Manappuram Finance is seeing a sluggish growth in the current quarter but expects growth to pick up second quarter onwards.In an interview to CNBC-TV18, V.P. Nandakumar, the Managing Director and CEO of Manappuram Finance Ltd, expects nonperforming loans (NPL) to come down in the coming quarter.Manappuram's recent acquisation, Asirvad Microfinance, which holds 85 percent of kitty fund, is doing well, Nandakumar said, adding he plans to strengthen the business over the next two to three years.
Below is the edited transcript of VP Nandakumar’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: Definitely an improvement in the top-line. What is the sense you are getting that you will be able to give double digit growth in the current and coming quarters? You already have seen about 45 days of this quarter. A: We do not expect growth in the current quarter. This was a scenario last year too where for the first quarter we see a sluggish growth. But the second quarter onwards, we feel that the growth will start, is what we have experienced.Sonia: Your disbursements have gone up by about 20 percent on a quarter-on-quarter basis. Can you take us through what the expectation is for the next quarter?A: Second quarter onwards we expect the disbursals to grow and maintain at this level. This quarter as I mentioned, first quarter has always been sluggish because of reasons.Latha: There are two pockets of worry. One is that your non-performing loan (NPL) has gone up slightly, 20 basis points. And secondly your spreads have narrowed. You were doing almost 14 percent and now the difference between your cost of money and what you are making has come down to 12 and a half. First can we start with the NPLs, is that a worry?A: Yes, the NPL is not a worry. This is because of the historic effect. Earlier we were granting loans for a period of one year. The thing used to be auctioned very late which took around 15-18 months.
Now, we have launched a short-term product; three months, six months, nine months, etc. So the effect relatively has come down.
So, historical effect of non-performing loan will not be repeated in the coming year. This is our expectation. So, in all possibility the NPL will come down.
Latha: And the spreads?A: Spreads also will be maintained because the spreads declined slightly at the same effect. But we will be able to maintain the spread of 13 percent. The last year the spread was around 12.87 percent which will slightly improve.Latha: Any update on the other businesses you are getting into?A: Yes, Asirvad Microfinance which is where we hold around 85 percent kitty is doing well. The Budget for the current year is almost 70 percent growth.The other businesses yes, this year we have the technology, everything in place in home finance. So, from the top to branch level we have recruited very competent people. This year we hope that home finance will see a very fruitful year.Latha: At the moment at about Rs 322 crore, the assets under management for Asirvad Microfinance is relatively small compared to your gold business. It is barely 15 percent of your gold business. Will it increase? Will you make it like say, 20 percent of your gold business?A: It may not be but in two, three years time, we plan to strengthen that by infusing capital. The credit rating has improved after our investment in the company. Because of the higher credit rating, the banks are also lending more at a lower rate, so this will help the company to capture market and grow big in the coming years.
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