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We want to aggressively grow home loan portfolio: VP Nandakumar, Manappuram Finance

Friday, April 21, 2017
Economic Times


In a chat with ET Now, VP Nandakumar, Manappuram Finance says that the company plan to have 50% revenue from gold loan and 50% from non gold segment by 2025.
Your stock has been on a fire of late, a significant traction in the stock price, tell us a little bit more about how you have managed to successfully diversify the business offerings to CVs, MFIs, etc and what really is the business plan going forward for these segments?
We have been a premier player in the gold loan segment for the last one decade and we have been maintaining that and growing that, last year also we have grown our gold loan book well. Due to demonetisation there was some impact on the disbursals as such because historically and conventionally this is a cash business, full cash business. Now we are slowly moving to a cashless mode also through our online gold loan digital gold loan product. Because of demonetisation the currencies were not available at the branches which impacted the disbursals, it has gone down to 40% and now it has come back to around 95%. I hope by next month the gold loan disbursal will reach the 100% which was of the same level of pre demonetisation era. Gold loan is growing and it has a potential for growth also but at the same time we do not want to concentrate on a single product because single product as the regulator see it as we also see it single product has its own risks so we thought of diversifying. We have identified certain areas; one area is microfinance, we are acquired more than 90% of Asirwad Microfinance which is a Chennai based company and after our acquisition this company is also spatially distributed across the country and grown and that company is doing well. Post demonetisation there are some impact in some collections, in some places in the microfinance industry but luckily in most of these places our presence is meagre but for Karnataka we have some presence in Bangalore but our recovery is improving steadily improving. The overall recovery rate has crossed 92% and month on month our collections are improving. There will be some at the same time there will be some impact on the NPA level in places like Bangalore which we will fully write off during this-- plans to write off during this quarter-- the last quarter. So the other businesses, which we are in is home finance which is doing well. The other portfolio is the commercial vehicles segment. Luckily on these areas there is not much impact of demonetisation. We are all with demonetisation and everything, we are hopeful that we will maintain our profitability plans, growth plans this year also.
How much of your current business you would classify is coming from the non gold segment now?

The total is around 15% is coming from non gold segment. We want to do that. By 2025 at least we plan to have 50:50, 50 from gold loan and 50 from non gold segment. We want to aggressively grow this home loan portfolio. Our primary thrust is affordable housing finance which we are expanding. The other which we want to grow is the commercial vehicle finance area. We are planning to do the business in the south as well as west to begin with and thereafter we will expand to other areas. Microfinance also we are distributing across the country, one risk is the political risk and the other risk-- sometimes what happens in some areas because of drought or other natural calamities the collection can be impacted. We plan to mitigate that risk also.

There were recent media reports stating that promoters are looking to sell some stake in Mannapuram, is there any truth to that?

It is a false news.

With your existing book, the existing cash level can you do this kind of a migration or you will have to dilute a lot?

No, we can do that because see we are better capitalised. Our tier-1 capital itself is over 20% whereas the statutory requirement is 12% so we are very well above that, that capital can be used for other businesses also. Gold loan, the prospects of growth of around 20% can be maintained even after allocating the capital for other businesses which will protect our ROE always at a level of above 20%. What I am targeting is an ROE is 20%. So there is no need of any dilution, we have adequate capital to ensure a robust growth in areas like home finance, SME finance, then again vehicle finance and microfinance.