Will achieve AUM growth of 20-25% over 5 yrs: Manappuram

Reiterating its previous target, Manappuram Finance CFO Kapil Krishnan expects 20-25 percent assets under management (AUM) growth over 3-5 years. The company's microfinance book stands at Rs 1,000 crore in March 2016, which will atleast grow by Rs 250 crore every quarter. This should double by end of FY17, he added. Below is the transcript of Kapil Krishnan’s interview to Nigel D’souza and Reema Tendulkar on CNBC-TV18.Reema: Let me start with the company’s assets under management (AUM) growth. That has come in at a healthy 29 percent. Do you believe it is sustainable?A: Yes, as you know we have been guiding for at least 20-25 percent AUM growth and we are slightly ahead of that. So, we maintain our guidance of 20-25 percent growth over the next 3-5 years.Nigel: Your microfinance book, that is looking quite good. That has grown close to around 23 percent on a sequential basis and that is driving your net interest margins (NIM) as well. The NIMs look better because of that. What is your outlook on the microfinance book? What kind of a percentage are you looking to maintain in terms of the total book and your NIMs will subsequently improve if you increase your weightage to the microfinance book. Could you give us some outlook on that?A: Yes, the microfinance book was Rs 1,000 crore in March, 2016 and we will grow by Rs 250 crore at least every quarter. So, it should be Rs 2,000 crore which is double by the end of FY17. The return on assets (ROA) there is around 4.5 percent, but in fact, the gold loan ROA is also the same. It is not that the performance is being pulled up microfinance. So, in fact, gold loan ROAs are also slightly higher than that right now.Reema: Your gross non-performing assets (NPA) at 0.8 percent of the AUM would be at multi-year lows. What is the outlook on that? Can we expect further improvement or are you seeing some caution currently?A: This is despite accounting for it at 90-days. We are two years ahead of the RBI's stipulation for non-banking finance companies (NNFC) and as you know, the gold loan business is fully collateralised. So, unlike many players in the banking and financial services sector, we do not face the problem of NPA in our businesses. Even gold loan and microfinance. Microfinance is 0.15 actually and gold loan also, whatever this NPA is, it is actually of two customers who have paid interest which is why we have not sold the collateral. Watch video for more..