Manappuram Finance FY20 Takeaways – Investometry

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In this blog, we will talk about the events that took place in FY20, and also I would like to add more points to the analysis that continued from my previous blog ‘Overview Manappuram Finance Ltd.’ If you haven’t read the previous post then click the link below to read.

Overview of Manappuram Finance Ltd


  • Subsidiaries
  • Year of Acquisition of subsidiaries
  • Key points of FY20
  • Key Financial metrics (consolidated)
  • Financial overview of subsidiaries
  • Marketing strategy
  • SWOT Analysis
  • Management
  • Committees

So let’s start with the performance highlights.

Source: Annual Report

Manappuram Finance is the second largest gold loan company in India (more than 60 years of gold biz) and evolved from a pure-play to diversified services across retail, microfinance, SME, and commercial customers. It is the second-largest gold finance NBFC in India.

The company is present in 24 states with 4,622 Branches, 27,726 Employees, and 5.14 Million active customer base.

Subsidiaries of Manappuram Finance:

  1. Asirvad Microfinance – Microfinance lending
  2. Manappuram Home Finance – Loans for construction, Homes, etc
  3. Manappuram Insurance Brokers – Distributes life and non-life Insurance
  4. Manappuram Comptech and Consultants – Provides IT products and services
Year of Acquisition of subsidiaries:
  1. Asirvad Microfinance: 2014-15
  2. Manappuram Home Finance: 2014
  3. Manappuram Insurance Brokers: 2016
  4. Manappuram Comptech and consultants: 2019

Key Points:

  • The company signed a Memorandum of Understanding (MoU) with Autolite India Ltd. (AIL) for a consumer and dealer financing agreement for electric vehicles. AIL manufactures 2 and 3 wheelers all-electric vehicles.
  • The long-term objective is to achieve a 50-50 mix between the new businesses and gold loans in the years to come. (didn’t mention the number of years)
  • Infused Rs. 2,640 Million into its subsidiary Asirvad Microfinance and now Manappuram Finance holds 93.33% stake.
  • Received funding of $35 Million from the International Finance Corporation (IFC).
  • The average life of the gold loan is 58 days, average LTV of around 59%, and the average ticket size of about Rs. 38,500
  • Asirvad Microfinance achieved a milestone of Rs. 10 Billion of AUM in Tamil Nadu and AUM grew 43.3% mainly due to the acquisition of new customers.
  • Gold loan disbursement increased by 88.4%
  • The major material requirements are office and IT-related equipment and prioritize the procurement of materials from local vendors so as to avoid transportation
  • Asirvad has 2.36 Million customers and 1030 branches spread across 22 states.
  • Asirvad has capped lending per state at 10% to reduce the risk.
  • Manappuram raised Rs. 1000 Million or Rs. 1 Billion from NCDs with coupon rates ranging from 9.75% to 10.65% and Rs. 300 Million from 3-year bonds with a coupon rate of 5.9% (compounded semi-annually of course)
  • Share of Online gold loan (OGL) in gold loan AUM stands at 48% from 39% a year back.
  • Additional Provision of Rs. 550.26 Million by Asirvad due to the pandemic and is one of the lowest cost and highest credit rating microfinance lenders in India (they mentioned that they are THE Lowest cost provider a year back).
  • Housing Finance grew its presence in 3 more states.
  • SME’s AUM degrew to Rs. 270 Million from Rs. 298.52 Million as they are being cautious due to economic slowdown.
  • Added a new subsidiary ‘Manappuram Comptech and Consultants’ with a gross income of Rs. 101.35 Million. This subsidiary offers services in audit and taxation, and IT services including application development for Digital Personal Loan, Loan Management Solutions, etc.
  • Now the insurance business provides it’s service to all branches of Manappuram Finance.
  • Chose Oracle’s second-generation cloud infrastructure due to which the company expects 2-3 times improvement in performance vis-à-vis our current IT setup, in addition to achieving 30-40% in cost savings over the next five years.
  • The company increased its stake from 81.07% to 99.81% in its subsidiary – Manappuram Comptech and Consultants
  • As the purity of gold is checked manually, the management is looking forward to an automated solution.
  • There were 9 complaints regarding sexual harassment which were filed with the Internal Complaints Committee of the Company and 9 were resolved by the Committee during FY 2019-20
  • There were 349 cases filed against the Company regarding unfair trade practices during the last five years out of which 146 cases are pending as on the end of FY 2019-20
  • Moved on from classroom training (32 regional training centers all over India) to virtual classes and will soon be shifting to eLearning courses (prepared 400 eLearning courses).
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Key Financial Metrics (consolidated):

