See AUM beyond Rs 9000cr during this quarter: Manappuram

A: Top line has improved from Rs 457 crore to Rs 503 crore which is also an increase of 10.2 percent and Profit before tax (PBT) also has improved from Rs 57 crore to Rs 115 crore, profit after tax (PAT) from Rs 44 to Rs 77 crore. This is as a result of assets under management (AUM) growth also which has grown by 3.9 percent. It was around Rs 8,200 crore. Now we have crossed 8,530 crore and we see a moderate growth now. Why I emphasise this is because last two years we have seen downturn. Now only during this quarter we started growing and we see further potential for growth.

One thing which we want to emphasise from the past is our loan-to-value (LTV) on an average has come down to around 70 percent which two years ago was around 90 percent. Our net worth also is showing improvement but disbursals also have improved because the rural economy is showing some signs of activity and that might be why our disbursals also have improved from Rs 5,500 crore to Rs 5,800 crore. We hope that it will further improve during this quarter.

Latha: Can you put some numbers to that what kind of improvement in assets under management you are looking at for the rest of the year, your disbursement, your loan growth?

A: This will continue, we expect our AUM to grow beyond Rs 9,000 crore during this quarter and we expect profitability also to be steady during this year. Next year also we see good improvement in profitability.

Latha: How are the margins this quarter and are you seeing the cost of funds dipping?

A: Cost of funds is around 12.25 percent which was around 12.75 percent during that last quarter. So there is a reduction of around 50 basis points. The Net Interest Margin (NIM) margin has improved by 4 percent from 10 percent to 14 percent. This is primarily because when we conducted the auction to realise the stressed assets there was not much losses compared to the previous quarter. This has resulted in improving the NIM.

Sonia: Overall what will you be diversifying into and by when will this take place?

A: We have already entered into loans against property business and that has started growing now. Another diversification was when we acquired a home finance company based out of Delhi the name change everything and all the regulatory approvals are there. The full team along with the CEO have been recruited and now we are on the job. They are about to start business from Mumbai.

Regarding commercial vehicle segment that segment is facing some tough challenges with the downturn of the economy but we hope that things will change. We have recruited a CEO there and we are going to start our operations really soon. We may not be that aggressive because in this condition of the economy we feel like we will not be aggressive in commercial vehicles segment.

But in the micro finance segment and affordable home finance and loans against property business also we want to be aggressive. As I mentioned the reason for this is we have a Tier I capital of around 27 percent which is very high. So the capital is underutilised. We want to use full potential of the capital which is why we are entering into this diversification. Also one more reason is that Reserve Bank of India (RBI) also wanted to see the Non-Banking Financial Banking Companies (NBFCs) diversify. So that concentration risk which is pursued as a big risk by stakeholders can be reduced, this is also one of the intentions of diversifying into safer areas.