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Standard & Poor’s on Friday said Manappuram Finance (MFL) faces reputational risk over a money laundering investigation.
The Directorate of Enforcement (ED) is probing Manappuram Agro Farms (MAGRO), a former sole proprietorship concern of V P Nandakumar (CEO and managing director of Manappuram Finance).
Pending further information, it is unclear if Manappuram (BB-/Stable/B) will face any legal, financial, or funding risk from the investigation, S&P said in a statement.
The company’s stock closed 11.45 per cent lower at Rs 105.6 per share on BSE.
The company said the board noted with satisfaction the explanation given by Nandakumar. The matter pertained to a 10-year-old of erstwhile proprietorship concern. He updated the regulators at periodical intervals and he was in touch with his legal advisors to remedy the situation.
S&P said it had in the past highlighted a few issues at Manappuram and the subsequent steps the company had taken to address them. “We reflect this comparative high risk within our banking industry country risk assessment framework,” it said.
Ratings on Manappuram derive support chiefly from the company’s strong capitalisation and earnings and from its position as one of the leaders in gold-backed lending in India.
As of May 3, Manappuram has about Rs 35 billion in working capital loans due for repayment in three months and liquid assets of about Rs 10 billion. The company has an asset base of largely shorter tenor and self-liquidating loans, tempering refinancing risk, S&P added.
First Published: May 05 2023 | 9:16 PM IST
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