While India’s non-banking finance companies are reeling under business slowdown blues and credit crunch, the leading gold finance company Muthoot Finance has more worries and is exploring options to scale down operations in Kerala. A section of the 600-plus employees in its home state of Kerala, belonging to the trade union Muthoot Finance Employees’ Union (MFEU) and supported by the left wing Centre of Indian Trade Unions (CITU), is on an indefinite strike from August 20 demanding wage hike and better incentives.
Analysts say the strike is unlikely to have a big impact on Muthoot’s business as Kerala now contributes only 4 per cent of its loan book, 12 per cent of employees and 15 per cent of nationwide branch network. Muthoot Finance has 5,092 branches across the country and has consolidated gross loan assets worth Rs 40,227 crore. It had a consolidated total income of Rs 7601 crore in 2018-19, with a profit after tax of Rs 2103 crore. Average realisation from the Kerala branches are much below the national average. That is one reason for the management to scale down operations in Kerala, say sources.
Gold loan non-banking financial companies SUCH AS Muthoot and Manappuram were feeling a credit squeeze a few months back following the IL&FS crisis, though the situation has eased now, they say.
The Kerala Government’s Labour Minister TP Ramakrishnan’s effort to resolve amicably the labour dispute through discussions had failed on Wednesday as the Muthoot management refrained from attending the meeting. The meeting has been postponed to September 9 in Kochi.
They said the Kochi-based Muthoot Finance management has been threatening to close down about 300 of the 600 plus branches in the state, if employees prolong the strike. Muthoot Finance had published an advertisement in local newspapers on Wednesday announcing closure of 15 branches in Kerala, following permission from the Reserve Bank of India for closing down operations of those branches. In its 600-plus branches in Kerala, Muthoot employs over 3,000 people and the trade unions have been trying to make them their affiliated association members for many years.
While managerial level employees are well paid, clerical and low-level employees are given meagre salaries, allege those who support the protest. The version of the management is that most of their employees in the state are willing to work and are not supporting the strike. The Kerala High Court on Thursday had directed the state government and the police to give protection to employees of Muthoot Finance who are coming for duty, following a petition filed on behalf of the management.