Demonetisation will have no impact because our customers are from bottom of the pyramid: V.P.Nandakumar

Friday, November 11, 2016
Economic Times

In a chat with ET Now, VP Nandakumar, MD & CEO, Manappuram Finance says, demonetisation is not going to have an impact on our business primarily because all our customers are on the bottom of the pyramid. Edited excerpts:

Before talking about profits, what are the key things is that you are picking up in terms of consumer behaviour post demonetisation and how do you see this shape up post this action taken by the government?

To curb black money, fake notes and fake currencies is very very essential. Our business is concerned our customers at the bottom of the pyramids. For them I do not think they have any unaccounted cash with them so our business I do not think will get impacted with this well this is my feeling. Some initial disruptions may be there with regard to collection etc. etc. till for a week beyond that I do not see much disruption happen it will go like that.

Not too much of an impact you are saying even when it comes to demand.

I do not think this is going to have an impact on our business primarily because all our customers are on the bottom of the pyramid.

What are the factors that have led to that superb NII growth of over 70% which areas have you seen maximum growth and if you could just talk to us about the share of the non-gold business to your total business in quarter two?

Our non-gold business is around at a 15% now, it was 11% during the last quarter. The income mainly comes from gold loan 92% so that is a scenario but definitely we are in the early stages in some of the sectors so in the coming quarters I think they will also result in improving our yield so that the percentage of our income also goes up. Our intent is to make sure that by FY18 we have 25% of the share of non-gold business both by income as well as the asset under management and by 2020 we intent to achieve just half of total business from non-gold.

What is the outlook on your AUM growth going forward do you think the 35% to 40% growth is sustainable, do you expect it to moderate this year?

What we have projected was 20% growth or CAGR for the next five years. This year was definitely good because of one reason was the change in the loan structure the product structure and collection etc. During the last quarter the auction was the lowest perhaps in our industry so even though we dispersed around 10000 crore the auction was just 22 crore so a miniscule portion of that so this could be achieved as I mentioned primarily through the collection efficiency and also it was aided by the gold price increases also that I do admit.

How do you see your product mix evolve between gold finance, affordable housing finance, micro finance and also you said that you expected new business that means your CVs, MFIs, home loans to contribute about 25% of your total AUM that is an FY17-FY18 so is that on track?

It is on track the first half the gold loan had in it I expect the second half the other businesses will outperform gold this is my expectation.

You have also largely delinked the portfolio from gold price volatility how is that panning out and what is the outlook ahead?

It is doing well that is why we were able to grow. Second because of the new product like Fintech product in gold loan that is online gold loan we were able to get customers so suddenly these loans has also improved because it is very easy they can do it both availing a loan as well as remitting towards the loan they can do it in 24 hours.

ET Now: What really has made the street nervous is what led to a rise in your gross NPAs on a QonQ basis?

VP Nandakumar: No, as a percentage it remains the same there is no increase in NPA.