Don't see any deterioration in asset quality going forward: I Unnikrishnan, Manappuram Finance

In an interview with ET Now, I Unnikrishnan, MD, Manappuram Finance Ltd, talks about the company's financials and shares his business outlook. Excerpts:

ET Now: What explains this huge loss that you have incurred in the fourth quarter?

I Unnikrishnan: During the financial year of FY12, we had certain lending where the LTV was relatively higher and that portfolio was a higher percentage which went for auction. Historically, only 2% of the loans used to go for auctions. The overall auction percentage was 5% for the year.

As a result when we sold the asset, there were some under-recoveries interest and that has hit this quarter's result. However, on yearly basis we have made a profit of Rs 208 crore this quarter and we have made a loss of Rs 141 crore because of the one time impact.

ET Now: Do you think the real reflection of crack in gold prices will be visible in your current quarter which is Q1 numbers?

I Unnikrishnan: We have factored all the fall in the gold prices till date while reporting these numbers. Therefore, we do not expect any further deterioration of this pool and also this pool has already been converted into cash. A significant portion of that has already been converted into cash by selling the gold. Therefore, we do not expect any further fall of any provision on account of any further fall in gold prices.

ET Now: Will your top line take a hit as gold prices have come down?

I Unnikrishnan: The remaining pool of asset is performing in line with the historical performance standard. Therefore, we do not see any deterioration in asset quality going forward.

ET Now: Give a sense of your loan to value book now.

I Unnikrishnan: We are lending around 60% of the ornament value which translates into something between 70 and 75% of the scrap value of gold. In amount terms, we are lending a maximum of Rs 1800 per gram.