Svatantra Microfin IPO papers flag cash-flow, unsecured loan risks

Svatantra Microfin is a company that gives small loans to low-income families in India who earn up to three lakh rupees a year.

It wants to raise up to 3,000 crore rupees by selling shares for the first time, which is called an IPO, and has shared its papers with the market watchdog SEBI.

The papers show some worries for investors.

Most of the company's loans — about 88 out of every 100 rupees — are given without any security, which is riskier.

It also collects most of its money in cash, and cash can be lost or stolen.

The money the company spends on lending grew much faster than before — it used over 5,000 crore rupees in its daily operations last year, about 12 times more than the year before.

Most of its loans are given in just five states, so trouble in one place could hurt the whole company.

The company is also being sued over its trademark and logo, and almost 40 out of every 100 employees left last year.

The company still wants to raise 1,500 crore rupees in new shares and another 1,500 crore from existing shareholders.