Manappuram Finance Ltd

Transforming Promises into Reality

Dear Shareholders,

At the outset, I am extremely delighted to present before you the Annual Report of your company for the financial year ended March 2024. Your company displayed stellar financial performance in the year gone by, leveraging on the strength of the Indian economy.

Your company continues to embark on a journey of expansion, innovation, and unwavering customer- centricity. The company continues to surpass conventional boundaries, delivering extraordinary value to customers and stakeholders.

The year 2024 holds special significance as we have nearly achieved our target AUM mix of 50-50 between Gold and Non-Gold segments. The enduring impact of our Company on the NBFC sector serves as a source of inspiration to all of us. As we reflect on the past year and the journey we have traversed, I am happy to share the highlights with all of you.

Economic Landscape

In 2023-24, the global economy moved from a period of turbulence to one of recovery. In its latest World Economic Outlook, IMF forecasts global economy to grow by 3.2% in 2024. A worldwide moderation in inflation has allowed central banks to temporarily pause interest rate hikes. However, geopolitical tensions continue to pose challenges. Despite these obstacles, emerging economies remain resilient and will play a significant role in driving global growth momentum. India retained the fastest growing economy tag in FY 2023-24 with a growth rate of 8.2%.

As the fastest-growing economy, India has become a global magnet for foreign investments, solidifying its reputation as an emerging power. This rapid growth is fueled by a favorable business environment. The manufacturing sector has been a standout performer, growing by 10% in FY 2023-24, with the potential to become a US$ 1 trillion industry by 2025-26. This growth is driven by initiatives like 'Make in India' and supported by schemes such as the Production Linked Incentives (PLI), which attracted investments in key sectors. The China+1 factor is also playing out in our favor.

We anticipate a future brimming with opportunities. A stable political dispensation adds to the growth momentum and catalyzes the journey towards a Viksit Bharat by 2047.

Strategic Review

Embracing the philosophy that change is the only constant, your company has evolved from a product-centric model to a customer-centric approach. While our gold business remains the cornerstone of our operations, we have strategically diversified into sectors like Microfinance, Vehicle Finance, and Housing Finance. This strategic realignment has not only expanded our revenue streams and assets under management (AUM) but also allowed us to offer a comprehensive suite of financial products under one roof, effectively catering to the diverse financial needs of our customers. As India urbanizes and formalizes at a fast pace, the fruits of these efforts will be ready for harvest in the years to come.

The diversification strategy serves a dual purpose. From a customer perspective, it provides the convenience of multiple financial solutions under one umbrella, enhancing the overall customer experience. From a business standpoint, it reduces concentration risks. Even as we leverage technology to optimize operational efficiency, the company always ensures the much- needed human touch when it comes to managing customer relationships.

Embracing Technology

Your company continues to enhance the capability to offer customer service by undertaking suitable upgradation and upskilling of employees. Embracing technological innovation, we have undertaken several transformative initiatives. Our improved KYC system, for instance, has transitioned from manual entries to an advanced OCR-based technology that automatically detects and fills text and images. This enhancement has significantly accelerated the KYC process and virtually eliminated manual errors. Apart from seamless customer onboarding, it also serves the company well in terms of strict compliance with regulatory requirements.

We have bolstered cybersecurity measures, ensuring privacy and security of client data. Early adoption of online gold loan facility in 2016 has enabled us to effectively navigate regulatory changes, such as the RBI's recent mandate to adhere to a cash loan cap of Rs.20,000.

Looking ahead, we are developing a robust data analytics system which is a crucial step in our commitment to superior risk management and personalized loan services. This forward-thinking approach underscores our dedication to leverage technology to enhance customer service and operational efficiency.

Our Financial Performance

I am delighted to share that your Company's financial performance remained robust throughout the year. True to our promise, we have delivered exceptional results. Our consolidated AUM grew by 18.7%, surpassing the Rs.400 billion mark to reach Rs.421 billion. On a consolidated basis, our PAT grew by 46.5% to reach Rs.21,975 million.

We also increased our returns, with ROA rising to 5.1% from 4.1% and ROE standing at 20.7% in FY 2023-24. The company remains well-capitalized with a capital adequacy ratio well above the regulatory minimum of 15%.

On a standalone basis, our Gold Loan AUM grew by approximately 9%, reaching Rs.207 billion, while our net profit rose to ? 16,578 million from Rs.12,663 million in the previous financial year. Our microfinance subsidiary, Asirvad, also demonstrated performance with a profit of Rs.4,583 million, an 105% increase from the previous financial year.

Our vehicle finance business continues to post the highest growth, recording a 69% increase year-on-year with an AUM of Rs.41,109 million. Additionally, our home loans saw a significant increase, with an AUM of Rs.15,097 million, reflecting a 37.8% rise over FY 2022-23. Increased capex plans by the Government have a direct bearing on the vehicle finance segment. While robust infrastructure push augurs well for commercial vehicle finance, measures like higher MSP for agricultural products are expected to boost farm income and create demand for two-wheelers. Meanwhile, additional 3 crore houses under PM Awas Yojna should offer a tremendous boost to the housing finance segment, especially affordable housing. In the interim Union Budget, Rs.80,000 crore had been earmarked for the housing sector.

Closing Thoughts

Even as we reflect on our past achievements and remarkable milestones in this diamond jubilee year, we eagerly look forward to the future with excitement and anticipation. The years ahead are sure to bring new challenges, growth opportunities, and groundbreaking achievements. With a legacy of dedication, expertise, and innovation, your company is ready to embark on this thrilling journey with unwavering determination. We extend our heartfelt gratitude to all our stakeholders, partners, and employees who have been crucial to our success. Together, let's march forward with confidence, ready to shape the future and make history.