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Mumbai, March 21: Trouble has been brewing at gold finance firm Manappuram Finance for a couple of months and has led to the exit of four of its directors till date.
On Thursday, Gautam Saigal, nominee of AA Development Capital India Fund 1 LLC, resigned from the board.
A Mauritian resident fund, AA India Development Capital Fund 1, is managed by AA Development Capital Investment Managers (Mauritius) LLC, a joint venture between Alchemy Partners LLP and Ashmore Investments (UK) Ltd. It holds around 3.59 per cent of Manappuram Finance’s stock.
Of the four directors who have resigned since January, two are nominee directors.
Today’s announcement came just a day after Manappuram Finance informed the bourses of the resignation of A.R. Sankaranarayanan, who was the chairman of the remuneration committee.
Last month, director M. Anandan, who was the chairman of the audit committee, had resigned from the board.
Sudhindar Krishan Khanna, a nominee of Hudson Equity Holdings Ltd, has also quit.
According to the shareholding data available with the stock exchanges, Hudson Equity Holdings held around 6.20 per cent in Manappuram Finance. In January, Hudson Equity Holdings had sold 1.8 crore shares of the gold mortgage company for over Rs 77 crore through an open market transaction.
Institutions hold around 39.71 per cent of the equity of Manappuram. Of this, foreign institutional investors have a shareholding of 36.48 per cent for the quarter ended December.
Manappuram Finance has been in the news over the past couple of days as lower gold prices have led to concerns over its profitability. The stock has lost around 30 per cent of its value over the past five trading sessions. However, in today’s trade it closed over a percentage point higher at Rs 24.
While there have been concerns over the fall in gold prices, which could lead to under-recovery in revenues, rating agency Icra said in a note today that it was monitoring the financial performance of the Kerala-based company. Icra said one of the reasons for under-recovery of revenues was the “bullet” nature of repayments.
“In most gold loans, delinquencies are known only at the end of 12-15 months (unlike an EMI-based product, where such information is available more frequently). Therefore, there could be overbooking of income in the initial phase of a loan or a lag in income reversal,” the rating agency added.
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