Today everyone understands the concept of floating rates. Only loans in the equipment segment operate on a three-four year fixed rate interest basis, the rest of our advances are floating. I do not think we have had any problems in passing on the rate hikes nor any issues of higher delinquency,” he said.

Updated: 22 Aug 2023, 09:35 PM IST