Manappuram Finance looks at inorganic growth to diversify business

Aims to expand business to reduce concentration risk from gold loan book

Kerala-based Manappuram Finance, a major name in gold-based loans, wishes to grow its non-gold loan book.

“We are looking at organic and inorganic growth to grow the non-gold loan business, now Rs 1,300 crore. In the next two to three years, we aim to grow it to Rs 4,000 crore,” said V P Nandakumar, managing director and chief executive.

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No funds had been set aside for this, but capital adequacy was a comfortable 25.4 per cent at end-December 2015, he said. The non-gold loan book consists of financing for small and medium enterprises, commercial vehicle loans, and affordable housing. It is 12-13 per cent of the total loan book.

The aim is to raise this to about 25 per cent in the next two years.

This is being done to reduce concentration risk from gold loans. The Reserve Bank of India has also said it wants large companies to diversify their portfolio, as a single business will lead to this risk.

Going ahead, it will look at further diversification and explore opportunities for lending in other segments, too. "Niche segments", said Nandakumar, where non-bank finance companies are typically not present.

He says he also expects the gold loan business also to grow at a better pace than last year, as volatility in prices has stabilised. “Last year, we grew about 13 per cent here. This year, I think we should be able to clock a growth of 20 per cent,” he said.

At the end of December, assets under management were Rs 10,579 crore. Earlier, the management had drafted a 'Vision 2020' plan forbusiness revenue of Rs 50,000 crore and to upgrade its assets under management to Rs 30,000 crore.