Gold Loan portfolio
As India’s leading gold loan company, they have the largest loan portfolio, and they said their focus has consistently been on extending financial services to segments of society that have remained underserved or overlooked. their lending operations revolve around utilising ‘Household Used Gold Ornaments’ (HUGO) as collateral, eschewing any dealings in gold bullion, their commitment centres on comprehending the unique needs of individuals facilitating swift access to funds. they go the extra mile by offering secure, insured lockers for pledged gold, accompanied by a transparent disclosure of lending rates and associated loan charges at the outset, ensuring complete clarity and comprehension. their ethos remains rooted in honesty, free from concealed fees or undisclosed additional charges. their services embrace digital innovation and encompass online gold loans, convenient loan withdrawals, seamless renewals, interest payments, and loan repayments. their userfriendly mobile app, iMuthoot, and the Muthoot online platform facilitate these services.
Muthoot Homefin (India) Limited
Founded in 2011, Muthoot Homefin (India) Limited (MHIL) is a housing finance company authorised by the National Housing Bank (NHB). Subsequently, it evolved into a wholly-owned subsidiary of Muthoot Finance Limited in August 2017. MHIL’s primary endeavour revolves around extending accessible housing finance solutions to individuals hailing from economically weaker sections (EWS) and lower-income groups (LIG), particularly in Tier-II and Tier-III cities. Operating on a hub-and-spoke model, MHIL has established its footprint across 13 states and 3 union territories, channelling centralised processing from its corporate headquarters situated in Mumbai.
Dividend
Muthoot Finance considering the good performance and strong growth seen in the financial year 2023-24 had declared an interim dividend of Rs 24 per equity share in its board meeting held on May 23, 2024 (240% of face value). The dividend payout amounted to H 9,635.08 million representing 23.79% of profit after tax for the year. The Board has decided to plow back the remaining profit after tax for business activities.
Company’s Performance
Amidst the global challenges, the Indian economy has remained resilient and has emerged as the world’s fastest growing major economy in the fiscal year ending on March 31, 2024 for the third consecutive year. This year, in line with the domestic economy growth, your company has also achieved the highest ever gold loan advance to new customers of H 164,152 million , reinforcing our position as a trusted partner in the gold loan industry.
RBI Guidelines. RBI Guidelines
The Company comply with the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 and all the applicable laws, regulations, guidelines, etc. prescribed by RBI from time to time. The Company was identified as NBFC-Upper
Layer under the Scale Based Regulation. In compliance with the requirement of Scale Based Regulatory Frameworks the Company has defined and appointed various control functions such as Chief Risk Officer, Chief Compliance Officer, Head of Internal Audit, Chief Information Security Officer. Your Company has complied with all the applicable regulations prescribed by the Reserve Bank of India from time to time. Please refer note 51,52,53,54 and 55 of Notes forming part of Standalone Financial Statements for additional disclosures required under RBI Guidelines applicable to the Company.
Risk Management
Risk management forms an integral element of our business strategy. As a lending institution, they are exposed to various risks that are related to their gold lending business and operating
environment. their objective in risk management processes is to appreciate measure and monitor the various risks they are subject to and to follow the policies and procedures to address these risks. The Company’s Risk Management Committee of the Board of Directors constituted in accordance with the Reserve Bank of India regulations has overall responsibility for overseeing the implementation of the Risk Management Policy. The committee meets at least twice in a year to review the Risk Management practices. Risk Management department periodically places its report to the committee for review. The committee’s suggestions for improving the Risk Management Practices are implemented by the Risk Management department. The primary responsibility for managing the various risks on a day to day basis will be with the heads of the respective business units of the Company. The major types of risk we face are collateral risk, operational risk, liquidity risk, market risk (which includes interest rate risk), Foreign currency risk , Prepayment risk and Business cycle risk.
Management Discussion and Analysis
Statement
In compliance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, separate Section of this Annual Report includes details on the Management Discussion and Analysis detailing the industry developments, segment wise/ product wise performance and other matters as Annexure 7.
