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Mumbai: Manappuram Finance, which is preparing the contours of succession planning, will announce the names of potential candidates in the next quarter, said managing director and chief executive officer V. P. Nandakumar.

With a 16% market share, Thrissur-based Manappuram Finance is the second-largest gold finance NBFC in the country after Muthoot Finance with assets under management of 19,190 crore and a gold loan customer base of 2.5 million.

In an interview, Nandakumar, 68, said the non-banking financial company is considering promoting internal candidates as its next CEO, as well as for other senior positions. He added that the decision to prepare a succession plan follows insistence from the Reserve Bank of India (RBI).

“For every position, there is a succession. We don’t go to the market. It will be announced in the next one quarter," said Nandakumar. “Regulators are insisting. For the business sustenance, regulator feels the risk," he added.

While discussions have been going on at the board level for the past six months, Nandakumar has been unable to make up his mind over a suitable candidate, said a person aware of the matter.

However, time is running out for Kumar as he has to finalize a plan by March-end with his bonus for this financial year resting on the condition that he prepares a succession plan.

RBI rules also mandate that the CEO of an NBFC cannot continue beyond 70 years, which leaves him with less than 2 years to find his replacement.

“The board has been working on it. It’s one of our very high priorities. That said, we are not constrained by a short timeline. Manappuram has historically groomed employees from within. The board will have to scan through these names and also revisit Nandakumar’s intention with respect to his family," said Shailesh J. Mehta, chairman of Manappuram Finance. “We want to do it fast as we want Nandakumar to groom the person or persons fast. The goal is to meet the deadline of 2024," he added.

To begin with, the board will consider internal candidates and also members from Kumar’s family since he is a promoter with 35.18% shareholding.

According to the person cited above, his three children haven’t shown the keenness to take over the reins of the company. His eldest daughter Sumita Nandan is a doctor by profession. In 2012, Kumar had tried inducting her and get her mentored by Mehta. The attempt, however, failed and she returned to her profession. His elder son, Sooraj Nandan, is pursuing a business career in the UK, while his younger son, Suhas, works in Manappuram Finance as an assistant vice president.

Among the employees who could be considered for the CEO’s post, include chief financial officer Bindu A. Lal and Raju Narayanan, both of whom have had long stints in the company, Mehta said. But the board is looking at options even among its other businesses.

“From a gold loan company, we are becoming diversified. Asirvad Microfinance is a fast-growing business. We have a lot of business heads at senior levels, whether it is vehicle business or home loan business or microfinance. We want to cast a wider net and include people who have operating experience and strategic thinking. But can they step in just now? The short answer is they can rise, but they are not ready," said Mehta.

Choosing a competent successor gains significance as the gold loan company has seen its profitability come under pressure due to stiff competition from banks, other NBFCs and fintech startups.

ABOUT THE AUTHOR

Gopika Gopakumar

Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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