Kerala-based gold loan major Manappuram Finance is pursuing a strategy of diversification and well on its way to reach the goal of a portfolio mix of 50:50 between gold and non-gold segments, said a top official of the firm.
While gold loans continue to remain a focus area, the company has gone forward with microfinance, vehicle loans, corporate loans, commercial vehicle finance, MSME finance and home finance with more aggression.
V P Nandakumar, MD & CEO of Manappuram Finance, told shareholders in his message in the Annual Report-2023 that the diversification strategy the company has put in place is to take advantage of the India growth story.
Several studies show that India’s per capita income will graduate towards the league of developed nations in the course of time, which offers immense scope to evolve new products tailor-made to suit the evolving customer aspirations, he said.
“Our gold loan AUM remains more or less unchanged while all non-gold verticals have contributed well during the year. Microfinance subsidiary Asirvad Micro Finance’s AUM crossed the milestone of Rs 10,000 crore. The vehicle finance business registered a growth of 49.4% with its AUM growing from Rs 1,640 crore to Rs 2,450 crore at the end of March 2023. Home finance AUM also grew 29.6%,” he said.
The gold versus non-gold business mix currently stands at 56:44.
With a consolidated AUM of Rs 35, 500 crore in FY23, the company is the second-largest NBFC operating in the gold loan segment, with gold loans (standalone) accounting for Rs 19, 000 crore. It has a strong pan-India presence through its strong network of 5,232 branches across 28 states and four union territories, and serves more than 5.09 million active customers.
The company’s core business of gold loans faced challenges arising from the intense price competition among the NBFCs which prevailed for much of FY 23 and impacted its profitability.
The gold loan business constituted 67% of the consolidated AUM and the remaining 33% comprised non-gold businesses such as microfinance, vehicle, housing and SME finance. The company’s gold loan AUM decreased by 2.1% YoY to Rs 19, 740 crore as against Rs 20,16 0 crore in the previous year.
As of March 31, 2023, the number of active gold loan customers stood at 2.41 million. With an average ticket size of Rs 57,500, the company’s gold loan portfolio is extremely resistant to gold price fluctuations. Gold loan LTV stood at 60% as on March 31, 2023 and its gold holdings stood at 60.14 tonnes in FY’23. The online gold loan (OGL) book represented 50% of the overall gold loan.
The total borrowing of the company on a consolidated basis was valued at Rs 28,500 crore in FY 2023. “On the liquidity front, we have not faced any issues in raising funds for growth, even at the peak of a liquidity crisis. We do not expect any funding challenges to come in the way of our plans and are comfortably placed with our ALM,” the company said in its annual report.