Ram Hari Dahal, CEO of Mero Microfinance: We will give industry average return to the investors

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Mr. Ram Hari Dahal is the Chief Executive officer of Mero Microfinance Bittiya Sanstha Limited.

Mero Microfinance is floating its Initial Public Offering (IPO) of 6,12,000 unit shares worth Rs 6.12 crore from Falgun 27, 2072.The offer is set to close on Chaitra 01, 2072 at the earliest. The microfinance company has set aside 24,480 unit shares for its employees and 30,600 unit shares for the existing six mutual fund companies. Remaining 556,920 units shares are floated to general public through this IPO.

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1. What is the current status of this institution ,including Q3 of this fiscal year?

We are in the third year of operation with a paid up capital of Rs 20 crore (after IPO). We have disbursed loan of Rs 1.23 arba and has collected Rs 18 crore in deposits as of today. Our Non Performing Loan very low which stood at 0.77% where as operating profit stands at Rs 6.91 crore. We are expecting operating and net profit of Rs 12 crore and Rs 7 crore respectively by the end of this fiscal year.

 Out of 30 branches 12 were affected due to earthquake. As of today, other earthquake affected branches have fully recovered financially except Barahbise branch. We are working to get Barahbise branch at its full strength.

2. What kind of technology is this organization using?

We have been using centralized system like that of commercial banks since our establishment. After the earthquake, we have established backup system as a precautionary measure. We continuously monitor financial activities of each branch from corporate office using cutting edge technologies being used in the banking industry of Nepal. This has helped us to make better use of resources available to us.

3. What are the future plans of expansion of this Mero Microfinance Bittiya Sanstha Ltd?

We will add at least 13 and at most 22 branches which are in approval process at Nepal Rastra Bank. If approved, we will have at least 43 and at most 52 branches from current 30 branches by the end of this fiscal year. Our new branches will be established mostly in the hilly area of western Nepal where the presence of other microfinance is negligible.

4. Your organization is expanding robustly in near future. How will your organization enhance/maintain corporate governance?

In order to meet the requirement of our expanding organization we have established supervision station at three places. We have established Manamaiju Station for central region, Itahari station for Eastern region, and Parsa (Chitwan) station for Terai area of Central region. The main functions of these stations are to look after branches in their area for good governance, compliance, risk and other various issues.  Furthermore, we have created various departments within our corporate office to provide our services more effectively. So, maintaining and enhancing good governance in our rapidly growing organization should not be an issue.

5. Let's look at IPO of Mero microfinance. There are only 10 collection centers in Kathmandu and few in outside Kathmandu Valley. Is this sufficient?

We think the number of collection centers allocated for this IPO is sufficient enough to meet the demand of the investors. From the day 1 of the IPO, Falgun 27, we will be visiting collection centers to make adjustments, if necessary, to make the submission of forms smooth. I will also be in the field to get real time update regarding the whole process.  I would also like to request investors not to wait until last day to submit your forms as we may be overwhelmed on that very day.

6. Recent public issues have seen shortage of application forms. How do you plan to address this issue?

In coordination with our issue manager, Global IME Capital Ltd., we have put in place working plan to make forms available easily. We will be printing more forms as necessary. There is intention to create shortage of forms. It may be that few investors may reach the collection center when they are out of forms for few hours but we will send more forms as necessary. So, Investors should not be worried about the availability of the application forms.

7. We have seen trend that microfinance unable to give return to the investors in the first year after listing. What kind of return can investor expect from Mero Microfinance?

Most of the microfinance in that category has been found to be regional level microfinance. Mero Microfinance is a national level microfinance with a reserve of Rs 72.23 crore as of Q2 of the current fiscal year.  Thus, we strive to provide industry average return to the investors from this fiscal year.

8. What kind of returns does your organization offer for members?

We have client welfare fund running even before the directive from Nepal Rastra Bank. As of now our institution puts in 0.5% of net profit and every year each member contributes Rs 150 to the fund. Any grants we receive from NGO/INGO/government go to this fund.  We use this fund for insurance of loan disbursed, trainings, skill enhancements, help other members in need and other activities beneficial to the group.

Furthermore, we offer scholarship of Rs 12,000 at every branch to one deserving student of our member who excels in SLC examination.

9. How do you plan to include your members/customers in this IPO?

We have sent adequate IPO forms to all of our branches. We have sent 3000 forms to each of our three supervision station.  We have also directed our staffs to provide necessary assistance and counseling, if needed, to our members regarding the IPO of Mero microfinance. So, we are expecting good response from our members.

10. What message do you have for the investors investing in the IPO of Mero Microfinance?

Our organization is promoted by 8 commercial bank and 2 development bank. We do not have individual promoters. We have seen continuous growth in this first three year of operation and are committed to grow this organization further in coming days. I urge investors to apply for IPO of Mero microfinance with full confidence and expectation of good return every year.