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Manappuram Finance Ltd.

BSE: 531213 Sector: Financials
NSE: MANAPPURAM ISIN Code: INE522D01027
BSE 00:00 | 02 Dec 119.35 2.95
(2.53%)
OPEN

116.60

HIGH

120.00

LOW

115.80

NSE 00:00 | 02 Dec 119.40 3.05
(2.62%)
OPEN

116.45

HIGH

120.15

LOW

115.90

OPEN 116.60
PREVIOUS CLOSE 116.40
VOLUME 1283131
52-Week high 179.45
52-Week low 81.50
P/E 8.69
Mkt Cap.(Rs cr) 10,102
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 116.60
CLOSE 116.40
VOLUME 1283131
52-Week high 179.45
52-Week low 81.50
P/E 8.69
Mkt Cap.(Rs cr) 10,102
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Manappuram Finance Ltd. (MANAPPURAM) - Chairman Speech

Company chairman speech

Message from the MD & CEO

Dear shareholders

It gives me immense pleasure to share with you our 30th Annual Report forthe financial year ending March 31 2022. The adaptability and agility displayed by ouremployees during this volatile period and the continuing trust of our customers havehelped us meet the challenges and stay ahead in a competitive landscape to achieve aprofitable growth. Our consolidated Assets under Management (AUM) stands at Rs.302.61billion as on March 31 2022 growing by 11.15% over the previous year.

What makes me happier is the resilience with which we stood by our customers ourpeople and the community at large in these difficult times taking inspiration from ourrich legacy. Manappuram Finance as you would be aware is a 70-year-old brand. We haveseen and withstood multiple challenges through our existence the latest beingdemonetization and COVID-19 pandemic. Each time we have emerged stronger. Each time ourdetermination to serve our customers majority of who are the most impacted in suchdifficult times becomes more steadfast. We are proud of our legacy and will continue tostay true to it.

FROM DARKNESS TO LIGHT AND SMILES

The FY 2021-22 was one of hope and change as the world learned to cope with theunprecedented economic and social crisis triggered by the COVID-19 pandemic. The yearbegan with a more severe second wave of the pandemic which took a toll on lives andlivelihood. However since then better understanding of virus rapid vaccination drivecovering majority of country's eligible population and sustained fiscal and policy supportfrom the government and regulators have greatly improved sentiments. The mood of despairhas now been replaced by a distinct feeling of optimism as all of us made peace with theNew Normal.

The euphoria was evident in a buoyant Indian economy which saw 8.7% growth in FY2021-22 against a contraction of 6.6% in the previous fiscal. All sectors performed welland the economy has recovered to pre-COVID levels although it may take another decade toovercome the losses. In another positive development the rural economy which was largelymuted through the year is beginning to show signs of revival. With a good monsoonforecasted at 103% of the long-term average for 2022 by the IMD the expectations ofbetter agricultural production and rural economy rebound remains high.

Though a few of the challenges that remain are that of rising inflationary pressureglobally and the geopolitical tensions due to Russia-Ukraine war which has raised therisks of stagflation. With no resolution visible in the near future global governmentswill have to combat mounting inflation while maintaining growth. That said compared withthe steep price inflations seen globally such as 8.5% in the US and 9.1% in the UKIndia's is comparatively benign at an estimated 6.7% for FY 2022-23. Decision of the MPCto remain focused on withdrawal of accommodation and recent hike in the policy rates arelikely to keep inflation under check. As for the war it continues to be a regional eventand has not spread.

The impact of these events along with hardening rates in the US and appreciation of USDollar against global currencies triggered sell-offs across global stock markets.

The Indian market followed the cues with FIIs pulling out which has caused significantuncertainties and volatility. India's benchmark index Sensex shed over 10000 points fromits peak level of over 62000 seen in October 2021.

As a result our share price along with others has experienced depreciation whichcaused some pain to our investors. With the improving economic situation of the countryand growth prospects of your Company I expect that the Indian stock market will reviveand we will regain our glory.

Banks as well as non-banking financial institutions I believe are better placed thantheir counterparts in many other sectors. As per RBI assessment they have sufficientcapital buffers to withstand negative shocks from the geopolitical tension and resultantinflationary pressure and supply chain bottlenecks.

Overall the recovery process for the Indian economy seems to be progressing smoothlyand efficiently despite global headwinds. The country tops the IMF forecasts for 2022 withGDP growth seen at 8.2% ahead of China and the US which are expected to grow at 4.4% and3.7% respectively.

A YEAR OF RESILIENCE AND POSITIVENESS

Our performance in FY 2021-22 reflected the immensely challenging phase that ourbusiness passed through. Economic distress in rural areas that form part of our targetmarket and an intense competition in our primary gold loans business impacted our businessto some extent.

