Gold loan company Manappuram Finance shares dip ... - TruthDive

Mumbai, May 17 (TruthDive) : Gold loan finance company Manappuram Finance took a beating as stocks dipped 8% to Rs 14.70. This is the lowest since July 2009 on the Bombay stock exchange.

It reported a loss of Rs 141 crore in the last quarter ended March 31, 2013 due to rising bad loans and lesser income from operations. The non-banking finance company (NBFC) had last year for the same period registered a profit of Rs 187 crore.

An RBI directive that mandates loan to value ratio should only be 60% of the pledged jewels hit the company since for every Rs 100 value gold it can give only Rs 60. This resulted in a drop of 61%. Its income was Rs 791 crore in January ?March last year. After the cap, the income is Rs 312 crore only.

Meanwhile, the company had in the last year ending quarter March had bad and doubtful loans worth Rs 2.23 crores and this year it has risen to Rs 61.95 crore.

NBFC stocks dipped on Manappuram Finance results. The shares that opened at Rs 15 were offloaded heavily with 4.63 million shares being sold while the average so far was 2 million in the Bombay Sensex and National Sensex.

The volatility of gold prices has badly hit the gold loan financing companies. RBI has asked state-owned banks to take more collateral on gold loans to cover up the downward slide.

PSU banks too are facing a situation where they have become loaded with gold that is not redeemed by those who pledged. The only option for NBFC and banks is to only auction them but again the prices are lower than for what they were pledged.

The procedural delay in auctioning is yet another reason for gold loan companies to report high losses. With the dollar getting firmed up, the price of gold has globally gone down. In India however the price upped by 2% but again there seems to be a lull.

Source: http://truthdive.com/2013/05/17/gold-loan-company-manappuram-finance-shares-dip.html

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