Company Essentials
| Market Cap | ₹ 78,028.52 Cr. |
| No. of Shares | 40.15 Cr. |
| P/E | 17.68 |
| P/B | 3.04 |
| Div. Yield | 1.23 % |
| Promoter Holding | 73.35 % |
| ROE | 17.86 % |
Profit & Loss
(All Figures in Cr. Adjusted EPS in Rs.)
| Year | 2020 | 2021 | 2022 | 2023 | 2024 |
| Operating Income | 8,714 | 10,557 | 11,082 | 10,514 | 12,635 |
| Profit Before Tax | 4,057 | 5,006 | 5,309 | 4,666 | 5,448 |
| Profit After Tax | 3,018 | 3,722 | 3,954 | 3,473 | 4,049 |
| Adjusted EPS (Rs.) | 75.26 | 92.78 | 98.53 | 86.53 | 100.87 |
Shareholding Pattern
- Promoter 73.35%
- DII 13.29%
- FII 9.85%
- Public 3.51%
Strengths
- Company has maintained a good ROA of 5.30% in last 3 years.
- Company has a healthy Return on Equity (ROE) track record of 19.68%.
- Promoters shareholding is 73.35%.
Limitations
- Provision and contingencies have increased by 89.48%.
Share transfer system
The shareholders are free to hold the Company’s shares either in physical form or in dematerialized form. However, with effect from April 01, 2019, the shareholders are not allowed to transfer any shares in the physical form and hence, the dematerialisation of the shares is mandatory for transfer of shares. Thus, the Company encourages the holding of shares in dematerialized form. The shares
held in dematerialized form can be transferred through the depositories without the Company’s involvement.
Pursuant to Regulation 40 (9) of the SEBI Listing Regulations, the Company obtains a certificate from a Company Secretary in Practice on a yearly basis to the effect that all the transfers are completed within the statutory stipulated period. A copy of the said certificate has been submitted to both the Stock Exchanges, where the shares of the Company are listed.
NBFC
The Non-Banking Financial Company (NBFC) sector in India underwent a significant transformation and experienced strong growth during the year under review. Moreover, escalating demand for credit from MSMEs significantly contributed to the growth of NBFCs. Digitalisation also helped to expand the customer base of NBFCs, increased its operational efficiency and resulted in better
customer service.
NBFCs demonstrated significant resilience and proved the ability to compete against larger financial institutions. The growth in housing and infrastructure loans further increased the contribution of NBFCs to the financial services industry.
Gold Market
Global gold demand was the highest at 4,899tonne in 2023. The global gold price increased by 15% in comparison to the last year. Gold as an asset class is considered to be one of the most sought-after investment options for people from all parts of the world. Apart from using it for making jewellery, it is considered a means for long-term wealth generation. The Asia-Pacific region dominated the demand for gold in 2023, with the largest share of gold consumption attributed to Indian and Chinese markets.
Gold has great significance for Indians. The preference for gold jewellery in Indian culture has made it an integral part of everyday life. From rituals and ceremonies to religious festivities, adorning gold is considered a good omen. At the same time, it also provides an opportunity for the common man to invest in an asset class that is considered to be extremely reliable due to its appreciating value. Gold loans have, therefore, become an easy way of accessing credit for numerous borrowers including individuals, small businesses and micro-enterprises. Globally, India is the world’s largest market for gold and the gold loan market in India flourished, with around 2,950-3,350tonne of gold used as collaterals for instantly availing funds. Southern India has remained a significant market for gold loans due to the age old preference for owning gold. During the year , NBFCs offering gold loans resiliently retained their market share despite stiff competition faced by banks. The Assets Under Management of most gold loan providers increased significantly due to the rising credit demand for small and mid-sized loans. Besides, digital adoption has played an integral role in streamlining loan processing.
Human resource
Human resources play an integral role in driving the Company’s growth. Muthoot Finance is certified as a ‘Great Place to Work’, reiterating its emphasis on nurturing a positive and engaging working environment. The Company values its people and is committed to build an inclusive and diverse workplace where every individual is treated with dignity and respect.
Auditors’ Report
We have audited the accompanying standalone financial statements of Muthoot Finance Limited (‘the Company’), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and Notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act,
2013, as amended (‘the Act’) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and its profit, total comprehensive income, its cash flows and changes in equity for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (‘SAs’), as specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the ‘Auditors’ Responsibilities for the Audit of the Standalone Financial Statements’ section of our Report. We are independent of the Company in accordance with the ‘Code of Ethics’ issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
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