Despite this I am happy to state that Manappuram Finance stood its ground andreported a consolidated profit after tax (PAT) of Rs.13287 million for FY 2021-22. OurOperating income for the year stood at Rs.60610.2 million down by 4.26% againstRs.63305.5 million recorded in the previous fiscal. Considering the volatility anduncertainty of the present times it is without doubt a heart-warming show and one thataugurs well for all those associated with the Company especially our loyal customers.

There have been several positive takeaways from the performance.

We delivered a balanced growth across our diversified business areas. This is a goodsign and indicates that we are gradually reducing dependence on our gold loans business bygrowing other businesses. This will give more stability to our operations and set path fora predictable growth in the long run.

In our core business of gold loans we combated stiff challenges as a result of intensecompetition from other NBFCs and banks that offered low rates for gold loans. We saw ourcompetitors targeting our high-Value customers and accordingly responded with aggressionto retain our customer base. As a result our gold loans portfolio crossed the Rs.200billion mark in Q3 FY 2021-22 accompanied by a proportionate growth in gold tonnage to~70 tons. However since then we have taken a cautious stance of maintaining yield ratherthan to bleed thereby closing the year with gold loans AUM at Rs.198.67 billion a growthof 4.14% over the previous year. The aggregate disbursement for the FY 2021-22 wasRs.1236.75 billion. As of March 31 2022 we had a robust 23.69 lakh live gold loancustomers and 33% of our AUM constituted customers with over Rs.2 lakh ticket size. Thisis a clear indication that customers have trust in the Manappuram brand and we willcontinue to build on this.

In the non-gold businesses comprising MSME and micro loan finance vehicle finance andhome loans we have successfully restored the growth momentum through augmenting businessdevelopment as the rural markets began to see revival towards the end of the year.

Our microfinance subsidiary Asirvad Microfinance reported a satisfactory growth inbusiness ending the year with an AUM of Rs.70.02 billion a jump of 17% over Rs.59.85billion reported in the previous fiscal. It also closed the year on a positive note with acollection efficiency improving to 99% post an initial setback at the start of the yearwhen collections were impacted as the team could not make visits due to the pandemic. TheVehicle and Equipment Finance division closed the year with an AUM of Rs.16.43 billion asubstantial growth of 56.11% over the last fiscal. Manappuram Home Finance our homefinance subsidiary ended the year with an AUM of Rs.8.45 billion a growth of 26.87%against Rs.6.66 billion achieved in the previous fiscal. Overall the non-gold businessescontributed a share of 34.34% to the Total loan book in line with our strategy todiversify.

We also improved on the balance sheet position. Our consolidated net worth stood atRs.836.84 billion and capital adequacy ratio (standalone) at 31.33% as on March 31 2022.Liquidity position is healthy with cash and cash equivalents of Rs.26974 million as onMarch 31 2022. The consolidated book Value per share is reported at Rs.98.87 and earningsper share (EPS) at Rs.15.70.

OUTLOOK

Moving forward we are optimistic of the future of gold loans in India given theimmense liquidity potential it offers to those in need. In terms of the ongoingcompetition I believe this is a temporary phenomenon as the levels at which industryplayers are operating are unsustainable. I foresee the situation to normalize in the nextfew quarters. With our long-term focus solid business model and brand we are confidentof registering a 10-15% growth in gold loans in the coming fiscal unless any furtherchallenges come up.

We see good potential in our non-gold businesses as well. We have established solidcompetencies in them and now with the rural markets improving our teams are activelyreaching out to customers for business development.

In the MFI businesses the regulatory decision to increase proportion of secured loanbook (other than microfinance) to 25% of the portfolio is a welcome move. With thisAsirvad Microfinance has initiated gold lending to improve quality of assets and so farit has opened 320 branches exclusively for this business.

CLOSING COMMENTS

I thank the regulators and policymakers for providing an entrepreneur-friendlyatmosphere allowing us to go from strength to strength over the years.

I appreciate the efforts of the senior management team who have risen to theunprecedented challenges and shown the will and resilience to translate the Company'svision to actual results on the ground. I would like to thank each of the workforce whohave shown immense dedication in achieving our goals. I also take this opportunity tothank our Board for their support and guidance as well as our shareholders and customerswho are our source of strength. Finally I express my gratitude to the community at largebecause our mission has always been not just to create wealth but also to serve them inthe best possible manner while enhancing their quality of life.

I have no doubt that with the continued support of all the stakeholders your Companywill scale new heights in the years to come and join the country's march towards becominga $5 trillion economy.

With best wishes

V.P. Nandakumar

MD & CEO

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