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Diversifying business beyond gold loans: Manappuram

Tuesday, December 15, 2015
In an interview with CNBC-TV18, VP Nandakumar, MD and CEO, Manappuram General Finance , discussed the ramifications of the gold price fall on the company's business and what it is doing to counter it.

Below is the verbatim transcript of VP Nandakumar’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: We are couple of months already into this quarter, in the last quarter itself we did see a growth has stagnated after quite a few quarters is it looking better this time around?
A: The growth all depends upon the gold price. As far as our main business is concerned gold loan we are growing our gold collateral with us, the security with us steadily. This year we have grown that around 15 percent.
However the asset under management (AUM) has not grown to that extent so last one or two quarters it is remaining more or less stable there. However, the collateral is growing because the loan to value (LTV) is coming down because the gold price has gone down. As far as we are concerned we have diversified into other areas and those new businesses are growing.

Reema: What you are saying that the total assets under managements or AUM as we call it would largely be flat in Q3 that is the quarter we are in? If you could also break that up in terms of gold AUM as well as non-gold AUM because you have been focusing a lot on disbursements in the non-gold AUM market as well?
A: So far the total AUM has grown during this quarter by around 1.5 percent. This is mostly due to non-gold AUM. Gold AUM is stable at the same level

Reema: So overall AUM growth in this quarter so far is 1.5 percent driven by non-gold. Gold AUMs would be flat.
A: Yes.

Nigel: The gross yields were at around 21.5 percent and they were soft on year-on-year just in the last quarter due to interest reversals on the auction portfolio. Now analyst on the street they expect yields to go back to around that 23 percent approximately is that happening?
A: It is happening. I am glad to say this is happening because the legacy portfolio which was there longer-term that portfolio is over. So, now around two-third of our portfolio is of a short-term nature around the three months time. So, the there is no cause of concern of interest reversal now. So, the yield will go to that level of 23 percent.

Nigel: Your legacy book was around Rs 800 crore?
A: Yes, now those are all redeemed or all these are cleared.