Looking at 20% growth: Manappuram CEO

Pronoy Nath Banerji | Updated on January 20, 2018 Published on May 15, 2016

Mr V.P. Nandakumar, Chairman of the Manappuram Group. Photo: K.K. Muntafah


Manappuram Finance has posted a strong fourth quarter with profit recording a whopping 87 per cent. Speaking to Bloomberg TV India, Manappuram Finance managing director and CEO, VP Nandakumar, says the company has diversified into new segments like loans for small and medium-sized enterprises (SME), upgraded technology and improved collection mechanism to grow the top line and bottom line by 20 per cent in FY17.

Manappuram is considering applying for a full-fledged bank when the RBI comes up with the final guidelines, he said.

Can you take us through the highlights of the Q4 numbers and give us a sense of why employee costs continue to remain high for the quarter?

The employee costs have remained high mainly because of the new gratuity rule where we have to provide for the past two years from 2014.

That is one impact. The second reason is that we have started a new initiative like the SME lending and other businesses. So the results will start flowing in coming days. That has affected the cost.

What has been driving the yields for the company and what’s the margin trajectory given the softening of the interest rates? Are you looking at lowering your lending rates as well going ahead?

 Our lending rates in the short-term (one year) would be steady because our product is a short-term product.

The average lifetime is about three months just like a credit card over a short duration. So the interest rate may not be a big issue. The yield will remain the same in the short-term. The improvement is primarily because of our collection efficiency.  Now we are restructuring the product.

So our loan to value (LTV) has been brought down. We have initiated two things.

To improve the collection efficiency, we are encouraging customers to submit interest monthly. Also, we have introduced a technology drive we have started an online platform where customers can use the 24x7 online system.

All of these initiatives have facilitated collections. Receivables have come down drastically.

In terms of outlook or guidance in terms of AUM growth into FY 17, if you can share some numbers in details there? As also pertaining to growth driver segments in gold loans, home finance or vehicle finance? What has given the most traction?

The consolidated growth, we are pretty sure, will be about 20 per cent CAGR in another two-three years. The growth segment will be in gold loan, which will be growing around 15-20 per cent. In case of microfinance, we expect the growth to be around 75-100 per cent on an average in another two years.

Then, in case of home finance, which was around ₹140 crore, will grow to around ₹400-500 crore. Similarly, passenger vehicles loans will also be around ₹400 crore. Overall, we expect 20 per cent growth in the consolidated loan book, as well as for both the top line and the bottom line.


Are you also considering applying for a banking license with the RBI having announced guidelines for on-tap licencing recently?

We are seriously considering that. For any non-bank finance company (NBFC), that is the ultimate goal.

Transforming from a NBFC to a bank is the ultimate objective. We are keenly looking forward to the final guidelines to come. Before it comes, we’ll make up our mind. We are definitely in favour of that.

Published on May 15, 2016
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