See good potential for gold loan companies once regulatory framework settles: I Unnikrishnan, Manappuram Finance

In an interview with ET Now, I Unnikrishnan, MD, Manappuram Finance, shares his company’s business outlook. Excerpts:

ET Now: What has led to the decline that you have seen in your profits as well as NIIs this quarter?

I Unnikrishnan: The decline in profits compared to last year on year is on account of corresponding fall in the loan book. Last year we had around Rs 11000 crore of loan book. This quarter it is Rs 9200 crore, but compared to Q1, we have seen an increase of 32% in profit at Rs 69.7 crore. In the last quarter, it was only Rs 52 crore.

ET Now: So what is your future outlook on margins? Can you go back to your peak margins?

I Unnikrishnan: This quarter also we have maintained our margins. Our NIM is 11.78%. That is more or less in line with the historical trends. Our disbursement also is more than 5000 cr, which also is in line with the historical trends. So the business is getting consolidated and we see good opportunities for gold loan companies. Once the regulatory framework settles down, we expect to see strong business opportunities.

ET Now: Currently, what is your loan to book value ratio and do you think that RBI could revisit that?

I Unnikrishnan: We have represented to Reserve Bank but we have not heard anything from the Reserve Bank so far.

ET Now: So what is your current ratio?

I Unnikrishnan: 60%.

ET Now: Last four or five months have been quite challenging for the entire gold NBFC business. When do you think things will reverse because currently gold prices also have corrected and is that also having impact on your business?

I Unnikrishnan: The correction in gold prices impacts our disbursement, not on the quality of loan book assets as we have seen during the last two quarters. On regulatory framework, as I said, we have represented to the Reserve Bank, and we expect that the Reserve Bank will be reviewing it.