Sanjay Sharma, MD of Aye Finance, shared that the AUM growth of the NBFC is likely to close at Rs 4300 crore by March-end of the Financial Year 2023-24.
While the AUM, which was recorded in FY23 at Rs 2700 crore, is likely to close at Rs 4300 crore by end of this fiscal.
Apart from talking about plans for raising funds in near future and launching IPO, the MD of Aye Finance highlighted that three key non-financial aspects for a women-led enterprise while giving them loans.
Read the full interview here:
Q: How was the Financial Year 2024 for Aye Finance?
This year has been unduly good for most of the entities in the Financial Services domain, and so for us.
Post-Covid, we have worked on reducing down costs and other parameters, and enhance process efficiency using data science tools.
In terms of Revenue, we were at Rs 643 crores in FY23, and for the current FY we are on Rs 960 crores as of February and we will be closing the FY24 at over Rs 1000 crore by March.
Profitability has been phenomenal for Aye Finance as in FY23, we were Rs 54 crore, and as of February of this fiscal year we were at Rs 150 crore and are anticipating to close the FY24 at Rs 155 crore.
For the growth on the AUM side, in FY23, we were at Rs 2700 crore, and as of February of FY24, we recorded Rs 4100 crore AUM, and are likely to close at Rs 4300 crore by March.
The Return on Asset (RoA) was 4.5% for FY24.
Q: What were the driving forces behind the growth?
The AUM growth was driven by the spike in demand in the unorganised market. In previous years we were growing close to 60-70%, and this year we moderated taking heat from the market, regulator among other factors.
In terms of profit, there were multiple factors like cost efficiency, higher productivity, processed discipline, and use of data science tools.
Q: What are the future plans for Aye Finance?
We will carry this growth momentum to new financial year, and we project over 40% AUM growth for the coming fiscal (FY25). Profit is expected to see 80% spike.
For the coming fiscal, we project Return on Asset (RoA) to cross 5% on post-tax basis.
Further, the growth of branches will not be liner as compared to the revenue growth. We have 496 brances today, and in next year, we are going to grow only nearly 50 more branches.
We will continue in the same states, and no plans to expand state-wise in this fiscal.
Q: What are your plans for women-entrepreneurs?
We conducted a survey to learn how many enterprises are run primarily by women. When we talk about ‘women-supported’ enterprises, then it could be over 90%, but the focus is on ‘women-led’.
We had 17% of applicants in our portfolio with women as first applicant.
As per the recent data by the MSME Ministry, the enterprises run by the women are about 14%.
Our aim is to increase the 17% share to over 20%, and in this regard, the Shakti Loan scheme was thought of. The aim was to make the understanding of the product more precise.
As of December over 1200 loans to women under the Shakti Loans scheme have been rolled-out.
Q: What are the challenges associated with financing women entrepreneurs?
It is very important to first identify women as the people who are primarily running the organization. Otherwise, statistically it becomes easy and convenient to say many women entrepreneurs are being serviced.
Women entrepreneurs are in short supply of funds. We are happy to provide this because women tend to be better from a credit perspective. Women entrepreneurs tend to be better at returning money.
Besides giving them loans one should also look at the three key non-financial aspects:
One is they do need a lot of help in market development. They often manufacture or produce the product or service and they don’t know which is the optimal way of selling it or marketing it to a buyer.
Second is that how can they improve the quality of what they produce, what technology is available, what sort of methods are available.
Third is that what are the financial management techniques, how do they know that their business is doing well, what metrics to use.
Q: What are your funding plans in the near future?
We raised our last equity in December 2023 at around Rs 310 crores. That was substantial amount of money and we would like to leverage to three and a half times of that money.
There’s no need for immediate raising of equity but we will be raising a lot of debt. Also, almost one-third of our debt comes from banks in various forms.
Another one-third comes from DFIs, typically these are term loans, and the other one-third comes from various other participants.
These participants are mostly large NBFCs who have taken our bonds etc.
In Financial Year 2023-24, we raised almost Rs 4,000 crores of debt and in the new Financial Year 2024-25 we believe that we will raise about closer to Rs 6,000 crores of debt.
Q: What are your plans for IPO?
We do not have any plans for an IPO in the coming Financial Year 2024-25. But in the Financial Year 2025-26, there is a good possibility.
We have not yet started working on the IPO preparation, we have not announced any investment banker as a lead or etcetera, because we have almost one more than a year to go.
In FY26, we project to grow to a size of about Rs 6,000 crores.
We are profitable and have a very good return on asset and return on equity profile. So, we’ll be in a good position to do an IPO that will benefit the public.
