Brand Manappuram, the Early Days

How a local brand became a National Brand

To talk about how Manappuram evolved from a local brand to a national brand is to begin with an exaggeration.

For much of its life, Manappuram was not even a local or regional brand in the sense we would understand the term to mean today. In fact, Manappuram began as a village brand, and that was how it stood for many decades. It was strongly identified with the village of Valapad where it was established in 1949, and where it functioned as a single branch business involved in money lending and pawn broking on a modest scale. This was how remained until 1986, when its founder Shri V.C. Padmanabhan (father of Shri V.P. Nandakumar) expired.

Remarkably, even as it remained a business with strictly limited reach, it had managed to become a highly successful and greatly trusted brand with deep roots in the local community. Over the decades, Shri Padmanabhan had earned a reputation for integrity and the firm became known in the area as a safe-haven for the deposits of the local people, offering them higher returns along with assured safety. True to the stereotype of a conservative banker, Shri Padmanabhan was averse to risks. He ran his business on a capital base of Rs.5 lakhs and had imposed upon himself a voluntary limit of Rs.25 lakhs being the maximum deposits he would accept from the public. Beyond this limit, potential depositors were either turned away or made to wait for their turn in a queue. As and when an existing depositor withdrew his money, Shri Padmanabhan would send out inland letters to the next in line, informing them of the availability of a slot and grateful depositors would rush in with their money.

And such was the formidable reputation of the firm that even as it remained anchored in Valapad, the deposits came in from around the world, from locals who had moved out of the Valapad area to the Gulf countries and to other parts of India in search of employment, and who continued to carry their trust in the Manappuram name with them.

When Shri Nandakumar took over the reins in 1986, it was this resolute trust in the Manappuram name—the goodwill that served as a hidden capital of the business—that he was able to leverage. Very early on, he decided to do away with the voluntary limits on deposits and loans and business levels shot up, quickly going over the one crore rupee mark and beyond. However, before long, the limitations of operating under a proprietary concern became clear and Manappuram Finance Limited (MAFIL) was incorporated in 1992. The company went in early for an IPO in 1995 because the experience of trying to raise funds from the Commercial Banks was frustrating—even after mortgaging his personal residence, Banks were unwilling to lend him the amounts he was looking for. But the financial implications of a public issue were daunting. At that time, the rule was that a company going in for the IPO should have a minimum of Rs.3 crores as paid-up capital and MAFIL, at the time, was about half of that. Shri Nandakumar launched an initiative to collect small retail investments from among the Manappuram customers belonging to the Valapad area who were personally known to him. Once again, it was the trust that people of the area had in the Manappuram name that came to his rescue. The funds were mobilized and the issue went through without a hitch.

This was how Manappuram Finance Limited (MAFIL) got its start and the rest, as they say, is history.