40 Years Ago... and now: Pushing for growth

It was in the last seventies that the Muthoot Group first stepped out of its comfort zone - the markets of southern India

At a time when India was going through a period of socio-economic renaissance spearheaded by the JP (Jayaprakash Narayan) movement, the Muthoot Group, which had interests in the finance sector back then, was looking to spread the group's footprints beyond south India. Armed with an engineering degree, MG George Muthoot was scouting for ways to build inroads into new territories. The company saw there was a clear absence of organised players in its business in the markets of northern India. As a result, after much planning, during 1979-81, three branches were opened outside Kerala, one each in Faridabad, Delhi and Chandigarh - to test the waters so to speak.

While the company needed to push its boundaries beyond the South to increase its customer base, the north Indian market still needed some convincing to engage with what to them was a new enterprise. The major challenge which Muthoot encountered was to do with people's inhibitions related to the practice of pledging gold jewellery. This was largely due to the perception created by unscrupulous moneylenders. Muthoot took up the challenge and put forth an aggressive expansion programme, which required a lot of strategic planning, scouting for locations and marketing. The company took special care to invest in staff training and in marketing and communication so that the right message could go out to help the company change the perception surrounding loan against gold as a "distress" issue to a "lifestyle banking" product.

All this was absolutely new for a group that started operations in 1887 as a small trading enterprise in the remote village of Kozhencherry in Kerala. Led by Shri Ninan Mathai Muthoot (founder chairman), the group entered banking and finance in 1939 by introducing the concept of easy secured loan. The idea was to provide immediate financial assistance to the needy customers in rural and semi-urban areas.

Although, the group had well-established itself in the southern markets, the then family-run business was reluctant to open branches in new markets apprehending possible misuse of people's assets for personal gains. But, considering the immense potential of this business and its ability to serve the un-served and under-served population of the country, Muthoot took the onus on himself and carried the family business forward by venturing into the northern Indian market in the mid-1970s, which proved to be the biggest turning point in the group's history.

In a way, the group helped in unlocking the potential of a static asset (gold jewellery) into an economically productive asset and an economy driver. It has also become the backbone of the micro, small and medium enterprises in the country. The group's business expansion has also led to employment opportunities for man. Its network is spread across India, including 1,072 cities, 364 districts and 1,240 talukas, with 65 per cent of its consumer base located in rural and semi-urban areas (Tier-III to Tier VI).

The next turning point for the brand came in 2010 when the group associated itself with Delhi Daredevils. The four-year association leveraged the group's brand leadership in the BFSI sector and gave it international recognition. Associating with big ticket events like the Cochin International Half Marathon and Indian Super League also helped the group get recognised both nationally and internationally. The group, which till then was a closely-held family-owned business, reached another milestone in 2011 when it launched its first IPO. It received an overwhelming response with the issue being over-subscribed almost 25 times in a depressed market. Since listing in May 2011, Muthoot Finance, the flagship company of the group, has disbursed over Rs 3 lakh crore as loans, of which Rs 1 lakh crore was disbursed in rural and semi urban areas.

Growing the empire
Today, under the leadership of MG George Muthoot, the group has broadened its scale of operations by stepping into new domains such as education, healthcare, money transfer, foreign exchange, leisure and hospitality, vehicle and asset finance, securities, and so on. In 2013-14, the revenues of Muthoot Finance stood at Rs 4,947 crore. The same year, the money transfer business stood at Rs 4,596 crore, while the foreign exchange business stood at Rs 512 crore. A new insurance product, Muthoot Gold Life, has seen over six lakh people insuring the lives of their loved ones.

A succession planning exercise is underway in the group where the fourth generation is steadily taking charge of the core business and venturing into new arenas.

MG George Muthoot
chairman,the muthoot group