Adapting to Thrive Strategies Behind a Financial Triumph

V.P. Nandakumar

Raising funds is crucial for the success of any financial company. In the aftermath of the CRB scam of 1997, this had become especially challenging, shared V.P. Nandakumar, MD & CEO, Manappuram Finance, in an exclusive interview with Srajan Agarwal of Elets News Network (ENN).

Your journey with Manappuram Finance began in a one-room store in Valapad, Kerala. Can you share with us the key milestones in the brand’s evolution from its humble beginnings to becoming a company that boasts of an AUM of Rs 40,000 crore? How did the initial vision shape the company’s growth, and what were the pivotal moments in this remarkable journey?

It was my father who laid the foundation for the Manappuram group when he set up the Manappuram National Bank in 1949 in his native village of Valapad in the Thrissur district of Kerala. It was a single-room set-up, but his sincerity and financial discipline won the hearts of the villagers. When he fell terminally ill, I had to resign from my job as a bank officer and take over the business in 1986. The rest, as they say, is history, and we now have more than 5,200 branches all across the country, a workforce of more than 47,000, and an AUM of Rs 40385 crore.

It has been a roller-coaster journey, and there are too many milestones to recount. Manappuram Finance, which was incorporated in 1992, became the first NBFC in Kerala to go for an IPO in 1995, at a time when very few in this part of the country had the expertise or awareness about the process of ‘listing.’ In 2007, Manappuram became the first Kerala-based NBFC to receive investment from Foreign Institutional Investors. In 2015, Manappuram acquired Asirvad, which has gone on to become one of the largest microfinance companies in the country.

Your leadership has evidently played a crucial role in Manappuram Finance’s trajectory. Could you elaborate on your leadership style’s transformative influence on the company? What guiding principles and strategic decisions have been instrumental in steering the company toward success under your stewardship?

My vision was not merely to make money but to create a large, professional organisation capable of creating wealth for the public and offering employment to youngsters. We started with an asset base of Rs 25 lakh and 3 employees. We still function from the same village of Valapad, which has transformed into a bustling town. The gold loan business was traditionally in the hands of pawn brokers and money lenders who charged usurious interest rates. Our attempt was to bring it within the formal sector and unleash the power of the gold reserve available to families across the country. We were able to convince people that the gold ornaments, to which Indians used to be emotionally attached, could be put to their best use during their times of need. The growth of the gold loan industry over the years is a testament to the concept that we pioneered.

The financial industry often faces challenges. What strategies and initiatives has Manappuram Finance employed under your leadership to overcome industry challenges and capitalise on emerging opportunities? How has the company maintained resilience and adaptability in a rapidly changing market?

As you know, raising funds is crucial for the success of any financial company. In the aftermath of the CRB scam of 1997, this had become especially challenging. Manappuram then became the first gold loan company to raise finance through the securitisation and assignment route in a tie-up with ICICI Bank. This worked well for a few years, but around 2006, ICICI Bank faced some regulatory hurdles regarding securitisation and pulled out, jeopardising our company’s expansion plans.

Around this time, Temasek, Singapore’s sovereign investment fund, was looking to expand its footprint in the Indian market. I happened to be in Singapore to take part in a conference on NBFCs, and I spoke about the gold loan business there. A representative of Temasek expressed interest in financing Manappuram through their India arm, Fullerton.

In December 2007, Manappuram became the first NBFC in Kerala to attract foreign institutional investment when the renowned PE fund Sequoia Capital invested Rs 70 crore together with Hudson Equity Holdings. Since then, the company has regularly received foreign investment. Once private equity came in, the company was able to grow faster than before.

Manappuram Finance is known for its customer-centric initiatives. Could you share some of the innovative approaches the company has taken to meet customer needs and expectations? How does the company continue to evolve its services to stay ahead in a competitive market?

In 2015, we pioneered Online Gold Loan (OGL), allowing customers to avail of a gold loan anytime, anywhere in the world. Later, we also came up with the Doorstep Gold Loan, enabling customers to take loans without leaving their homes.

There is a big push given to digitalisation and we have a large IT division that develops the required software and other innovative applications. Data analytics is yet another focus area that helps us arrive at the correct decisions with respect to business development. We give a lot of importance to in-house training of our workforce in a bid to retain our competitive edge.

Navigating market dynamics is crucial for sustained success. How has Manappuram Finance demonstrated agility and adaptability to stay ahead of market trends? Can you share specific instances where the company adjusted its strategies to maintain a competitive edge in a dynamic financial landscape?

Even as Manappuram established itself as a strong player in the gold loan industry, we realised that there was a continuing stigma attached to pledging gold as Indians traditionally nurture an emotional bond with their ornaments.

In 2010, we launched a big-budget advertising campaign that revolved around celebrity brand ambassadors with strong regional appeal, who talked about the benefits of gold loans to the masses in their own language. We deployed a galaxy of superstars like Akshay Kumar, Mohanlal, Mithun Chakravarty, Vikram, Venkatesh, etc to target different geographies. The campaign was successful for our company and helped grow the gold loan sector as a whole.

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What are the key focus areas and future endeavors for Manappuram Finance? Are there specific sectors, technologies, or markets that the company is eyeing for expansion or innovation? How does the company plan to stay at the forefront of the financial industry in the coming years?

The company has recently diversified into new business areas like microfinance, vehicle and housing finance, and SME lending. Asirvad, our main subsidiary, has an AUM of Rs 11,563 crore. Our other new businesses are also growing rapidly. Overall, non-gold businesses now contribute 49 per cent of the total business. So, we are now a well-diversified entity, and we would like to retain such a portfolio while not neglecting our main focus of gold loans.

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