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Praveen: An Ingenious Mahout Ushering a Giant Institution towards Industry Zenith

Praveen: An Ingenious Mahout Ushering a Giant Institution towards Industry Zenith

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Praveen,CFOWorking Capital for any NBFC is the finance and if the finance is managed well, the job is half done. To spearhead such critical finance operations of one of India’s giant Microfinance Institutions(MFI) require strategic intelligence, perseverance and a positive attitude in the face of adversity. Blessed with all these three in abundance is Praveen, CFO, Muthoot Microfin Limited, which stands tall as one of India’s top MFIs with a PAT of Rs.201 crore and above average earnings profile, as reflected in annualised ROMA of 6.61 percent in FY2019.

Adeptly guiding this mammoth corporation towards industry zenith, Praveen orchestrated the creation of diversified funding profile with a lender base of 48 institutions, including banks, NBFCs, DFIs and foreign banks, which allowed the company to have access to funds even post liquidity crisis since September 2018. He also earned the appreciation for playing an instrumental role in billion private equity investments from Creations Investment India LLC. Praveen, in an exclusive conversation with CEO Insights shares his strategies, challenges he faced & suggestions to budding entrepreneurs.

What inspired you to join Muthoot Microfin and how has been your journey so far?
Muthoot Pappachan Group being one of India’s leading business conglomerates with over 130 years of history in financial services, the decision to join as a Sr. Manager reporting to the CFO was easy. I was fortunate to work with an amazing team & a CEO like Sadaf Sayeed who gave me the confidence to take up the CFO role.
Kindly tell us about the key drivers you implement to enhance the profitability of Muthoot Microfin.
I give emphasis on the sourcing of funds & managing the funds well. Accessing low cost funds and including funding techniques which can increase the return, de-risk the company, all the while ensuring adequate liquidity. Besides driving profitability by closely managing cost and boosting productivity (operationally & function-wise), I also benchmark revenue & overhead percentages to the industry peers. Today, the company’s asset liability maturity profile is very comfortable with cumulative positive mismatches across all buckets.

Accessing low cost funds and including funding techniques which can increase the return, de-risk the company, all the while ensuring adequate liquidity


How do you leverage technology to improve the performance of Muthoot Microfin?
Muthoot Microfin is an NBFC MFI registered with RBI providing a lifecycle need to the rural household, especially women entrepreneurs at various levels of economic ladder. Although technology is instrumental for driving cost reduction while serving rural markets, the clients are not well-versed with the technology advancement. Hence, we are investing in technology at large scale with very simplified interface, including several mobility solutions.

Being in the unsecured lending space has always been a risk and our focus on South India is adding to it. Our usage of securitisation in the form of direct assignments deals helped Muthoot Microfin to reduce the risk in operation, whereas maintaining above 35 percent of the portfolio in the assigned mode helps us to reduce our risk substantially. Being an NBFC-MFI, the company has restrictions on margin which shouldn’t be more than 10 percent
as per RBI guidelines. However, the company managed to earn a higher NIM throughout the assigned portfolio where such margin is not specified. We focus on direct assignment & higher leverage on capital to maintain very high ROA and ROE.

How has been the support from your family in your journey so far?
Although I belonged to a middleclass family from a village 40 kilometres away from Kochi, my father Late Balakrishnan & mother Shylaja, never hesitated to provide dedicated support to my education. Similarly, my wife Aadithya was supportive enough to resign her job to be together as the job demanded transfers.

How do you manage to balance between your personal & professional life?
Since the responsibilities grow as the time grows, you should manage your time better, set your priorities and give family the time & attention they need. Moreover, striking a balance between career & personal life can bring out the best in you & accelerate your productivity. I take only the good things to the home and to the office.

Key Management
Praveen, CFO
Praveen is a member of ICAI with nine years of experience in finance & accounts, management reporting, compliance and Resource Planning. Adeptly accomplishing his responsibilities across all the finance functions, resource planning & reporting to all the interested parties, bestowed him with a spot in the CFO India’s 9th Annual CFO100 Roll of Honour in 2019.

Hobby: Loves to watch football & whenever time permits, plays as well
Favourite Food: Indian & Chinese cuisines

Favourite Destination: Hailing from God’s own country, Praveen’s frequent outing locations are within the state, although his home remains as his most favourite destination.

Words of Wisdom: “Truly understanding your industry and the organisation is the key to having success. Be open to ideas and changes.”