Financial overwiew of Subsidiaries:

Company Gross Income PAT
Asirvad MF 11,014.44 2,353.28
Home Finance 856.73 105.64
Insurance Broker 150.24 73.3
Comptech and Consultants 101.35 17.69
In Rs Millions

Marketing Strategy:

  1. Local Marketing: Village campaign, loan mela, shop visit, home visit and pamphlet and brochure distribution
  2. Digital campaigns: OGL Lite application, along with various advertisements and outreach activities on social media
  3. Consumer Connect: Door-to-door awareness campaigns in villages and at gram panchayat levels with emphasis on establishing personal connect
  4. Celebrity Allure: Many renowned celebrities from the Indian film industry have endorsed our brand including Venkatesh, Mohan Lal, Puneeth Rajkumar, Vikram, Akshay Kumar, Jeet, Sachin Khedekar and Uttam Mohanty

SWOT Analysis:


  1. Healthy capital adequacy ratio of 21.74%
  2. Diversified borrowings- 63% funding was from banks and the remaining from capital market instruments.
  3. Short tenure of 3 months which reduces the gold price fluctuation risk.


  1. South India accounts for 58% of the total AUM (82% in 2012)
  2. More than 37% of Microfinance portfolio are in southern states like- Tamil Nadu, Karnataka, and Kerala
  3. Asset quality and growth of non-gold biz are yet to stabilize.
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  1. The informal sector continues to dominate the overall market for gold loans
  2. The Company had rolled out an advanced Online Gold Loan product that is cashless and available to the customer 24×7


  1. Gold loans constitute 67.25% of the consolidated advances
  2. A sharp decline in the price of gold within a short period may adversely affect repayments
  3. Financial performance is vulnerable to interest rate risk, as most of the funding is from banking channels
  4. AUM growth can be negatively impacted by a decline in the gold prices
  5. An increase in competition from banks and NBFCs will impact the AUM growth.


  1. Mr. Jagdish Capoor (Independent & Non-executive Chairman)
  2. VP Nandakumar (MD and CEO)
  3. Mr. B.N. Raveendrababu (Non-Independent and Non-Executive Director)
  4. Mr. P. Manomohanan (Independent and Non-Executive Director)
  5. Mr. V.R. Ramachandran (Independent and Non-Executive)
  6. Mr. Gautam Narayan (Non-Independent and Non-Executive)
  7. Ms. Sutapa Banerjee (Independent and Non-Executive)
  8. Mr. Abhijith Sen (Independent and Non-Executive)
  9. Mr. Harshan Kollara (Additional Director)
  10. Mr. Shailesh. J. Mehta (Additional Director)


Audit Committe:

(4 Independent and 1 Non Independent)

Chairman– Mr. Abhijith Sen

Members– Mr. Jagdish Capoor, Mr. P. Manomohanan, Mr. Gautam Narayan and, Ms. Sutapa Banerjee.

Risk Management Committee:

(3 Independent, 2 Non Independent and MD & CEO)

Chairman– Mr. P. Manomohanan and Mr. Abhijith Sen

Members– Mr. V.P. Nandakumar, Mr. B.N. Raveendrababu, Mr. Gautam Narayan, Ms. Sutapa Banerjee.

Asset Liability Management Committee:

(1 Non Independent and MD & CEO)

Chairman– Mr. V.P. Nandakumar

Member– Mr. B.N. Raveendrababu

CSR Committee:

(2 Independent and MD & CEO)

Chairman– Ms. Sutapa Banerjee

Members– Mr. V.R. Ramachandran and Mr. V.P. Nandakumar

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Meet Mehta

21 | Small & Mid Cap Investor | CFA L1 candidate | Blogger | Reader | Engineer | Life-Long Learner
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