Expect growth to pick up in Q3: Manappuram General Finance

In an interview to CNBC-TV18 I Unnikrishnan, ED, Manappuram General Finance spoke about the financial performance of the company in the quarter gone by and the road ahead.

He said that the company’s loan book de-grew by nearly Rs 600 crore in the last quarter on the back of new loan-to-value norms. Its current order book is at nearly Rs 10,738 crore. However, Unnikrishnan is hopeful of growth picking up in the third quarter. "Starting this quarter we may not see de-growth in the loan book. Starting Q3 of this year we should be growing by around 10% annualized," he elaborated. Below is the edited transcript of Unnikrishnan’s interview with CNBC-TV18. Q: How your core business is doing because your sequential decline in assets under management is not very significant compared to what was happening last quarter with the new LTV (loan-to-value) norms? A: Our loan book has de-grown by nearly Rs 600 crore. Currently, our loan book is around Rs 10,738 crore. Q: Is the pace of decline or shrinking of the book coming down now as you seem to be adjusting with the LTV norms? A: Starting this quarter we may not see de-growth in the loan book and starting Q3 of this year we should be growing by around 10% annualized. Q: You are on course to the realignment to 60% LTV and you are saying that in the current quarter the effect of that would have played out fully? A: In Q1 it has played out fully and Q2 is flat and starting Q3 we should be growing at 10% per annum. Q: Do you expect to keep spreads above 14%? A: The spread may come down slightly, may be by 1% or so over the next one year period, but it will be around 24% and spread will be around 12%. _PAGEBREAK_ Q: Will the cost cutting program continue from here or have you done most of the shrinkage in the cost structures already? A: Cost structure will change. We have started cost cutting program and that will be running through the next three quarters. So, we will see the full benefit only by the end of this year. Q: Do you expect to further reduce the opening of the new branch program more from here or would you expect to cut advertising and markets spends? A: We have already cut down advertising and market spends and in Q1 we have already opened some 63 branches. But, going forward we may not add any new branches. Q: You are considering a proposal on giving specific institutional shareholders like Secure Capital and Bearings, some additional rights for controlling the board and operations. There is some resistance to that idea from some of your investors. Can you explain why you are trying to do it? A: I have not seen any resistance as such. There have been certain queries and we have answered that. If you look at the rights that we are giving to Bearings, they are only board rights. It is quite a normal practice in most of the companies. Q: You have not received any kind of descend from shareholders because we have got a note from IIAS specifically advising shareholders to vote against it? A: We have got certain queries and we have answered that. We are going to have our AGM now and we will put it up for voting. I don’t think there is an issue with that.