### **Company Overview** Muthoot Capital Services Limited (MCSL) is a listed Non-Banking Financial Company (NBFC) under the Muthoot Pappachan Group, offering retail vehicle financing branded as “**Loans on Wheels**.” Established in 1994 and registered with the Reserve Bank of India (RBI), MCSL operates in 20 Indian states with a strong focus on semi-urban and rural markets. It specializes in financing two-wheelers, used cars, and used commercial vehicles (CVs), targeting underserved mid-income, self-employed individuals and small entrepreneurs. The company leverages the vast **3,800+ branch network of its group entity, Muthoot FinCorp Limited**, for customer sourcing, lead conversion, and collections. Equity shares are listed on the BSE and NSE, and debt instruments are actively traded. --- ### **Key Business Highlights (Oct–Nov 2025)** #### **1. Digital Transformation & Technological Advancement** Despite its moderate AUM (~₹3,300 crores), MCSL has invested heavily in digital infrastructure on par with larger NBFCs: - **State-of-the-art Loan Origination Systems (LOS)** for two-wheelers and used CVs, supported by **Business Rule Engines (BREs)**. - **CoreCard platform** for digital origination. - **Bot-based calling systems** for collections and an **AI-powered automated calling system** enabling thousands of concurrent, human-like interactions during onboarding. - Partnership with **EY** to develop a **best-in-class data lake platform**, supporting advanced analytics, pre-delinquency modeling, customer behavior analysis, and cross-sell models. - Implementation of **eNACH** has reduced processing failure rates from 50% to **10–15%**, with **eNACH penetration rising from 50% to 82%** (target: 90–95%). - **Muthoot FinCorp ONE app** enables end-to-end frictionless service, including digital onboarding, self-service journeys, and loyalty loan top-ups. #### **2. Portfolio Growth & Product Diversification** As of Q2 2025, the total loan portfolio stood at **₹3,283.66 crores**, with strategic shifts evident: - **Two-Wheeler (TW) Loans**: Largest segment (~90% of AUM historically), contributing **22% of revenue**. - **Commercial Vehicle (CV) Loans**: Fastest-growing segment — up **40% QoQ and 1,511% YoY**. - **Loans Against Property & Light/Personal Loans (LL&PL)**: Up **20% QoQ and 280% YoY**, signaling a strategic pivot towards secured retail lending. - **Used Car & Used CV Financing**: Each contributing ~18.5% and 17.5% of revenue; management expects combined **30% portfolio share by FY25 end**. - Expansion into **used two-wheeler financing**, scheduled for launch in **November 2025**, aims to boost asset yield. #### **3. Risk & Pricing Strategy** - **Risk-based pricing** implemented across two-wheeler portfolio: higher rates for high-risk, lower for low-risk customers, enhancing portfolio yield. - ~50% of borrowers are **New-to-Credit (NTC)**, making differentiated pricing vital for profitability. - 98% of two-wheeler borrowers are **homeowners**, aiding traceability and collections. - Portfolio concentration in high-resale-value OEMs: **Hero, Honda (70%), and TVS (14%)** — mitigates depreciation risk. #### **4. Strategic Partnerships & Co-Lending** - Operates co-lending partnerships with **four key partners**, primarily **WheelsEMI** and **EVFin**. - Recently partnered with **evfin** (Greaves Finance) with a **₹150 crore deal** to finance **electric two-wheelers** in collaboration with Ola, Ather, Ampere, Hero, and TVS. - Also partnered with **Onemoney** (account aggregator) to access real-time bank statements, improving underwriting through **income proxy analytics**. - Active in **dealer-based financing** with digital integration on **Hero MotoCorp’s dealer app** and partnerships with **Bajaj Finserv** and **BikeDekho**. #### **5. Geographic & Financial Expansion** - **South India** remains dominant (41.4% of hypothecation loans), but company is aggressively expanding into **North, East, and non-southern states**. - Plans nationwide **cost-efficient expansion** by leveraging Muthoot FinCorp’s existing infrastructure. - **50% of disbursements** now come from non-southern regions, reducing regional risk. - **Corporate Office in Ernakulam** supports pan-India operations. #### **6. Funding Structure & Cost Efficiency** - Reduced reliance on high-cost **Non-Convertible Debentures (NCDs)**. - Attracted increased **term loans from banks** under favorable RBI liquidity policies. - Maintains **stable borrowing cost of 9.82%**, irrespective of co-lending or direct lending model. - Promoter shareholding: **62.62%**, retail investors: **28%**, reflecting stable ownership and investor confidence. #### **7. Organizational & Leadership Strategy** - **Collaborative leadership model** involving third- and fourth-generation promoters, driving digital innovation and long-term continuity. - Established **four Strategic Business Units (SBUs)** — Two-Wheeler, Used Car, LCV, and Digital Sales & Retail Liabilities — with dedicated teams to improve focus and scalability. - Staff productivity increased from **4.5 units/employee (Q1) to 8 (Q2)**; targets **12–15 units** in future quarters. --- ### **Recent Financial & Operational Performance (Q2 2025)** | Metric | Value | |-------|-------| | Total Loan Portfolio | ₹3,283.66 crores | | Two-Wheeler Disbursements | Leading contributor (~22% revenue) | | Commercial Vehicle Loans | +1,511% YoY growth | | LL&PL Loans | +280% YoY growth | | Digital Disbursements Target | 5% of total via digital channels | | eNACH Penetration | 82% (from 50% in FY24) | | Co-lending Partners | 4 (WheelsEMI, EVFin, Up Money, Onemoney) | | Yield on Direct Loans | ~23% | | Yield on Co-lending | ~14.5–14.75% | | Borrowing Cost | 9.82% |