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See AUM, profit growth of 20-25% in FY17: Manappuram Fin

Tuesday, June 07, 2016
The company, is confident of seeing reasonable growth of 20-25 percent in FY17 both in assets under management (AUM) and net profits, said VP Nandakumar, Chairman and Managing Director, Manappuram Finance.
Manappuram Finance is targetting a growth of 20-25 percent in both assets under management (AUM) and profits in fiscal year 2016-17, says VP Nandakumar, Chairman and Managing Director.
Speaking to CNBC-TV18, the gold loan provider chief said he is upbeat of growth in all the other segments like housing, commercial vehicle, micro finance and SME.
Shares of Manappuram, which has a customer base of 20 lakh and 3300 branches across India, has posted superlative returns recently, having returned 24 percent, 70 percent and 100 percent in the past one month, six months or one year, respectively.
The company recently introduced short-term loans of three months from twelve months, which has been a hit with customers because the interest burden reduces for short-term loans.
“By changing the duration of products offered, average loan-to-value (LTV) has come down to 64 percent against regulatory cap of 75 percent,” he said.
Below is the verbatim transcript of VP Nandakumar's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: The disbursement growth for the company has been very healthy, up almost about 56 percent. Do you think that a company like yours could perform as well as what you have done in the past and also there is so much competition now picking up in this space coming in from the smaller banks as well? What is the sense you are getting about how you could combat this kind of competition?
A: Our Company is more focused on gold loan. We have 3,300 branches across India. We have a large customer base. The customer base is over 20 lakh now. So most of these customers are loyal customers as is seen by the repetition with which they are there over a period of time. So I see this quarter to be good because the demand is picking up. Q1 used to be good every year because the activities happening in the market like reopening of educational institutions etc and if monsoon is good as forecasted, the demand will pick up.
As of now we see a reasonable growth and hopeful that we will be able to achieve around 20-25 percent growth during the current year and also in profit.

Latha: About couple of years back you changed your strategy from 12 months financing to 3 months financing. Is that something that has significantly improved the quality of your business? Can you take us through this change of strategy?
A: By changing the product from one year to three months and also offering the product for 12 months at a reduced loan-to-value (LTV), our average LTV has come down to around 64 percent now whereas our regulatory cap is around 75 percent. We are far below that and maybe the longest in the industry.
However, another thing, being of a shorter duration, for the customer also it is good because otherwise if these are carried forward over a period of time, the interest burden also goes up and after one year he will find it difficult to redeem it and also we are offering a technology solution, online solution for repayment etc, so it is convenient for the customer. This has actually reduced our auction percentage around 1 percent which was hovering around 4 percent a year ago. So this proves that the strategy to switch to short-term loans in a commodity based lending is a prudent approach.