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Digital money remittance service MoneyOnMobile’s Indian subsidiary, My Mobile Payments Limited (MMPL), has secured $1.5 million in unsecured credit from YES Bank. The company will be repaying the loan by December 2017 and will be charged an annual interest rate of 11.6%, it added in a press statement.

As part of the agreement, a performance guarantee was provided in order to assure repayment by MMPL of any amounts borrowed from the bank. However, the company has not given details of the performance guarantee. “The proceeds from the new credit facility will provide MoneyOnMobile with enhanced financial capabilities to execute growth strategies,” CEO Harold Montgomery added in the statement.

Retooling business model

Note that MoneyOnMobile is currently retooling its business model in the country which is looking to reduce the amount of cash collateralization. ““Our main growth driver in processing volume in prior quarters has been domestic remittances, this product requires cash collateralization. However, we believe that our retooling of the business model will result in an operation that will allow us to replicate prior quarters’ growth, at higher margins, on a flat expense base, with lower cash collateral requirements,”  CFO Scott Arrey said in last quarter’s analyst call.

We are unsure about what the company means when it says it needs to reduce cash collateralization, but we have contacted them about this and will update once we hear from them.

Fund raising

In the June quarter, MoneyOnMobile said that is looking to raise $10 million in a Series E round of funding and engaged US Capital Partners, a San Francisco based investment bank. However, no timeline about the fund raise was given. Montgomery said that the company is looking at a valuation similar to Citrus Pay.

Financials

MoneyOnMobile reported revenues of $1.1 million for the quarter ended September 2016 (Q2 FY17), down 21.43% from the same quarter last year. Sequentially, revenues were down from $1.4 million. The management attributed the fall in the revenue to a decrease in processing volumes and the retooling of the business model. The company processed payments worth $140 million in the quarter compared to $154 million in the quarter period last year, a decline of 9%. MoneyOnMobile had processed payment volumes of $224 in the preceding quarter.

Gross profit stood at $585,377 down 13% from $675,441 in the same quarter last year. However, the company reported an operating loss of $2.3 million compared to the loss of $6.1 million in the same quarter last year.