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Cover Story

“Rural Markets Are Central to Our Plan”
In an Exclusive Conversation with B&E’s Mona Mehta, V. P. Nandakumar reveals The Strategies that made Manappuram Finance one of The Biggest Wealth Creators in FY2010-11
Issue Date - 26/05/2011
B&E: Manappuram General Finance & Leasing achieved a stunning 113.94% growth in M-cap in FY2010-11. What factors led to such a fabulous growth?
V. P. Nandakumar (VPN): Broadly speaking, the growth in M-cap reflects the growth in our business levels. We ended FY2009-10 with an AUM (assets under management) of Rs.26 billion which went up by three times to about Rs.75 billion by the end of FY2010-11. A major factor behind this achievement has been the significant expansion of our branch network, from 1,005 branches to 2,064 branches in FY2010-11. Of course, we were helped by the fact that raising funds for this scale of expansion was never an issue for us. For instance, in November 2010, our QIP was a huge success and we could raise Rs.10 billion of additional capital. A game-changer, as far as Manappuram is concerned, has also been the way we have used top-notch regional and national celebrities as brand ambassadors in our ad campaigns. It has not only made Manappuram a household name, but has also helped in demolishing the age-old taboo against pledging family gold.

B&E: What boost in business opportunities do you foresee from rural India?
VPN: It is a well known fact that India has the world’s largest stock of privately held gold. However, what is lesser known is that unlike other forms of wealth, about 65% of this gold is held in the rural areas. Thus, if you are in the gold loan business, you must be present in the rural areas because that is where the potential is. Not surprisingly then, about two thirds of our branch network is in the rural and semi-urban areas. The rural market is central to our plans and we intend to continue our focus on this market for expansion.

B&E: How is Manappuram looking at enhancing its customer base when it comes to general financing?
VPN: I must clarify that despite our name, we are today predominantly a gold loan company and we intend to retain this focus. In fact, our customer service strategies revolve around this focus. First, we have worked hard to bring down the turn-around time in gold loans so that the entire process is accomplished in a matter of few minutes. Second, we have continuously been innovating in order to offer products that are relevant to the needs of our customers. Today, within the category of gold loans, our customers can choose from two dozen different products.

B&E: Has Manappuram really been able to change the age-old norm in rural India i.e. the dominance of local moneylenders and pawnbrokers?
VPN: Actually, this has already happened to a significant extent in many southern states which include Kerala, Tamil Nadu, Karnataka and Andhra Pradesh. In these states, there has been a shift in business from local moneylenders and pawnbrokers to the gold loan NBFCs and I would say, it’s not just Manappuram, even our competitors have helped in this process. As for the rest of India, yes, there is still a lot more work that needs to be done. However, I am confident that as the gold loan companies expand their network in these regions, we would be able to break the grip of moneylenders.

B&E: What’s the way forward for Manappuram, particularly in the current year?
VPN: In the current year, we are looking at both growing and consolidating our business. While the pace of growth is likely to be slower, we still hope to double our AUM to Rs.150 billion by the end of this fiscal. On the branch network front, we will continue to expand but at a slower pace, maybe, adding another 500 branches or so by the year end.


Mona Mehta           

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