Gold opens new doors for Manappuram

19 Jan,2012

By Tuhina Anand

 

The traditional arena of the gold loan as a source of quick cash has been transformed into a booming business with the advent of some major players. In redefining the way gold loan is viewed, Manappuram Finance Limited (MAFIL), based in Thrissur District in Kerala has played a key role, and in the process has turned its own fortunes around too, especially in the last two years.

 

As  I Unnikrishnan, Managing Director, MAFIL says, their balance sheet has shown 100 percent growth in terms of profit in FY 2009-10 and 200 percent in FY 2010-11. There are multiple reasons for this growth, including being the first Kerala-based NBFC (Non-Banking Finance Company) to receive foreign investments which paved way for its geographical expansion. Manappuram had been restricted to Kerala till 2005 but started expanding to west, north and east. They have 2700 branches and in FY11 it has already opened some 700 branches. Also technology has played a major role in the company’s success with core banking solutions available to them, thus revolutionizing the loan against gold business.

 

Other than this, communication has played a crucial role in Manappuram’s success. The company has splashed out on getting top film stars as brand ambassadors. Mr Unnikrishnan explained, “We have got not one but multiple brand ambassadors to reach out to people in various regions. When you enter a new geography, the need is to create a trust among consumers on your brand especially in our trade where we are asking them to part with their gold which is something precious to them. There is a need to build credibility in the lending business. We decided to go with the popular film actors as these are names people trust.  The idea to have so many film stars helps as each actor is trusted by people especially in their region.”

 

They have roped in Mohanlal who is leading actor in Kerala, Puneet Rajkumar from Karnataka, Vikram who rules Tamil cinema, Akshay Kumar who has pan India appeal as well as actors Venkatesh and Mithun Chakraborty.

 

More than anything as Mr Unnikrishnan says, they have managed to create awareness about gold loans and brought about a perceptual revolution. Earlier pawning of gold was seen in a poor light and there was a negative impression that people sell gold when they are in distress. “We have positioned gold loan as something that is handy and that is where our well crafted advertising has helped. It has required a commitment to convince the customer that gold loan is a feasible and quicker way of getting cash and not just in distress. I think this strategy has paid off and not just for Manappuram but also for the gold lending business.”

 

The communication shows that gold loan can help one scale up their business or fulfill a long awaited dream. So gold which Indians have a tendency to hoard and keep in lockers can actually fetch you money to realize your dreams.

 

After having a good run in the South, now Manappuram is experiencing growth from Gujarat, Maharashtra, Chhatisgarh , Orissa and West Bengal among others. In fact, Mr Unnikrishnan is bullish on the trade and estimates that the organized gold loan market is close to Rs 1 lakh crore and the unorganized as Rs 2 lakh crore. In fact, seeing the opportunity in gold loan besides the NBFCs like Manappuram and Muthoot who have gained success even banks have got into this area. He concludes, “The challenge is not the market as it is growing. The challenge is to train people who can understand and meet the need of customers.”

 

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